U.N. Report Shows Global Wages Falling

On Nov. 3 the U.N. agency on labor, the International Labor Organization (ILO), released a 15-page report finding that real wages fell in countries around the world, including the U.S. and some other wealthy nations, raising questions about whether workers are sharing in any global economic recovery.

The report included data from 35 countries, and found that monthly wages have fallen almost 2 percent in the U.S. since January 2009. The ILO found that inflation-adjusted wage growth fell sharply around the world in 2008 to 1.4 percent, down from 4.3 percent in 2007, and wages continued to fall in a number of countries in 2009.

This continuing drop in real wages around the world illustrates the need for trade policies and agreements that protect workers’ rights and prevent a further “race to the bottom” in global wages. Fair traders have long warned that trade agreements such as NAFTA, CAFTA, and other NAFTA-type trade agreements would deflate wages and threaten workers’ rights. The ILO’s report on the drop in real wages for workers in the global economy is disturbing and makes a strong case for renegotiating these pacts and preventing new trade agreements based on the flawed NAFTA model.

Offshoring airline safety

Last week, NPR ran a three-part story on U.S. airlines sending airplane maintenance work - formerly a high-paying, unionized domestic profession - offshore, particularly to Central America and Asia. The lead story, To Cut Costs, Airlines Send Repairs Abroad, summarizes much of the relevant information, but the entire three parts are worth a read. Also note that this is not the first time that this issue has made headlines in recent years. At issue here are both the offshoring of quality jobs and the problems with regulating safety under today's trade model. Some of the money quotes from the first NPR story regarding the latter:

"The FAA does not require airlines to report exactly where they send their aircraft for which kinds of repairs. So, FAA inspectors are not sure which of the roughly 700 foreign repair shops they should inspect... The FAA's inspectors didn't even show up at some foreign repair stations to monitor their work for as long as three to five years."

The second story in the series details some of the questionable practices at one Salvadoran repair operation, Aeroman:

...[Aeroman] mechanics say managers keep pressuring them to fix the planes faster. For instance, if there's rust on a metal beam, but it's just a little over tolerance, "the supervisor says, 'Oh, just leave it like that,'" the mechanic says, through an interpreter. "'There's no need to repair it.'" [...] Another mechanic ticked off other problems at Aeroman. Some employees don't store glues at the required temperatures, he says. That means the glues could fail — which potentially means that parts of the airplane could fall apart... And this mechanic says some workers can't even read the airlines' repair manuals. The manuals are written in English, but some mechanics at Aeroman can't read English — including him.

Trade a Flash Point Issue in Pennsylvania’s Democratic Primary

As Rep. Joe Sestak (D-Pa.) is set to challenge Sen. Arlen Specter (D-Pa.) for his U.S. Senate seat in the upcoming Democratic primary, trade policy has surfaced as a point of contention between the two candidates. Both have criticized the other as being supportive of unfair trade agreements and Specter agreed with the accusation that Sestak is “weak on trade.”

The candidates have a mixed vote record on trade. Specter voted for both NAFTA and the WTO, but has made occasional fair trade votes in recent years, by voting against China PNTR and CAFTA. On the Senate floor in 2005, Specter said of CAFTA,

“This trade agreement would adversely affect this job loss in the United States… many U.S. corporations would have to shut down their operations, export their jobs, and leave skilled workers jobless. This agreement would aggravate the problem. In addition to job loss, this agreement fails to enhance workers' rights…Ultimately, CAFTA would create downward pressure on wages because it would force our American workers to compete with Central American workers who are working for lower wages. This would allow foreign based companies to expand while leaving America more dependent on imports from abroad, which in turn would lessen the demand for domestic production and create even greater economic instability.”

Sestak for his part voted to deny fast-track treatment to the FTA with Colombia and has said that he plans to vote against the Korea and Colombia FTAs.

Yet, both candidates voted for the Peru FTA in 2007 and at this point, neither has cosponsored the TRADE Act – a key demand of fair traders.

The fact that the two candidates are analyzing each other’s trade policies and referring to specific trade agreements shows that political candidates are becoming more educated about trade policy and are using the issue as a platform for (re)election. In other words, trade continues to be a major election issue.

CAFTA Signatory Honduras Falls Victim to a Coup

Recently ousted Honduran President Manuel Zelaya was in Washington, DC earlier this month and met with Secretary of State Hillary Clinton. Zelaya was roused from bed at gunpoint by the Honduran military, forced on a plane, and flown to Costa Rica in June. Since then, the de facto government has violated civil liberties left and right: The Huffington Post reports that Zelaya supporters have been killed, hundreds of people have been assaulted by armed forces, and over a thousand have been illegally detained. Meanwhile, press and media outlets have been shut down and journalists have been arrested and detained. 

Zelaya was criticized by Honduran elites for his progressive policies: During his tenure, Zelaya’s administration raised the minimum wage, gave out free school lunches, provided pensions for the elderly, distributed energy-saving light bulbs, decreased the price of public transportation, expanded scholarships for students, and passed legislation to protect the environment. He enjoys broad popular support, especially from unions, human rights groups, indigenous groups and peasant associations. 

The situation in Honduras has a number of important implications: Fair traders have long argued that NAFTA-style deals promote instability and now Honduras, a signatory to CAFTA, has suffered Central America’s first coup since the Cold War. CAFTA was approved in Honduras by local elites, the same interests who are threatened by Zelaya’s progressive policies. The instability in Honduras is an illustration of how NAFTA-style trade agreements can undermine democratic governance in member nations.

University of California Study Finds that CAFTA Intellectual Property Rules Hinder Access to Medicines in Guatemala

A new study from the University of California concludes after rigorous analysis that the Central American Free Trade Agreement (CAFTA) elevates the prices of medicines in Guatemala while removing cheaper, generic options from the market. 

Guatemala is a low-income country with a domestic generic drug industry.  CAFTA’s intellectual property rules affect the drug market not as much through patent protections, but through data protection (or data exclusivity), which inserts an administrative barrier to generic drugs entering the market even if there is no patent in place, providing one company with a monopoly. Not only are generics denied registration and entry into the market by CAFTA’s market protections but generics already in the market are removed. 

The study looked at drugs used to treat some of the most common causes for sickness and mortality in Guatemala, including cancer, pneumonia, diabetes, and cardiac disease and stroke. The intellectual property rules in CAFTA have had a significant effect on medication costs in Guatemala, making many of them prohibitively expensive. In every case included in the study, the data-protected drug was more expensive than its generic equivalent. For example, the insulin Lantus, used to treat diabetes, costs 846 percent more than its generic equivalent. The antifungal Vfend, used to treat infections, costs 810 percent more than the generic medication. 

In fact, CAFTA’s rules on intellectual property provide even stronger monopoly protections than U.S. law or the WTO’s Agreement on Trade-Related Aspects of Intellectual Property (TRIPS).  Unfortunately, Guatemala is a prime example of the effects of CAFTA’s intellectual property rules and the Guatemalan people are paying the price, literally and figuratively. 

For more information, see GTW’s information on CAFTA and access to medicines.

The University of California article, entitled “A Trade Agreement’s Impact on Access to Generic Drugs,” can be found here. 

Honduran coup-plotters hurl racial insults at President Obama

Cadejo4 at DailyKos has the full and completely starling story, and BoRev reacts to the racist comment. And Das Racist has a suitably mind-numbing song to accompany the reading...

Tantamount To, Equivalent To

One of the most controversial provisions in trade and investment agreements is the following provision, taken from CAFTA: "Article 10.7.1: No Party may expropriate or nationalize a covered investment either directly or indirectly through measures equivalent to expropriation or nationalization (“expropriation”)..." CAFTA goes on to say:

The Parties confirm their shared understanding that:...
3. Article 10.7.1 addresses two situations. The first is direct expropriation, where an investment is nationalized or otherwise directly expropriated through formal transfer of title or outright seizure.
4. The second situation addressed by Article 10.7.1 is indirect expropriation, where an action or series of actions by a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure.

(a) The determination of whether an action or series of actions by a Party, in a specific fact situation, constitutes an indirect expropriation, requires a case-by-case, fact-based inquiry that considers, among other factors:

(i) the economic impact of the government action, although the fact that an action or series of actions by a Party has an adverse effect on the economic value of an investment, standing alone, does not establish that an indirect expropriation has occurred;
(ii) the extent to which the government action interferes with distinct, reasonable investment-backed expectations; and
(iii) the character of the government action...

Virtually every NAFTA investor-state case has claimed that certain policies were "tantamount to" an expropriation (the language was changed to "equivalent to" in the post-NAFTA period). We did a report that touched on some of these issues back in 2005. As we wrote then:

NAFTA’s investment rules give foreign investors new rights that go significantly beyond the rights available to U.S. citizens or business under the Takings Clause of the Constitution. In the 1993 Concrete Pipe case, the U.S. Supreme Court held that “our cases have long established that mere diminution in the value of property, however serious, is insufficient to demonstrate a taking.” In contrast, NAFTA Chapter 11 tribunals have defined compensable takings as “the incidental interference” with the use of property that need only cause a “significant” or “substantial” impairment of an investment. Thus, in the Metalclad case, a municipality’s denial of a construction permit to a U.S. company seeking to expand an existing toxic waste facility on land it had purchased was found to be an indirect expropriation requiring compensation under NAFTA. Rather than fixing the problems caused by NAFTA’s loose rules and troubling case history, the USTR has merely made cosmetic changes in the new FTA’s foreign investor protection provisions. For instance, one “fix” the USTR attempted in CAFTA was to eliminate the phrase government actions “tantamount to” an expropriation that appears in the NAFTA text as activity requiring compensation. However, that change is merely cosmetic. The new FTAs still require compensation for “indirect” expropriations, which is the operative term NAFTA panels have relied on in finding regulatory takings. Indeed at least two NAFTA panels have held that the “tantamount to” clause in NAFTA is redundant and does not expand upon the scope of NAFTA’s terms requiring compensation for direct and indirect expropriation. The Bush administration could have conformed the new FTAs to U.S. law which, among other things, requires the demonstration of a near total takings of the property as a whole before a regulatory takings is found, but failed to do so. The end result is that foreign firms are still being granted substantive and procedural legal rights that go beyond what is provided in the U.S. Constitution as interpreted by the U.S. Supreme Court.

