INTRODUCED: 06.23.05 [House]; SPONSOR: Rep. Tom DeLay [R-TX]
SIGNED INTO LAW: 08.02.05 [Senate: Yea-55, Nay-45; House: Yea-217, Nay-215]

The Legislation:
The Dominican Republic-Central America-United States Free Trade Agreement Implementation Act (DR-CAFTA) implements a new trade agreement among the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. The trade agreement, modeled on the 1994 North American Free Trade Agreement (NAFTA) between among the U.S., Canada and Mexico, would eliminate most export tariffs between the included countries while also increasing protection for pharmaceutical patents and other intellectual property. The agreement also includes requirements that all public services be open to private investment and all government purchases be open to international bidders. DR-CAFTA is considered a step toward a comprehensive Free Trade Area of the Americas, which would include all of the western hemisphere with the exception of Cuba.

The middle-class position:
The Middle Class Opposes: Increased international trade can contribute to economic growth, but the way trade rules are formulated in agreements like NAFTA and DR-CAFTA means that the benefits of trade are distributed very unevenly, ultimately undermining the middle class and aspiring middle class in both the U.S. and the nations it trades with. A central problem is that DR-CAFTA empowers businesses and investment capital to cross international borders more easily, providing a decisive advantage over working people who are not so internationally mobile and whose rights are not equally well protected in all of the nations covered by the agreement. One result is that CAFTA is expected to increase the outsourcing of U.S. jobs?from manufacturing to reading x-rays and operating call centers?to Central America. U.S. workers are also likely to see their wages eroded as they are placed in more direct competition with poorly-paid Central American workers who lack strong labor protections and rights in the workplace. At the same time, Mexico?s 12 years of experience with NAFTA suggest that the average person in Central America will also see his or her standard of living decline under these conditions. In the U.S., the experience of NAFTA also suggests that more jobs will be lost due to displaced domestic production than will be gained due to export growth.

from the experts:
“CAFTA would reward companies that ship American jobs overseas with greater access to the U.S. market, more freedom to violate workers' rights with impunity, and the ability to challenge government regulations enacted in the public interest. CAFTA's rules on investment, government procurement, intellectual property rights, and services create new rights for multinational corporations, but the agreement contains no effective new protections for workers' rights and actually removes existing protections, leaving the interests of ordinary working men and women out in the cold.”

—John Sweeney, President, AFL-CIO (May 28, 2004)

—Statement of the Congressional Hispanic Caucus (May 26, 2005)

—Mark Weisbrot, Economist and Co-Director, Center for Economic and Policy Research (April 16, 2005)

Next Steps for 2006:
Congress must act to ensure that the benefits of trade are more evenly distributed throughout our economy. Negotiating strong labor protections into our existing and future trade agreements will help to prevent a “race to the bottom” in wages and labor standards that erodes the standard of living for the American middle class.