Can We Be a Global ‘Good Neighbor?’—Talking Points

Global Debt

· The main challenges to the world economy are persistent global imbalances, high and volatile oil prices and the need for a more balanced distribution of the benefits of globalisation...

· Vigorous action is needed to ensure more balanced growth between the main economies. The key priorities remain continued fiscal consolidation in the US, further structural reforms in Europe and Russia, and further structural reforms, including fiscal consolidation, in Japan.

Read the full article, “G8 MEETING At-a-glance guide to the main points” 06.11.2005, 03:07 PM AFX News Limited

Debt Erased

· The United States and Britain have reached an agreement on how the billions of dollars that the world's poorest nations owe to international lenders can be erased…

· The plan would free 18 countries, most of which are in Africa, from any obligation to repay the estimated $40 billion they owe the international lenders…

· The agreement on debt cancellation is likely to be the only big issue at the coming Group of 8 summit meeting in Scotland on which the United States is in full accord with the other major industrial nations.

· The debt relief negotiations had been bogged down for months over which of two possible methods should be used to eliminate the debt. One approach, favored by Britain, was for the rich nations to take over responsibility for repaying the debts.

· The second method, favored by the United States, was for the loans to be written off entirely by the lenders.

· Britain agreed to the American approach with a promise from the United States to provide additional money to the lenders to make up for the assets they were writing off.

· The second issue was whether to sell some of the International Monetary Fund's gold reserves to help pay off the loans owed to the fund. The United States objected to any gold sales, saying it would drive down the price of gold on the open market, hurting, among others, American gold producers.

· In theory, the deal would free the 18 countries from making $1 billion in interest payments each year to the World Bank, the I.M.F. and other international lenders like the African Development Bank. In practice, they had not been making the payments, leaving them mired in debt and unable to fully engage in the global economy.

· The 18 countries eligible for debt relief are: Benin, Bolivia, Burkina Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia.


See full article, “US and Britain Agree on Relief for Poor Nations” By ELIZABETH BECKER and RICHARD W. STEVENSON June 10, 2005 New York Times


G8 Summit 2005—Held in Gleneagles, Scotland From July 6th-8th 2005


· G8 finance ministers agreed a deal offering 100 pct relief on the 40 bln usd of debt owed to the international financial institutions by 18 poor countries.

· The World Bank and African Development Bank will be compensated 'dollar for dollar' for the debt cancellation. The IMF debt relief will be covered from existing IMF resources where possible, but rich countries will provide extra resources if necessary.

· UK Chancellor of the Exchequer Gordon Brown said the deal could ultimately be extended to further countries and provide total debt relief of 55 billion USD. A further nine countries could become eligible for 11 billion USD of debt relief over the next 12 to 18 months, he said.

· The G8 will continue to work on proposals for the financing of additional development aid, such as Brown's International Finance Facility and a Franco-German plan for a tax on airline tickets, ahead of the Gleneagles summit on July 6-8, ministers said.

· They also underlined the vital importance of a deal in the WTO world trade round for helping developing countries to increase exports.

· The UK's Brown said the ministers' agreement on development issues was 'the most comprehensive statement that finance ministers have ever made on the issues of debt, development, health and poverty'.

Read the full article, “G8 MEETING At-a-glance guide to the main points” 06.11.2005, 03:07 PM AFX News Limited

US Debt

· The deficit in April increased by 6.3 percent from a revised $53.56 billion in March. The record monthly deficit of $60.12 billion was set in February. Analysts said this year's deficit is likely to top last year's record of $617.58 billion.

· Gary C. Hufbauer, an economist at the Institute for International Economics, a Washington think tank, said the United States goes deeper in debt to other countries each year. The nation's net external debt to other countries is about 28 percent of its gross domestic product

See Full article, “US trade deficit surged in April” By William Neikirk Chicago Tribune
June 11, 2005

There’s Democracy, There’s Free Trade, and then there’s China

· President Bush touted his proposals for a hemisphere-wide free trade agreement, saying it will open the way to peace and prosperity for all nations of the Americas and reduce the attraction of "false ideologies."