These provisions not only expose governments to liability that they often would not have under domestic law with domestic investors, but can also chill policy initiatives. As we said in our report:

A March 16, 2002, article in the Toronto Globe and Mail surprised Canadian health officials who were preparing to issue a new regulation on cigarette labeling. The newspaper reported that Philip Morris, the U.S. tobacco giant, was considering a Chapter 11 investor-state suit under NAFTA because of a proposed public health rule that would ban the words “light” and “mild” from cigarette packaging, terms that have misled smokers into believing that they were using a safer product.

In a submission to the Canadian government, Philip Morris argued that the proposed ban of the descriptors “light” and “mild” would be “tantamount to an expropriation” of its tobacco trademarks containing those words in violation of NAFTA Article 1110, because it had invested millions “developing brand identity and consumer loyalty.”...

While Philip Morris has told Public Citizen that it is not moving forward with the threatened NAFTA case, the Canadian public health legislation is not moving forward either. A spokesperson for Physicians for a Smoke Free Canada thinks that the Philip Morris threat as well as threatened domestic court action has played a role in stalling passage of this important public health policy.

What Happens in Guatemala...

One of the first CAFTA investor-state cases is underway, and it has been brought against Guatemala by a U.S. company (Railway Development Corporation, or RDC) that won a contract to take over operation of Guatemala's privatized railroad system in 1996-97. (As Sarah reported, another case has been launched against El Salvador related to mining issues.) In 2006, Guatemala's government initiated the process of declaring the contract "injurious to the interests of the state," known in Spanish as a "declaración de lesividad."

The company alleges that this administrative proceeding, and the events that it set off (loss of other contracts, a fall-off in police protection of the railway, etc.), violate the company's CAFTA rights, including provision of a "minimum standard of treatment" (Article 10.5), national treatment (Article 10.3), and protection against measures "equivalent to expropriation" (Article 10.7). A great part of their case rests on the observation that the Oscar Berger administration appeared to be on the side of Guatemalan sugar oligarch Ramon Campollo, who wanted to take over part of the railroad concession that RDC had not built out.

RDC is asking for Guatemalan taxpayers to compensate it over $64 million, which is the equivalent of the total annual income of over 26,000 Guatemalans. Guatemalan papers report that it has already cost that country's taxpayers (among the poorest in the hemisphere) hundreds of thousands of dollars to defend the case.

I've scanned the "Claimant's Memorial on the Merits," which is basically a detailing of RDC's version of the events leading up to and following the declaration. Here are some of my initial reactions to the document:

• The lesividad declaration is a long-established practice within Spanish administrative law, dating back to the 19th century. It is on the books in Guatemala and other Latin American countries with Spanish legal systems. Indeed, in the memorial, RDC surveys a long history of "lesivo" resolutions brought by the Guatemalan government, dating back to 10 years prior to RDC's initial negotiations with the government. Presumably, some of these many cases were also brought against Guatemalan nationals. In other words, RDC should have known what it was getting into when it invested in a country that had lesivo declarations as part of their legal system.
• Lesivo declarations could be seen as blunter form of backstop regulation, and an alternative to other measures, such as expropriation or renegotiation of contracts. So, to the extent that RDC's claim is successful in arguing that lesivo declarations violate CAFTA's minimum standard of conduct, CAFTA can be seen as pushing deregulation, even when domestic regulations are used against both domestic and foreign corporations.
• It is worth pointing out that RDC's business model is thoroughly wrapped up with pushing railway deregulation and privatization, often in developing countries. This is a choice that RDC makes, to invest capital in developing nations rather than at home. There's a simple reason for this: companies can often make higher returns in developing nations, for minimal investments with minimal regulatory oversight. According to textbook economics, this higher return compensates investors for taking the higher risks associated with investments in developing nations. Heads, you make a killing; tails, your investment goes under. It should not be the role of public policy (such as trade pacts) to remove these risks - after all, the home country public gets none of the upside if the investment works out. Again, if RDC didn't want to deal with lesivo declarations, it could have invested in a country that didn't have them on the books, rather than call on the nanny state to bail it out when it got into trouble.
• Part of RDC's concession was the exclusive right to use at least five different "routes" in Guatemala. While RDC indicated that they would build out all the routes, they decided (as per their apparent contractual rights) that business conditions did not favor building out any but one of the routes. The Berger government, and Ramon Campollo, for whatever their faults, wanted to build out the other routes. RDC didn't want to build them out, and didn't want to let others build them out. Instead, they wanted to sit on the route and let nothing happen. This is rentier type behavior if I have ever seen it. This is an important part of the backdrop to the CAFTA claim, and one that should serve as a warning sign to governments that auction off exclusive rights to use privatized assets.
• RDC gripes about some of its contracts falling through, and faulty police protection of their railway installations following the lesivo resolution. While the fall out does sound rather unpleasant, the question remains: how much liability should the state have for actions that are indirectly caused by government action?
• This case illustrates how FTAs bind the room for maneuvering of successive governments, and thus frustrate democracy. RDC signed the original contract with the civil war-ending Alvaro Arzu government, tangled with the right-wing Berger government over the lesivo declaration, but then decided to bring the CAFTA case against the (relatively) progressive government of Alvaro Colom, in office since early 2008. Why should the Colom government, not to mention the Guatemalan people, be liable for the behavior of the man - Oscar Berger - that they defeated in the last election?

Finally, a wide number of bilateral trade and investment cases have dealt with this notion that measures can be "tantamount to" or "equivalent to" expropriation (or be an indirect expropriation) without actually being an expropriation. I'll run an update on this later today or tomorrow, with some of my notes on the recent Glamis ruling.

EOT Prize for Best Coverage of Honduras Coup in a Blog Goes to...

...The folks at BoRev.Net. Melvis may have left the building, but democracy supporters want the fair trader back!

FTAs = Destabilization

Fair traders have long maintained that NAFTA-style trade deals promote instability.

The case of Mexico clearly showed this, with massive amounts of post-NAFTA rural displacement leading to sharp increases in immigration and narcotrafficking, leading the country to the brink of failed statehood.

Earlier this month, the thesis was proved again in Peru. In 2007, Peruvian fair-traders warned against signing the FTA, arguing that it would incentivize further rainforest destruction. Sure enough, within months of the deal going into effect, huge parcels of the Amazon were sold off to developers, and indigenous forest-dwellers were locked in a life-or-death battle with the government.

Now, over the weekend, fair trader Manuel Zelaya (president of Honduras) was ousted in the region's first military coup since the Cold War. Opposition to CAFTA ran high in Honduras, but local elites signed the deal anyway. This led to a groundswell of support for a president that kept getting more and more progressive, most recently signing onto the Bolivarian Alternative of the Americas, an alternative to NAFTA-style FTAs. The country's elites wanted to block these changes, so pushed a coup. (More information on how you can take action is available here.)

Looking ahead, as the debate continues in the United States over the Panama FTA, some comments made by that country's peasant leaders are worth considering. He said of the FTA:

In Panama, the poverty rate is nearly 40 percent, and it is even higher for the rural areas (65 percent) and indigenous communities (95 percent). If we experience even a fraction of what happened to Mexico in terms of the flood of subsidized U.S. agricultural products, our rural population will disintegrate and look for any survival option – including immigration to the United States.

This kind of trade agreement will only increase hunger and misery in the indigenous and peasant sectors of Latin America, pushing our countries even faster into the arms of leftist governments, which has already happened in South America proper.

The message is clear: if you want increase in desperation and polarization, push FTAs. If you want preservation of democracy and stability, choose fair trade.

Pacific Rim Uses CAFTA to take on Mining Regs in El Salvador

Canadian mining company Pacific Rim Corp. has responded to grassroots efforts against its proposed mining project in El Salvador by filing a CAFTA investor suit against the Salvadoran government.  

Communities in northern El Salvador, worried about the environmental impacts of proposed mining projects, campaigned vigorously along with environmental, religious and human rights organizations to hault what would be El Salvador's first large-scale mine in 70 years. They were successful in convincing President Tony Saca to rethink issuing the permit for Pacific Rim's El Dorado mine.

The Miami Herald explains:

President Saca fears mining would cause cyanide contamination of water much in the way it did in the 1950s at the El Dorado mine, the same underground mine in the eastern region of Cabañas which Pacific Rim wants to reopen and expand.

''I won't give any mining exploitation permits because mining is definitively harmful,'' Saca said.

Saca's position has been echoed by his successor, president-elect Mauricio Funes, whose left-wing FMLN party ended 20 years of right-wing rule with their victory in the March elections. Funes will officially take power in June.

El Salvador is not alone in choosing to preserve natural resources over mining projects that do not bring long-term employment and whose profits will flow out of the country. And Pacific Rim is not alone in using NAFTA or CAFTA investor rights to challenge local decisions over mining. The United States is currently fending off a $50 million NAFTA investment suit over California's mining regulations.

Although Pacific Rim is a Canadian company that shouldn't even be eligible to utilize investor rights under CAFTA (an agreement between the United States and five Central American countries), they have found a way around this problem. Pacific Rim Mining Corp. will bring this investment suit through its Nevadan subsidiary, Pac Rim Cayman LLC! As with all NAFTA and CAFTA investor-state cases, the case will be decided outside of domestic courts by a panel of arbitrators.

And all this talk of a Panama FTA, which contains the same kind of investor rights found in NAFTA and CAFTA could makes matters much worse. Panama is home to an estimated 350,000 subsidiaries of foreign mulinational companies. Just as Canadian company Pacific Rim used its Nevadan subsidiary to file a CAFTA investor suit against El Salvador, so could any of the 350,000 parent companies use their Panamanian subsidiaries to take the United States government to task over environmental and other public interest regulations.

Fair Trader Wins Salvadoran Presidency

Count one more fair-trade government in Latin America. The Washington Post reports the winner is Mauricio Funes:

Funes, a dynamic speaker and political outsider who compares himself to President Obama and pledged to be an agent of change in the small Central American nation, was leading the polls late Sunday night with 51.2 percent of the vote and more than 90 percent of the ballots counted...

