CAFTA: Amnesty for Trade Cheats

Articles

Congressman Charles Norwood, June 17, 2005

Georgia chicken farmers are trying to sell poultry in Central America under a 160% import tariff, while Central American farmers sell their chicken in America tariff-free. Any five-year old will tell you that’s cheating. So what are we going to do about it?

The global trade crowd says we ought to reward these “competitors” by offering them the chance to cheat us on textiles and sugar, by approving the Central American Free Trade Agreement, or CAFTA. In return, they agree to stop cheating us on chickens after another 18 years during which they put our poultry industry out-of-business. Amnesty for trade cheats, just like the same crowd’s proposals on amnesty for illegal aliens.

“Let’s open foreign markets to American goods”. That battle cry has been the mantra of the globalists for the past decade. It was their whole rationale for pushing the United States – against public opinion – away from America’s historically proven bilateral trade agreement system.

We enjoyed our last trade surplus - $12.4 billion – in 1975. Decades of government regulation, trade union demands, and the unfair trade policies of international competitors like Japan were finally taking their toll. By 1994, the United States was posting consistent trade deficits, recording a $98 billion dollar deficit.

That brought the globalists into play, negotiating multi-nation “mega deals” in which other countries were allowed to ship either low-tariff or completely tariff-free goods into the United States, while we agreed to continued tariffs on our goods to their countries, like the chicken-cheating deal we agreed to as part of the Caribbean Basin Initiative.

The argument then and now for this economic stupidity is the same. We lose some jobs and markets, but overall, our exports will increase, as foreign countries that currently protect their markets through high tariffs agree to lower them on some things - as long as we agree to lower ours more, or eliminate them entirely.

The first, the granddaddy of all the giveaways, passed Congress in 1994 – the North American Free Trade Agreement, NAFTA. Mexico and Canada were our largest trading partners, and this deal would further “open their markets to American goods.”

In 1994, we still had a $1.3 billion trade surplus with Mexico. Today, as a direct result of NAFTA, we have a $45 billion trade deficit. In 1994, we had a $14 billion trade deficit with Canada. Today, we have a $66.5 billion deficit.

But to the globalists, this is all good. For while we lost good paying manufacturing jobs and markets, U.S. exports did in fact increase. Exports to Mexico jumped from $51 billion in 1994 to $111 billion in 2004. Exports to Canada grew from $114 billion in 1994 to $190 billion in 2004.

It’s just that imports grew a lot faster than exports. So while our sales to Mexico grew 118%, our purchases grew 215%. Sales to Canada went up 66%; imports from Canada grew 100%.

The undeniable end result is a net loss of dollars and jobs to Americans. A few people gained; the majority lost.

NAFTA alone is bad enough, but the globalists have piled one bad trade deal on top of the next ever since. Congress approved U.S. membership in the World Trade Organization (WTO) in 1995, and the Caribbean Basin Trade Partnership Act and the Africa Growth and Opportunity Act in 2000.

But that still wasn’t enough. We still needed to “open more markets to American goods.”

So we approved Permanent Normal Trade Relations to Communist China in 2000, in spite of the fact we knew they used slave labor in their Red Army-owned factories.

The result? The percentages weren’t as bad as Mexico and Canada due to the fact we sold little to China to begin with. But the result in real dollars is appalling. Between 2000 and 2004, U.S. exports to China grew $18 billion; U.S. imports shot up $97 billion. We ended with a net loss of $162 billion for 2004 alone.

China further rewarded our trust by passing a new law giving advance approval for the Red Army to invade our ally Taiwan.

Then we gave the President Fast Track Trading Authority in 2002 to get us into these messes more quickly in the future. No point dragging our feet down the road to ruin. That $98 billion trade deficit in 1994 has now exploded to $618 billion last year, thanks to these policies.

The essence of stupidity is defined in those who simply cannot learn from experience.

In spite of these glaringly failed trade policies costing 3 million American manufacturing jobs, now the precise same special interest lobbyists are demanding we pass CAFTA, “to open markets to American goods.”

Like all the other give-way deals, this one attempts to divide and conquer U.S. business interests. Our farmers are told this will finally eliminate those unfair tariffs against our farm products, while failing to tell them this only occurs after another 18 years of tariffs against their products, which will likely put them out of business. Our textile folks are told this won’t hurt jobs, because all the jobs that could be hurt are already lost. The only ones who will lose business is the sugar industry, so we ought to sacrifice them so the others can gain – which they won’t.

It’s the same argument as every other trade deal. We were told we would lose textile jobs to Mexico under NAFTA, but other industries would prosper, so to heck with those backward textile folks.

The European Union then used the WTO deal to threaten our agriculture industry with tariffs and boycotts unless we sacrificed our airliner production or changed our internal tax laws.

This past summer, the Red Chinese threatened our sawmills with a boycott unless we agreed not to enforce our dumping laws against their illegal furniture exports. They very shrewdly attempted to pit our timber industry against our furniture manufacturers.

And just in case you’re a cotton farmer thinking CAFTA’s okay because you’ll do okay – wrong, you’re next.

Even now the Bush Administration is moving to gut our cotton production programs to satisfy the demands of Brazil. Brazil is threatening to steal the patents of our pharmaceutical, movie, music, and computer industries unless we agree to allow Brazilian cotton to undermine U.S. cotton production. So we have the drug, computer, and entertainment companies pitted against our cotton farmers.

Every new trade deal we pass sacrifices another U.S. industry, and more U.S. jobs, to satisfy the globalists, who care nothing for the economic well-being of America or any other nation, as long as they make their percentage off these bad deals.

This time, let’s consider an alternative. Instead of CAFTA, how about a new law that places a 160% tariff against CAFTA nation imports unless they remove their tariff against our farmers? If it ends trade with CAFTA nations, they are hurt more than us. We have big trade deficits with CAFTA countries that would be eliminated in the process.

If Brazil can’t live with our cotton program, then we shouldn’t live with Brazilian imports. That will free up another $7.2 billion in trade deficit we ran up last year.

Fear of trade wars? There is obviously no fear among our competitors, as they threaten industry-after-industry here in the U.S with impunity.

Fear of alienating these Central American countries? We can’t do much worse than at present. Here’s how often they voted against our positions at the United Nation’s last year: Honduras, 76%; Guatemala, 76%; Nicaragua, 74%; El Salvador, 76%; Panama, 77%. All while taking millions in American foreign aid, and taxing our goods at 160% while we let them ship here duty-free. A little alienation from this crowd might do us some good.

CAFTA is just one more in an unbroken chain of bad trade deals that sacrifice our industries, markets, and jobs, with a deceitful promise that other industries will prosper as a result. Then we sacrifice those industries in the very next deal.

It’s time for smart and fair U.S. trade policies. A pre-requisite for any such policies is that they benefit the vast majority of Americans, at the unfair expense of no one.

CAFTA fails that test on all counts. And if it passes, just remember – you’re next.

About the author: http://www.house.gov/norwood/.