Thursday, July 7, 2005
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Why support CAFTA?
In an e-mail, Slate and New York Times contributor Daniel Gross asks a fair question: "unless you're a really, really, passionate free trader--which few congressional members, republican or democrat, are--why would you vote for CAFTA?"
Actually, it's not like free traders are terribly enthusiastic about the deal. In NRO, Bruce Bartlett conveys a free trader's feelings about the deal pretty well:
In the end, there are three reasons I can give to support CAFTA:
There are many things I don't like about this agreement -- but there are even more things I don't like about the policy environment for trade if CAFTA goes down.
UPDATE: As God is my witness, I did not coordinate this blog post with Donald Rumsfeld.
One final reason for supporting CAFTA if you're from the Midwest -- CAFTA puts an ever-so-slight dent in the wall of sugar protectionism, which would help to staunch the flow of candy manufacturers across the border.posted by Dan on 07.07.05 at 09:50 PM
Secretary Rumsfeld has an op-ed in today's Miami Herald arguing that CAFTA is a national security vote, basically on the soft power grounds, but also on the grounds that they stood with us after 9/11 and are democracies that should be rewarded.posted by: boz on 07.07.05 at 09:50 PM [permalink]
How free trade theorists support intellectual property rights is truely baffling. And how free trade theorists call themselves free trade theorists without supporting the free trade of labor (the most valuable commodity) is more baffling.posted by: No von Mises on 07.07.05 at 09:50 PM [permalink]
Also, the foreign policy impetus for CAFTA is not about the rhetorical term 'leadership'. It's about market leverage pure and simple. You're misrepresenting Dani Rodrik as well. Everyone, and I mean everyone, when wearing an American hat, will say CAFTA is a great foreign policy move. That is indisputable. But, Rodrik doesn't wear that hat. Wearing the independent observer hat, Rodrik's analysis has always been on target when discussing trade agreements in relation to free trade theory. His criticism is that trade agreements have been drafted with a foreign policy pen and not a development pen, as free traders presume, which in turn has created more foreign policy problems. Nations have been on-balance adversely affected which is not supposed to happen in free trade theory. Rodrik has the gumption to work within the realm of intellectual honesty, free trade theorists do not.
Rodrik's papers have been practically untouchable.posted by: No von Mises on 07.07.05 at 09:50 PM [permalink]
In June U. S. lost manufacturing jobs for the fourth month in a row.
Now I know many of you think this is good, and that the kind of people who work in manufacturing don't matter much anyway, but why are you surprised at the political backlash?
Even former manufacturing workers are smart enough to call their member of Congress.
And if I were a Democrat, I certainly wouldn't go out on a limb for George Bush.posted by: save_the_rustbelt on 07.07.05 at 09:50 PM [permalink]
Hmm. Seems to me that in both the cases of the agricultural subsidies and the steel tariffs, there was a strong Congressional majority for both actions. The agricultural subsidies were entirely the work of Congress, opposed in the drafting by the Administration, albeit not vetoed. The steel tariffs have already since been repealed.
I'm not sure that I buy the argument that those actions made it harder to get free trade through Congress. Especially not when members of Congress were already making their vote contigent on such things. Yes, there is a benefit to not allowing members to start a bidding war for their vote, but other than that, I don't quite see it.
Right now, the Administration is trying to get Congress to repeal the cotton subsidies that the WTO found illegal. Let's see how that goes. (Also, at the G8 summit the President offered to eliminate all our subsidies in exchange for the EU scrapping the CAP; not that it will happen, unfortunately.)posted by: John Thacker on 07.07.05 at 09:50 PM [permalink]
Regardless of what the Euros do, we should repeal the cotton subsidies. We'll be a freer marketplace, while the Euros will absorb all the costs (and silly politics) of the ridiculous CAP. They'll be taxing themselves to make money off us.posted by: Don Mynack on 07.07.05 at 09:50 PM [permalink]
If CAFTA is in the interests of ordinary Americans, then Daniel Drezner should be able to make a compelling case to them in simple, clear terms.
That fact that he does not make such a case -- and must fall back on vague, handwaving rubbish about "foreign policy benefits" (while never mentioning those benefits) shows how weak his position is.
South America would be deeply grately if the US government would simply rein in its historical aggression -- it's support for military coups, it's installation of regimes who rule with right wing death squads, it military support of small , vicious oligarchies under the guise of the "war on drugs", and its economic imperialism based on collection of loans made to past puppets.
But I don't think the business interests backing CAFTA would be interested in that. No one wants to risk $Billions in a foreign country without assurance from "our boys" in Washington that "our boys" in Chile are in charge.posted by: Don the Greater on 07.07.05 at 09:50 PM [permalink]
To say that six other countries want it is a bit inaccurate. Six other governments and the limited interests they represent may want it but that isn't quite the same thing. There is easily as much resistance to unbalanced trade liberalization in developing countries as in developed ones.posted by: peter on 07.07.05 at 09:50 PM [permalink]
It won't be long before the Professor entitles a post "Free Trade Republicans, R.I.P..."
America simply can't compete in most key industries.
Another question, if freer trade and the edicts that govern free trade theory are so wonderful, why does the defense industry operate outside of the marketplace? Some higher-ups must understand the volatiliy associated with working within the marketplace. Defense operates outside of it and agriculture is the most heavily subsidized in the world. Those are probably the two most important industries in crafting any successful foreign policy when you are a country the size of the US.
So America is in the wrong for ignoring central and south America, but would also be wrong to address their problems vis-a-vis our trade policies. America is wrong to prevent political chaos, collapse, and war in the region, but also wrong for not doing enough to stablize the region.
It's not a matter of wrong or right but empirical evidence. Empirical evidence shows that liberalization of capital and financial markets has been a net negative in Latin America.