Funes's opponent, former National Police chief Rodrigo Ávila, who represented the Nationalist Republican Alliance (ARENA), was trailing with 48.7 percent of the vote. Ávila conceded defeat, telling supporters, "We will be a constructive opposition."

The Committee in Solidarity with the People of El Salvador (CISPES) is hopeful about the prospects for the country under the new government:

CISPES also wants to pass on a profound congratulations for the Salvadoran people, who today triumphed over fear and joined the countries of Latin America who are proving that indeed another world is not only possible, it is in formation!

Amen to that!

Fair Traders Hang Tough in Salvadoran Elections

The Salvadoran fair-trade party FMLN (Frente Farabundo Marti de Liberacion Nacional) - vehement in its opposition to CAFTA - is leading the presidential race, but facing typical last-minute shenanigans from the right wing. And given the recent interventions by Republican congressmen - not unlike Bush administration's meddling in the CAFTA Referendum in Costa Rica - the FMLN is holding its breath.

A recent Washington Post piece reveals that while polls show the fair-trade FMLN candidate Mauricio Funes up by 18 points on the CAFTA-fans and privatizers' candidate Rodrigo Ávila of the ruling ARENA party, there's always a chance that something will give.

The February polls show Funes up 49 percent to Ávila 's 31 percent, but Aguilar [a commentator] cautioned that the race remains dynamic. Other polling shows the race to be a virtual dead heat.

That something might just be the not-so-veiled threats made by GOP congressmen yesterday, orchestrated to dominate the Salvadoran headlines the final moments of the campaign. As highlighted by CISPES, the Committee in Solidarity with the People of El Salvador (who also urges you to take action to make the clear U.S. neutral position):

Rep. Dan Burton (R-IN) stated, “Those monies that are coming from here to there I am confident will be cut, and I hope the people of El Salvador are aware of that because it will have a tremendous impact on individuals and their economy.” Indeed, these threats carry considerable weight for Salvadoran voters, as 25% of the Salvadoran population lives in the U.S., and 20% of the nation's economy consists of remittances from those family members.

This sort of meddling was full anticipated, which is why Rep. Raul Grijalva (D-Ariz.) coauthored a letter signed by 33 members of Congress to the State Department, calling for a preemptive declaration of U.S. neutrality in the Salvadoran elections. Now we clearly see why this was necessary.

You can see Grijalva's press conference here, or below on yesterday's Democracy Now:

The Post reports on Funes' own reaction to the scare tactics:

During his speech in Metapan, Funes promised that "we will end the economy of privilege for the few," a reference to the so-called 14 major families of the Salvadoran elite, who have dominated the country for generations. He urged the crowd not to believe ARENA's "propaganda." "They're desperate because they know they're going to lose," he said. "If you vote for me, light is at the end of this tunnel."

Eyes on Trade will be watching and will keep our readers posted.

One Third of CAFTA 30 Are Gone!

After the razor-thin margin for CAFTA passage back in 2005, we highlighted what we called the CAFTA 30, which was basically the CAFTA 15 Democrats that voted for the deal plus a few handfuls of Republicans who had committed (or who politically should have) to vote against.

Well, as of today, nearly a third of the CAFTA 30 are gone - ousted from office or otherwise replaced.

• In 2006, Reps. Charles Taylor (R-N.C.), Richard Pombo (R-Calif.), Mike Fitzpatrick (R-Pa.) and Mark Foley (R-Fla.) were ousted by Heath Shuler (D-N.C.), Jerry McNerney (D-Calif.), Patrick Murphy (D-Pa.) and Tim Mahoney (D-Fla.) - who all called out the Reps' bad CAFTA positions. (Mahoney later sold out fair traders, but that's history, since he also lost his re-election.)
• Now, in the 2008 races, there are four more casualties: Rep. Chris Cannon (R-Utah), Phil English (R-Pa.), Robin Hayes (R-N.C.) and Marilyn Musgrave (R-Colo.) -- all who were ousted by fair traders Jason Chaffetz (R-Utah), Kathy Dahlkemper (D-Pa.), Larry Kissell (D-N.C.) and Betsy Markey (D-Colo.). 
• Additionally, Rep. William Jefferson (D-La.), one of the CAFTA 15, lost his 2008 election, and Rep. Jo Ann Davis (R-Va.) passed. And Sens. Norm Coleman (R-Minn.) and Elizabeth Dole (R-N.C.), whose bad CAFTA votes we also highlighted, lost their elections to fair traders Al Franken (D-Minn.) and Kay Hagan (D-N.C.).

This contradicts the claims of some corporate groups that voting for CAFTA was a not a political liability.

3 Years and 3 Strikes for CAFTA

The Stop CAFTA Coalition just released their third annual DR-CAFTA monitoring report highlighting the damages of this particular Bush trade deal. The report focuses on the three cases of the Guatemala, El Salvador and Nicaragua, the first three countries to implement CAFTA. Despite the warnings of people in each country, those three governments each swung hard, and missed big.

CAFTA has failed to bat in the promised shared prosperity and economic development. From the Stop CAFTA Coalition's press release:

Patterns of growing inequality and ongoing poverty within the signatory countries have only become more extreme, contrary to the promises of supporters of the agreement.

Coalition members are calling for the incoming Obama administration for at least a thorough renegotiation of the Central America Free Trade Agreement, and a moratorium on further NAFTA-style trade deals. In the Stop CAFTA Coalition's press release Burke Stansbury of the Committee in Solidarity with the People of El Salvador (CISPES), a member of the coalition, summarizes:

We believe that the results of CAFTA demonstrate the failure of ‘free’ trade and justify a definitive split with this model by the incoming Obama Administration... Not only should the Democratic Congress reject pending agreements such as the Colombia Free Trade Agreement, but the party in power should take this opportunity to introduce a new trade policy based on human rights, and economic, social and environmental sustainability.

Katherine Hoyt of the Nicaragua Network, also a coalition member, elaborates on the problems as seen from Central America:

Unless there is a significant shift in the economic model, employment opportunities will continue to be scarce, agricultural prices will continue to fall, the poor will become poorer, and immigration will increase.

You can view the full report here.

When the new home place ump, and increasingly fair trade 1st and 3rd base umps arrive in January, the fans will be doing the wave demanding action to match words. They earned their posts by promising change toward fair trade, and they be cheers for them to make good on renegotiations of not just CAFTA but NAFTA, and to pass structural reforms like the TRADE Act. The air will be crisp, the beer flowin', red hot hot, and it'll be hard to ask for a better night for a ball game.

CAFTA Continues to Crawl

It’s now been over four years since the Central American Free Trade Agreement (CAFTA) was signed by Nicaragua, El Salvador, Honduras, Guatemala, and Costa Rica (and later the Dominican Republic) in March 2004, and two years since it was to take effect in March 2006. Two years later in March 2008 was the deadline for full implementation of the provisions. Yet countries, especially Costa Rica, have been slow to dive head first into this agreement.

In February of 2007, tens of thousands of Costa Ricans took to the streets to demonstrate the ratification and implementation of CAFTA, but it narrowly passed through a country-wide referendum vote in October 2007. Since then it’s been inching its way through the court system and government. The March 2008 implementation date has been extended several times, and just this past week was extended again til January 1, 2009.

All eyes are on this country, with the most prosperous economy in Central America and the third largest goods export market for the United States in Latin America. So while the US continues to pressure Costa Rica’s implementation of the agreement, the implementation date seems to float farther away as citizens and farmers speak out against CAFTA's lack of labor, environmental and health provisions, among a host of other concerns.

In other news, U.S. corporate takeover of Central America has continued. You may remember that Wal-Mart was able to buy control of Central America’s leading retail chain in 2006 when CAFTA went into place. Once the Central American Retail Holding Company (CARHCO), the retail chain has now been renamed to Wal-Mart Central America. Clever, eh? Guatemala experienced some of the largest Wal-Mart infiltration, with hundreds of stores being sucked into the international Wal-Mart conglomerate and out of the local economy.

Just as CAFTA encourages this sort of foreign investment, it makes sure to transfer plenty of control from the domestic government to the investing corporations.  As part of CAFTA’s Investor Protection Provisions, foreign corporations are able to sue the local governments for any "potential loss of profit" for the company, as already demonstrated in dozens of cases through NAFTA.

Recently this incredibly vague provision in CAFTA began working its way through the Dominican Republic’s energy sector. The French investor Societe Generale sued the DR’s government for $680M in potential losses related to allegations that the government’s mistreatment of the company has led to a diminished value of EDE Este, a Societe Generale power company. More specifically, the company claims “catastrophic losses” due to allegations that the government has failed to prevent the theft of electricity, blamed the company for power blackouts, and encouraged Dominican citizens to forgo paying their electricity bills. That’s a $680 million whine that could transfer millions of taxpayer dollars to the hands of a foreign private corporation.

Take heed Costa Rica, it could get ugly.

Making a story where there isn't one

(Disclosure: Global Trade Watch has no preference among the candidates.)

Philip Elliott of the AP writes an unusual story the headline of which is "NAFTA Bashing off the Democrats' Agenda" and the lede of which is: "The once-decried free trade deals of the primaries have been all but abandoned as political boogeymen."

Yet the story goes on to say that both Obama and Clinton campaigned and won primaries based on their NAFTA criticism, and all of the people cited argue that trade is and was a potent political issue.

So what's the evidence for the proposition in the lede and headline?

During the Democrats' nominating convention here this week, nary a mention arose about the North American Free Trade Agreement or its peers... Part of the reason Obama has gone silent on NAFTA is because it riles up some unions and staunch Democrats, but not independent and swing voters. NAFTA is an easy target because some voters blame such trade deals for lost jobs, but its details don't work well in 30-second soundbites.

This last sentence might have been the lede: I think I would advise anyone running for office not to talk about investor-state mechanisms in their nomination speech too, much as I am fascinated by the topic.

The para is also off on its politics: independents and swing voters are MORE trade-skeptical than Democrats, as this Pew poll from May shows:

In general, Republicans express more positive views than do Democrats about the impact of free trade agreements on the United States. Still, as many Republicans see free trade agreements as a bad thing as a good thing (43% vs. 42%). Democrats, by 50% to 34%, say free trade agreements are bad for the United States. A narrow majority of independents (52%) views free trade agreements as bad for the country.

