Free Trade Follies (CAFTA Edition)


Yesterday, the Senate passed the Central American Free Trade Agreement, which lowers trade barriers between the U.S. and six basically puny Central American nations, by a 54-45 margin (go here for a roll-call vote). No need, for now, to get into an argument whether CAFTA represents truly free trade (it doesn't), but it does represent freer trade, which is a good thing for everyone involved (read this for why; and this too).

In order to get that vote, reports the Washington Times, President Bush had to make a number of last-minute concessions, including once again sucking up to Big Sugar and promising to protect American producers of nature's sweetener that trade with the likes of the Dominican Republic will never, ever eat into their profits.

The House Way and Means Committee has passed CAFTA 25-16, but it's still not quite clear whether the bill will pass the full House when it comes up for a vote, probably some time after July 11.

CAFTA is mostly symbolic–not just of free trade per se, but of whether Bush can get anything done in a second term. Here's hoping he can, at least in this instance–and not just for the poor of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. It'll also be good, though in a small way, for U.S. consumers, too. Like NAFTA, it will likely build on trends already in place with small but positive effects.

Sobering thought of the day: The much-bigger and more-important North American Free Trade Agreement passed the Senate 61-38 in 1994.

Question of the day: In the decade since NAFTA's passage, what has happened to make free trade less politically viable? Or, as suggested above, perhaps this has nothing to do with free trade and more to do with domestic politics?

Whole Times story here.


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  1. One thing that I believe has made free trade less politically viable was the overtures, implied promises etc. made that NAFTA would make the United States less attractive to ‘undocumented’ workers from Mexico, and keep immigration down.

    NAFTA didn’t live up to its perceived end of the bargain and the flow of workers over the border hasn’t abated.

  2. Where’s Perot and his “giant sucking sound” when we need him?

  3. Post-WW II, American support for free trade was partially (possibly mostly) driven by the fear of Soviet influence. NAFTA was arguably the final flowering of that impulse, as most of the groundwork for the agreement was completed during, or immediately after, the Cold War.

  4. Perhaps last fall’s multi-billion dollar advertising campaigns aimed at terrorizing people about “offshoring” have led to a more protectionist mindset in general. Just a guess.

  5. It’s just too bad that CAFTA (like NAFTA) is unconstitutional (as violative of the plain requirement that treaties be ratified by a by two-thirds Senate majority). U.S. Const., Art. II, Sect. 2. Last I checked, a 54-45 vote falls short of that. (And NAFTA wasn’t ratified either.)
    Why are we willing to let the Constitution fall away when it serves our political ends?

  6. Question of the day: In the decade since NAFTA’s passage, what has happened to make free trade less politically viable? Or, as suggested above, perhaps this has nothing to do with free trade and more to do with domestic politics?

    I have two more questions:

    1. Do the opponents of free trade realize they sound to economists like the opponents of climate change sound to climate scientists? And, more importantly, why doesn’t the media treat free trade skeptics the same way they treat climate change skeptics?

    2. Given that there seems to be some liberal traction in opposition to the Kelo decision and its implications, can we somehow get liberals to recognize protectionism as cut from the same cloth? After all, both redevelopment and protectionism are exercised by the state to promote limited and powerful private interests at the less well-connected person’s expense.

  7. Norberg and Bhagwati say so? Well *I’m* convinced!

    CAFTA produces *less* free trade in some areas, like intellectual property [sic].

  8. 1) Offshoring has led to a fall in support for free trade among white collar workers, who had previously assumed that the only temporary pain for free trade would fall on manufacturing and agriculture.

    2) Republicans tend to be more likely to vote for free trade regardless of the President; most Democrats need a Democratic President twisting arms to do so.

    3) NAFTA didn’t affect sugar; about 5-10 of the votes against CAFTA are pure sugar state votes, whether cane (LA), maple (ME), or beets (WY, SD, MT, etc.)

  9. MikeP,

    Many of the “opponents of free trade” aren’t actually opponents of free trade. They’re opponents of “Free Trade.”

  10. What is Free Trade? Is it actually trade as historically understood. Historically, trade was based on trading products. Free Trade today is based on moving production, farming, factories and outsourcing jobs outside the USA. The main commodities are actually the workers who are put on a world trading block to compete down to the lowest levels of destitute workers, wage slave and even child labor.
    Henry Ford realized that workers have to be able to buy the things they make. Then, WW2 was won through the awesome industrial might of the USA. The Marshall Plan which restored local value added economies in Europe and Asia after WW2 was also based on this U.S. industrial power.
    Then in 1956 the U.S. Government start funding the moving of factories outside the USA. It was supposed to be only a temporary program to help the Mexican economy out while bringing in cheaper consumer products to the USA. The process continued for years. NAFTA just confirmed and speeded up the process. So there is a long history of so called Free Trade and it is not a good one. Right after getting NAFTA passed, President Clinton had to rush billions of dollars to Mexico to keep the economy afloat.
    Now Free Trade has shoppers shopping their way out of their jobs. A working poor class has been created in the USA and soon they will not even be able to afford to buy the cheaper imports while the destitute workers abroad can not afford to buy the very things they make let alone have any money left over to buy whatever the USA has left to sell.
    We need to study the past and abstract the best econmic models possible and we have plenty of examples from WW2 to the 1980s.
    Worst yet, the moving of production has become portable too ready to be moved from place to place based on the cheapest deals possible without any constraints. When the factories are moved, burn out societies are left behind.

    And it is ridiculous to have taxpayers pay for research and development if the production phase goes outside the USA. This leads to taxpayers paying their way out of their jobs while they also are shopping their way out of their jobs.

    We need to stop this insanity and bring back real jobs and then as we did with the Marshall Plan help others to duplicate our efforts and not have workers being the commodities.
    For more information, see Tapart News and Art that Talks at featuring the American Dream is Burning artwork by Ray Tapajna.
    Other reference sites include
    or search on Google, Yahoo, Donkeydo and other search engines for hundreds of more references under Tapart News.

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