May 11, 2005

May 11, 2005 | Commentary on

Defending Free Trade

How do you avoid losing the peace, once you have won the war? The question applies as much to Central America as it does to Iraq. Not very long ago, Central America was a battlefield of competing Cold War ideologies.

The determined efforts of the Reagan administration in the 1980s and courageous domestic resistance halted the advance of communism in our own hemisphere. During the 1970s and 1980s, all the countries in Central America were ruled by dictators of one stripe or another, with the exception of Costa Rica. Since Nicaraguans threw the Sandinistas out on their ears, however, in that glorious election of 1996, all of Central America has seen the arrival of freely elected governments. The region has been transformed.

But today we stand in danger of losing that hard-won progress. Instead of embracing trade with the region, which would encourage economic freedom and sustain political development, the U.S. Congress is under siege from special interest, anti-trade lobbies that oppose a highly promising vehicle for spurring economic growth, the Central American Free Trade Agreement, and have sworn to bring it down. (Combined with a U.S. free trade agreement with the Dominican Republic, the agreement is known in Washington lingo by the acronym DR-CAFTA).

If DR- CAFTA is defeated in Congress, anti-Americanism will certainly gain ground in Central America. What's more, we may also soon see the return of authoritarian, populist regimes - possibly in the mold of Venezuela's Chavez regime -- where we thought democracy and economic liberalization had blossomed once and for all.

This week, the six presidents of the DR-CAFTA countries - Nicaragua, El Salvador, Honduras, Guatemala, Costa Rica and the Dominican Republic - are in the United States to promote the agreement. They will be meeting with President Bush tomorrow at the White House, to press their case. The fact is that the longer the vote is delayed, and the longer the agreement is debated, the more time the opposition has to organize, both here and in Central America. In the DR-CAFTA countries, particularly in Costa Rice, labor unions are dead set against the agreement (why?).

Specific Americans opponents are the sugar and textile lobbies, which fear not just DR-CAFTA, but the broader Free Trade Area of the Americas that could follow, as well as new global free trade agreements. Now, no one should take American job losses lightly, but protecting uncompetitive industries is not a winning strategy. A far better option is to retrain workers in a competitive business environment. And the truth is that U.S. sugar production will be minimally affected, governed as it is by an arcane quota system that resembles nothing so much as a planned economy.

DR-CAFTA promises major trade benefits for American companies. Currently almost all products from the DR-CAFTA countries are imported duty-free into the United States. The same does not apply to American goods going the other way, a situation DR-CAFTA would do much to remedy. In addition to reducing tariffs and quotas on a rage of industries and goods, the agreement would also open up the services sector. It would expand access for the Central American countries to foreign direct investment and institute transparency rules.

But there is more at stake than the economic development of Central America. If the forces of isolationism were to defeat DR-CAFTA in Congress, the Bush administration's whole trade agenda would suffer a major blow, and with it world trade.

At risk could be Trade Promotion Authority (TPA), the legislation that obliges Congress to vote up or down on trade agreements negotiated by the president, which is coming up for renewal in July. In the absence of TPA, trade negotiations become festooned like Christmas trees with every type of special interest, labor and environmental amendment imaginable.

Also affected would be World Trade Organization (WTO) negotiations in the current Doha round, a major focus of which is agricultural subsidies. A ministerial meeting is scheduled for December in Hong Kong, and the developing countries are keenly watching how far Europe and the United States will be prepared to cut their agricultural subsidies and quota systems.

The Bush administration is poised to make a major push for DR-CAFTA in the coming days and weeks, an effort that is long overdue. It will take just about every ounce of persuasive power of the president and his cabinet to pull victory from the jaws of defeat on this one. And it is not just the Central American countries that are hoping they succeed.

Helle Dale  is director of the Douglas and Sarah Allison Center for Foreign Policy Studies of the Heritage Foundation. 

About the Author

Helle C. Dale Senior Fellow for Public Diplomacy
The Margaret Thatcher Center for Freedom

First appeared in The Washington Times