Solid majorities of Democrats (64%), independents (64%) and Republicans (55%) say that free trade agreements lead to job losses - rather than create jobs - in the United States. There also is fairly broad agreement that free trade agreements lower, rather than raise the wages of American workers. Democrats, by nearly four-to-one (57% to 15%) say that free trade agreements slow the economy down rather than make it grow; this also is the prevailing view among independents (50% vs. 18%).

The Punditocracy: Speaking for the Wretched of the Earth

For those of us who get dizzy listening to the circular logic of the paragons of Punditocracy (especially of the capital P variety), Roger Bybee's (Fairness and Accuracy in Reporting) excellent historical round-up of Fareed Zakaria's noxious views on trade and globalization issues offers a welcome breath of cold, clean facts  after some pretty serious doses of post-Doha death vertigo from the 'powers that be'...

Fareed Zakaria, now the highly influential editor of Newsweek International, author of The Post-American World, and host of Fareed Zakaria GPS, constructed a landmark of unintended irony when he regally pronounced that “the downtrodden beg to differ” with protesters of corporate globalization (Foreign Affairs, 12/13/99).

Those who demonstrated against the World Trade Organization at the famous “battle of Seattle” in 1999, he asserted, were displaying the hubris of the “rich and privileged,” who were delivering “a familiar plea for the downtrodden of the world” by challenging the WTO’s promotion of sweatshops and environmental degradation in the impoverished Third World.

In other words, Zakaria denounced the arrogance of those who presume to advocate for the world’s poor—while appointing himself, the son of a prominent Indian attorney and politician, as the poor’s spokesperson. “There’s just one problem: The downtrodden beg to differ,” Zakaria declared.

In his eyes, the Third World’s poor eagerly welcome Western investment on any terms as a vast improvement over their current misery. Microscopic wages, long hours and heartless management in sweatshops, along with befouled air and water, might seem horrific to wealthy Westerners, but are gratefully welcomed by the desperate people of nations like Mexico, China and India. “In fact, if the demonstrators’ demands were met, the effect would be to crush the hopes of much poorer Third World workers,” he declared (12/13/99)...

On globalization, Zakaria zealously denounces opponents of corporate-determined trade agreements as seeking to impose utopian rules for the global economy that are widely rejected, especially by the most wretched of the earth....

Zakaria’s “anti-democratic” and “minority” accusations invert reality in...critical ways....

A recent multinational Chicago Council/ WorldPublicOpinion.org poll (released 4/25/07) found majorities in most poor nations insisting that globalization be accompanied by global standards to prevent a “race to the bottom.”

“Strong majorities in developing nations around the world support requiring signatories of trade agreements to meet minimum labor and environmental standards,” the survey concluded, citing data from China, India, Thailand, the Philippines, Argentina and Mexico. “Nine in 10 Americans also support such protections for workers and the environment.”

Elites in Third World nations, in contrast, staunchly opposed such standards, the study noted:

The leaders of less developed nations have generally opposed including language mandating minimum standards for working conditions and environmental protections in trade deals, arguing that such rules are protectionist and would undermine their ability to compete in major markets such as Europe and the United States.

“It has often been assumed that when leaders of developing countries argue against including labor or environmental standards in trade agreements, they represent the wishes of their people,” added Steven Kull, director of WorldPublic Opinion.org. “However, it appears that these publics would like to see the international community put pressure on their governments to raise their standards.”

These findings directly contradict Zakaria’s simplistic worldview that the free-trade agenda of America’s political and business elite reflects overwhelming public sentiment in both poorer nations and the U.S.

And, closer to home (and to the other salient topic of the day - the upcoming November polls - about which Zakaria is busy confusing the American electorate daily), Bybee reminds us of the ultimate price yet to be paid by those candidates who forget that the people actually know what's going on...

While elites across the globe support unregulated globalization, majorities in both the U.S. and poorer nations essentially seek to restructure globalization so that it benefits everyone—as signified by the flipping of 37 congressional seats in the 2006 mid-term elections from “free trade” advocates to supporters of “fair trade” (Global Trade Watch, 12/13/06)."

Gotta love it when the real elites try to carve their niches by claiming to speak for the poorest of the poor. Frantz Fanon must be spinning in his grave!

Real World of Fair Trade

(Disclosure: Global Trade Watch has no preference among congressional candidates.)

Some of you may recall that Rep. Ed Towns (D-N.Y.) was one of the CAFTA 15, in reference to the 15 Dems who betrayed their party's base and supported the NAFTA expansion to Central America back in 2005. Towns attracted several progressive challengers in the 2006 elections, and skated by with under 50% of the vote in a three-way primary that included Charles Barron and Kevin Powell from MTV's Real World's first season.

Well, Powell is back, and going after Towns again. And apparently, he has the support of Chris Rock, Dave Chappelle, and a bunch of other incredible Brooklyn residents. We'll stay tuned to see what happens.

La.-6: Another fair trade election victory

Don Cazayoux, the Democrat who just won the Louisiana-6 House seat long held by the GOP, campaigned and won on a fair trade platform. Here's what he told the Daily King Fish:

I support fair trade agreements that raise labor standards for all workers - both here in the United States and abroad - while ensuring that American businesses remain competitive. I will vote to close tax loopholes that reward companies for moving our jobs overseas. I oppose the Colombian Free Trade Agreement in its current form and believe that we need to renegotiate CAFTA and NAFTA to include more protections for our workers.

Cazayoux takes the open seat vacated by Rep. Richard Baker (R-La.), who voted against fair trade on 18 out of 18 votes in his 22 years in Congress, including NAFTA, WTO, Peru FTA, and CAFTA (which even many GOP in La. opposed, including now-Gov. Bobby Jindal, who William Kristol says might be McCain's running mate).

UPDATE: Special elections this cycle have been good for fair traders. And as we documented back in March, fair trader Rep. Bill Foster (D-Ill.) took Denny Hastert's seat. Foster ran paid ads on trade. Also, fair traders were able to keep several more seats that were opened up through the special elections of Reps. Andre Carson (D-Ind.), Laura Richardson (D-Calif.), Jackie Speier (D-Calif.), and Niki Tsongas (D-Mass.). This crew all voted for fair trade in the Fast Track cancellation vote in April.

Inglis and CAFTA 30 still feeling the pain

Rep. Bob Inglis (R-S.C.) was one of the CAFTA 30 - the most unlikely reps to vote for CAFTA back in the summer of 2005 by one vote. We predicted that these members would be hearing about their vote for a long time.

We turned out to be right. The Spartanburg Herald-Journal reports that Inglis has a primary challenger who is bringing up the CAFTA issue:

Energy, high gas prices and the future of fuel highlighted the first debate between Republican Rep. Bob Inglis and his primary challenger, Charles Jeter, Wednesday night at the University of South Carolina Upstate...

Jeter also criticized Inglis for supporting the Central American Free Trade Agreement, or CAFTA, saying such a policy was responsible for draining Upstate jobs.

In other news, the Bush administration has failed to live up to its promise of supporting Alabama's sock industry after getting Rep. Bob Aderholt (R-Ala.) to vote for CAFTA on that basis. This week, they announced a safeguard on Honduran socks, several years later and at a lower rate and for a shorter time period than promised.

Pre-Super Tuesday reflections

(Disclosure: Global Trade Watch has no preference among the candidates.)

A lot of folks are offering their reflections the relative merits of the candidates (see here, here, here, and here.) I was able to share mine at San Francisco's NPR station a little earlier today.

As I see it, we should evaluate trade policy on three overlapping dimensions:

1. Who is affected
2. How is it made
3. What are the "surprise" implications for non-trade policy

On the first front, I'm thinking of how our trade policy has resulted in (or not helped us avoid) a skyrocketing trade deficit, largely stagnant wages and farm prices, and the loss of millions of manufacturing jobs, hundreds of thousands of family farms, and an increasing number of service sector jobs. Nearly every candidate touches on this part of the issue - even Huckabee and Romney with their comments on manufacturing. (McCain has spoken about compensating losers through TAA.) With the exception of Ron Paul (who calls for scrapping the WTO, NAFTA, etc. directly), the whole field talks about the losses from trade policy for many people. They are largely silent on the trade-wage connections.

The second category relates to how we make trade policy. For four decades, our trade policy has been conceived under the undemocratic Fast Track mechanism, which takes away Congress' constitutional authority and responsibility to set our trade policy, and gives it to an executive branch that sets the terms and picks the partner countries and writes the deal, leaving Congress only an up or down vote. Obama has talked about replacing Fast Track, while Clinton has said she will hold off from asking for Fast Track until she reviews past agreements.

Finally, as we have long been arguing, trade policy these days is only marginally about trade. Much of the 600-page texts of the WTO and FTAs has to do with how we adopt policies domestically. Thus, a move to universal health care could be challenged as a limitation on market access for health insurance companies. Under our FTAs, investors can demand taxpayer money for public interest policies that limit their future expected profits. Obama has addressed investor-state, consumer protection, and domestic regulation. We haven't heard much from the other candidates on this dimension.

As we'll document in an upcoming report, both the Dem and GOP health care and climate change proposals could face WTO challenge. More specific responses to these and other questions can help voters can make an informed choice.

Trade on the Trail, Part Cinco

This week was a big one for trade on the trail.

"Clinton Pledges to Revisit Trade Deals" says the Financial Times:

"I think it is time that we assess trade agreements every five years to make sure they’re meeting their goals or to make adjustments if they are not,” she said in a speech in Cedar Rapids, Iowa, which stages the first caucus vote in the presidential nomination process next January. “And we should start by doing that with Nafta.”

"We have to change our economic course just as we have to change course in Iraq and change course when it comes to healthcare,” she said.

In addition to the five-year trade reviews, Mrs Clinton said she would appoint a federal trade enforcement officer who would monitor compliance with trade agreements.

She also pledged to expand the trade assistance adjustment programme, which retrains manufacturing workers who lose their jobs when employers relocate to other countries.

She would extend the TAA to redundant service sector workers, whose jobs have mostly been “offshored” to India, and to workers whose employers have relocated to countries that have no trade agreements with the US, such as China.

