The House of Representatives narrowly passed the Central American Free Trade Agreement (CAFTA) this morning. This agreement will expand free trade to Central American nations, which will help expand the American economy while providing more economic opportunities to Central American nations as well.
Since the passage of NAFTA in 1993, the US economy has added 18 million new jobs, seen an increase in manufacturing production of 41%, and experienced 38% GDP growth. The “giant sucking sound” of jobs that were supposed to be the result of NAFTA’s passage never materialized. NAFTA is one of the major contributing factors to the economic growth of the 1990s, and exports to Mexico and Canada increased from from $134.3 billion to $250.6 billion – creating new American jobs.
Furthermore, export related jobs pay significantly more than import related jobs. Export related jobs pay an average of 11% above the median national wage. Import-related jobs pay 15% below the national median wage. The number of high-paying jobs gained by free trade initiatives such as NAFTA far outweigh the number of low-paying jobs that have been lost during the same period. Furthermore, the biggest reason for the longstanding decline in the manufacturing sector has more to do with technology than trade – material science, electronics, and other technologies have meant that consumer goods last far longer than they did 10 or 20 years ago. Rather than having to buy a new washer and dryer every 5 years, consumers need only buy one every 10 or 20 years. Less demand obviously means that there is less need for heavy manufacturing. Traditional heavy manufacturing is giving way to much more technologically advanced materials like carbon-fiber and composite materials.
During the 1990s, the one good thing about the Clinton Administration was that it was one of the strongest supporters of free trade in recent history and was instrumental in passing NAFTA and creating the World Trade Organization. However, Will Franklin notes that the Democrats have abandoned their position on free trade. In 1993, 40% of House Democrats supported NAFTA. Today, only 7% of House Democrats voted for the bill.
Free trade benefits American workers. This agreement will help counterbalance the inflow of Chinese textile products made with foreign cotton and add to Latin American textile imports made with American cotton – helping American cotton farmers and reducing our dependence on Chinese goods. Labor conditions and political freedoms tend to be much better in Central America than they are in China as well.
For workers in Central America, CAFTA provides increased protections for local workers, and all DR-CAFTA countries have signed on to meeting International Labor Organization standards. Furthermore, countries that engage in dangerous or predatory labor practices can be fined or lose preferential access to the US market under the terms of CAFTA – giving those countries every economic incentive to reform their labor laws.
The Democratic Party’s shameful retreat from free trade is a sign of how far out of the mainstream they have become. They’ve abandoned one of their most successful policies in favor of a form of protectionism that has failed time and time again. In the past progressive groups railed against protectionism, correctly arguing that tariffs and restrictions on trade were tools of big business and special interests to stifle competition and protect domestic monopoly interests. Despite the Democrats waving the flag of progressivism around, they no longer uphold its key principles.