See full article, “Bush Touts Trade Agreement at OAS Meeting” By GEORGE GEDDA The Associated Press Monday, June 6, 2005; 1:39 PM

· The Bush administration and at least one business owner played the "China card," are warning U.S. jobs would migrate to very low-paying Chinese firms, unless Congress approves the controversial Central American Free Trade Agreement.

· GOP President Bush's CAFTA would remove all tariff and non-tariff barriers in the U.S. and in El Salvador, Honduras, Nicaragua, Costa Rica, Guatemala and the Dominican Republic to each others' goods.

· Notable opposition came from farm-state senators of both parties, particularly concerned that CAFTA would open the U.S. market to low-cost Latin American sugar. That issue concerns unionists, too, as the Bakery, Confectionery and Tobacco Workers represent sugar processing plant workers in the upper Midwest.

· Jack Roney, economics director for the American Sugar Alliance--the growers--said CAFTA could cost 146,000 jobs and "devastate the industry."

· Meanwhile, Levinson and committee Democrats pointed to a decade's worth of experience with NAFTA, the controversial and labor-opposed U.S.-Canada-Mexico "free trade treaty," in arguing against its successor pact. NAFTA, they said, not only did not protect labor rights, but also cost almost a million U.S. jobs.

· "Instead of improving things, CAFTA will further oppress workers, depress wages in Central America and cost jobs in the United States," AFL-CIO Executive Vice President Linda Chavez-Thompson told the House Western Hemisphere subcommittee hearing on U.S. relations with Latin America the same day.

· Over in the Senate, Acting U.S. Trade Representative Peter Allgier declared that without CAFTA, jobs in the textile and apparel industries would migrate from the CAFTA nations to China. One business witness--a North Carolina apparel manufacturer of the elastic bands used in underwear and socks--backed him up, saying U.S. textile and apparel jobs would migrate, too.

· Sen. Olympia Snowe (R-Maine) turned Allgier's "China card" on its head, by saying CAFTA's "loopholes...will allow Chinese fabric" to be trans-shipped through Central America, costing U.S. apparel workers their jobs.

· The solution to the Chinese threat is not CAFTA "because Central America cannot lower its wages to Chinese levels and shouldn't aim to," Levinson added. "Central America should instead position itself as a supplier to the U.S. market with high skills and productivity and...high labor standards."

See the full article, “BUSH, BIZ PLAY 'CHINA CARD' IN OPENING PUSH FOR CAFTA By Mark Gruenberg PAI Staff Writer Press Associates, Inc. (PAI) -- 4/18/2005

· The proposed Dominican Republic-Central American Free Trade Agreement is being touted by its proponents as an accord that will promote democracy, insure stability, create better working conditions, and safeguard human rights in the six Central American countries it includes.

· Yet, it is not always the case that free trade and economic success in a country correlate with higher levels of democracy and a greater respect for human rights. Take China, for example.

· China still remains a communist country, no more democratic today than it was 15 years ago


See full article, “China trade bodes ill for others” By Kaylee Collins at
http://www.sun-sentinel.com/news/opinion/sfl-03forum06jun06,0,2282385.story?coll=sfla-news-opinion

CAFTA

· CAFTA has no meaningful, enforceable labor rights provisions. CAFTA does not require that countries meet core labor standards as established by the International Labor Organization.

· CAFTA only allows recourse over repeated failures of signatory nations to enforce their existing domestic labor laws. This is regardless of the fact that the labor laws of many of the Central American countries are far below international standards and have repeatedly been criticized by human rights organizations and the U.S. State Dept.

· This provision is so full of loopholes that it would be very difficult to take action when countries fail to enforce their laws in an effort to attract investment, since countries can claim non-enforcement is a matter of funding priority discretion.

· Even if you could make a claim under this provision, the enforcement mechanism for the labor provision is less than the enforcement for commercial provisions. Penalties for labor violations under CAFTA would affect the governments of the countries where the violations occur – not the companies that may share in responsibility for the violations. The fines that the countries would pay would actually be paid back to themselves, the violators, in order to “improve their labor situations.”

· Penalties for countries running afoul of the labor provisions consist of a limited fines regime, versus the sanctions and cash damages provided for violations of commercial provisions.