Women's Wear Daily does a good job of laying out all of the candidates' positions. Here are some highlights:

Fred Thompson: "I was one of the strictest advocates of imposing restrictions on the Chinese for their behavior of exporting dangerous materials to countries and tying some of our trade policies to what they did in that regard...They still have not done enough...but in terms of turning our backs on free trade, that's not the direction to go."

Rudy Giulliani: "We can't say that because these agreements weren't perfect, because they have problems, we're going to turn our backs on free trade...We're a country that depends on exports and we're also an entrepreneurial country."

Hillary Clinton: "The Bush administration has filed roughly the same number of enforcement actions under our trade agreements that were filed during one year of the Clinton administration...That is unacceptable. When I'm president, we're going to start enforcing them again and we're not going to enter into them unless we think they're going to be good for American workers."

Barack Obama: "We wholly agree with the labor movement that labor and environmental provisions have to be included in the core of labor agreements. Business has said historically that it couldn't be done until now," the [Obama] aide said, referring to an agreement Democratic leaders reached with the Bush administration to include stronger labor and environmental provisions in four pending trade agreements.

Mitt Romney: "has pressed Congress to act immediately on two pending trade deals with Colombia and Peru, a campaign spokesman said."

(Disclosure: Global Trade Watch has no preference among the candidates.)

The Offshoring of Hope

Did you hear about Obama's new book, "The Offshoring of Hope"? According to MSNBC:

Obama said he would vote for a Peruvian trade agreement next week, in response to a question from a man in Londonderry, NH who called NAFTA and CAFTA a disaster for American workers. He said he supported the trade agreement with Peru because it contained the labor and environmental standards sought by groups like the AFL-CIO, despite the voter’s protests to the contrary. He also affirmed his support for free trade. “I am not going to say on a blanket basis that I’m going to vote against trade agreements,” Obama said. “We cannot draw a moat around the u.s. economy b/c china is still trading, India is still trading.”

Funny thing about that... neither the AFL-CIO or Change to Win is supporting the agreement. And Peru FTA critics are not calling for a moat around the economy. In fact, leading Peru FTA opponents announced legislation to make permanent poor countries' duty-free access to the U.S. market.

Waaaayy back in 2005, Obama voted against a virtually identical bill - CAFTA, which nearly half of Costa Rica's population voted against despite Bush's misleading threats of economic reprisals. In his piece for the Chicago Tribune on CAFTA, Obama argued:

I meet these workers all across Illinois, workers whose jobs moved to Mexico or China and are now competing with their own children for jobs that pay 7 bucks an hour. In town meetings and union halls, I've tried to tell these workers the truth--that these jobs aren't coming back, that globalization is here to stay and that they will have to train more and learn more to get the new jobs of tomorrow.

But when they wonder how they will get this training and this education, when they ask what they will do about their health-care bills and their lower wages and the general sense of financial insecurity that seems to grow with each passing day, I cannot look them in the eyes and tell them that their government is doing a single thing about these problems. That is why I won't vote for CAFTA.

Hard to see the government has really stepped up to the plate since 2005. If anything, things have gotten worse, as Bush showed some Texas will and vetoed the Dems' most ambitious domestic policy initiative - expanding kids' health care insurance. It seems very strange to reward that veto with support for Bush's plan to expand NAFTA to Peru.

Hat tip to Sirota for the heads up.

UPDATE: JES' A REMINDER for the sake of context: Democrats came to office in 2006 by responding to their base and swing voters' demands for fair trade, and the latest polling shows this will be an important issue in the general election as well. And just take a looksie here to see how every important base group for the Democratic Party is opposing the Bush's Peru NAFTA expansion, which replicates and expands on NAFTA's harmful provisions. And the kind folks at CEPR have just laid out a reminder of the economics of our status quo trade policy, and why the Dems' working class base have not benefited from these policies.

National Latino Congreso to Congress: Oppose Bush's NAFTA Expansions!

NEWS RELEASE, October 7, 2007

National Latino Congress Unanimously Passes Resolution Calling on U.S. Congress to Stop Signing New Trade Agreements

Latino Leaders Say U.S. Cannot Address Immigration without Changing Course on Failed Trade Policy

Los Angeles, CA – Reflecting on the root causes of poverty and migration in Latin America, the National Latino Congreso has unanimously approved a resolution rejecting new trade agreements based on the North America Free Trade Agreement (NAFTA), and calling on the U.S. to change its international economic policies, which so far are largely to be blamed for producing wealth and income inequalities abroad, as well as at home. In the case of Latin America, policies promoted by the U.S. have also resulted in the impoverishment and displacement of millions of rural inhabitants.

The resolution adopted on Saturday Oct. 6 by delegates of the Second National Latino Congreso , comes at a moment in which the U.S. Congress considers a new trade agreement with Peru, which largely mirrors NAFTA. The adopted resolution reads, in part:

“Therefore, be it resolved that the organizations present at the 2007 Latino Congreso, are strongly opposed to expanding the failed NAFTA and CAFTA through the “free trade” agreements between the United States and Peru, Colombia, and Panama, and will mobilize our constituencies to work in vehement opposition to their passage, and call on the U.S. Congress directly to reject these agreements.”

The resolution specifically condemns national lawmakers who are attempting to push anti-immigrant legislation while continuing to push for expansion of trade and economic policies that force families to emigrate in the first place. More than 1,000 Latino leaders present applauded the passage of the resolution, calling it an important step towards addressing the obvious link between current U.S. trade and economic policies, and migration.

"No" campaign accusing Arias/ Electoral Auth of collusion

This breaking news has the "no" campaign accusing the electoral authorities of collusion with the Arias administration, in particular by allowing campaigning in the media (including about the Bush threats) in violation of the media blackout: 

Among the most serious violations: the "yes" campaign continued to distribute propaganda, organize rallies and placed a great number of TV ads within two days before the referendum, in violation of the Electoral Code (Art. 85(g)), which clearly establishes that "During the two days immediately before and the day of the referendum, it is prohibited to distribute propaganda of any kind related to the issue at hand," a requirement strictly adhered to by the "no" campaign...

Clearly, the national media became channels for the Arias administration and treaty promoters, openly distributing their propaganda; just one instance is the wide broadcast coverage given to [Bush's] U.S. Trade Representative Susan Schwab's statement, where she categorically denied the possibility of renegotiating the agreement, and also suggested that the country's Caribbean Basin Initiative benefits would be lost, if the Costa Ricans voted 'no' on the referendum.

All of the above violations were allowed to take place, without the TSE (the body responsible for organizing and enforcing the referendum rules) taking any steps to avoid their continuation. Costa Ricans are indignant over this attitude, and sees the tribunal as sharing the blame for the aforementioned abuses.

There are also accusations of other irregularities, including:

• The massive utilization of "robo-calls" sent via cellphone voice and text message near the time of the vote, with messages like, "I thought the FTA didn't affect me. But Ana is going to lose her job. Let's help her. Vote yes."
• "Yes" campaign material inside some polling stations.
• The "yes" campaign offering $52.89 for a "yes" vote (This is about 2-3 days' wages for the average Costa Rican, earned on one day when all the business are supposed to be closed.)
• Flower exporting firms told their workers not to show up to work on Monday if the "no" won, the implication being they would have to shut down.
• Some polling stations only had red pens, even though only ballots marked with black ink were considered valid by the electoral authorities.

Read the press release here. We'll have more as it develops.

UPDATE, 5:30 pm: The Washington Post puts the real story front and center, in a piece by Manuel Roig-Franzia entitled "Costa Ricans Vote on Trade Pact: White House Pressed for Approval as Heated Campaign Closed":

Costa Rica appeared headed late Sunday toward approval of a trade pact with the United States after a count of 88.7 percent of polling stations showed 51.6 percent of voters in favor of the trade deal. The balloting follows a contentious campaign marked by a scandal that toppled one of the country's vice presidents and a last-minute push for votes by the White House. (emphasis added)

Close CAFTA Vote Shows Failure of NAFTA Model

Here's our statement on the results, followed by the more recent numbers by region:

For Immediate Release:                   
Oct 8, 2007

Close Tally on CAFTA by Costa Rica in First-Ever Public Vote on a NAFTA Expansion Shows That Bush Administration's Continual Push for These Deals Hurts U.S. Foreign Policy in Latin America

Even After U.S. Threats Aimed at Stimulating Public Fear of Reprisal and Big-Dollar Campaign Pushing ‘Sí' Vote, Result Is Marked by Razor-Thin Margin

WASHINGTON, D.C. – The depth of public opposition to North American Free Trade Agreement (NAFTA)-style pacts was demonstrated Sunday by Costa Rica's massive "no" vote to CAFTA despite a intensive campaign led by the country's president, months of deceptive radio and television advertising in favor of the pact, and a threatening statement issued Saturday by the White House, Public Citizen said today.

The strong vote against CAFTA likely will fuel growing opposition to another Bush proposal now before Congress to expand NAFTA to Peru. The Peru Free Trade Agreement (FTA) contains the same foreign investor privileges, service sector privatization, agriculture and other provisions that fueled Costa Rican public opposition.

"That nearly half the public in Latin America's richest free-market democracy opposed CAFTA despite the intensive campaign in favor of it should end the repeated claims that pushing more NAFTA-style free trade deals is critical to U.S. foreign policy interests in the region or helps the U.S. image," said Lori Wallach, director of Public Citizen's Global Trade Watch division. "This vote also debunks the claim that these pacts are motivated out of U.S. altruism to help poor people in trade partner countries, given that many of the people in question just announced that they themselves don't want this kind of trade policy. This policy, supported by the elite, will help foreign investors seize control of their natural resources, undermine access to essential services, displace peasant farmers and jack up medicines prices."

Despite massive fear-mongering, "No" vote gets nearly half

The results look to be sticking at about 52-48, with the yes winning. It looks like about 55% turnout, meaning about a quarter of registered voters chose "yes" and "no." This despite the massive fear mongering campaign by the Bush admin just hours before the vote, when there was supposed to be a media black-out on CAFTA. We'll be doing more commentary tomorrow. For now, the "no" campaign is still waiting for the final counts from the electoral authorities.