When LA history is a hundred years of social, political and economic intervention by America, and prior Spanish and French colonialism, followed by hyper-liberalization of markets, their must responsibility to be had. Is there?
Are you arguing that America has not been a destabalizing presence in LA?posted by: No von Mises on 07.07.05 at 09:50 PM [permalink]
Woops. It should read:
When LA history is a hundred years of social, political and economic intervention by America, and prior Spanish and French colonialism, followed by hyper-liberalization of markets, there isn't much responsibility to be had. Is there?posted by: No von Mises on 07.07.05 at 09:50 PM [permalink]
"It's not a matter of wrong or right but empirical evidence. Empirical evidence shows that liberalization of capital and financial markets has been a net negative in Latin America."
That may be the specific case, but we have certainly seen the power of liberalized trade in the rest of the world. And what is the alternative? Status quo? Dump buckets of dollars out the back of C-130s like we essentially have in Africa for 20 years?
Certainly. But i think guilt based trade and foriegn policy tends to go horribly wrong, while pragmatic policies such as those we showed towards East Asia and Eastern Europe have been sparkling successes generally.
"Are you arguing that America has not been a destabalizing presence in LA?"
One, America has been destabalizing (and worse) in many cases, and it has been critically helpful in many others. The Monroe Doctrine has to great extent kept the rest of the worlds mits out of the region for 2 centuries, otherwise instead of 1 interfering busybody power to worry about SA and CA would have had a dozen. Do we garner thanks for that? No, only our blunders are remembered. If a hurricane wiped half of central america off the map, who do you think the eyes would turn to? France?
The US causes loads of violence in Latin America and insofar as it creates stability, it is the stability of dictatorships and graveyards not of democracies. Nicaragua under the sandinistas was a functioning democracy from the moment they took power with broad support from all Nicaraguan social sectors (including by many elements within the business sector). The regime was destabilized by the contra war funded by washington. That war simply wouldn't have happened except for US intervention. The contras just didn't have any local support. Similarly Guatemala was a functioning democracy under Arbenz until the CIA got rid of him and set the stage for decades of brutality, dictatorship and inevitable war. To take a more current example, Venezuela is democratic (with Chavez enjoying support at all of federal, state and municipal levels and having secured multiple clean electoral wins). It is also the only country in the region with improving standards of health, education and general welfare. Inspite of this Washington is doing its best to destabilize the country by supporting anti-democratic elites in their lockouts and coups.
As to your remark about division of blame, of course there are multiple actors involved. The US does not act alone in the region. Local elites do cooperate with US policy both within their own countries and across borders. It is unfair to place all the blame on US policy. Nonethless, the US acts according to its own corporate interests and not according to basic democratic ideology.posted by: peter on 07.07.05 at 09:50 PM [permalink]
"To say that six other countries want it is a bit inaccurate. Six other governments and the limited interests they represent may want it but that isn't quite the same thing. There is easily as much resistance to unbalanced trade liberalization in developing countries as in developed ones."
You don't seem to have much faith in democracy in Central America. Then again, maybe you would make the same statement (regarding the government not representing the people) about the US, and with some justification. But relative to other developing countries, democracy in the CAFTA countries is doing ok. Sure, Guatemala and Honduras may be on somewhat shaky ground, but Costa Rica? DR? There is a simple reason countries like Argentina and Venezuela are not jumping on the FTAA bandwagon: their governments would be booted out of office in short order. Whatever the merits of CAFTA, lumping all the "developing countries" together and dismissing the decisions of their governments on the basis that they don't represent the people is misinformed and patronizing.posted by: Dave Bennion on 07.07.05 at 09:50 PM [permalink]
Peter, thats some serious revisionism. Nicaragua under the Sandanistas saw some serious crimes against humanity. Ethnic cleansing, mass murder of indians, institutionalized torture, 8000 political executions.
From U.S. Rep. Ron Paul comes "CAFTA: More Bureaucracy, Less Free Trade":
...The quasi-judicial regime created under CAFTA will have the same power to coerce our cowardly legislature into changing American laws in the future... CAFTA will provide yet another avenue for globalists to impose the Kyoto Accord and similar agreements on the American people. CAFTA also imposes the International Labor Organization's manifesto, which could have been written by Karl Marx, on American business. I encourage every conservative and libertarian who supports CAFTA to read the ILO declaration and consider whether they still believe the treaty will make America more free.posted by: The Lonewacko Blog on 07.07.05 at 09:50 PM [permalink]
To be blunt, you haven't the faintest idea what you are talking about. The Sandinistas did not engage in anything remotely close to ethnic cleansing, mass murder of native peoples or systemic torture. They did not need to use those kind of things enjoying as they did broad-based and long-term democratic support. The main reason why they were elected out of office was because the Nicaraguan people were made to understand by Washington that was the only way to end the Contra terror campaign.
If you crossed the border into Guatemala you would have found systemic torture, mass murder of natives and so on - all committed by a regime closely backed by the US.
As to El Salvador I condemn American intervention there as well. The Duarte regime unquestionably had one of the worst human rights records in the entire world and it wouldn't have been able to achieve it without US backing.
I strongly urge you to do some reading about C.A. in the 80s. There isn't a whole lot of disagreement amongst reputable scholars about what generally happened there. You might start with Thomas Walker's "Land of Sandino". Walter Lafeber's "Inevitable Revolutions" is also good.
My point is that trade liberalization is contentious everywhere (both in the developed and developing world). Therefore, I am not sure Dan's concern that the US will fail to show leadership if it rejects CAFTA is valid. An american rejection would please at least as many people in Central America as it would annoy.posted by: peter on 07.07.05 at 09:50 PM [permalink]
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