Economics: Food: CAFTA passes USA Senate, move could free Bush's hand against ag-subsidies at G8
G8 WATCH:
The passage today by the US Senate of approval of CAFTA means that goods, largely agricultural products from 6 countries of Central America, can now enter the American market without duties and important taxes. That in turn means that the US will not artificially uphold competing products manufactured and processed in the USA, by means of US government subsidies, as in the past. And that in turn would mean that some USA subsidy-supported farmers competing with these Central American products and producers and workers, will have to find another line of work. Theres the pinch! and an ouch! for a sector of American companies and their employees in the arrangement.
Despite that disadvantage, the move is consistent with several brands of conservative economics, the most severe of which opposes all forms of subsidy to for-profit businesses, a practice which this view terms "corporate welfare," and the farmers receiving it, "corporate welfare bums." That's an advantage for Bush's move, now approved by the Senate, that earns him credit with said schools of economics and large sectors of the American business community who hate the unfair competitive advantage the practice hands out to some industrial sectors, some industries, and even specific corporations regarded as "favourities" (Canada does this all the time as in the case of the $70 million payed out by Ontario to Hondo to establish another manufacturing plant here.)
The second advantage the Senate's action gains for Bush is credit with those who ardently follow his distinctive brand of Christian conservatism, which often puts him at odds with the thin-brained opponents in both America's far-rightwing libertarian Christian milieu and its accompanying secularist conservative milieu, both of which would compromise Bush's unique brand of "Compassionate Conservatism" for a more rigourous and stingey extreme rightwing version (these people usually agree with his military budgets, but balk at any public spending thereafter). This time around, however, Bush is not spending, is cutting corporate welfare subsidy by market mechanisms, and has sponsored a treaty-policy (the Agreement in the 2nd "A" in CAFTA), now passed that does indeed pinch certain agricultural sectors in the American homeland. Yet the economy has steadily improved during his five years in office, despite some ruff goes and some scowled-upon spending options that have increased national debt and unbalanced budgets. There's still repair work to do, while encouraging more investment, production, and commerce to the prosperity of the USA, the NAFTA allies (Canada and Mexico), and now the CAFTA allies (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua). The Free Trade provisions are linked to strengthening democracy in Latin America, and thus to security, as pointed out by Sen John McCain (R, Arizona).
These are the two main domestically-configured advantages. There are some international advantages. The first of these also applies domestically, in that it allows American producers of goods desired in the 6 Centeral American states to purchase USA-manufactured goods (and services) without also having to pay import taxes on them, or other duties. It is expected nevertheless that in terms of comparative revenues, the Central Americans will be net sellers, while the USA markets of CA goods will be net buyers. But more cheaply and quickly in both directions. "Free trade!" Another international gain for the USA and Bush is in the model CAFTA may serve as, in regard to other Latin American regions, as this Agreement is a regional one, not just a bilateral one. I have yet to determine from the reports and text whether the Agreement commits the Central American states to trade more freely among themselves. If so, the value of CAFTA as a model for other Latin American regions is doubled.
The most expansive international advantage of the passage by the Senate before the Live Aid Concert on the eve of July 2 with its huge international lobbtying effort, and before the G8 Summi at Gleneagles, Scotland, is that Bush goes into the G8 with having just created another zone of liberalization of trade for a region of poorer states. This is a G8 issue which impinges on its European members (especially the EU states of France, Germany, and Italy) where certain members are notorious for subsidizing their own farmers to maintain barriers against consumers buying less expensive food products from poor states dependent on their agricultural industries for export. France and Germany are the greatest obstacles to free trade of food products in the EU.
Now, all of the above has been written as tho CAFTA had passed in the Senate and that was that. So, the whole text so far is misleading. CAFTA has not yet passed the House, where, some say, it will be defeated. All the farmers who want agricultural subsidies maintained will be pressuring their Representatives to vote No. This will be Liberals and Conservatives, both elements not wanting to fast constituencies with vested interests in making American taxpayers shell out for overpriced goods = not just foodstuffs competing with Central America, but all foodstuffs; and not just foodstuffs, but all forms of subsidiy of profit=making business and corporate welfare bummers. It's time they were soundly defeated on every front.
I guess my point for the moment is this: Senate passage put Bush in a better position to fite for a halt to agricultural subsidies by rich nations of their own farmers against their own food-buyers, and thus to generate wages and profits for food producers in the poorer countries, of which Central American is an important instance symbolizing what such a change generally could mean for everyone, except the subsidized farmers in the rich countries, who would have to make major readjustments. I wonder what the Christian Farmers Federation of Ontario, think about this. Maybe they have a different view that should be consulted. - Owlb
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UPDATE: READ ALL ABOUT IT:
CAFTA's Hidden Enemy is Communist China
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CFFO website
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