CAFTA and Central American workers

Edward Gresser of the Progressive Policy Institute makes the case for the Central American Free Trade Agreement (CAFTA) on labor grounds: "The Progressive Case for CAFTA".

The principal argument of CAFTA’s progressive opponents is that the agreement does not address labor issues strongly enough.  More particularly, opponents believe that the argument should commit CAFTA partners to laws that fully implement the core standards of the International Labor Organization (ILO), and that it should provide the same enforcement measures, ultimately sanctions based, that apply to more traditional trade disputes...

...Simply rejecting the agreement on labor policy grounds will not meet the challenge. Over time, it could result in some reforms to legal regimes, although this is not at all certain. The more immediate risk is that of destabilizing CAFTA economies, making it harder for rural and informal workers to find better jobs, and pushing workers out of relatively prized export industry jobs into lower-paying jobs.

Neither is the case for rejecting the agreement on more legalistic grounds totally certain. It is true that CAFTA does not require adoption of ILO labor standards. But reviews by the ILO of CAFTA-member laws do, however, find them generally of high quality, though often with weaknesses in enforcement. This is a difficult standard for any U.S. trade agreement to meet, since the United States itself would not qualify.  (The United States has failed to ratify six of the eight core ILO conventions, and retains many state child labor laws that do not meet ILO standards.)

It is also true that CAFTA does not have a trade sanctions option to enforce judgments in potential disputes about labor, which was at least a theoretical possibility when the United States negotiated a free trade agreement with Jordan in 2000. Yet, in practice this means relatively little. Neither the United States nor any of its eight Free Trade Agreement partners has ever used sanctions in any dispute—whether on tariffs, agricultural policy, trade remedies, intellectual property, or other issues—arising under one of the FTAs. The United States has also not withdrawn benefits from a CAFTA partner through the CBI [The Caribbean Basin Initiative, providing a boost to regional economies through tariff exemptions since 1983 - Ben] or the Generalized System of Preferences, though this option is theoretically available for labor, intellectual property, and other purposes.

More generally, the use of sanctions, or threats of sanctions, to respond to labor violations is a valid option in extreme circumstances, such as industries that use abusive child labor or forced labor. For more typical problems, however, it is an option that raises deep ethical questions. The most immediate effect of sanctions, of course, is to close factories and put people out of their jobs altogether. Again, if the remedy to poor labor conditions is to force workers out of export industries into lower paying jobs—where the international community is uninterested in monitoring abuses—that risks making the problem worse rather than better

Over time, the best way to raise labor standards, while also supporting CAFTA economies and avoiding unintended harm to workers, is to take a more patient approach. The better alternative is to develop technical assistance programs that strengthen labor ministries and labor law enforcement in the region, to improve education for workers—in particular the young women who make up most of the region’s export labor force—and to ensure that exporting businesses see high labor standards as a commercial asset (as has been done in Cambodia).

In each of those respects, CAFTA started out mediocre and has become greatly improved. Democratic supporters have won commitments of $20 million to help strengthen labor ministries, train child labor enforcement personnel, and improve environmental regulation, plus $200 million to help rural regions in Central America adjust to rising agricultural trade with larger and sometimes heavily subsidized U.S. industries.  These will need to be watched carefully as they are implemented, since they do not have the teeth and emotional punch of sanctions based enforcement. Over time, however, they can do more to help workers, and they will do so with lower risks of hurting the people progressives rightly hope to help.

Comments

[Mary Millard Schmidt]

Hello Cousin Ben,
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Hope you are well!
We like your blog.
Yours truly,
Mary, Aunts Carlota and Philippa, Uncle Jim and Virginia