Vote Counts (of around 12:30 AM)

Region	No	Yes	Total
San Jose	283,391	303,900	587,291
Alajuela	143,957	137,543	281,500
Cartago	80,156	103,181	183,337
Heredia	78,945	87,002	165,947
Guanacaste	39,357	35,584	74,941
Puntarenas	53,298	52,626	105,924
Limon	34,475	43,248	77,723
Total	713,579	763,084	1,476,663

Preliminary results

Reuters is reporting a win for the yes based on the preliminary results. About 20% of the polling stations in the urban areas have still not reported; while over 30% in the rural areas - where CAFTA opposition is higher due to predicted displacement of these workers - have still not been reported.

If the percentages for the yes and no for reported balloting stations holds for the region, this would be the vote result (based on a full turnout):

Region	Estimated No	Estimated Yes
Guanacaste	95,605	86,603
Alajuela	250,500	237,234
Heredia	122,903	135,296
Limon	92,285	117,741
San Jose	469,196	497,621
Cartago	134,517	172,471
Puntarenas	121,492	120,332
TOTAL	1,286,498	1,367,297

Map of Costa Rica with registered voters

Region	Registered Voters	Number of polling stations
Guanacaste	182,208	443
Alajuela	487,734	933
Heredia	258,199	430
Limon	210,026	391
San Jose	966,817	1625
Cartago	307,819	542
Puntarenas	241,824	568
TOTAL	2,654,627	4,932

If Voter Turnout (%) is	Then # voters turnout	Then winner needs
40% (minimum necessary)	1,061,851	530,926
65% (estimated)	1,725,508	862,755
100% (total turnout)	2,654,627	1,327,315

Polls just closed...

The polls just closed less than 30 minutes ago in Costa Rica - the international observers from the Organization of American States has said that things have been mostly calm when they were interviewed at around 2 PM EST, although some observers were not accredited by the electoral authorities and were turned away - not clear what the story is there. The "no" campaign is denouncing irregularities in the process, including the absence of officials from the "no" campaign that are supposed to be watchdogging every precinct, and incomplete photo IDs of voters in the registries.

Apparently 3,000 people got  voter identification cards today, 700 of which were just requested today. (The last one apparently distributed less than an hour ago.) The OAS will publish a report on any discrepancies in the election over the next few weeks, and asked Costa Ricans to respect the outcome of the vote.

The results from 20-40% of the precincts will be in by 10:30 pm EST, with the majority of the results available by 1 AM EST tomorrow.

At about 5:30 PM EST, a leader from the "no" campaign predicted a 10% point win, and said that there had been 70% turnout. The "no" campaign also criticized the last minute wave since Thursday of government publicity (disguised as "interviews") in violation of the media blackout on the referendum.
The "yes" campaign refuted the prediction about an hour ago, saying it wasn't possible to know the result.

Radio Dignidad, associated with the "no" campaign, is running live coverage as we speak.

The heat is on

Voting is underway. Yesterday's Bush bombshell dominated headlines, even though it's ridiculous and based on fabrications...

Costa Rica has 2,654,627 million registered voters, 1,061,851 million of which need to turn out (40%) in order for the referendum to be binding. The majority of that wins - a single vote difference in the 4,932 polling stations could make the difference. So, for the "no" vote to win, a minimum of 530,926 + 1 people need to vote that way (assuming the total of 1.04 m turnout). Since there were 150,000 people that marched in the "no" march last weekend, this means that each marcher would need to turn out a minimum of 4 of their friends and family members to vote "no".

If less than 40% of the voters turn out, CAFTA will be kicked back to the legislature, where the pro-CAFTA president's supporters have a narrow advantage. But polls are showing that 60% of registered voters intend to turn out, so that's unlikely.

Bush admin continues interventions just hours before Costa Rica vote

Just when you thought the Bush administration was at its most shameful, it gets even worse. Just hours before Costa Rica goes to the polls to decide the fate of CAFTA, the Bush administration released yet another statement trying to intimidate Costa Ricans into approving CAFTA.

Quote one: "If the free trade agreement is rejected, the United States will not renegotiate the agreement." This is a ridiculous statement coming from an administration that has just over 470 days left in office. The majority of the presidential candidates of both parties voted or were against CAFTA, and most are on the record favoring a change in the NAFTA trade model. Republicans as well as Democrats, independents and swing voters from across the country tell pollsters they hate the trade status quo. Come January 20, 2009, it is highly likely that there will be someone in the Oval Office who will be open to a different kind of trade pact with Costa Rica, if the country is interested.

Second, Perino says, "With respect to trade preferences provided under the Caribbean Basin Initiative which will expire in September 2008, the United States has never before confronted the question of extending unilateral trade preferences to a country that has rejected a reciprocal trade agreement. Voters in Costa Rica should be aware that many of those assuring Costa Rica of continued access to the U.S. market have consistently opposed measures that would open the U.S. market to goods from Costa Rica and other countries, whether through trade agreements or through trade preference programs. "

This is pretty rich. Several Andean countries rejected NAFTA-style trade deals, and Congress voted overwhelmingly (with the support of all the fair traders that have weighed in on Bush's interventions in Costa Rica) to extend their preferences this summer. And just yesterday, fair trade members of Congress announced a bill that would make permanent the tiny portion of Costa Rica's duty-free market access that isn't already.

Sen. Bernie Sanders (I-Vt.), who along with Sens. Sherrod Brown (D-Ohio) and Byron Dorgan (D-N.D.) wrote to Bush yesterday demanding that his administration cease their dishonest threats against Costa Rica, had this to say in response to the latest Perino statement:

Statement of Sen. Bernard Sanders On The Bush Administration’s Fear Mongering Attempts With Respect to the CAFTA Referendum in Costa Rica

WASHINGTON, October 6 – Senator Bernard Sanders today issued the following statement in response to White House threats regarding Sunday’s election in Costa Rica on the Central American Free Trade Agreement.

“As everyone knows, a vice president of Costa Rica was forced to resign because he was linked to a campaign of fear and distortion that was exposed in a memo.  Unfortunately, the Bush administration continues to carry out that campaign of fear.

“What President Bush seems not to understand is that his party, the Republican Party, no longer controls the United States House of Representatives and the United States Senate, and that many of the new leaders in Congress have a different view of trade than he does.

“In recent days, such congressional leaders as Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi, House Ways and Means Chairman Charles Rangel, Senators Byron Dorgan and Sherrod Brown, and Congressman Sander Levin have made it clear that the executive branch of the United States does not have the authority to eliminate Caribbean Basin Initiative (CBI) benefits if a country rejects a free trade agreement in a democratically-held election. Cancelling basic CBI benefits with Costa Rica would require an act of Congress.  These congressional leaders made it clear that they would not support such a move, and that they opposed any linkage between CBI benefits and approval or disapproval of CAFTA.”

Fair traders for trade and intact machines

Folks trapped in a flat world mindset may think all this hub hub about fair trade is some sort of disguised attempt to smash the machines and shut down the borders.

That’s so 1990s. Consider just two examples from this week.

Case study 1: Costa Rican voters will vote on Sunday in the world’s first popular referendum on a trade deal (CAFTA). Polls show the “no” vote with a 12 point lead, despite the Bush administration’s considerable bullying and threats. And the hundreds of thousands of people that have filled San Jose’s streets for the “no” campaign aren’t asking for a shut down of trade, but a renegotiation so that human, labor and environmental rights can be put in, and a lot of the bad NAFTA-style provisions taken out.

Case study 2: Just this afternoon, leading fair traders in the U.S. Congress showed yet again that they’re not anti-trade, they just want a different model of trade. Reps. Raúl Grijalva (D-Ariz.) and Linda Sánchez (D-Calif.) announced plans to introduce a bill to make permanent the tiny fraction of Costa Rica’s duty-free market access that isn’t already. These benefits would be extended to nearly two dozen countries, including desperately poor Haiti. This move puts the kibosh on the Bush threats that preferences would expire, which, as I argue here, were based on lies anyway.

In fact, there’s a growing sense that, in order to save our foreign policy, we’re going to have to move away from the NAFTA-CAFTA model, which has been a largely destabilizing factor in Mexico and had painful economic costs. Sen. Bernie Sanders (I-Vt.) articulated this well in his Wall Street Journal op-ed earlier this week, as did Sen. Sherrod Brown (D-Ohio) in a moving floor speech:

Reps. Charles Rangel (D-N.Y.) and Sander Levin (D-Mich.) echoed some of these themes in a statement today (you can read it after the jump), as did Nancy Pelosi and Harry Reid earlier in the week. So did Rep. Mike Michaud (D-Maine) in a letter sent just last night to Costa Rica:

There is a growing sense in Congress and among the American public that threatening our neighbors to our South with reprisals for seeking their own economic path after a generation of lost income growth is a strategy that has largely backfired and undermined the U.S. reputation in the region.

Indeed, whoever our next commander in chief ends up being, if they want to re-establish U.S. credibility in the region, they’re going to have to start paring back the harmful interventionist habits and the trade and aid conditionalities and rules that limit local economic development. 

Devil worshippers taking over anti-fair trade campaign in Costa Rica

The CAFTA fight is on fire in Costa Rica, which this Sunday is scheduled to have the world's first ever binding popular referendum on a trade deal. Last weekend, over 100,000 fair traders filled the streets of San Jose, the capital city, calling for a "no" vote on CAFTA. As Tasini reminds us, that would be the equivalent of 7.5 million Americans protesting, and scarcely covered at all by the U.S. press.

The "yes" campaign, as we've written here, has been increasingly resorting to scare tactics, including using the threat of Costa Rica's U.S. market access disappearing if CAFTA is not ratified. Sen. Bernie Sanders (I-Vt.) and Rep. Mike Michaud (D-Maine) already traveled to Costa Rica to make it clear that such threats were baseless. Similarly, letters from Senate Majority Leader Harry Reid (D-Nev.), House Speaker Nancy Pelosi (D-Calif.) and Rep. Linda Sanchez (D-Calif.) of the House Foreign Affairs Committee make clear that this is a ridiculous threat not based on law, history, or the intention of Congress. Here's a great You Tube video on this series of events.

