VOLUME V, NUMBER II – February 27, 2004

President Bush has officially notified Congress on Feb. 20 that he intends to sign the Central American Free Trade Agreement.  What is not known is if Congress will vote on the trade deal this year.  Those for and against the trade deal do agree that it will be difficult to round up the votes for passage during an election year where the number one worry of the voters is that employment is not rebounding strongly enough.  The agreement would eliminate duties on most manufactured goods and reduce barriers on many agricultural goods between the United States and Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. 

ACTION REQUEST

Contact your Members of Congress and ask them to oppose the CAFTA trade agreement.  Just because it’s not on the Congressional schedule at the moment does not mean it may not become part of the agenda at any time.  Please review the attached materials. 

CAFTA SHAFTS LABOR STANDARDS

In the U.S. – Central America Free Trade Agreement (CAFTA) with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, the agreement adopted a labor chapter text that is virtually identical to the labor chapters of the Chile and Singapore agreements. The Chile/Singapore model was inadequate even for Chile and Singapore. In the context of Central America – where laws fall far below international standards and governments and employers are actively hostile towards unions – this labor chapter model will encourage rampant workers’ rights violations to continue.

Central American Labor Laws Violate International Standards

The labor laws of the CAFTA countries do not come close to meeting international standards, and have been repeatedly criticized by the UN’s International Labor Organization (ILO) and the U.S. State Department. There is no political will in Central America to bring labor laws into compliance with international standards, to punish violators, or to proactively enforce those laws that are on the books. A climate of impunity for labor law violators envelops the region, particularly in export processing zones.

Employers in Central America intimidate, fire and blacklist workers for attempting to exercise their right to join an independent union, and they do so with impunity under Central American laws. The ILO has found time and again that these laws fail to meet international standards on the right to organize.

•     In El Salvador and Nicaragua, workers fired for union organizing have no right to be reinstated, and the only remedy available is a minor fine – a small price to pay to keep factories union-free.

•     In Guatemala and Honduras, the laws’ fines for anti-union discrimination are so low that they do not effectively deter the practice, and courts hardly bother to enforce the fines anyway.

•     In Costa Rica, a proposal to strengthen remedies for anti-union discrimination as recommended by the ILO is still not law, and the government has repeatedly backtracked on tripartite agreements for labor reforms.

The ILO and U.S. State Department have highlighted a number of other areas in which Central American labor laws fail to meet basic international labor standards:

•     Costa Rican law allows “solidarity associations” to represent workers in the place of unions. In practice, employers establish solidarity associations to avoid recognizing and bargaining with legitimate independent unions that have been organized by their workers. A bill introduced in Costa Rica in 2002 would strengthen the very solidarity associations that the ILO has condemned.

•     El Salvador’s officials take advantage of the law’s overly formal union registration requirements to deny legal recognition to legitimate trade unions.

•     In Guatemala, more than half of all the workers in an entire industry must agree to form an industrial union, presenting an insurmountable barrier to the formation of industrial unions, and barring union pluralism. In export processing zones, where workers routinely shift from plant to plant and thus cannot organize effective unions at the plant level, this restriction essentially denies workers the freedom to form unions.

•     In Nicaragua, the large number of small unions active in the agricultural sector make effective bargaining impossible without federation involvement. Yet Nicaraguan law bars federations and confederations of unions from playing a role in collective bargaining, denying workers in sectors like agriculture their right to bargain collectively.

•     Onerous voting requirements and procedural impediments make it nearly impossible to ever call a legal strike in Costa Rica, Honduras, and Nicaragua. In Guatemala, workers can be held individually liable for damages resulting from a strike and face criminal penalties for striking, while the executive has broad legal discretion to bar strikes in certain sectors.

These are only some of the most egregious examples – a review of ILO and State Department documents tallied more than 40 separate areas in which Central American labor law falls short of international standards on freedom of association and the right to organize and bargain collectively. Despite numerous promises to bring their labor laws up to international standards, some given to maintain preferential trade benefits, Central American governments still have not fixed their laws.

CAFTA Proposal Would Not Require Needed Labor Law Reforms

The labor provisions of the Chile and Singapore agreements adopted in CAFTA, would not require Central American countries to revise their labor laws to meet international standards. Instead, the labor chapter would only require governments to enforce the flawed set of laws they already have. The administration claims that Central American countries will be required to improve their labor laws before CAFTA comes into effect, and thus the Chile/Singapore model will be sufficient to guarantee that workers’ rights are respected. But to date the U.S. Trade Representative has not even produced a list of the labor law changes that each CAFTA country needs to make. Nor has the administration obtained a real commitment from Central American governments that these changes will be made before CAFTA is finalized. Even if Central American governments were to bring their labor laws into compliance with international standards before CAFTA is signed, under a labor chapter modeled on Chile/Singapore they will be free to undo those improvements as soon as CAFTA goes into effect.

