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Capital Hill Watch Alert

Dominican Republic-Central America-
United States Free Trade Agreement Implementation Act (H.R. 3045)

As early as Wednesday, July 27, 2005, the House of Representatives is expected to consider the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act (DR-CAFTA) [H.R. 3045] (To view the Full Text of the legislation visit: Full Text of Legislation ).    

Trade barriers between the United States (US) and nations in Central America would be eliminated by the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act.  The free-trade accord under consideration would establish the second-largest U.S. export market in Latin America linking the economies of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.  

Poorly conceived is DR-CAFTA as well as the rest of US trade policy that could destabilize and radicalize Central America and other strategic Third World regions and shackle the war on terrorism.  Severely limiting DR-CAFTA's potential to increase Central American incomes through higher exports to the US are these policy defects.  Even if DR-CAFTA's tariff preferences increase their U.S. market share, the Central Americans will face ever more depressed prices and earnings.  

The Bush administration has already failed to combat predatory trade policies of China and other Asian super exporters that are the threats to the economic futures of Central America.  Asian mercantilism cannot be offset by anything in DR-CAFTA or any other part of current trade policy.  And despite its tariff preference DR-CAFTA has numerous loopholes that will permit enormous quantities   of Asian garments and fabric into the US.  

DR-CAFTA will actually reduce by $330 million Central American shipments to the US of the much more lucrative products, like electrical equipment and industrial machinery predicts the US International Trade Commission (ITC).  Central America's embryonic manufacturing base, which receives no new trade breaks will lose foreign capital to the increased appeal of apparel production resulting in the region to lapse even further into the apparel ghetto.  

DR-CAFTA's immediate end of most Central American tariffs looms as a major economic upheaval as well as its inability to increase Central American export opportunities.  

Trade liberalization can be highly disruptive in the crucial short-term despite the fact that nations that reduce or eliminate trade barriers usually become wealthier over time.  Thus income inequality, efficiency and overall output increase.  

Furthermore, gains flow disproportionately to the small minority that can compete with global competition in Third World countries.  For years and even decades the less skilled and less educated tend to fall further behind.  

The Asian blinders of DR-CAFTA and the rest of US trade policy will only intensify these problems by squandering most of their promised Third World export opportunities.  For example, soon after the North American Free Trade Agreement was established, similar defective policies left Mexico almost defenseless against China's export invasion of the US market.  

Often undermining political stability and even sparking revolution is the increasing rich and poor gap.    In nations where progress starts and where its fruits can be glimpsed but not grasped by the masses, radicalism and anti-Americanism often take place for example, Iran in the 1970s, Cuba in the 1950s and the late-czarist Russia.   And the most recent is following a decade-and-a-half of freer trade in markets of much of contemporary Latin America.   This results in new democracies faltering and the average citizen still not experiencing the economic benefit.  

The national security of this nation could be enhanced by trade liberalization with Central America and other strategic Third World nations.  However, if the US market remains indiscriminately open to China and all others, and especially if Washington permits their mercantilism to diminish the effects of targeted trade breaks, priority countries cannot be helped.  

An analysis released in 2004 by the ITC indicated that the pact would likely have minimal impact on production, employment or prices in the US.  When DR-CAFTA is implemented fully, the lower prices and new export-oriented production would provide additional benefits to the US economy worth $166 million annually estimated the ITC study.  

The party nations are resolved to promote regional economic integration states the preamble to the DR-CAFTA agreement.  Furthermore, it states that they will contribute to hemispheric integration and provide an impetus toward the establishment of a Free Trade Area of the Americas.  

Integration and convergence is what is meant by full-blown economic, political and social merger which is an end to US sovereignty and independence and the subjection of US citizens to the laws and administrative dictates of a regional, hemispheric suprastate.   

Additional Reading:    

CAFTA's perils . . . and positives

CAFTA effect on consumers would be small

Trading down?

CAFTA: Stepping Stone to the FTAA  

What Can You Do?  

Urge your representative to  NOT TO SUPPORT   the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act (DR-CAFTA) [H.R. 3045]

Contact Information:      

Capitol Hill Switchboard Numbers: 202-225-3121 or 202-224-3121 (Those numbers will direct you to the Capitol Hill operator. Ask for your representative's office.)  

To go to your representative's website, find his E-mail or to find out who your representatives are... http://www.house.gov/house/MemberWWW.html    

To electronically mail your U.S. House of Representative, go to http://www.house.gov/htbin/wrep_findrep.    

Addressing Correspondence:    

The Honorable (full name)
United States House of Representatives
Washington, DC 20515  

Dear Representative (last name):

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