· The CAFTA would encourage the proliferation of sweatshops in “free trade zones” where investors are able to import goods to assemble for export, skirting tariffs and quotas while exploiting workers and not contributing to the local economy leading to increasing loss of quality jobs and a race to the bottom in working conditions.

Agriculture:

· CAFTA could devastate small farmers in both the U.S. and Central America. The elimination of an effective price floor would force down market prices, allowing corporate agribusiness to sell their products at far below cost. Under NAFTA, huge multinational agribusinesses all but wiped out Mexican corn farmers – forcing many of them to seek jobs in maquiladoras or to emigrate to the U.S.

· Central American farmers depend on a few key crops. CAFTA would force small farmers and rural populations to “compete” in a volatile international agricultural market, causing increased farm failure, poverty, and malnutrition.

· Under CAFTA, Central American countries would be required to reduce tariffs, subsidies, and other supports that protect their vulnerable agricultural sectors while competing with low priced imports from the U.S.

· CAFTA would limit the ability of governments in Central America and the U.S. to implement measures to ensure that food traveling across barriers is safe and meets domestic food safety and other “sanitary and phytosanitary” standards.

· CAFTA could put in place intellectual property and other rules that would make current farming practices such as saving seeds illegal.

· CAFTA would significantly increase imports into the U.S. of sensitive crops like sugar, threatening to wipe out thousands of small sugar beet farmers and devastate rural communities in the U.S. Sugar beet farmers would especially be affected in the Plains states, the Midwest, California, Idaho, and Washington.


Access to Medicines:

· Patent rules included in CAFTA’s Intellectual Property Rights provisions require signatory countries to give pharmaceutical corporations greater rights than even those provided in the WTO. These “TRIPS-plus” rules would severely restrict countries’ ability to produce generic, affordable medicines for the seriously ill – including AIDS patients, undermining a dynamic that is currently keeping thousands of patients alive, and halting future expansion of affordable medicine programs.

· CAFTA rules would effectively extend pharmaceutical patents, giving corporations monopoly control of a medicine for more than the 20 years provided under the WTO. This means it would take longer to get affordable medicines on the market in both the US and in Central America.

· CAFTA would grant exclusivity on medical test data to pharmaceutical companies for 5 years. This would have the affect of establishing a 5-year ban on generic production of certain medicines, since test data is needed to prove a drug's safety and effectiveness. This would function like a 5-year patent monopoly - even where patents do not exist.

For a full report, see “CAFTA Analysis” Citizens Trade Campaign, P.O. Box 77077 Washington, D.C. 20013PHONE (202) 778-3320 FAX (202) 293-5308 www.citizenstrade.org

Hispanic Caucus

· As Hispanic Members of Congress, we fully understand the critical importance of promoting economic development throughout the Americas. However, United States policy towards Latin America must promote growth that is sustainable, just and inclusive, regardless of socio-economic status. We must invest in programs that elevate people to a higher standard of living, that allow for and encourage entrepreneurship and self-reliance, and adhere to democratic principles.

· A decade after the passage of NAFTA, an agreement that some CHC members supported, it is clear some sectors in the Latino community benefited. As a caucus, however, we are gravely concerned those benefits were lopsided. This model of trade has not delivered the promised benefits and has widened the gap between the rich and poor. For instance, 47% of workers receiving federal assistance for being certified as having lost a job due to NAFTA were Latino.

· In Mexico, 1.3 million small to medium-size Mexican farmers have been forced off their land because they were unable to compete with large multi-national producers. For those concerned about our “broken borders”, the CHC asks that you think of this: the employed farmers and agricultural workers of 10 years ago have become the undocumented immigrants of today.

· The United States must also be cautious about entering into free trade agreement with countries that lack strong legal systems, transparency, and accountability. If this agreement ensured the Rule of Law, and created a transparency in the governance of the nations involved, perhaps we would support it. Unfortunately, it does not. According to Transparency International, four out of the six CAFTA countries received a Corruption Perception Index score which indicates rampant political and legal corruption.

