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The CAFTA Choice

October 01, 2004

In early May, we had the opportunity to visit El Salvador. Had we gone ten or fifteen years ago, we would have talked with generals and military advisors about guerrillas, death squads, military aid and democracy. In 2004, we talked with legislators, businessmen and unionists about jobs, sewing machines, and the fate of the recently concluded US-Central America Free Trade Agreement (CAFTA). Arriving in San Salvador as proponents of CAFTA, we left believing its passage can help cement the democracy and national reconciliation of the past decade – and a failure to approve it risks pushing the region back toward the past.

The Central American countries – El Salvador, Costa Rica, Guatemala, Honduras, and Nicaragua – once relied almost completely on natural resource commodities like coffee and oil. Over the past fifteen years, they have diversified into light manufacturing, with a textile industry that now accounts for about 20% of Central America's jobs. This growth, sparked by the Caribbean Basin Initiative, has meant greater prosperity for the countries than ever before and thus a chance for democracy to succeed after the devastating wars of the 1970s and 1980s.

While the CBI may have worked ten years ago, it is no longer adequate. Garment quotas are approaching their end this year, competition from China, India and Vietnam grows ever sharper, and Central America needs something more comprehensive and permanent to keep up.

This is where CAFTA comes in. Congressional approval would help Central America maintain its relative advantage in the textile industry and sustain its economic progress, while over time diversifying further. The defeat of CAFTA, meanwhile, could send the people of Central America a message that the United States is no longer interested in their success, and could lead to a familiar cycle of lost economic opportunity and violent political instability.

This choice became clear to us after our visit to Charles Products, a San Salvador textile factory that made children’s jeans and overalls. The factory floor was a field of a thousand unmanned, idle sewing machines. The reason: Charles Products decided that they could be more competitive by moving their operations to Sri Lanka. The plant's 1600 workers, once paid between 5 and 10 dollars a day, are now unemployed. Failure to pass CAFTA could see their story replayed all over the region.

U.S. Embassy personnel and experts in the textile industry project that if the U.S. does not ratify CAFTA, Central America will lose 30 to 50 percent of its textile industry and thousands of jobs, a devastating blow to a region struggling to employ thousands of farmers migrating to cities. CAFTA has provisions that will allow El Salvador, Nicaragua, and Honduras to be more competitive with China. Considering that the majority of Central American textile imports rely on components produced by U.S. workers, and Chinese imports generally do not, CAFTA is needed to ensure that the source of imports shifts from Asia to our neighbors who rely on U.S. goods.

Groups opposing CAFTA contend that a Congressional defeat is in the interests of Central American workers. Organized labor says it would support CAFTA if the agreement had stronger enforcement of core labor standards. We are doubtful that organized labor would ever support CAFTA, especially when one considers its opposition to the US-Australia trade agreement. If labor opposes an agreement with a country with a higher minimum wage, twice the percentage of union workers, and arguably higher labor standards, why should anyone believe that it would ever support a trade agreement with Central America?

In fact, the CAFTA talks have led each of the democratically elected governments of Central America to enhance its labor laws. The International Labor Organization (ILO) found them to be in close compliance with international core labor standards. CAFTA will ensure that they enforce their labor laws and will provide assistance in building their capacity to improve labor conditions. CAFTA has significant financial penalties for countries that fail to enforce their labor laws. Even after the favorable ILO assessment, the CAFTA countries have continued to demonstrate an unprecedented commitment to improving the enforcement of labor laws through continued domestic reforms and by identifying areas in need of further technical assistance.

We need to approve CAFTA to send a signal that the United States is committed to these domestic reforms that improve the lives of Central Americans and to providing economic opportunities that are important to preserve stability in the region.

These facts illustrate the tremendous impact our choice about CAFTA will have on the region in years to come. But we also need to look at the past. The young Salvadorans who are graduating from high school were kindergarteners in the late years of a war that killed 70,000 of their countrymen and women. They and their neighbors may have far to go in some respects – but they have come an awfully long way and deserve credit for it.

It will be a travesty if CAFTA is defeated in an effort to improve the lives of workers, because the result will be just the opposite. The idle field of a thousand sewing machines we saw at Charles Products in San Salvador will be the harbinger of future human misery repeated hundreds of times. Each idle sewing machine will represent a lost job, a lost opportunity, and a lost dream.

*Cal Dooley is a Democratic Member of the U.S. House of Representatives, representing California's 20th District. He was a leading co-sponsor of the Trade Act of 2002, resulting in the enactment of Trade Promotion Authority (TPA). Jerry Weller is a Republican House Member from the 11th District of Illinois, and is a leading member of the House International Relations Western Hemisphere Subcommittee.

Mara Lemos
Director, Communications
Council of the Americas
Phone: (212) 277-8363