Friday, July 29, 2005

CAFTA--Was it worth it?

Last night I got a rather exuberant email from Chicago outlining for anti-CAFTA activists all the reasons they should be proud of their work. Unusual for a group who lost a vote by such a small margin, and who one otherwise might expect to be demoralized.

But reading today's Wall Street Journal, indeed there may be substance to their glee. If the page one story in today's WSJ is on the mark, for example, and the "CAFTA vote clouds prospects for other trade deals," then the Bush administration should be worried.
...the trade fight has also become increasingly partisan for its own sake, with Democrats voting as much to gain approval from domestic interests and labor groups as out of principled objections to the details of an agreement.

That clouds prospects for future trade deals, especially if the Republican margin shrinks in the 2006 elections. The all-important fast-track authority -- which gives the U.S. president the power to negotiate trade deals that Congress either accepts or rejects without amendment -- is up for renewal in 2007.

...For Latin American governments mulling their own free-trade pacts with the U.S., the Cafta cliffhanger raised an unsettling question: If the tiny, ardently pro-U.S. economies of Central America can barely get a deal, what can we expect? That may make Latin leaders less willing to expend political capital at home to win approval for trade deals that grant greater access for U.S. goods. While individual countries like Panama will continue to seek bilateral pacts with the U.S., the Bush administration's already troubled plan for a Free Trade Area of the Americas faces an increasingly uncertain future.
Elsewhere in their paper (another two news stories, and one editorial bemoaning the Democratic posture), reporters note the US' declining influence in the region, CAFTA notwithstanding:
Washington's reluctant approval of a deal that was widely seen in Latin America as tilted in the U.S.'s favor is likely to aggravate the decline of U.S. influence in the region, which feels it has an uneven relationship with the world's sole superpower.
Finally, the Journal continues it's excellent coverage of Republican "arm-twisting" (yes, a phrase they do use) to get the oh-so-slim CAFTA victory.

Time will tell whether it was worth it to the Bush administration to elevate CAFTA to such a primordial place on its policy agenda. To read the reporters of the WSJ, one would think they already have an opinion about that.

Update: Reading through a round of friendly bloggers (something I have little time for of late), I see that Boz comes up with another interesting unintended consequence of a CAFTA victory (something he supports, albeit with reservations). I noted yesterday that Central American elites will be held accountable for any failure (likely, in my opinion) of CAFTA to produce lots of new jobs. Boz sees gold for Chavez as well:
The bad news for bill's supporters is, in the short term (1-3 years) the passage of CAFTA may actually benefit Chavez. CAFTA becomes Chavez's whipping boy, a gringo economic policy he can point to when development doesn't come immediately or some people lose out in the new free trade deal. Chavez doesn't care whether it's true or not. The Venezuelan regime is a master of public relations and they will find a way to turn CAFTA against us in the media. This isn't an argument against CAFTA, but it is something to be prepared for.

Thursday, July 28, 2005

CAFTA as Trojan Horse

The best coverage today comes from the Wall Street Journal, which details some of the last-minute vote-buying/bargaining from the Administration:
Republican leaders secured at least five votes for Cafta by agreeing to bring separate legislation to the floor that would allow the U.S. to impose duties on exports from China and others designated as nonmarket economies by the Commerce Department. The measure, approved yesterday in the House by a 255-168 vote, was castigated as "a sham" by Senate Democratic leader Harry Reid of Nevada and faces uncertain prospects in the Senate.

Another five votes, and perhaps more, came after the administration cut deals to assuage textile-industry concerns, such as fears that the pact would create incentives for Central American producers to use inexpensive Asian-made yarn and fabric instead of U.S.-made materials. Even with the changes, opposition remained among lawmakers from textile-producing states.
Even their accompanying graphic was snyde, or at least used it to illustrate how all of this is much ado about very little. It's worth going back about 10 days to another WSJ analysis piece, entitled "CAFTA No Cure-All for Central America," to grasp why this CAFTA may not do much for the region. That article ends with the following prognosis, and makes the radical suggestion that perhaps free movement of labor (which is what we have already in a rather de facto way, and which is what is really helping Central American economies) is what might work best:
But Cafta's immediate economic benefits are so "nebulous" says the economist Carl Ross, a Bear Stearns analyst, that he says he can't incorporate them into his forecasts for the region.

When it comes to promoting regional security through economic growth, the Europeans, looking for deeper economic integration, have adopted another model. The European Union offers its poorest entrants free trade coupled with development assistance, free movement of labor and other measures designed to lift nations out of poverty.

When such poor nations as Ireland and Spain were admitted to the EU, they received funding aimed at boosting competitiveness and their workers were able to work elsewhere in wealthy Europe. Today, Ireland has one of the world's fastest growing economies and is competing on solid footing in high technology. The disposable income of Spanish families has risen by nearly 40% since 1998, estimates by Spain's La Caixa bank show.

Cafta's limited trade openings are unlikely to produce such dramatic gains.
Finally, today's WSJ piece provides more explicit details about Administration lobbying:
In a day of high-level lobbying, Secretary of State Condoleezza Rice made the rounds to argue that Cafta would help heal old divisions in the region and foster stability. Late last night, Mr. Cheney camped out in an office just off the House floor, and Commerce Secretary Carlos Gutierrez worked the halls.
Wait a minute -- CAFTA will "help heal old divisions" in the region?

NOT. CAFTA has already provided a useful political foil for the left, and now that the region's elites have it, they'll have to accept the political consequences should that reported 300,000 job gain in the region prove elusive. That can only help the left and other opposition forces. Which I doubt the Bush administration will be too happy about.

Tuesday, July 26, 2005

Talking sense on CAFTA

Okay, so he doesn't really delve into the issues, but this is a nice bit from today's op-ed from one of Maine's two Congressmen, Michael Michaud.
At the end of the day, opponents of CAFTA have not asked for no trade deal at all, but merely for a simple renegotiation of the treaty in order to fix glaring problems and promote trade that is fair to workers on both sides. So far, the administration has refused.

How could such a bad deal for our workers pass? In recent days, the administration has authorized House leaders to secure votes with whatever is at hand, from extra funding for individual members' districts in the highway and energy bills to the still incomplete annual appropriations bills. Members are being asked to trade away their votes for a trade agreement that only promises to trade away American jobs.

Two years ago, this tactic worked to pass the deeply flawed Medicare bill by one vote - leadership held open a 15-minute vote for three hours while they twisted arms in order to ensure its passage. It is expected that the CAFTA vote will be more of the same.

Is this the way that the people's House should look after the best interests of our nation? What message does this send the American people and our work force? And why must these votes always be held in the dark of night? While working Americans sleep, their jobs are traded away in a Capitol Hill back room.

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