Ron Wyden, Gordon Smith, and Central America

Today, the U.S. Senate Finance Committee takes up the Central American Free Trade Agreement, or CAFTA. It's CAFTA's big debut, and Oregon is the only state with two members on Senate Finance.

That's right: Gordon Smith and Ron Wyden are both on the key committee dealing with this legislation. Oregonians will play a key role in determining the eventual outcome.

So, here are your questions. Is CAFTA a good deal for Oregon? Will free trade with Central America create jobs, or siphon them away? If it's a bad deal, can it be improved? If it's a good deal, what could derail it?

Discuss.

Comments

  • Ralph Makenna (unverified)
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    It will lower sugar prices -- for whatever that's worth.

    In the words of Homer Simpson, first you get the sugar, then you get the power, then you get the women.

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    It seems like every time the merits of free trade agreements are debated, the frame for the debate is that if you are generally or theoretically in favor of free trade, then you must support the specific free trade agreement on the table, and if you don't then you are branded a protectionist, or someone who is against free trade in general. It is not possible to support the theory of free trade while also opposing the specifics of the deal currently being debated.

    On the other hand, some people are generally against the concept of free trade with other countries, and consider anyone who supports the concept of free trade or any kind of deal to be a sell out to corporate power.

    Then there is the fair trade movement, which means whatever you want it to mean: Either a viable alternative model to "free trade" agreements, or a cover for protectionism and/or the status quo.

    I haven't read the CAFTA agreement and I don't have an opinion on it. However, I am highly skeptical of any talking points or sound bites presented from any side in this debate. I would rather have a in depth, intelligent discussion concerning specifics rather than have the debate degenerate into another proxy battle between those in favor of protectionism vs those in favor of corporate controlled and dictated free trade.

  • Eric Berg (unverified)
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    Wyden and Smith aren't the only officials from Oregon who need to be persuaded to vote against Cafta. US Rep. Earl Blumenauer has never seen a bad trade agreement he didn't like. All three other Democratic US House members from Oregon say they will vote against CAFTA. Bumenuaer's vote is important because a some Republicans in the House oppose Cafta. These Rs know Cafta will destroy what's left of of the textile industry in the South and harm farmers accross the country, especially sugar growers (btw, sugar beets are a major crop in Oregon).

    Rather than re-hash all the reasons why Cafta is bad for Oregon and Central America, I'm going to share something I learned recently. I think it says a lot and it's not the direction I want Oregon, Central America and the rest of the planet to go:

    Before Nafta, Wal-Mart had no stores in Mexico. In some 11 years, Wal-Mart is now Mexico's top seller of groceries and largest private employer.

  • Ralph Makenna (unverified)
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    Statement from Earl's website, for whatever it's worth:

    "During negotiations in 2003, I led efforts on a House of Representatives letter to U.S. Trade Representative Zoellick to adopt investment rules in CAFTA and other future agreements that will not negatively impact environmental and labor regulations. While I believe that there are many potential benefits of a free trade agreement for both the U.S. and Central America, I continue to be vigilant in regards to the potential impacts on the environment, labor, and the public interest."

    Earl can defend himself, for certain. But it doesn't sound to me like he's decided to endorse CAFTA -- and in fact may have been responsible for efforts to make it better...

    Eric, not to defend Wal-Mart, but could it be they are now Mexico's top seller of groceries because they provide quality goods at a reasonable price? Just asking...

  • David Wright (unverified)
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    Also not to defend Wal-Mart, but haven't they had explosive growth everywhere over the last 11 years? And isn't Mexico's economy such that it shouldn't be too hard to become the country's largest private employer when establishing a relatively labor-intensive business (like retail stores) with many locations? And didn't Wal-Mart also become the largest private employer in the United States (I'm not sure about this but I seem to recall hearing it recently) during the same time frame as well?

    Interesting statistic, but how much did NAFTA have to do with it? What provisions of CAFTA would promote the growth of Wal-Mart elsewhere in Central America?

    And, assuming that CAFTA would promote the growth of Wal-Mart in other countries -- would that alone be a reason to oppose it?

    Just curious...

    I completely agree with Adam about the prepackaged stock sound bites over the free trade/protectionism issue. Both sides generally sound too much like Bush the Lesser's line about "You're either with us, or with the terrorists." Life isn't nearly that black and white...

  • Ralph Makenna (unverified)
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    I would also say that Wal-Mart, at least in the United States, seems to be bumping up against the natural limits of how big they can get.

    Wal-Mart's net income compared to revenue is only 3.5%. That is, for every dollar of merchandise they sell, they only keep 3.5 cents -- after labor, overhead, taxes, etc.

