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June 26, 2005

Congress Learning to Speak French

New York Times foreign affairs correspondent Thomas Friedman wonders—with good reason--if "we are all French now":

Lordy, it is fun poking fun at France. But wait. What is that noise I hear coming from the U.S. Congress? Is that members of the U.S. Congress - many of them Democrats - threatening to reject Cafta, the Central American Free Trade Agreement? Is that members of the U.S. Congress afraid to endorse a free-trade agreement, signed over a year ago, with El Salvador, Costa Rica, Guatemala, Honduras, Nicaragua and the Dominican Republic? Mon Dieu! I am afraid it is. And for many of the same reasons France has resisted more integration: a protectionist fear of competition in a world without walls.

For the record, Democrats don’t have a monopoly on mimicking French-style demagoguery on trade; some Republicans are mastering the lingo as well.

Opposition to CAFTA is rooted in zero-sum economic thinking that is at best, naïve; at worst, it’s cynical. The worldwide textile industry is much more complicated than one country wins while another loses. In the case of the U.S. and Central America, these two regions are complementary to each other to the gain of both, as Friedman effectively notes:

Cafta is critical for enabling U.S. and Central American textile firms to compete with China. U.S. firms specialize in the more sophisticated work of making dyes, designing patterns and manufacturing specialized yarns, threads and fabrics, and the Cafta countries specialize in the labor-intensive sewing. Because the Cafta countries are right next door, U.S. retailers can respond quickly to changes in the marketplace, which far-off Chinese factories cannot do as easily.

That's also why, explains Deputy Secretary of State Robert Zoellick, that a shirt that says "Made in Honduras" might contain 60 percent U.S. content, while a similar shirt that says "Made in China" most likely would have none. [Emphasis mine]

As we’ve noted in an earlier post on this trade deal, last year the United States exported $2.6 billion of textiles to the CAFTA countries, some of which is assembled and returned in the form of imports back to this country. There are real U.S. jobs behind those $2.6 billion in exports, and passage of CAFTA will help strengthen the companies creating those jobs.

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