Boy, are the scaremongers upset now. First, the business groups in Costa Rica behind the anti-fair trade campaign started running attacks ads against Sanders and Michaud, in an editing style that would make Anton LaVey envious. (Click for the video, it's a hoot!) Second, the NAFTA-loving Wall Street Journal opinion page ripped into Democrats, accusing them of trying "to undermine the ... argument that might help get Cafta approved." (Too bad that "argument" was more like gloves-off foreign bullying based on lies.)

We've almost hit the trifecta. For the final act, the Bush administration, whose ambassador (a big time GOP fundraiser) has been making the false threat of preference expiration for nearly two years only to be caught in the act by Congress, concedes that "no one can say for sure" what will happen with Costa Rica's preferences.

The truth is, it's almost certain that Costa Rica will maintain its duty-free access, because the bulk of it was made permanent in 1990 or under the WTO in 1995, and the tiny part (less than 10% of its U.S. exports) first approved in 2000 that requires renewal will almost certainly be renewed next year, for reasons explained in this memo.

100 Priests Against CAFTA in Costa Rica; Workers Against Bush Admin Interference

Just as we're hearing about the impressive uprising in Burma against the military dictatorship - being led by Buddhist priests no less - the priests in this hemisphere are also getting active. (Check out Gringos Against CAFTA for ongoing updates and great photos on this story.)

According to the Spanish AP (my translation),

On Wednesday, nearly 100 Costa Rican priests let their opposition to CAFTA be known, in spite of the church hierarchy declaring itself neutral on the topic.

The religious leaders, represented by Father Ignacio Trejos, detailed their reasoning in an 8-page document entitled, "Ethical Evaluation of the FTA," as only 10 days remained before the referendum that will decide the fate of the commercial pact in this country.

"We have been asked by our Church to remain neutral on this important issue, which is the referendum on the FTA. This would mean no more or less than the total disfiguration [of our church], since the Church should always be on the side of the truth, justice and the social well-being," wrote Trejos.

Among the reasons mentioned for their opposition is that the pact was negotiated in secret without citizen input, and that there were no safeguards for the rights of oppressed peoples.

For the prelates, "The FTA is equivalent to a reform of the state by stealth, introduced from outside the country."

Costa Ricans area also upset about the Bush administration's ambassador interfering in the referendum, as Xinhua reports in Spanish (again my translation):

Sanders and Michaud show real solidarity in Costa Rica

As we've reported, Costa Ricans on October 7th will have an unprecedented opportunity to vote in a popular referendum on whether the country - Central America's oldest and strongest democracy, according to the State Department - will join CAFTA.

Recently, this drama has involved the resignation of top government officials who have been using threats and scare tactics to try to win support for CAFTA.

And then, over the weekend, Sen. Bernie Sanders (I-Vt.) and Rep. Mike Michaud (D-Maine) went down to Costa Rica to let folks know that the scare tactics and the bullying are based on lies and hoaxes. According to Diario Extra:

• The Bush administration has threatened Costa Rica with elimination of its current duty-free access in many products. According to Sanders: "That's absolutely false. Costa Rica will continue to benefit from the Caribbean Basin Initiative because it's a law and its existence depends exclusively on the U.S. Congress. Neither Democrats nor Republicans are talking about getting rid of this law."
• Michaud pointed out that the Clinton administration promised a reduction in illegal immigration if NAFTA is signed, but that instead that NAFTA has caused a sharp increase in displacement and immigration.
• Sanders said that, if the U.S. had a popular referendum on CAFTA, it would have gone down.

Now, that's people's solidarity and diplomacy. Hat tip to Sanders and Michaud!

Roll Call: Weller aide roughs up journalist over CAFTA

We recently reported that Rep. Jerry Weller's (R-Ill.) political career is crumbling in the wake of questions about his conflicts of interest with Nicaraguan investments as he boosted CAFTA in 2005.

Apparently, the CAFTAgate pressure is starting to get to Weller, who recently announced his retirement and is married to the daughter of the former Guatemalan dictator Rios Montt. Roll Call is reporting that a Weller staffer pounced on a journalist who was inquiring about CAFTAgate:

A staffer for Rep. Jerry Weller (R-Ill.) apparently took questions from a reporter a bit too seriously Friday, when he allegedly pushed the scribe down a flight of stairs.

Mike Flannery, the political editor at the CBS affiliate in Chicago, planned to file charges against the staffer, identified by the station as John Dusik.

According to a news report on the station’s Web site, Flannery followed Weller into a stairway at the local chamber of commerce in Joliet, Ill., after the Congressman delivered the speech announcing his retirement. After Flannery asked Weller about the Central American investments that have gotten the Congressman into hot water, Dusik apparently pushed Flannery — first off-camera and then again on-camera, causing a woman nearby to fall.

“There’s a large man, who begins shoving reporters around, including yours truly,” Flannery told the station. “He shoves me one way, then he goes after another reporter with CLTV. ... There’s an opening in the doorway, and I begin moving through that doorway, and he shoves me down the stairs; he shoves me into a railing on the staircase and also into a woman on the staircase who was traveling with Weller.”

Dusik later was arrested, according to the report. Weller, for his part, stayed mum during the incident and drove away without answering questions from reporters.

ScareGate Outed in Costa Rica

The Los Angeles TImes has a great story on Costa Rica's upcoming CAFTA referendum, as well as the ScareGate tactics that the anti-fair trade side is using.

But that was before a memo written by CAFTA advocates was leaked to the public this month, fueling outrage here. The document, dated July 29 and written by two high-level government officials with close ties to Costa Rican President Oscar Arias, outlined a campaign of dirty tricks intended to sway voters.

The authors proposed smearing CAFTA opponents by linking them to leftist firebrands such as Venezuelan President Hugo Chavez and Cuban President Fidel Castro. They called for a public relations campaign to "stimulate fear" among citizens about the alleged dangers of snubbing the deal.

They also advocated punishing local officials -- by withholding funds for public programs in their regions -- if their constituents repudiated CAFTA.

CAFTA opponents have cried foul while supporters have suddenly found themselves on the defensive over a measure that appeared headed to victory. Prominent CAFTA backers, including Arias, have distanced themselves from the memo, which was addressed to him and his brother, Presidency Minister Rodrigo Arias.

One of the authors, Second Vice President Kevin Casas, has resigned from the "yes" campaign and temporarily stepped down from his Cabinet post as planning minister while election officials investigate whether any laws were broken.

"It's a bombshell," said Luis Guillermo Solis, a political science professor at the University of Costa Rica who opposes CAFTA. "It's Watergate."

Solis predicted that the memo would spark a backlash among undecided voters and citizens fed up with corruption scandals that have roiled Costa Rica in recent years.

Breaking News About Pro-CAFTA Electoral Manipulation

A very important document (PDF) just came over the wires that describes the dirty backroom politics of the "yes to CAFTA" campaign being run by President Oscar Arias. Costa Rica is the first country in the world to ever have a popular referendum on a trade agreement, scheduled for October. But while there have been innumerable restrictions put on the fair trade side of the campaign (the "no" campaign), the "yes" campaign is operating with the full resources and bully pulpit of the state. Says my colleague Stephanie Burgos from Oxfam about the document:

The document was published in Costa Rica by el Semanario Universidad (a weekly newspaper published a prestigious university) and both authors have accepted it as legitimate.  The authors are close advisors to the President: Casas is his vice-president and Minister of Planning and Sanchez is a cousin of the President and a Member of Congress.

Here are some key excerpts (my translation):

• "The campaign around the FTA is becoming what it should never have been permitted: a fight between the rich and the poor, between the people and the government elites. Our opposition is formidable: universities, the church, unions, environmentalists, etc. And on the other side in favor of the FTA, there's only the government, the media, and big business. That's not a way to win."
• The Congress needs to go into recess so that "our representatives" don't have to show up to work and can agitate for the "yes" campaign.
• On local officials: "We have to make all of the mayors responsible for the campaign in their districts, and let them know, as crudely as possible, a very simple idea: the mayor that doesn't win their districts on October 7 is not going to receive a cent from the [central] government for the next 3 years."
• Launching a media campaign, with the following tactics: "Get rid of the notion that this is a fight between the rich and the poor. This requires choosing the face in the mainstream media for the yes campaign and use almost exclusively the faces of workers and small businessmen."
• And... "Stimulate fear. This fear is of four categories: 1. Fear of the loss of jobs... 2. Fear of the attacks on democratic institutions... 3. Fear of foreign intervention... and 4.Fear of the effect of a no triumph [on governability]."
• "it's crucial that 'yes' be associated with democracy and stability... and that 'no' be equivalent to violence and disloyalty to democracy. Here's something very important: the campaign has stopped being rational and, as a consequence, about the actual content of the FTA. Thus, the argument of defending democracy is the only resource we have left to mobilize the emotion of the people."
• "We must rub in all over the place the connection of the no campaign with Fidel, Chavez and Ortega, in very strident terms. It's possible that this kind of campaign will turn off some people, but it's almost sure that it will have a significant impact among the more simple people, which is where we have the biggest problems."

There's a lot more in the document, but what really grabs one's eye is how these kind of manipulations of public opinion and the truth of economic policy occur every single day all around the world, even in the United States.

[MONDAY UPDATE: Costa Rica's English language newspaper ran a story about this today, confirming the authenticity of the memo.]

Postcards from Nicaragua - xoxo, Rep. Jerry Weller

The Chicago Tribune reports:

The rolling surf of the Pacific Ocean crashes onto white sand beaches below a lush hillside in southwest Nicaragua, a picture of tropical paradise by anyone's definition.

Who wouldn't want to live here?

Well, Rep. Jerry Weller (R-Ill.) does live here. He also had the foresight when buying the property to pass legislation to make his property rights unusually strong and his life much easier.

His investment got a boost from the narrowly passed Central America Free Trade Agreement, which Weller pitched in 2005 as a tool to enable businesses in his hard-pressed district to sell tractors and food to Latin America. CAFTA also includes additional legal protection for American investors, including those who have purchased lots from Weller.

What he didn't say was that, while he publicly pushed CAFTA, Weller privately was pursuing his land development, some 2,000 miles away. The House approved the trade pact in July 2005 by only two votes, 217-215.

