By Lou Dobbs
CNN
March 4, 2005


The Bush administration is trying to push the Central
American Free Trade Agreement through Congress quickly and quietly.

The White House, however, couldn't find the votes for this so-called
free trade agreement before his re-election in the fall, and the
president likely doesn't have the votes for it now. And that's a
good thing for American workers.

CAFTA advocates say the agreement would open up free trade between
the United States and the Dominican Republic and five countries in
Central America: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

But this agreement represents the same free trade at all costs
policy that has led to a 70 percent increase in the trade deficit
since 2001. We're not signing trade agreements to open new markets
for our exports. Instead we're continuing to enter into outsourcing
agreements with countries that cannot possibly buy our goods.

If you add up the gross domestic products of the six CAFTA
economies, the total market comes to about $85 billion, according to
the latest available figures. That's only slightly larger than the
economy of New Haven, Connecticut and less than a fifth of the size
of New York City. As such, expanding trade with this bloc cannot
possibly be a serious growth driver for the $11 trillion U.S. economy.

The CAFTA trading partners are simply too poor and too small to
serve as major consumer markets for anything made in America, if
indeed we still are manufacturing anything in this country. But with
40 percent of workers in Central America earning less than $2 a day,
CAFTA will pit the working poor of these countries against American
workers, especially textile workers and small farmers. U.S.
multinationals don't exactly have a great track record when it comes
to keeping jobs at home in the face of cheaper labor overseas.

More than 35 percent of all U.S. goods exports to the six CAFTA
countries consist of turnaround exports, which are unfinished
textile, apparel and other materials that are not ultimately
consumed in these countries. These "round-trip" imports are
assembled by low-wage workers and exported right back to the
American marketplace.

As a result, U.S. exports to CAFTA countries generally produce
greater imports to our market, which further swells the worsening
record trade deficit. In fact, turnaround exports have contributed
to the U.S. trade deficit with the six CAFTA nations rising by
nearly 60 percent from 1997-2004, according to the U.S. Business &
Industry Council.

And at least three of the six CAFTA countries are in such a weak
financial position they couldn't possibly boost imports. The
Dominican Republic is currently receiving a $665 million standby
loan from the International Monetary Fund to help the country emerge
from its economic crisis of 2003. The program is set to last until
mid-2007, and the country will be under pressure to increase exports
and curb imports. Unless, of course, those imports are turnaround
imports that are shipped right back into the U.S. market.

Honduras and Nicaragua are also receiving special debt relief from
the IMF because of their great indebtedness and high poverty rates.
While they're not austerity programs like the Dominican Republic's,
neither country has much capacity to sharply increase net imports.

"Americans know a bad trade deal when they see one," says Ernest
Baynard, executive director of Americans for Fair Trade. "They've
already had to live through one for 10 years under NAFTA."

U.S. workers have lost nearly 900,000 jobs as a result of the North
American Free Trade Agreement, most of them in the higher-paying
manufacturing sector, according to the Economic Policy Institute.

But NAFTA's effects are even more evident in our exploding trade
deficit. Exports to Canada and Mexico have more than doubled since
1993, but imports to our neighboring countries have risen by 173
percent, from $151 billion to $412 billion. As a result, the trade
deficit with Canada and Mexico has ballooned from $9.1 billion in
1993 to $110.8 billion last year.

CAFTA may bring lower prices to consumers, but it would most likely
lead to more jobs being shipped to cheap foreign labor markets. And
a new poll on CAFTA shows American consumers do not want to give up
their jobs for lower prices, according to the nonprofit organization
Americans for Fair Trade. In fact, 74 percent of those polled said
they would oppose CAFTA if it reduces consumer prices but eliminates
jobs for American workers.

"The only people who stand to gain from CAFTA," Baynard adds, "are
people who are offshoring jobs already or want to offshore jobs."

That is something we simply cannot afford. Working Americans know
all too well the high cost of free trade. I can only hope Congress
has learned that lesson as well.