    Their stock price, now trading exactly where it was in 1999, is an expression of investors saying the company cannot do much better in terms of return on investment than they currently are. Think of everything that has to go right for Wal-Mart just to keep that 3.5 cents on the dollar. Think of all the potential things that could go wrong -- and cost them additional money -- that would bring that number down to 3 cents, 2.5 cents, 2 cents...and would send investors screaming to the exits.

    Wal-Mart exists because every day, millions of people make a voluntary choice to enter their stores and walk out with merchandise. The switching costs of not shopping at Wal-Mart are essentially zero -- it would only take someone coming along and offering a better product or service.

    Wal-Mart is a slave to customer demand in this way. So, any dissatisfaction with Wal-Mart is really dissatisfaction with consumer behavior in general.

    This doesn't have much to do with CAFTA, but it's tangentially related, anyway.

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    [Editor's note: Off-topic comment deleted from here and republished as an original post here.]

    One of the things vexing the Bushies is the rise of autonomous free trade agreements among Latin American nations that exclude the US entirely. Coupled with the serial failures of the US sponsored "Chamber of Commerce" coups in recent years in Venezuela, the administration is increasingly desperate to assert its continuing dominance in the hemisphere.

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    Here are some good sites on Walmart for those of you who don't seem to have a clue about what's wrong with Walmart. "not to defend Walmart but..." are you guys on their salary? We've got 3 "site-fights" as they're called going on in Oregon right now - Beaverton, Gresham and Bend

    www.savecedarmill.com - Beaverton www.greshamfirst.org - Gresham www.notanotherwalmart.org - Bend

    here are some other sites to prepare you for what Walmart is up to and what's next. From the articles in the paper today about how Walmart is giving money to conserve some land north of Bend, they're getting themselves ready for convincing you that all is well and that they are good neighbors.

    http://www.anti-walmart.com http://www.mcspotlight.org/beyond/companies/antiwalmart.html

    and my favorite

    http://www.sprawl-busters.com/

  • Ralph Makenna (unverified)
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    Albert --

    I believe they are entitled to conduct business as they see fit, within the bounds of the law and subject to the decisions of local communities to allow them in.

    I don't shop there, but it does not bother me that others do. Clearly a lot of people like it if they are now a "Fortune 1" company.

    If communities want to put pressure on their leaders to stop Wal-Mart from moving into a particular area, that's fine with me.

    And as I said, the economics of their business don't look all that good to me, long term. A 3.5% net margin is not a business I want to be in. That's far from Wal-Mart puffery, that's talking about how difficult it is to make a sustained profit in retail. Sears used to be the premiere retailer in this country, now look at them. Wal-Mart will meet its doom somewhere down the line, thanks to a better model. It WILL happen. We have a dynamic enough economy to allow for that.

    So far from being on their payroll, I think I'm just giving economic facts and letting others be the judge. But if you want to bluster away, go ahead.

  • Ralph Makenna (unverified)
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    Albert --

    I believe they are entitled to conduct business as they see fit, within the bounds of the law and subject to the decisions of local communities to allow them in.

    I don't shop there, but it does not bother me that others do. Clearly a lot of people like it if they are now a "Fortune 1" company.

    If communities want to put pressure on their leaders to stop Wal-Mart from moving into a particular area, that's fine with me.

    And as I said, the economics of their business don't look all that good to me, long term. A 3.5% net margin is not a business I want to be in. That's far from Wal-Mart puffery, that's talking about how difficult it is to make a sustained profit in retail. Sears used to be the premiere retailer in this country, now look at them. Wal-Mart will meet its doom somewhere down the line, thanks to a better model. It WILL happen. We have a dynamic enough economy to allow for that.

    So far from being on their payroll, I think I'm just giving economic facts and letting others be the judge. But if you want to bluster away, go ahead.

  • Ralph Makenna (unverified)
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    Albert --

    I believe they are entitled to conduct business as they see fit, within the bounds of the law and subject to the decisions of local communities to allow them in.

    I don't shop there, but it does not bother me that others do. Clearly a lot of people like it if they are now a "Fortune 1" company.

    If communities want to put pressure on their leaders to stop Wal-Mart from moving into a particular area, that's fine with me.

    And as I said, the economics of their business don't look all that good to me, long term. A 3.5% net margin is not a business I want to be in. That's far from Wal-Mart puffery, that's talking about how difficult it is to make a sustained profit in retail. Sears used to be the premiere retailer in this country, now look at them. Wal-Mart will meet its doom somewhere down the line, thanks to a better model. It WILL happen. We have a dynamic enough economy to allow for that.

    So far from being on their payroll, I think I'm just giving economic facts and letting others be the judge. But if you want to bluster away, go ahead.

  • Ralph Makenna (unverified)
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    Whoa, apologies for the triple post. Too much coffee today.