Besides not mentioning his Nicaraguan investments during the CAFTA debate on the House floor, Weller did not give anywhere close to a complete accounting of them in his required 2005 financial disclosure statement. House ethics rules require representatives to disclose all property they own except for their personal residences...

He also was an outspoken advocate for CAFTA, which among other things improves conditions for investors in Nicaragua...

This is just another example of a few legislators' instincts to make laws that suit their personal interest over the public interest.

CAFTA socks it to Aderholt

Our last update on the Aderholt-sock situation was a few months ago. Today, Inside U.S. Trade (as usual, not linkable) has this:

"Honduras this month rejected U.S. proposals aimed at reaching a negotiated settlement in advance of the public announcement of the injury investigation that could pave the way for the U.S. to invoke a Central America Free Trade Agreement (CAFTA) textile safeguard that re-imposes duties on Honduran wool, man-made fiber and cotton socks, according to a Honduran official... Honduras, the official said, was not receptive to any of the proposals and did not make any proposals of its own."

As we've described before both on this blog and in a 2005 release, this is mostly about a promise that Rep. Robert Aderholt (R-Ala.) received from the Bush administration that they would seek to limit CAFTA imports of socks by phasing out tariffs over 10 years instead of immediately. Aderholt, in return for this promise, voted for CAFTA despite expressing concerns that it would kill jobs in his district just weeks before.

Now, to no one's surprise except maybe Aderholt's, CAFTA is killing jobs in the U.S. sock industry and the promise made to Aderholt remains unfulfilled, and seems like it will remain that way for a while. In the meantime, the jobs they're a-movin':

The Federal Register notice states that of all three sock import categories, Honduras’ imports rose from 6 percent in the year ending June 2006 to 8.3 percent in the year ending June 2007, while U.S. domestic market share in all three categories has fallen from 36.6 percent in the year to date March 2006, to 29.1 percent in year to date March 2007.

P.S. sorry about that groaner of a pun.

On Trade, Democracy Is Speaking

Polls in developing countries are notoriously unreliable, although you occasionally find some good work coming out of universities. This latest poll from the University of Costa Rica shows that nearly 60% of decided voters will oppose CAFTA in the upcoming referendum there. Costa Rica is the only one of the 7 CAFTA nations not to have ratified the pact, and CAFTA critic Otton Solis came within a percentage point of becoming president (after being thought of initially as a long shot candidate). Keep in mind, the level of opposition to CAFTA is very high in all the CAFTA countries, it's just that Costa Rica - thanks to the lack of war and U.S. intervention there - has developed political institutions (including a very forward looking referendum mechanism) that allow popular views to be more clearly articulated.

Gene Sperling: "[trade adjustment] assistance is the pre-nup of public policy"

Live from Yearly Kos - Panel: What it Means to be a Progressive in a Global Economy with Thea Lee, Chief Economists, AFL-CIO, Austan Goolsbee, professor of economics at the University of Chicago graduate school of business and Gene Sperling, senior fellow for economic policy at the Council on Foreign Relations and the Center for American Progress and moderated by Andrei Cherney, founder and co-editor of Democracy: A Journal of Ideas.

As you may have guessed at first both Sperling and Goolsbee sputtered off the talking point that globalization is inevitable (WRONG/BESIDE THE POINT: of course we could change the rules if the political will existed) and that technology has at least been a cause of the economic insecurities workers in this country feel - and the cause of the loss of jobs, etc. Sperling said that we can not ignore the huge productivity gains and consumer benefits (click to read about the Center for Economic and Policy Research's research that proves the losses in wages far outweigh the gains).

Goolsbee and Sperling insisted that we must shift the focus to what to do now about the inevitable globalization. Some ideas: universal healthcare, energy independence which will drive down gas costs and trade adjustment assistance (though Sperling said he would not instruct a presidential candidate to talk about this first - because it's the equivalent to the "pre-nup of public policy" and to workers it's "a great idea for what I do after I lose my job and am scared to death").

But when the questioning started these guys were just out of answers. Sperling said apologetically that he admits "the final word was not in on globalization." Goolsbee, when asked about the investment rules, shrunk in his seat and said that "this really backfired." Sperling added that progressives should be against international agreements that undermine our domestic environmental and health policies.

Goolsbee continued, "when domestic regulations are challenged on a widescale" in trade tribunals and the US loses, "that will be the end [of these provisions in trade agreements]."

You heard it from him. Tell a friend, tell your elected officials - don't keep making more NAFTA-style agreements that contain these expanded investor rights provisions that even according to NAFTA-advocates have "really backfired."

More about this breakthrough panel and more panels at Yearly Kos to come...

Costa Rica Doing Better than Countries that implemented CAFTA

Umberto Mazzei has a pretty damning analysis of how Costa Rica is thriving without CAFTA, while Guatemala is suffering with CAFTA.

The message is overwhelming: [Guatemala] "sacrificed" itself to the Free Trade Agreement (FTA) with the United States for nothing. The CAFTA model, pushing the Central American economy toward the export of non-traditional goods to the United States, has been a pretext for imposing expensive foreign pharmaceuticals as opposed to cheap, national generic drugs, overwhelming the peasant farmer with subsidized imports, and granting extra-territorial jurisdiction to foreign companies.

Non-traditional exports in Guatemala have decreased instead of increasing—contrary to the objectives of CAFTA. In Costa Rica, which remains outside CAFTA, exports of new products and markets have grown. All indicates that the privileged share in an FTA with the United States is more a hindrance than a help.

This comes a few months before Costa Ricans vote in the world's first ever referendum on a trade deal.  If you're in DC next Wednesday morning, you might want to check out this debate between the U.S. Chamber of Commerce and Otton Solis, the fair trader who nearly became Costa Rica's president.

Dead-end trade deal nears dead end

We recently received this brief paper on CAFTA's impact on Nicaragua from Ben Beachy at Witness for Peace Nicaragua, who summarizes its findings thusly:

The US sold CAFTA to the Nicaraguan public on the promise that the agreement would spawn a wave of new jobs, particularly in textile maquilas. That promise has proven empty. In the last six months, a rash of maquila closings and mass firings have meant the alarming loss of 3,880-4,120 jobs, while new textile maquilas have provided a mere 176 new jobs. Factory owners and managers point to the fact that U.S. clothing brands are rapidly shifting business to China's cheaper labor. Incredibly, just over a year ago CAFTA was passed as a gift that would allow Nicaragua to create jobs by further exploiting its comparative advantage in cheap labor. Such a model, beyond being inherently exploitative, is short-lived. As soon as free trade is redefined to include other, more desperate developing countries, the comparative advantage evaporates along with the jobs.

You can read the full paper as a PDF or after the jump (sans footnotes).

Left wearing nothing but socks

As we warned over two years ago before and after the CAFTA vote, you simply can't trust the executive branch deal-for-vote promises on trade policy - over 90 percent over the last two decades have been broken.

Shocking, but some members didn't listen to lil' ol' us. The latest broken promise comes from Alabama on CAFTA, and it's shaking up the GOP base in the "Sock Capital of the World" there in a big way:

[Rep. Robert Aderholt (R-Ala.)] two years ago was convinced, at the last minute, to vote for the Central American Free Trade Agreement based on assurances from the Bush administration that it would negotiate a change to phase out the [sock] tariffs from CAFTA countries over 10 years rather than immediately. That deal, which requires the approval of the affected countries, has not been signed.

"The longer we wait, the worse off we are and the harder it is going to be for them to bring into enforcement what they promised," said Charles Cole of Alabama Footwear Inc. in Fort Payne. Cole was in Washington last week on behalf of the domestic sock industry, a key to the economy of northeast Alabama.

About 4,300 people, down from 7,500 in 2005, work in the industry in Alabama.

Cole said imports from Honduras alone are up 50 percent and domestic production has dropped 20 percent since CAFTA took effect, and jobs are being lost.

"We just feel like it's time," Cole said. "They, again, told us they were committed to taking action as was warranted, but we feel like right now taking some action would be better than words."

As Andrew Wolf and I documented last year (PDF), thousands of U.S. sock and apparel jobs have been lost thanks to CAFTA, which has barely been in effect for a full year. In addition to the thousands in Aderholt's district, CAFTA job loss has hit the districts of CAFTA-supporting Reps. Terry Everett (R-Ala.), Mike Rogers (R-Ala.), Ed Whitfield (R-Ky.), Ron Lewis (R-Ky.), John Tanner (D-Tenn.), and Harold Rogers (R-Ky.). And CAFTA opponents Reps. Heath Shuler (D-N.C.) and John Barrow (D-Ga.) made the CAFTA job loss in their districts a major issue in their slams on their corporate opponents last year.

CAFTA member Honduras slashes minimum wage... in order to compete with low-wage Nicaragua

The National Labor Committee has posted an action alert that shows just how much CAFTA has not lifted all boats, but to the contrary is creating pressures to capsize the whole working class flotilla:

First it was Alcoa workers in Mexico who were pitted against lower wage Honduran workers.  (They were told by Alcoa that they "could hire two Hondurans for every Mexican.")  Now that Alcoa has busted a union organized at its wire harnessing plant in the El Porvenir Free Trade Zone in Honduras--immediately firing all 50-plus union leaders and organizers--local Alcoa management is threatening that if the workers continue to organize, the plant will be shut down and relocated to NICARAGUA, where "labor is cheaper and workers don't make so many demands or cause problems." Alcoa's race to the bottom strategy has spread from the U.S. to Mexico and now to Central America, where under CAFTA the workers are being pitted against each other to work for less and abandon their legal rights...

In a related CAFTA-esque step backward, the Honduran Government has just reduced the minimum wage in the South of Honduras (including the department of Santa Barbara) from $178 to $136 a month. This is a 24 percent drop in wages, from 74 cents an hour to 57 cents. The largest free trade zone in Central America, the recently completed Green Valley Industrial Park is conveniently located in Santa Barbara to access the 57-cent-an-hour wages.  San Pedro Sula, where the majority of the maquila factories are concentrated, is just 20 miles or so from Santa Barbara.  How long will it be before wages drop in the rest of Honduras? The last time the export factory workers’ wages were at or lower than 57 cents an hour was 5 years ago. Today's 57 cent an hour wage is, in terms of real purchasing power, much lower due to inflation.