CAFTA and Labor Standards

Posted May 24, 2003
Washington Trade Daily

Central American countries must agree to adopt and enforce core international labor standards if they want a free trade agreement with the United States that gives them the access they need to the US market - especially in the sensitive sectors of textiles and apparel and agriculture, Rep. Sander Levin (D-Mich) said yesterday (WTD, 5/16/03).

Mr. Levin - ranking Democrat on the House Ways and Means trade subcommittee - said that core labor standards will be crucial to gaining a broad base of Congressional support for the US-Central American Free Trade Agreement now under negotiation.

Without that broad support - as opposed to the single vote margin the Administration scrapped together for Trade Promotion Authority last year - there will not be enough votes for an agreement that takes on sensitive sectors like textiles and agriculture, Mr. Levin told a forum sponsored by the Center for Strategic and International Studies. Instead, the Administration will have to make concessions to lawmakers seeking to protect US textile and apparel and farm interests - like sugar - in order to pull together enough votes to pass.

And a CAFTA that does not provide access to the US textiles and apparel and agricultural markets will be of limited benefit to the Central American countries. Textile and apparel maquiladoras are a major source of economic growth and jobs in four of the five CAFTA countries, he noted.

Toward a Middle Class

The CAFTA is an important opportunity to help the five countries - Costa Rica, El Salvador, Honduras, Guatemala and Nicaragua - to raise their labor standards, which will help lead to the creation of a new middle class, Mr. Levin said. He said the agreement needs to commit the five countries to adopt and enforce core standards - and provide an enforcement mechanism to ensure the countries meet that commitment.

The Democratic lawmaker expressed concern that draft labor language offered by the Administration during last week's CAFTA negotiations in Guatemala was based on the model used in the recently concluded FTAs with Singapore and Chile. Those agreements commit the countries to enforce their existing labor laws and not to derogate from existing laws to gain an unfair trade benefit. Although there are some concerns about the labor provisions in the Singapore and Chile agreements, the basic concept is acceptable because both countries have sound labor laws.

But that model is not acceptable for CAFTA, given that both the State Department and International Labor Organization have found the five countries do not meet core labor standards, Mr. Levin said. He noted that House Democratic leaders sent a letter last week to US Trade Representative Robert Zoellick expressing concern about the Administration's attempt to apply the Chile-Singapore labor language to CAFTA.