The U.S. Central American Free Trade Agreement (CAFTA)

(Part 2)


These statistics demonstrate that Central America does not have stableаeconomic and social impact in their region. In the United States, moreаthan 750,000 manufacturing jobs have been lost since the NorthаAmerican Free Trade Agreement (NAFTA) and were replaced by low-wageаservice jobs. Working conditions in Mexico have deterioratedаsubstantially with the maquila sector as the primary source of newаjobs: the median salary has lost 23% of its purchasing power, and 8аmillion more Mexican families live in poverty than before NAFTA wentаinto effect. Not only has NAFTA damaged the economy in Mexico, butаalso in the United States. Here are just a few examples of how NAFTAаhas damaged U.S. economy:

* Turned the 1993 pre-NAFTA $1.7 billion U.S. trade surplus withаMexico into a $25 billion deficit, while the U.S. trade deficitаwith Canada has grown from $10.8 billion to $44.9 billion underаNAFTA. Federal Reserve Chairman Alan Greenspan has called theаtrade deficit a significant drag on growth;

* Eliminated nearly one million well-paying jobs and deterioratedаthe manufacturing base;

* Impoverished the Mexico-border region in the United States, withаmany border cities now facing higher unemployment rates thanаbefore NAFTA;

* Encouraged union-busting and depressed wages and benefits asаcompanies threaten workers with the prospect of overseas moves,аespecially to Mexico;

* Granted transnational corporations the power under NAFTA’s Chapterа11 to claim reimbursement with taxpayer money (to date over $13аbillion) for “future lost profits” when domestic public safeguardsаlimit profitability

In view of NAFTA’s statistics, North America and Central America canаonly assume the same thing will happen when CAFTA takes effect. Itаseems as if the Americas will suffer from this agreement and the onlyаentities who will profit will be the corporations who plan onаinvesting in Central America. This agreement may advance theаglobalization process but little research has been done on CAFTA sinceаtrade negotiations started a year ago. The U.S. citizens should beаaware that the government seems to be making “trade free” as opposed
to making “trade fair.”

[i] U.S. & Central American Countries Conclude Historic Free Trade
Agreement. Office of The United States Trade Representative.
Retrieved: February 21, 2004.

[ii]U.S. & Central American Countries Conclude Historic Free Trade
Agreement. Office of The United States Trade Representative.
Retrieved: February 21, 2004.

[iii] Trilateral Customs Guide to NAFTA. Retrieved: February 23, 2004.

[iv] Conference Draws Central American, Bank Officials To Discuss
Opportunities Of Cafta. DevNews Media Center. Retrieved: February 22,

[v] McElhinny, Vincent. U.S.-Central American Free Trade Agreement:
Leaping Without Looking? Retreived: February 22, 2004.

[vi] CAFTA! NAFTA for Central America. El Salvador Watch. Retrieved
February 23, 2004:

[vii] Brown, Sherrod. ‘CAFTA’: The New Word for Bad Trade Policies.
Retreived February 23, 2004.



Trade Representative