How CAFTA shapes up on First Coast
Published by Florida Times-Union on July 12, 2005.
In a cavernous facility down a side road in Macclenny, dozens of workers put the final touches on sport coats destined for department stores around the country.
This week, many of the garments have arrived from China, but typically, most of the clothing comes from the factory that Macclenny Product's parent company owns in Nicaragua or one it contracts with in the Dominican Republic.
That ratio will shift even further away from Asia, said Russ Holder, director of distribution for the plant, if Congress signs off on the Central American Free Trade Agreement.
The agreement extends the free trade zone created by the North American Free Trade Agreement to El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica and the Dominican Republic. NAFTA, the earlier agreement, created a free trade zone stretching from Canada to Mexico.
"What CAFTA would afford us is quicker turnaround," Holder said, explaining that it can take six weeks for the Macclenny shop to receive an order from Central America.
From China, it could take three months.
One of the reasons Holder doesn't order more from Central America is because of quotas placed on the number of wool garments that can be imported from those countries. CAFTA would get rid of those quotas, and, Holder said, help the company keep its 75 employees in Macclenny.
"If, in fact, you were importing 100 percent from China, there's a range of jobs you wouldn't need anymore," he said. "The way the business is run now you need those jobs here."
For example, the Macclenny facility coordinates fabric shipments to the factories in Latin America. Chinese factories, on the other hand, handle that process on their own.
The impact of the trade agreement on employment -- as well as what it will do to family farms, manufacturers, workers, the enviornment, the sugar industry and a host of other parts of life -- is a matter of some debate: Proponents of CAFTA say the agreement opens the Latin American market to more U.S. exports, ranging from agricultural products to manufactured goods, as well as helping regional garment makers compete with Asia and strengthening democracies in the area. Those opposed to the deal say it will open the door for U.S. jobs to move to Latin America, will devastate the U.S. sugar industry and impose low labor standards on workers in those countries.
On the First Coast, many say the main effect of CAFTA would be to boost the region's activity as a link on the supply chain stretching between Latin America and the United States. Local businesses involved with importing and exporting to and from the area say the agreement would lead to an increase in business, both for local manufacturers and for the companies that ship their product.
Each week, ships from Jacksonville carry containerloads of goods to the Dominican Republic, while items bound for Central American countries are loaded onto trucks and trains here to make the trip to South Florida ports.
Although there's no direct service to Central America through the port, the trade agreement has the potential to increase business enough that some shippers might move business to Jacksonville, said Raul Alfonso, the director of Latin American marketing and trade development for the Jacksonville Port Authority.
"There's a future for Jaxport with the passage of CAFTA," Alfonso said. "It creates a bigger pie that we can get a piece of."
Florida East Coast Industries, whose railroad line ships goods to South Florida ports for transport to Central America, will also see an increase in business, said Husein Cumber, vice president of public affairs for the St. Augustine-based company.
"Any business involved with trade will become a direct beneficiary," he said. "The ports benefit, the steamship lines benefit, the railroads benefit, the trucking carriers benefit."
Before that happens, CAFTA has to be ratified by Congress, which has been sitting on the bill for almost a year. On June 30, the Senate approved the agreement 54-45, with Florida Senators Mel Martinez and Bill Nelson both voting for it.
In the next few weeks, the legislation will go to the House of Representatives, where it is expected to face bitter opposition from Democrats. The agreement is also opposed by sugar growers, textile manufactures and a variety of groups concerned about human rights issues in the affected countries.
There are some people who vehemently oppose the trade agreement, saying it would hurt both the United States and the other nations that are covered by the free trade zone. One of those people is Eric Rubin, state director of the Florida Fair Trade Coalition, a group of labor, environmental, social justice, and farm organizations opposed to corporate globalization.
Pointing at the North American Free Trade Agreement, which CAFTA is modeled after, Rubin said that Florida has seen small farms shut down and jobs moved out of the country, while Mexican workers haven't seen the benefits promised by NAFTA supporters.
"CAFTA needs to be voted down," he said. "It's based on a failed model. We look at NAFTA, where the cost of living has gone up and the amount of annual wages has dropped in Mexico, and say it's a failed model."
Those who support the agreement say that any jobs that leave the United States are ones that will go offshore no matter what happens. Without CAFTA, though, the move would be to China rather than Latin America.
"All you have to do is pack up your sewing machines," said Marilyn McAfee, secretary of the board of the Jacksonville Port Authority and a foreign service officer in Latin America for three decades. "They'll go wherever the wages are lowest. This would help prevent them from going off to China. Mexico and Central America are afraid of jobs they'll lose, and we should be worried: This is our neighborhood."
Garment factories in Central America and the Dominican Republic are the second largest buyer of U.S. textiles, McAfee said, and the trade agreement should increase those purchases.
"Without CAFTA, we lose a major market for our textiles -- our yarns and fabrics -- and Central America loses a major way to gain foreign exchange currency," she said. "Whatever concessions we give them will come back to us. We're their largest single market."
The agreement is also a way of promoting political stability in the region, said McAfee, who was ambassador to Guatemala from 1993 to 1996. "This is our neighborhood," she said, "and their political stability depends on economic stability."
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WHAT IS IT?
The Dominican Republic-Central America Free Trade Agreement is an agreement that would reduce or eliminate trade barriers between the United States and El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica and the Dominican Republic, ending most tariffs on $33 billion in goods traded between those countries. The deal has to be ratified by Congress before it goes into effect.
The agreement is opposed by U.S. sugar producers, which are worried because the deal would allow a 50 percent increase in sugar imports over 15 years; textile manufacturers; and groups concerned about working conditions in the Latin American countries.
Supporters of CAFTA say it will create a larger market for American farm produce and manufactured goods, strengthen democracies in other countries and help reduce the U.S. trade deficit.
THROUGH THE YEARS
January 2003: Negotiations between the United States and the Central American countries included in CAFTA begins.
May 2004: Trade representatives from the United States, El Salvador, Guatemala, Honduras, Nicaragua and Costa Rica sign the agreement.
August 2004: The Dominican Republic, which had a separate free-trade agreement with the United States, is added to CAFTA
December 2004: El Salvador becomes the first country to ratify the agreement.
June 2005: The Senate approves the agreement.
July 2005: The House of Representatives is expected to vote on CAFTA.
In the future: CAFTA is seen as a step toward the Free Trade Area of the Americas agreement, which would establish a free-trade zone covering North, South and Central America and the Caribbean. That agreement is still being negotiated.