June, 2005

Everybody has a dog in this fight over Central American free trade.

Under the proposed CAFTA legislation, America intends to cast in bronze the temporary suspension of tariffs negotiated in the Caribbean Basin Initiative. If Congress approves (which is very dicey), Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua will reduce or get rid of tariffs on a bunch of imports, open their governmental monopolies to (mostly U.S.) competition and encourage (mostly U.S.) foreign investment.

Those lobbying for, include:

• The U.S. Chamber of Commerce, representing a zillion businesses that want to sell goods or manufacture goods in Central America.
• The pharmaceutical industry (not one of my poster-causes)
• Telecoms and high-tech industries, thirsting for all that cell-phone and computer business.
• The National Pork Producers, who would support almost any prospective buyer of link-sausages.
• Procter and Gamble, who manufactures nearly everything in the world except cell-phones, computers and pork.

The harrumphers and nay-sayers are made up of:

• All Democrats, which just proves how much Howard Dean needs to clank some heads together.
• U.S. trade unions, purporting to ‘worry’ about underpaid Central Americans but actually scared stiff of more U.S. job migration.
• Anyone who can even spell ‘sugar.’
• Nancy Pelosi, opportunist du jour, who will use this short-term and badly thought-out chance to rub Bush’s nose in defeat.
• Cattle ranchers, who wouldn’t eat a link-sausage if they were starving.

The same tired old decriers of low foreign wages are on the blower to their representatives to vote 'no,' as is their right. Their voices will no doubt echo in the halls of Congress until the last job leaves the country, but the last job isn’t going to leave the country. Jobs and job-markets will change, as they always have. Guttenberg put a lot of quill pen pushers out of business and Cyrus McCormick pretty much single handedly destroyed scythe manufacturers with his reaper. Horseless carriages (after the laughter died) wreaked havoc on the wagon-building business, but truck-drivers call themselves ‘teamsters' to this day. More damage was done by a long shot to General Motors by protectionist legislation and corporate hubris than by Japanese carmakers.

We are innovators, we Americans. Even if it were possible to protect our declining industries, it wouldn’t be in our best interests. Producing increasingly shabby goods, protected by import duties, lost us our radio and television manufacturing industries, most of our textile production and fabrication and is working hard as it can to sink Detroit. My own family was in the shoe business. Shoes are no longer manufactured in the United States. And yet every third shop (or so it seems) in the Mall of your choice is a shoe-store and billions are made annually by Americans in the selling of shoes. The shoes I'm wearing were made in Portugal, ordered from L.L. Bean.

We will either elect to change our protectionist manufacturing and agricultural industries or they will be forcibly and painfully changed for us by world markets. That has already been happening for the past three or four decades. Trade protectionists stand with their fingers in a dike that cannot be held against a sea of worldwide change. Tom Donahue, CEO of the Chamber of Commerce said, “If we walk away from this deal, we walk away from years of investment and we walk away from extraordinary trade opportunities." He didn’t say it in so many words, but China is coming to dinner anyway, with or without an invitation.

The United States has an absolutely horrendous record in Central American history ever since the bad old days of United Fruit Company. United single-handedly turned Central America into the banana republics, a pejorative they have yet to shake off. It’s not a good enough reason to build trade consensus based on guilt and past offenses, but it is certainly one additional reason among many.

These are our customers in Asia and Central America, Africa and South America, as well as our competitors. They need what we sell, which is and always has been innovation.

When the votes are counted in Congress on the CAFTA legislation, it would be an educational exercise to strip-search all the nay-sayers for foreign labels.

Get out of the Archives and read what Jim's writing today