CAFTA Proposal Is Weaker than Existing Workers' Rights Conditions

Our unilateral trade preference programs provide for the withdrawal of trade benefits if steps are not taken to meet international labor standards – including steps to reform weak domestic laws. This is a higher standard than that found in the Chile and Singapore agreements. If the Chile/Singapore model is followed in CAFTA, employers and governments will actually enjoy more freedom to deny workers their fundamental human rights than they currently have under our trade preference programs. While the labor rights provisions of these programs are not perfect, they have led to some improvements in workers’ rights in Central America. The region has been the subject of more workers’ rights petitions under the Generalized System of Preferences (GSP) than almost any other, and Central American countries promised improvements on workers’ rights to gain expanded preferences under the Caribbean Basin Initiative. In fact, the administration just accepted a GSP petition on Guatemala this year, and is now in the process of wielding the very workers’ rights tool it is preparing to give up in CAFTA.

A Better Way

The labor provisions of the Chile and Singapore agreements will not work in CAFTA. Central American unions, international human rights and development groups, and other experts on the region have called for a different kind of trade model that will truly protect workers’ rights. The Administration should work with Congress to develop rules for CAFTA that will require full compliance with ILO standards, and that will ensure Central American countries live up this obligation in order to receive trade benefits. Any trade agreement with Central America that falls short of this standard must be rejected.

Stopping CAFTA: The Next Trade Battle to Protect Workers’ Rights

Workers and their allies are mobilizing for the next battle in the struggle for fair trade: to stop the Central American Free Trade Agreement (CAFTA), signed Dec. 17 by the United States and four Central American countries. The Bush administration plans to present the deal to Congress as soon as March 2004.

CAFTA, which does not include protections for workers’ right to form a union or safe work conditions, is another step toward passage of the Free Trade Area of the Americas (FTAA) and future bilateral and regional agreements. CAFTA is the first bilateral or regional agreement the Bush administration has pushed since fierce opposition from workers in North and South America and their community allies stymied trade ministers months ago from consolidating FTAA, which would eliminate tariffs from 34 countries with a population of more than 800 million.

“This is yet another job-destroying free trade agreement that will undermine workers’ rights here and around the world,” AFL-CIO President John J. Sweeney said. “Clearly, this administration has no interest in creating new rules for the global economy which work for working people, both in the United States and in other countries.”

If approved, CAFTA would eliminate tariffs from the United States, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. It would extend to Central America the disastrous job loss and environmental damage caused by 10 years of the North American Free Trade Agreement (NAFTA). U.S. workers lost 879,280 jobs and real wages in Mexico have fallen as a result of NAFTA in the past 10 years, according to the nonprofit Economic Policy Institute.

Recent reports by Human Rights Watch and the National Labor Committee have highlighted how workers in Central America are often denied such basic rights as the right to organize and bargain collectively. Yet, the Bush administration has refused to include workers’ rights in CAFTA.

Proposed CAFTA Would Lead to Unmanageable Sugar Imports

The ILWU opposes the inclusion of sugar in the proposed Central America Free Trade Agreement (CAFTA) because it would lead to sugar imports greatly in excess of U. S. needs, make the no-cost U.S. sugar policy inoperable, and ultimately lead to the destruction of U.S. sugar jobs including ILWU jobs.  CAFTA does not promote decent labor and environmental standards in the sugar industry.  In fact, the U.S. Department of Labor in its publication entitled “By the Sweat and Toil of Children” reported that sources confirm that children cut can along with their fathers in Guatemala.  Some sources state that children use small machetes to help trim the cane after it is cut.

One Million Tons of Excess Imports. The proposed CAFTA would more than double CAFTA countries’ duty-free access to the U.S. sugar market over 15 years. But the CAFTA cannot be looked upon in isolation. The U.S. is currently negotiating free trade agreements (FTAs) with 23 other sugar-exporting countries. A doubling of current duty-free access for all these countries implies an increase in imports of about 1 million tons per year – a near doubling of U.S. sugar imports.