  • David Wright (unverified)
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    Albert, when I said "not to defend Wal-Mart but..." I meant it. My points were not in defense of Wal-Mart. My points were questioning the inferred link between NAFTA and Wal-Mart's growth in Mexico. I didn't say anything about whether that growth was good or bad.

    I tend to share Ralph's view on the company. I could care less whether other people shop at Wal-Mart or not. I don't happen to shop there myself, but who am I to tell anyone else where they may or may not shop?

    Seems to me there are legitimate arguments to make about siting decisions (for example the proposed Wal-Mart location in my neck of the woods at Baseline and Cornelius Pass could be a traffic disaster -- but then, if so it would be because of the popularity of the store) but certainly NAFTA and CAFTA have nothing whatsoever to do with zoning laws, right?

    And really, wasn't there something in the title of this thread to do with CAFTA rather than Wal-Mart?

    By the way, I do think it's pretty remarkable that little ol' Oregon has double representation on the Senate Finance Committee. Good for us! <nobr>  ;-)</nobr>

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    And really, wasn't there something in the title of this thread to do with CAFTA rather than Wal-Mart?

    Point taken. I hope, for some perspective on Sprawlmart, that you might have a look at the websites I listed. A year from now this will be a much hotter issue, hopefully we'll stop them early on. If not, say goodbye to any locally owned businesses that compete with Walmart.

  • David Wright (unverified)
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    Albert, why not write a column and submit it to BO to start a discussion thread about this? I know there have been other columns here that touch on this in the past, but hey if we can rail against the ORA minimum wage bill through several columns, why not <nobr>Wal-Mart too?   ;-)</nobr>

    I am checking out the web sites you listed, thanks for the links.

  • Liz Trojan (unverified)
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    If you are Labor friendly you should be Wal-mart unfriendly. Wal-mart - the largest employer on the face of this planet is fiercely anti-union to the point of shutting their doors rather than allow a union to form in one of their stores.

  • Ralph Makenna (unverified)
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    Liz, I think the People's Liberation Army of China's employs more people than Wal-Mart...

    2.3 million - size of PLA 1.7 million - Wal-Mart employees

    Maybe you'd say the PLA are forced into their jobs...but then again, you would probably also say the same about Wal-Mart...

  • Michael Geoghegan (unverified)
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    The connections between Wal-Mart and CAFTA run a little deeper that what's been posted so far. Wal-Mart is one of 50 corporations in the Business Coalition for US Central America Trade along with Citigroup, Exxon Mobil, Phizer, The GAP, Cargill and others. They've been advocating for a swift passage of CAFTA for two years now. In addition, they have had heavy influence on the US Trade Representatives through a lobby group called ISAC-17.

    Wal-Mart knows that their business philosophy meshes perfectly with CAFTA's agenda. CAFTA would expand Wal-Mart's access to wholesale suppliers in nearby Central America/Dominican Republic without any serious labor standards undermine their low, low prices.

    And maybe low, low prices are a good thing for the families of the 13,000 Oregonians whose manufacturing jobs went overseas due to NAFTA (that's not counting the service sector jobs that relied on the manufacturing plants).

    Wal-Mart is now the biggest employer in Umatilla County -- no big surprise given that JR Simplot just shut down it's potato processing plant in Hermiston. The Department of Labor certified the 600+ person lay-off as trade-related job losses.

    "Free Trade" is being packaged as trade policy when all it really deals with is gaining market access to foreign markets. That's a poor excuse for well-rounded trade policies that take into account the environment, labor standards, food security, and a real vision for how we are should integrate our economy with that of our neighbors. The question is: how many of our Congressional reps step forward to send that message to the Bush administration?

  • Tenskwatawa (unverified)
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    <h1/>

    (The setup. Backwards? Maybe: 'bad deals derailed. good deals improved.')

    Oregon: Good. CAFTA: Bad.

    Corruption And Fraud Tanking America.

    Comprehension: Global good. ===== Warning: Global bad.

    By Paula Routly, Seven Days -- Posted on April 13, 2005

    We can predict that life is going to become a lot more local, and that food production is going to occupy much more of the center of our economy. ...this period ahead, will produce a lot of economic losers, people whose vocations are lost forever. Many of them will eventually find a place in food production, but exactly how that will shake out is a very interesting question. Will they sell their allegiance for food or physical security?

    What do these coming changes imply for education and employment? Where are the jobs going to be?

    I doubt that our centralized schools with their yellow bus fleets will remain in operation many years from now. I imagine that whatever education there is will go not much beyond the equivalent of the eighth grade. I tend to think that many colleges will simply close up, especially the land-grant diploma mills. College, if it continues to exist at all, will once again be an elite activity, not a consumer activity.