· It is our strong belief that CAFTA will only continue to broaden the gap between the haves and have-nots. It is in the vital interest of the hemisphere and in the interest of the security of our great nation that we look for avenues to close the gap. CAFTA is certainly not the answer. It is our hope that in the future the Administration produces agreements that are more fair and better address the concerns of the CHC. We can and must do better for the Americas.
To read the full statement, see “Congressional Hispanic Caucus Opposes CAFTA: CHC concerned trade agreement would widen gap between haves and have-nots,” Friday, June 10, 2005
Contact: Imelda Aguirre 202-225-2410
“Afta” NAFTA

· Implemented in 1994, NAFTA is the most fully realized version of the corporate globalization model. It is currently being used as the blueprint for other trade and investment agreements that the Bush Administration is pushing in the hemisphere, such as the Central American Free Trade Agreement (CAFTA), the Free Trade Area of the Americas (FTAA) and an array of bilateral free trade agreements with the Andean countries (Bolivia, Colombia, Ecuador and Peru) and Panama.

· Mexico suffered many negative economic effects as a result of NAFTA. Sharp cuts in farm subsidy programs combined with the near-elimination of import restrictions on corn and other commodities resulted in dumped U.S. corn flooding the Mexican market, forcing over 1.5 million campesinos or peasant farmers whose livelihoods were based on small-scale farming off their land. Many U.S. agribusiness multinationals also used NAFTA investment and service sector rules to buy corn-processing and tortilla-making factories in Mexico. Yet instead of falling (as “free” trade theory predicts), retail prices for food products increased sharply. The cost of tortillas rose by 50 percent in Mexico City and more in the countryside2, even as prices paid to Mexican farmers for corn plummeted. At the same time, the purchasing power of the average Mexican worker has also dropped. Since NAFTA, a combination of factors – including the migration of so many campesinos to the cities – has caused Mexican industrial wages to decline by approximately 25 percent.3 The economic fallout from NAFTA has also been shown to have had particularly harsh consequences for Mexican women; a recent study found that the poverty rate for female-headed households in Mexico has increased by 50 percent since NAFTA went into effect.4

· Despite promises by NAFTA proponents that the agreement would stabilize Mexico’s economy and therefore lower immigration levels, unauthorized immigration from Mexico to the United States is estimated to have increased sharply – more than doubling between 1990 and 2000, with the majority of the growth seen after NAFTA’s implementation.6 Over 1,600 Mexican migrants have died trying to reach the United States since 1998.

Job Security and Wages for Latino Workers

· Both Mexican and U.S. workers have suffered economic losses because of NAFTA. During the ten years of the trade agreement, the U.S. manufacturing sector has lost almost 2.5 million jobs – one in six. What has not been recognized widely is that U.S. Latino workers are some of the hardest hit by the U.S. job losses to date. In 1999, an astounding 47 percent of the total number of workers who received federal assistance under a program for workers certified as having lost jobs as a direct result of NAFTA were Latino.

· This disproportionate impact can in part be attributed to the fact that Latino workers are concentrated in industries – such as electronics, textiles and apparel – that have been hardest hit by factory relocation and import floods under NAFTA .17 Latinos accounted for 12.6 percent of the U.S. workforce in 200318 but represented 26.2 percent of the workforce in the textile, apparel and leather industries. NAFTA provisions largely eliminated quotas and tariffs in the textile and apparel industry. These measures resulted in the flooding of the U.S. market by cheap imports, forcing scores of U.S.-based factories out of business or into production abroad (often to Mexico), to compete with the factories that proceeded them to take advantage of cheaper labor.

· Between 1994 and 2004, total employment in U.S. textile mills and apparel manufacturing fell by almost 60 percent, with the loss of over 780,000 jobs

· The overwhelmingly Latino populations in communities close to factories on both sides of the border have suffered from massive and widespread illegal dumping of waste and hazardous materials. Border residents continue to suffer from environmental health problems related to air pollution, inadequate water and sewage treatment, pesticides and hazardous waste. On the U.S side of the border, these communities are overwhelmingly Latino; according to U.S. Census figures the population of Imperial County, California, is 72 percent Latino; the border county of Santa Cruz, Arizona, is 80.8 percent Latino; and Webb County in Texas is 94.3 percent Latino.

See full report, “Another Americas is Possible: The Impact of NAFTA on the U.S. Latino Community and Lessons for Future Trade Agreements” by the Labor Council for Latin American Advancement
Public Citizen’s Global Trade Watch August 2004