Policy, Price Effects. Increased imports of only a few hundred thousand tons would cancel the marketing allotment system that Congress requires USDA to use to operate U.S. sugar policy at no cost to taxpayers; cause forfeitures of sugar loans to the government at significant taxpayer cost; allow existing surplus sugar onto the market; and destroy the U.S. sugar policy and price.  Studies by Louisiana State University and North Dakota State University conclude that excess imports of 1 million tons would drive the U.S. price down by 30-40%, and few American sugar producers would survive. At risk are 146,000 sugar-producing and related jobs, nationwide, and nearly $10 billion in annual economic activity.  At least 1,000 ILWU jobs tied to the sugar industry would be lost if CAFTA goes into effect.

Destructive Precedent. CAFTA would be far from the only additional import concession the U.S. is negotiating. In the coming months alone, the U.S. government is attempting to reach agreement with Mexico for additional imports under the NAFTA and with the Dominican Republic, whose current share of the U.S. import quota is almost 50% greater than the share of all five CAFTA countries combined.  In addition, the U.S. seeks in 2004 to conclude negotiations with the South Africa Customs Union, which exports as much sugar as the CAFTA countries do; to begin negotiations with Thailand, which exports as much sugar as Australia; and to complete the Free Trade Area of the Americas, with countries whose combined sugar exports are double total U.S. sugar consumption. Even if none of these countries or regions receives any greater access than the access proposed in the CAFTA, the U.S. market would still be swamped by 1 million additional tons of sugar, equal to 12-15% of U.S. sugar production.

U.S. Market Already Oversupplied. The U.S. sugar market does not need this sugar. To accommodate current WTO-required imports of 1.256 million tons, and allow no-cost operation of U.S. sugar policy, the government currently requires American sugar producers to isolate from the market, and store at their own expense, nearly 700,000 tons of sugar. Additional imports from the proposed CAFTA and subsequent FTA countries would either oversupply the U.S. market and collapse the price, or force American producers to cut back on their production so significantly that whole states or regions would be forced to exit the sugar business. Every additional ton of sugar that we are forced to import is another ton American sugar producers must either store, or forfeit to the government, or reduce their own production to accommodate.

Broken Promise. The proposed CAFTA would break U.S. Trade Representative’s promise to the Congress not to negotiate changes in domestic support programs in FTAs. The U.S. sugar support program, alone among domestic support programs, would be undermined by import concessions in the proposed CAFTA, which would make continued no-cost operation of U.S. sugar policy impossible and force sugar policy changes the Congress had not intended.

CONTACT INFORMATION

WASHINGTON

Senator Patty Murray (D)

202-224-2621 (phone) 202-224-0238 (fax)

173 Senate Russell Office Building

Washington, DC  20510

Senator Maria Cantwell (D)

202-224-3441 (phone) 202-228-0514 (fax)

717 Senate Hart Office Building

Washington, DC  20510

Representative Jay Inslee (D)

202-225-6311 (phone) 202-226-1606 (fax)

308 Cannon House Office Building

Washington, DC  20515

Representative Rick Larsen (D)

202-225-2605 (phone) 202-225-4420 (fax)

1529 Longworth House Office Building

Washington, DC  20515

Representative Brian Baird (D)

202-225-3536 (phone) 202-225-3478 (fax)

1421 Longworth House Office Building

Washington, DC  20515

Representative Doc Hastings (R)

202-225-5816 (phone) 202-225-3251 (fax)

1323 Longworth House Office Building

Washington, DC  20515

Representative George Nethercutt, Jr. (R)

202-225-2006 (phone) 202-225-3392 (fax)

2443 Rayburn House Office Building

Washington, DC  20515

Representative Norman Dicks (D)

202-225-5916 (phone) 202-226-1176 (fax)

2467 Rayburn House Office Building

Washington, DC  20515

Representative Jim Mc Dermott (D)

202-225-3106 (phone) 202-225-6197 (fax)

1035 Longworth House Office Building

Washington, DC  20515

Representative Jennifer Dunn (R)

202-225-7761 (phone) 202-225-8673 (fax)

1501 Longworth House Office Building

Washington, DC  20515

Representative Adam Smith (D)

202-225-8901 (phone) 202-225-5893 (fax)

227 Cannon House Office Building

Washington, DC  20515

HAWAII

Senator Daniel Inouye (D)

202-224-3934 (phone) 202-224-6747 (fax)

722 Senate Hart Office Building

Washington, DC  20510

Senator Daniel Akaka (D)

202-224-6361 (phone) 202-224-2126 (fax)

141 Senate Hart Office Building

Washington, DC  20510

Representative Neil Abercrombie (D)

202-225-2726 (phone) 202-225-4580 (fax)

1502 Longworth House Office Building

Washington, DC  20515

Representative Ed Case (D)

202-225-4906 (phone) 202-225-4987 (fax)

128 Cannon House Office Building

Washington, DC  20515

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