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Julian Sanchez | July 18, 2005

Jeff Taylor reports from North Carolina, where President Bush is pitching CAFTA to skeptical audiences.

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Adam|7.18.05 @ 6:45PM|#

Off the beaten path of the article and clicking over to the account of the speech in NC Jeff links to, I've got to say, those are some big balls Bush has got, to go to North Carolina and criticize Nicaragua for having a 10% tariff on shrimp, given what his administration has done.

|7.18.05 @ 6:54PM|#

Jeff wonders,

"But what is it that has made the economic benefits of free trade such a tough sell in so many places?"

He posits that it has something to do with the fact that it doesn't "square" with all the state and local subsidizing that goes on. Perhaps.

I would say, though, that a bigger part of it, perhaps all of it, is the simple fact that the "economic benefits of free trade" are slow coming. Couple that with the rather massive bump in the road that will inevitably come if and when you try to ween all those subsidized/protected workers off the gubmint tit. In the long run, it's in the best economic interest--but in the short term, there's gonna be a pretty substantial adjustment period during the switchover. Most people, when they're trying to scrape together enough at the textile mill to put food on the table, have trouble seeing the forest for the trees. They don't care if the long-term effects will be positive, they care whether they'll have a job next week, or if, instead, the price of their labor just fell by 1/2 because the federal government is no longer protecting them from real competition.

And that's the sad reality. Once you train industries on the gubmind teet, it's particularly hard to ween the off---mainly because of the immediate opportunity costs.

Adam|7.18.05 @ 6:59PM|#

Anyway - after finishing, and after reading Ron Paul's objections to CAFTA (of which I've chosen only one):

CAFTA...imposes the International Labor Organization�s manifesto, which could have been written by Karl Marx, on American business

and reading Sander Levin's objections:

This is not true in Central America, where State Department and International Labor Organization reports confirm that the basic legal framework is not in place to protect the rights of workers. Regrettably, CAFTA sanctions the status quo or worse by saying to these countries: "Enforce your own laws" when it comes to internationally recognized labor standards,

and reading the text (which says quite clearly that Levin is right and Paul is wrong, at least on labor), it sounds like one of the better ideas that's come through Congress lately.

|7.18.05 @ 8:40PM|#

the WSJ had an interesting take:

http://online.wsj.com/article/0,,SB112163988770387826,00.html

Cafta offers much less than Nafta did. The deal mostly cements temporary trade preferences Central American countries already have. Regional negotiators lacked the leverage to pry concessions from the U.S., so they won only limited gains in two areas where the region is strongest economically -- the sugar and garment industries.

Cafta leaves in place a system of price supports for U.S. sugar producers, and allows Central Americans to export only a meager amount to the U.S. -- equivalent to about 1% of annual U.S. production. The Bush administration has offered even more protection to the sugar industry to win votes needed to pass the accord.

Nevertheless, the administration and its Central American allies say the accord will boost investment in the region. They also warn that a failure of the U.S. Congress to approve Cafta could undermine leaders who have helped forge free-market democracies and who bet their political futures on tying the region closer to the U.S. As for providing additional help, Honduras and Nicaragua qualify for development assistance under the administration's Millennium Challenge Account -- although the other Central American nations don't yet qualify.

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.

|7.18.05 @ 9:15PM|#

"Pork, for example, faces a 47 percent tariff. Or as Bush told the crowd: "You grow a lot of hogs here. And you're good at it; you're really good at it. And you grow more than we eat."

With North Carolina a top pork exporting state, that was an important rhetorical point for the president to make."

Yeah. At the super farms they are raising hogs on today, there are maybe 30 people working the farm, and 10,000 that live around it smelling the stench. If you've never smelled shit from thousands of cows or hogs piled up in one big pile, you haven't lived.

If I was in NC, that rhetorical point might have been enough to sway me against CAFTA.

|7.18.05 @ 9:49PM|#

Regarding Ron Paul's objections: In the real world nothing is perfect, and so a principled libertarian can find reasons to oppose just about anything. No doubt libertarians will find perfectly good principled reasons to oppose the Anchower Act of 2019, which will legalize marijuana for adult consumption but up the penalties for selling to children (as well as impose a small tax).

Adam|7.18.05 @ 10:57PM|#

2019? sweet.

|7.18.05 @ 11:00PM|#

Well, it's supposed to be 2019. But if Anchower's car breaks down and Wes and Ron aren't able to give him a ride then he might not make it to Congress before the deadline for submitting legislation.