    As I said above, the Long Emergency will produce a lot of economic losers. Many types of jobs will cease to exist: public relations executive, marketing directors, et cetera. I think work will be very hands-on, and a lot of it will revolve around food production. We will, of course, have to completely reorganize our trade infrastructures, since Wal-Mart and its imitators will not survive the end of the cheap-oil era. The consumerist frenzy will be over. We will have far fewer things to buy.

    I'm late getting my vegetable seeds and starts going, what with the irregular unbasking days, and nights click-n-dragging informed previews in front of eyeballs.

    I do feel better knowing Blumenauer and all them have seen and know all this stuff to consider in weighing their votes.

    Sure am glad I don't have some car payment schedule with more than six months left on it. Thought for just a millisecond about what if electricity was so limited I had to choose between the television or the internet ....

    <h1>11th Annual TV Turnoff Week, April 25 - May 1, 2005</h1>
  • Richard (unverified)
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    I just finished reading Karl Polanyi’s "The Great Transformation." While I hate to simplify this complex book into a thought or two, here goes.

    His thesis is that a ‘self-regulating market’ and its attendant theory of ‘free trade’ are fairly recent ideas, which had disastrous consequences – i.e. World War I, The Great Depression, and the rise of fascism in Europe.

    For him, this system requires subordinating complex social systems to market place logic. That is it turns humans and nature into commodities. Naturally people will resist this, which is happening now.

    This is not to say that what happened in the early 20th Century will occur again. But it is useful to keep these thoughts in mind when one speaks of free markets and trade.

    It’s also useful to put this idea of ‘free trade’ into a historical context. The idea of free trade is, of course, part of classic liberal thought, classic liberalism being a 19th century vision of how society should be organized. Classic liberalism drew this idea of free trade from the writings of Adam Smith, David Ricardo, Malthus etc.

    But one who has read Adam Smith could rightfully argue that Smith understood what Polayni was saying. That is, if a nation was to have a capital economy, there must be a strong social order to assist the less fortunate.

    Let’s go back to the idea of free trade. This phrase and idea is a misnomer and could have been hatched by the likes of Newt Gingrich. Merely recall Gingrich’s phrase book - one must always put their position in a positive light. So of course you call this theory ‘free’ but is it really free?

    In order for trade to exist there must be a strong state behind it to regulate the money supply, enforce contracts, etc. So this trade isn’t really ‘free,’ but regulated and enforced by the state.

    A few years ago Ha-Joon Chang came out with a book on economic history called "Kicking Away the Ladder." In it he argued that what the West (esp. the US) has asked for the less developed countries to do – open markets, free trade – was never practiced by them during their period of industrial development.

    During its infancy, the U.S. depended on protective tariffs. Alexander Hamilton believed that new U.S. industries would not be able to survive foreign competition unless the government imposed import tariffs.

    When it acquired the power to tax, Congress imposed a 5 percent tariff on most imports.

    Many tariffs were increased in 1792, although they still fell short of Hamilton's recommendations, which called for infant-industry protection.

    It was only after World War II, with its industrial supremacy unchallenged, that the U.S. started championing the cause of free trade.

    I don’t think free trade and the other economic policies from the collapse of the Bretton Woods agreement onward have been beneficial for the bulk of Americans. And I blame the Democrats as well as the Republicans for this. Maybe the average person is beginning to recognize this as Bush is feeling the resistance to privatize Social Security.

    Unregulated markets do not help the average person. And I don’t expect CAFTA to help the average person either.

    It’ll be interesting to see how Bush handles Hugo Chavez who is very suspicious of these free trade policies.

    Then we will understand if Bush really wants democratic or compliant countries.

    As for the Democratic Party of Oregon, it needs to find ‘new blood.’ Democrats like Darlene Hooley, who supported the Iraq war, and voted for the terrible bankruptcy bill and the elimination the estate tax, are just awful.

    Can’t the Oregon Democratic Party find and field better candidates?

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    Richard, Darlene Hooley had a primary challenge from the left - by Andrew Kaza (of kazablog.com). He lost miserably.

    Apparently, the Democrats in the 5th kinda like what Darlene is up to.

    (Disclaimer: I worked on her original 1996 campaign.)

  • Richard (unverified)
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    Kari, Thanks for your response. But just because Hooley was re-elected doesn’t justify her record, since one can make the same argument about Bush.

    In addition, just because Mr. Kaza lost (he didn’t have much money and hardly anyone knew Hooley was being challenged) doesn’t necessarily mean that she in not vulnerable.

    It is unfortunate that it takes a lot of money to run for public office these days, especially on the federal level. But I think a candidate who can get the funding and attack her miserable record can beat Hooley, who is, like I said above an awful Democrat.

    To repeat myself - surely the Oregon Democratic Party can do better than someone who would support the awful Bush bankruptcy bill.

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