The agreement strengthening the labor commitments in the Central American Free Trade Agreement (CAFTA) negotiated by Congressman William Jefferson   and Ways and Means Chairman Bill Thomas represents a constructive response to the concerns that have been raised about the agreement.  This agreement further strengthens the labor provisions in CAFTA and should form the basis for rebuilding the bipartisan consensus on trade.

The primary substantive objection to CAFTA relates to labor standards. The concerns about the labor protections in the agreement are less about the actual text of the agreement – which contains labor protections as strong or stronger than previous trade agreements – and more about doubts about how aggressively the administration will enforce these provisions.  

As Ambassador Portman has acknowledged, labor laws in the Central American countries and the Dominican Republic (DR-CAFTA countries) are generally good but are not adequately enforced.  Respect for human and workers' rights has improved dramatically, but there is still considerable room for improvement, and gross income inequality remains.  The judicial and regulatory systems need to be modernized and reformed to increase transparency.

The language negotiated by Congressman Jefferson would make a significant step in addressing these concerns by requiring the President to report to Congress on the progress of DR-CAFTA countries with regard to improving labor conditions.  Additionally, it would identify steps that the United States can take to improve labor conditions.  This language builds upon the commitments made by Ambassador Portman in his speech to the Hispanic Alliance for Free Trade to continue funding for labor-capacity building in Central America, work to organize international efforts of DR-CAFTA countries to improve labor enforcement, as well as develop benchmarks for improvement.

• Progress made by DR-CAFTA countries in implementing the labor provisions of the agreement and the White Paper, including capacity building projects undertaken, funds received, and results achieved;
• Recommendations on how the United States can facilitate implantation of the White Paper; and
• Description of the work done by DR-CAFTA countries to work with the ILO to meet commitments regarding labor standards.

The legislation would establish a mechanism for public comment on the administration’s capacity building efforts and work to facilitate implementation of the White Paper recommendations as well as the efforts of DR-CAFTA countries to comply with the labor provision in CAFTA and improve labor conditions.  The legislation would also require periodic meetings between the U.S. Secretary of Labor and the Labor Ministers of DR-CAFTA countries to discuss the operation of the labor provisions of the agreement and progress toward fulfilling the White Paper recommendations.

As Congressman Jefferson noted in his statement at the Ways and Means mock up, the reports and high-profile meetings required will provide an incentive for DR-CAFTA countries to continue to improve their labor standards.  Perhaps more importantly, the bi-annual report will give the administration a powerful incentive to ensure that the labor provisions of the agreement are enforced and to follow through on the commitments they have made on capacity building and other assistance in improving labor conditions. The reports will give Congress a mechanism to monitor compliance with the agreements and commitments made by the administration and DR-CAFTA countries and evaluate the funding necessary for capacity building.
 

CAFTA is not a panacea for the social and economic problems in Central America. A great deal of work remains to be done beyond expanding trade, and investments must be made in order to improve social conditions in Central America.  Passage of the trade agreement, though not the entire answer, will improve those conditions beyond where they would be in the absence of such an agreement.  As World Band President James D. Wolfensohn recently stated:

"The DR-Central America Free Trade Agreement (DR-CAFTA) offers opportunities for increasing trade and investment that will boost long-term growth and reduce poverty in Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua."  

Approval of CAFTA will send a signal that the United States is committed to these domestic reforms that will improve the lives of Central Americans, and to providing economic opportunities that are important to preserve stability in the region. 

The defeat of CAFTA, however, could send the people of Central America a message that the United States is no longer interested in their success, and could lead to a downward cycle of lost economic opportunity and violent political instability.


Links:

CentristPolicyNetwork.Org  The Breakdown in the Bipartisan Consensus on Trade  (May 11, 2005)

Summary of Report “The Labor Dimension in Central America and the Dominican Republic – Building on Progress: Strengthening Compliance and Enhancing Capacity”  (April 5, 2005)

"Strengthening the DR-CAFTA Labor and Capacity Building Commitments" Statement by William J. Jefferson, House Ways and Means Committee, regarding the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act  (June 15, 2005)

"Congressman Jefferson Announces New Labor Provision for CAFTA"