You may be asking how Jim Anchower will get elected to Congress, but you have to remember that by 2018 he'll have already held every single other available job in the US, and Congressman will be the only job left for him to try.

|7.18.05 @ 11:09PM|#

I'll say a pointless, ignorant statement which I know is not accurate to make a larger point. Here goes...

We still have textile mills in America?

The point of course is that textile jobs have been leaving America for the Caribbean and Asia since before Norma Rae held up her handwritten, cardboard "UNION" sign.

I understand the role of manufacturing and technology and I understand that economy of some entire towns depends on it. But I also understand that this is not a new thing and it didn't start with Bush or because of him.

POINT: If your town is dependent on manufacturing, vote your city council out of office or move.

POINT 2: If you left high school with nothing more than the dream of following in your folk's footsteps of working for the rest of your life in the town textile mill, say hello to the Peter Principle.

POINT 3: If you've been coming home after a hard day of work from the mill and NOT working on a contingency plan for the last 20 years, you're a fool.

Manufacturing in emerging technologies has some anchor, as do manufacturing processes that take advantage of raw materials her in America (steel, agricultural products, etc.)

But with few exceptions, manufacturing in established technologies are the buggy whip industries in America.

Blame Walmart if that get's you to sleep at night. Blame NAFTA, Clinton, Bush Sr., Reagan, Nixon, Roosevelt or the Indian-owned convenience store if that gets you your jollies.

But the facts are the reasons are far more complicated and far less evil that most want to believe and the handwriting's been on the wall for years.

I felt sorry for folks in the 1980's. But by now, I don't feel sorry for folks who've had years to see this stuff coming and refused to do anything but bitch that the government isn't doing enough to protect them.

|7.19.05 @ 6:39AM|#

mapdap,

Nice analysis. :)

thoreau,

Paul's basic argument is that the U.S. cannot sign treaties which effect the Congress power to regulate international trade; but the Congress choose how it wants to regulate trade, including doing so through international bodies. That's why I find his argument, well, absurd. Does that make me a purist?

Honestly, I think you are setting up some false dichotomies here regarding your continuing arguments about purists.

|7.19.05 @ 8:44AM|#

In fact, if Bush really wanted to connect with his audience, he should have expanded on the quick observation that more jobs in a prosperous Central America means fewer people looking to "sneak across the border." North Carolina, like many states in the Southeast, is fairly obsessed with illegal immigration from Mexico and points south.

I doubt this argument would gain any ground against the nativist crowd (of which I'm not a member), for the simple reason that illegal immigration from Mexico is apparently greater than before NAFTA. I don't know enough about the issue to state whether the increased border jumping occurred because of NAFTA or in spite of it, or if the situation is at all comparable to what would occur under CAFTA, but I guarantee you the nativists would hammer away at this point.

|7.19.05 @ 11:07AM|#

I think the whole linking of illegal immigration to NAFTA is a bit of a red herring. Yes, Mexico liberalized its economy somewhat due to NAFTA, and it made it easier to conduct trade between the two countries, but it's still very difficult and costly to start a business there, and, combined with the level of corruption in gov't there, its still a mess. None of these things, to my knowledge, were part of NAFTA, and it seems like they certainly should have been. There really is not a whole lot the U.S. can do about this, other than try to pressure Fox into it, and he can't really move on this due to the capital it brings to Mexico. I think the guest worker program that got killed by 9/11 was the hammer that Bush wanted to hold over Fox to do something, and he needs to bring it up again.

As far as Paul goes, I think his stance, in the long run, is the correct path - we don't really need free trade agreements if we just dump our own tarriffs and reap the benefits of less gov't payouts and taxes. I would say more free trade, even with another extra governmental body being involved, is better than no free trade.

M1EK|7.19.05 @ 11:12AM|#

"And that's the sad reality. Once you train industries on the gubmind teet, it's particularly hard to ween the off---mainly because of the immediate opportunity costs."

Oh, come on. Plenty of companies have shut down factories that never received a government incentive, and plenty of those factory-closings devastated small towns. And I guess they should uproot themselves and move to where the jobs are, right? Except, oops, they have families. And oops, sometimes there aren't other jobs available. And oops, even when there _are_, there's a reason most of us don't want to be migrant workers.

The key here that most of you Randsuckers want to ignore is that macroeconomics matters. I, for instance, have had little trouble getting good jobs most of my career, but during 2001, I had a hell of a time, as did most of my friends. It didn't _matter_ that I'm near the top of my field; what mattered was that a ton of companies in my field were laying off and nobody was hiring.

Now repeat with somebody who's "only" a median-caliber worker and tell me macroeconomics can't hurt them, with or without EVUL GUBMINT SUBSIDEES.

Asshats.