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8/10/2005

Studies: CAFTA, Exporting Jobs, Hurt Economy

Source: AFL-CIO

Despite the claims of Big Business and the Bush administration, trade deals that send jobs abroad hurt U.S. workers and the economy, according to two reports by the Economic Policy Institute (EPI).

One such trade deal, the Dominican Republic-Central American Free Trade Agreement (CAFTA), which President George W. Bush signed into law Aug. 2, will worsen conditions for workers in the United States and throughout the Western Hemisphere, EPI reports. CAFTA will eliminate tariffs among the United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua.


CAFTA duplicates most elements of the North American Free Trade Agreement (NAFTA), which has cost 1 million U.S. jobs since 1993 and has caused real wages in Mexico to decline, say Robert Scott and David Ratner, authors of the EPI report, NAFTA’s Cautionary Tale.

The report shows NAFTA cost jobs in every state and major industry in the country. Two-thirds of those lost jobs were in manufacturing industries. States that lost the most jobs include California, Florida, Georgia, Illinois, Indiana, Michigan, New York, North Carolina, Ohio, Pennsylvania and Texas.


Although NAFTA stimulated foreign direct investment and the movement of factories within the hemisphere, especially from the United States to Canada and Mexico, it did not protect labor or environmental standards. As a result, NAFTA tilted the economic playing field in favor of investors and against workers and the environment, causing a hemispheric race to the bottom in wages and environmental quality, EPI reports.

Another EPI study refutes reports that on balance, sending jobs overseas benefits the nation. The study, Truth and Consequences of Offshoring, shows serious flaws in business-backed reports on offshoring that overstate the benefits and ignore the costs to American workers. Any potential benefits to the American economy from jobs exports are likely to be concentrated in the incomes of a very small percentage of American households, the EPI study says.

Although exporting jobs provides substantial cost savings and improved profits for numerous corporations, the benefits are not being spread across the economy, says Josh Bivens, the report’s author. If American workers lose at the expense of corporate profits, workers are justified in resisting offshoring, at least until they receive some compensation for their losses, Bivens says.

“Good economic policy should not rest on insisting that American workers sacrifice their own self-interest in terms of lower wages to the larger national interest of increased national income,” he says.


U.S. workers and their unions will remember the 15 Democrats and 202 Republicans who voted for CAFTA, which passed by the U.S. House of Representatives by two votes July 28, says AFL-CIO President John Sweeney. “Anyone of either party who gets labor’s support should be ashamed” for their vote against working families, Sweeney said. “The labor movement will remember this vote.”

House Democratic Leader Nancy Pelosi (Calif.) said the House floor resembled the set of the 1960s TV show “Let’s Make A Deal” as the White House twisted arms and offered inducements for members to support CAFTA in a post-midnight vote.

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