May 12, 2005 | Commentary on International Organizations

Trading Up

To see how, in Washington, special interests often outweigh the greater needs of America, one acronym will suffice: DR-CAFTA.

The debate over DR-CAFTA (the proposed free-trade agreement between the United States and the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua) has focused so far on the wrong question. Instead of asking, "What happens if DR-CAFTA passes?" we ought to consider "What happens if it doesn't pass?"

After all, if DR-CAFTA were to be defeated, it would hurt not only our economy but those of several Central American countries as well. And it would have larger ramifications, for years to come, on U.S. security interests in Latin America, illegal immigration, imports from China and America's free-trade agenda.

What do we risk losing if DR-CAFTA doesn't pass? Consider these often-overlooked ramifications:

  • U.S. security interests in Latin America would be undermined. Central America has made great strides toward democracy, economic freedom and the rule of law since the 1980s. Leftist dictator Fidel Castro of Cuba and dictator aspirant Hugo Chavez of Venezuela oppose free-trade agreements such as DR-CAFTA and the proposed Free Trade Agreement of the Americas (FTAA) because they lock in economic openness and forge closer ties to the U.S. Failure to pass DR-CAFTA would play into the hands of Castro and Chavez by confirming what the Latin American public already suspects: the U.S. doesn't care about the region.
  • The illegal immigration problem would be aggravated. A majority of the citizens in Central America and the Dominican Republic are informally employed, underemployed or lack jobs altogether. Illegal immigrants come to the U.S. searching for jobs. DR-CAFTA would help generate jobs in these countries and reduce incentives to illegally enter the U.S.
  • Pressure from Chinese imports would increase. Because the global system of quotas on textiles and apparel has expired, Chinese production is surging. Central America is an important market for American textile producers, and DR-CAFTA will help keep that market viable. Under DR-CAFTA, more than 90 percent of the garments made in Central America will be made with U.S. textiles and yarn. Without DR-CAFTA, Central American textile manufacturers likely will migrate to China, not only increasing Chinese exports, but eliminating an important textile market.
  • America's further gains through open trade would be stalled. Our economy thrives on trade. As trade's portion of gross domestic product rises, so does the U.S. economy and per capita income. It's in our economic interest to continue to expand trade by lowering barriers to goods and services in the U.S. and in other countries. But half a dozen other free-trade agreements could founder if Congress opposes DR-CAFTA.

Economically, DR-CAFTA is a clear winner for America. Under existing trade preferences, the Dominican Republic and Central America already have extensive duty-free access to the U.S. market, while American exports face significant barriers. Therefore, the benefits to America would come at very little cost.

But perhaps even more important is that DR-CAFTA would bolster political stability and enhance hemispheric stability and security at the crossroads of North and South America.

Meanwhile, the handful of groups who oppose free trade merely want to protect their turf, whether or not their arguments have merit.

Sugar producers oppose DR-CAFTA because it would increase the amount of sugar other countries can send to the U.S. without facing prohibitive tariffs. That boost would amount to about one-and-a-half spoonfuls per American per week. Despite the tiny effect DR-CAFTA would have, sugar lobbyists are exerting enormous efforts to stop it. For some members of Congress, this spoonful of sugar -- or, more specifically, the contributions of the sugar industry -- outweighs all other trade and security concerns.

Labor and environmental activists grumble because DR-CAFTA doesn't require those countries to adopt U.S.-level regulations. But wages and environmental protections are linked to a nation's income: As income increases, so do wages and environmental protections. Defeating DR-CAFTA actually would work against these lobbyists' stated goals.

But free-trade agreements bring real economic benefits to people through the products they buy and make. When all is said and done, DR-CAFTA is a good deal for most Americans. Plus, DR-CAFTA isn't just about trade. It's also about national security, illegal immigration, stopping the spread of leftist dictators and the future of the U.S. economy. These are the potential losses if DR-CAFTA doesn't pass.

The benefits of passing it far outweigh the narrow special interests of the lobbyists who are arguing against it.

Brett D. Schaefer is the Jay Kingham fellow in international regulatory affairs in the Center for International Trade and Economics at The Heritage Foundation.

About the Author

Brett D. Schaefer Jay Kingham Senior Research Fellow in International Regulatory Affairs
The Margaret Thatcher Center for Freedom

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