June 22, 2005 [LINK]
CAFTA ... and party politics
The Central American Free Trade Agreement is nearing a showdown on Capitol Hill, and President Bush will have to spend a lot more "political capital" (and pork) to get it through Congress. That's right, yet another issue of vital importance to the nation is being reduced to a political football. For many years, I have been in favor of liberalized trade among the countries of the Western Hemisphere. I supported NAFTA, which yielded strong mutual overall benefits to both Mexico and the United States, though it must be acknowledged that the disruptive social effects on either side of the Rio Grande have yet to be fully reckoned. The point was that the two countries already were trading heavily with each other, in a classic symbiosis, and in a real sense NAFTA merely institutionalized and rationalized ongoing trends. The countries of Central America are another matter, however: Except for Costa Rica, they are much poorer and more politically unstable, raising doubts about whether free trade with the United States would produce greater economic wealth or just more political friction. The Dominican Republic is also included in the agreement, but not turmoil-wracked Haiti. For the PRO side in this debate, see the U.S. Trade Representative, and for the CON side, see StopCAFTA.org. I remain skeptical of the proposed grandiose "Free Trade Area of the Americas," which would run up against sharp differences of national interest, within South America itself, but I believe that further institutionalizing economic relations between the U.S. and its (relatively close) neighbors would serve a compelling mutual interest. I find the provisions for stricter controls on pollution and higher environmental standards to be among the strongest reasons for favoring it. How else are we North Americans going to have influence over the fate of the ecologically precious rain forests and beaches of that region? As for the leftist charge that this is all just a sell-out to corporate interests, I would submit that the character, competence, and public-mindedness of Special Trade Representative Robert Zoellick should allay any such fears.
Earlier this year I was travelling in two of the countries where free trade with the U.S. is most controversial. Costa Rica has a long tradition of state management of the economy, emulating the European social democratic model, and its social stability might well be put at risk by being exposed to the rigors of free trade. I saw a lot of political activity against the free trade pact in San Jose, and the most academics there seem to be against it as well. Meanwhile, Nicaragua has been undergoing a serious political crisis in recent months, due in part to controversies over trade and relations with the United States. The Sandinista party of former president Daniel Ortega has been putting the squeeze on the conservative government of Enrique Bolaños in what some are calling a "creeping coup." The CAFTA showdown also coincides with increased complaints about the flow of illegal immigrants across the border from Mexico. One of the fundamental objectives of NAFTA was to minimize the gap in economic opportunity between the two giants, and the shortcoming in that department has to be considered one of the biggest disappointments with NAFTA.
But what about the domestic front? As the dust settles on the compromise that avoided the "nuclear option" in the Senate, indications are that partisan divisiveness is as deep as ever. As reported in the Washington Post, House Minority Leader Nancy Pelosi strongly warned her side of the aisle not to vote for CAFTA because "A vote for CAFTA, she said, was a vote to keep the GOP in the majority." She gives the impression of caring not in the least whether the agreement is in the best interess of the country. Meanwhile, the Republicans are inclined to pacify their base in the key state of Florida, which makes them prone to continue coddling the ultra-protected sugar cane industry. The June 18 Economist magazine opines, "Mr Bush must defeat the sugar lobby. The pro-trade Democrats must stand up to their short-sighted leaders." They interpret the Democrats' obstructionism as a reflection of being "intoxicated with their success, thus far, at stymieing Mr Bush's agenda on social security reform." Given the climate in Washington these days, trying to assess the relative merits of CAFTA, apart from the calculations of partisan gains and losses, may be futile. Moderate Republicans in the Senate such as John Warner had better pay heed to the fact that their gestures of bipartisan cooperation are not being reciprocated.
This would be a good opportunity to remind everyone of one of the most praiseworthy aspects of the Clinton presidency: a solid commitment to freer international trade, as exemplified by NAFTA and the WTO.