President George W. Bush’s speech in Fort Lauderdale on Monday dealt with an important issue for Florida’s economy. This wasn’t one of the campaign-style events choreographed to support the president’s Social Security reform agenda or an attempt to advocate tax reform. President Bush used the opportunity to speak to foreign ministers from the Western Hemisphere and advocate Congressional approval of the Central American Free Trade Agreement (CAFTA).
CAFTA, signed in 2004 by the leaders of five Central American countries, the United States and the Dominican Republic, would eliminate tariffs and other barriers to trade.
Congressional support for the proposal is mixed, but consideration is expected to begin this month.
CAFTA is an important step in leveling international trade between nations in the Western Hemisphere. Due to agreements such as the Caribbean Basin Initiative (CBI), the office of the United States trade representative estimates that “nearly 77 percent of regional imports entered the U.S. duty-free in 2003.” CAFTA would guarantee American exports receive the same duty-free status, thus improving the collective competitiveness of U.S. companies and workers.
CAFTA also has far-reaching implications for the Florida economy and especially the port of Tampa. According to an April story in the St. Petersburg Times, “some 55 percent of U.S. trade with Central America” moves through Florida ports and, according to a U.S. Chamber of Commerce study, if CAFTA passes, “Trade with those countries at the port of Tampa is calculated to double over the next 10 years.”
Despite these numbers, there is opposition to CAFTA within Florida and it is largely centered on the sugar industry.
“The sugar industry, which accounts for 25,000 Florida jobs, has been hurt by depressed prices, an oversupply and duty-free exports from other countries,” according to U.S. sugar industry spokeswoman Judy Sanchez told the Times.
It must first be understood that free trade does not claim to be a winner for every industry. These are just the cold hard facts. While there is no doubt that the sugar industry is fighting to protect their interests, current price supports through high tariffs and import quotas have created a lopsided playing field for the industry for too long.
The sugar industry must understand their artificially opposed advantage and that is why they are fighting a CAFTA agreement, which would allow a modest increase of sugar exports to the U.S. equal to 1.7 percent of consumption after 15 years. Translation: That isn’t very much sugar.
The loss of jobs under a free trade agreement is nothing to dismiss. The social implications of trade policy can be easily forgotten under a barrage of data and graphical models. National unemployment figures fail to express the gravity of the situation for individuals who lose their jobs and whose personal experience tells them that their unemployment rate is 100 percent.
That is why the approval of CAFTA in the United States must be paralleled with extended unemployment benefits and effective retraining mechanisms to shift labor to expanding industries. The contraction of specific industries is a reality in the global economy and the real winners are countries able to adapt to these changes to smooth labor market fluctuations.
To be fair to the CAFTA opposition, it is important to note that concern also exists over labor protections in these foreign countries. Allowing countries to enforce their own set of labor rules seems a dubious proposition, but a free trade agreement can provide the leverage to promote International Labor Organization standards within these countries.
Considering the mixed reviews of the North American Free Trade Agreement (NAFTA), Congressional approval of CAFTA will be very difficult without bipartisan support. A telling indication of the fate of the trade agreement will be the votes by centrist, pro-trade Democrats.
A Wall Street Journal opinion piece, written by two democrats holding international positions during the Clinton presidency, suggested, “A vote for CAFTA would help Democrats regain their position as the party of growth and the party promoting international trade.” Let’s hope that Democrats put aside their part in the acrimony of political discourse and vote for a free trade agreement that is good for the country and the Florida economy.
Aaron Hill is a juniormajoring in email@example.com