WS>>Crossing the CAFTA bridge

carl william spitzer iv cwsiv_2nd at JUNO.COM
Mon Mar 8 09:21:13 MST 2004

          By Donald Lambro

          With a single agreement, the United States moves closer
     to  free  trade  throughout the  Western  Hemisphere,  while
     domestically  setting the stage for a battle in next  year's
     elections over exports and jobs.

          The Bush-backed accord worked out by U.S. Trade  Repre-
     sentative Robert B. Zoellick and the governments of Guatema-
     la, Nicaragua, El Salvador and Honduras follows in step with
     Ronald Reagan's vision of a free-trade zone stretching  from
     Canada to the tip of South America.

          Under   the  Central  American  Free  Trade   Agreement
     (CAFTA),  more  than  80 percent of  American  consumer  and
     industrial  products would immediately be allowed  into  the
     four  countries, tariff-free, as soon as  Congress  approves
     the  agreement.  Everything  would be  duty-free  within  10
     years,  except  for U.S. farm products. They would  take  18
     years to achieve full free-trade status.

          Protectionists  will undoubtedly compare CAFTA  to  the
     North American Free Trade Agreement (NAFTA) with Mexico  and
     Canada.  But,  despite involving more nations, CAFTA  has  a
     smaller  economic  impact.  For example,  the  four  Central
     American countries combined produced more than $100  billion
     in  goods and services last year, a relative  pittance  com-
     pared to Mexico's $900 billion.

          Regardless,  CAFTA will open up a juicy new target  for
     the  labor  unions  and other neo-Luddite  forces  of  trade
     protectionism who caution it will exploit the world's impov-
     erished nations and eliminate millions of U.S. jobs.

          "It's a very big issue for us," said Thea M. Lee, chief
     international  economist for the AFL-CIO.  "This  represents
     the cutting edge of the flawed Bush trade policy."

          But  the way I see it, such free-trade agreements  will
     strengthen  impoverished Central and American  economies  by
     creating  desperately  needed, better-paying  jobs,  helping
     reduce poverty and, eventually, stem the migration from poor
     nations  to  currently more prosperous  countries  like  the
     United States.

          Remember  the gloom-and-doom forecasts we heard  during
     the early 1990s after President Clinton pushed NAFTA through
     Congress? Ross Perot warned of "a giant sucking sound"  that
     would send millions of jobs into Mexico and irreparably hurt
     the U.S. economy.

          Pat  Buchanan and others in and out of the trade  union
     movement said the issue would be one of the central campaign
     battles  of our time. But it barely garnered half a  percent
     of the vote for the former Nixon aide.

          The big story of the 1990s was not U.S. job losses,  as
     these  people  wrongly predicted, but of  jobs  becoming  so
     abundant that America's No. 1 economic problem turned out to
     be  finding enough workers, skilled and unskilled,  to  fill
     them  all. Unemployment did not rise as Mexican imports  and
     exports rose under NAFTA -- it fell to 4 666percent or  less
     -- a level all economists consider full employment.

          The  economy began to slow and unemployment started  to
     rise at the end of the last decade -- not as a result of too
     much  trade  but because of too little trade.  Economies  in
     Europe  and Asia weakened, and thus U.S. export sales  fell.
     U.S.  manufacturing went into a slump and was forced to  cut
     jobs and other overhead costs.

          One  of the ways to cut was to raise  productivity  and
     reduce the per-unit cost of manufacturing. Some  manufactur-
     ers  moved businesses abroad to slash labor costs, but  many
     more eventually found high-tech methods to manufacture their
     new products faster, cheaper, better and with fewer workers.
     Those jobs are not coming back.

          But  these improvements will boost supply,  which  over
     time  will lead to higher demand. The jobs created  in  this
     environment  will  no doubt require a  degree  of  technical
     skill. America's economy is undergoing structural changes to
     remain competitive in a rapidly expanding global economy. If
     we  are to keep up with the rest of the world, we are  going
     to  have  to find new markets for our  products,  and  those
     markets  are overseas and, of course, here in our own  hemi-

          The  administration's  plan to  reduce  and  ultimately
     eliminate  trade  tariffs in Central and  South  America  --
     which  is, let's face it, nothing more than another  govern-
     ment tax on businesses and consumers -- is opening up  these
     markets  to increased trade that, as I see it, is a  win-win
     game for all of us.

          The  election  year debate over CAFTA will be  full  of
     hyperbolic forecasts of lost jobs. The answer to this  dubi-
     ous charge is simply this: Spurred by the robust economy  of
     the  '90s, American jobs bloomed in the trade expansion.  As
     our  current  economy continues to improve and  CAFTA  takes
     root, these trade sector jobs will no doubt bloom again.

          Donald  Lambro,  chief political correspondent  of  The
     Washington Times, is a nationally syndicated columnist.

          Copyright =A9 2003 News World Communications, Inc.  All
     rights reserved.

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