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CAFTA-DR is a Mistake for America

United States of AmericaJuly 25 2005

Press Release - Organization For Competitive Markets

By Fred Stokes

With an impending vote in the House on CAFTA-DR (Central American Free Trade Agreement-Dominican Republic), and its recent passage in the Senate, I urge you to look at the facts of the agreement and let your representative hear your voice.

There are many problems with the way the agreement is written that pertain directly to the American agriculturalist. Trade deficits, job displacement, failure to implement and use Country of Origin Labeling (COOL), labor exploitation, and the continued loss of our national sovereignty are the largest of these problems and the agreement does not address any of these. We must hold strong to the values this country was founded upon by telling those we have elected to the House to defeat CAFTA-DR.

In the early nineties, we passed NAFTA (North American Free Trade Agreement) on the promises that we would decrease our trade deficit, increase profitability in production agriculture, and increase the standard of living in Mexico. Now that the agreement has had ample time to take effect, we look back to see how these promises have fared. The trade deficit for American agriculture was at record levels prior to the closing of the Canadian border to live cattle in 2004, thus granting a somewhat general reprieve for production agriculture. Even with the border closed, the overall deficit continued its decline, just at a slower pace.

We are told the trade deal will increase stability and economic growth in the CAFTA countries; however, 1.4 million Mexican farmers have lost their jobs since the NAFTA implementation. The number of family farms and ranches in the United States have declined as well. If you take into consideration just cattle operations, the total number has declined from about 1.2 million in 1994 to under 990,000 in 2004. That is a loss of over 210,000 cattle operations alone. Family farms have suffered much the same fate. The promises made during the NAFTA debate have been proven wrong through real world tests. The funny thing is that the proponents of CAFTA-DR are promising the same things. CAFTA-DR is similar in writing to NAFTA, but with fewer safeguards for the American and Central American ag producer.

The countries that compose CAFTA-DR include Costa Rica, Honduras, El Salvador, Guatemala, Nicaragua, and the Dominican Republic, and the majority of production agriculturalists in those respective countries don’t want to see the agreement passed either. The reason for this is simple: if you are the lowest cost producer and eventually all competition is either pushed out of business or reduced so much that they can no longer pose any substantial risk, do you think that the buyer is then going to give you premiums for your product seeing as how you have produced at such low costs for so long, or will they continue to try to cut corners on your cost so they can procure your product for even less? I believe the latter to be true and have never seen any conscience exercised by big business in matters such as these. Just ask the Mexican producers if that happened to them. You can probably find one right down the street looking for a job.

As independent producers, we have been continually told by organizations and institutions that we have to get to a point where we can compete in a global marketplace. In the United States we produce the safest, highest quality food products in the world and we do so under the strictest of guidelines. Be it food safety guidelines or environmental regulations, we continually exceed international quality standards.

Keeping all of this in mind, we were successful in getting mandatory COOL passed in the last farm bill so that we could “compete in the new global market.� Yet, now those that are proponents of CAFTA-DR are the biggest opponents of COOL. There is no language in the current agreement that mandates an origin label on food products.

In the United States we will be forced to again compete with a lower cost, lower quality product without the ability to differentiate between the two. In Central America, this gives rise to another problem. Without some sort of COOL, the possibility of the countries involved in CAFTA-DR to become trans-shipment areas is a reality. For example, Brazil has a supply of 200 million bushels of wheat that it would like to enter into the most lucrative agricultural market in the world - the United States - but does not want to pay the required tariff. So it ships the wheat to Honduras for a short period of time and they in turn ship it to the U.S. tariff free as Honduran wheat. This saturates our market and drives down the domestic wheat price U.S. farmers receive, and it’s all done without breaking the laws of CAFTA-DR.

Exploitation of the Central American labor force under CAFTA-DR is a clear and present danger. The average wage for workers in Central America varies from $2 per day in Honduras to $8 per day in Costa Rica. American farmers and ranchers simply cannot compete with these low costs of production. When NAFTA was passed we were promised that labor protections and wages would increase in Mexico. They did not.

In fact, American companies have already relocated some of their factories in nations like Honduras, where young Honduran women are being employed in textile and clothing factories. Fair trade agreements should encourage and nurture the building of independent economies in lesser developed nations in order to build a marketplace for American products.

CAFTA-DR is the precursor to other, larger Free Trade Agreements such as the Andean Free Trade Agreement and the huge FTAA (Free Trade Area of the Americas). These two agreements include most South American countries that are not already included in a FTA with the United States. These countries, i.e. Argentina and Brazil, have shown that they are able to produce huge quantities of agricultural goods at a greatly reduced cost of production through everything from government subsidies to cheap land, not to mention the lower pharmaceutical and labor costs.

It is a fact also that the food safety and environmental regulations are, at best, sub-par when compared to those of the United States. So, in essence, by passing CAFTA-DR, the precedent, we are opening our doors to an unending supply of ag products that don’t have to meet our safety guidelines. If the huge supply doesn’t push American farmers and ranchers out the gate, which it is likely to do alone, the quality and safety of their product might affect consumer confidence which could finish the job.

All of these points lead to this: the slow and continued loss of our national sovereignty.

CAFTA is a threat to the sovereignty and autonomy to local, state, and federal governments, and is in violation of the United States Constitution. CAFTA allows for disputes between the signatories to the agreement to be resolved by tribunals. These foreign CAFTA Tribunals have the power to not only sanction U.S. policy makers, but also to determine whether or not American local and state laws are in compliance with CAFTA. Who is best fit to handle policy considerations concerning such topics as utilities, transportation, public land use, and the granting of public contracts? In the opinion of those in opposition to CAFTA, only those that are close enough to a problem to understand its’ complex and subtle details should be charged with giving a solution.

This is why citizens of the United States elect representatives to make decisions regarding public policy. We do not believe that decisions about the legality of local, state, or federal laws should be left up to interpretation by foreign tribunals. If these tribunals are able to rule that local, state, or federal laws are not in compliance with CAFTA’s “no more burdensome than necessary to trade� clause, then they are in effect making decisions on public policy that should be left up to those elected by the American people. CAFTA entrenches the U.S. into a new world order where our future is determined by un-accountable, un-elected bureaucrats and foreign judges. The World Trade Organization has already limited our rural policy options and CAFTA only threatens to limit them further. This is not only in violation of common sense it is in violation of the U.S. Constitution. The tenth amendment reserves all powers not delegated to the Federal government to the States, which include the regulation of utilities, transportation, public land use, and the granting of public contracts. Elected officials, sworn to protect the U.S. Constitution, are forbidden from delegating any decision making authority to foreign entities.

George Washington once said, “I know of no pursuit in which more real and important services can be rendered to any country than by improving its agriculture.� He, like many of our early presidents, was a farmer in an independent agrarian society and saw the important role agriculture played in maintaining and improving the United States. I understand that times have changed and we have moved away from the agrarian society to one in which we have become more industrialized, but, make no mistake; agriculture is still the backbone of this country.

Lately, we have seen what a foreign dependency on a product can do for us. I do not care much for paying $2.25/gallon of gas, but is it little more than a financial inconvenience. Imagine if we were to rely on a foreign market for our food and protein. It is more than an inconvenience when you are starving and, you cannot be a superpower if your soldiers are hungry!

Does CAFTA-DR sound like a good deal to you?