June 30, 2005

Statement of Senator Clinton for the Congressional Record on Central American-Dominican Republic Free Trade Agreement

Mr. President,

Today the Senate votes on the Central American-Dominican Republic Free Trade Agreement. During my tenure as Senator, I have voted for every trade agreement that has come before the Senate and I believe that properly negotiated trade agreements can increase living standards and foster openness and economic development for all parties. When DR-CAFTA negotiations began, I was eager to support an agreement. It was my sincere hope that President Bush would send an agreement to Congress that would help address the DR-CAFTA nations’ development challenges and spread the gains from trade more broadly. Unfortunately, the Bush Administration has not submitted such an agreement, instead missing a tremendous opportunity to conclude an agreement that strengthens the bonds between the United States and the DR-CAFTA nations. While this agreement provides some benefit for New York, I regretfully conclude the harm outweighs the good. I must therefore vote to oppose.

My vote to oppose DR-CAFTA is one taken with great difficulty. I have heard strong arguments both for and against from many New Yorkers who have a stake in the agreement and I have weighed them seriously. Segments of the New York economy would benefit from this agreement, But at the end of the day, I cannot support an agreement that fails to include adequate labor standards and is a step backward in the development of bipartisan support for international trade.

At the outset, it is important to understand that consideration of DR-CAFTA is not occurring in isolation. This agreement must be read within the larger context of the failed economic and trade policies of this Administration. Under this Administration, the trade deficit has soared. The offshoring of U.S. jobs has continued to increase, and the U.S. economy has experienced a net loss of U.S. jobs. The Administration has no plans to address rising health care and pension costs that are imposing such a tremendous burden on American businesses. This Administration has also failed to enforce existing trade rules and has not been aggressive in addressing the tax and capital subsidies of our competitors.

Turning to the specifics of the agreement itself, DR-CAFTA fails in significant respects. The most problematic elements are its labor provisions which retreat from advances made in the late 1990s and that culminated in the labor provisions of the U.S.-Jordan Free Trade Agreement. The U.S.-Jordan Free Trade agreement included internationally recognized enforceable labor standards in the text of the agreement. Sadly, DR-CAFTA is a step backward. The labor provisions of the DR-CAFTA agreement instead used an “enforce your own laws” standard which is not included in any other area of the agreement. An “enforce your own laws” standard may work in nations with a strong tradition of labor enforcement, but the International Labor Organization (ILO) has documented that the CAFTA countries’ labor laws have not complied with international norms in at least 20 areas.

The Jordan FTA made labor rights obligations subject to the same dispute settlement resolution procedure as commercial obligations. Conversely, DR-CAFTA includes a separate dispute settlement procedure for labor disagreements which caps the damages that can be imposed for labor violations.

The Chile, Australia and Singapore free trade agreements, which I supported, contained similar “enforce your own law” labor provisions to DR-CAFTA, but as I noted when I voted for these agreements, I was greatly disturbed by these provisions’ departure from the labor rights standards negotiated in the U.S.-Jordan Free Trade Agreement. In the end, I supported these agreements despite these concerns because I believed the agreements would not harm the average working person in those nations and, thus, the flawed labor provisions did not outweigh the benefits offered by the agreements. I noted, however, that I would not continue to support agreements with these provisions where the impact was greater on workers. In the DR-CAFTA agreement, the flawed labor provisions represent a real missed opportunity to spread the benefits of trade not just to the wealthy elites, but to the broader workforce as well.

There are other problems with the DR-CAFTA agreement. The final agreement excludes provisions for assisting U.S. workers harmed by trade. The environmental provisions of CAFTA undermine environmental protection, by including a lack of parity between the enforcement of commercial and environmental provisions. This is a clear step back from the Jordan Free Trade Agreement. Finally, the environmental conservation provisions lack a commitment to fund their implementation.

The agreement also fails in the area of public health. Regarding pharmaceuticals, I would note that in 2001, 142 countries, including the United States, adopted the “Doha Declaration,” an agreement that provided that trade obligations should be interpreted and implemented in ways that protect public health. In August 2002, Congress passed the Trade Promotion Authority Act which applied Doha to U.S. trade negotiations. Despite this commitment, the Administration has promoted provisions within trade agreements – including DR-CAFTA - that will significantly impede the ability of developing countries to obtain access to inexpensive, life-saving medications. Contrary to the principles of Doha, these agreements place the interests of large multinational drug companies over the ability of developing countries to safeguard public health.

The DR-CAFTA agreement negotiated by the President represents a missed opportunity in many respects, both for the DR-CAFTA nations and for the U.S. For the DR-CAFTA nations, it is a missed opportunity to insure that the benefits of trade flow to all of their citizens and not just wealthy elites. This agreement will not promote democracy and stability in these nations. A stronger agreement would instead have bolstered the political and economic stability in these nations, through fair apportionment of benefits. In some of the DR-CAFTA nations, the agreement has proved to be quite polarizing and a better agreement could have gained broader public support.

For the U.S., DR-CAFTA was a missed opportunity to reconstitute the bipartisan consensus in support of international trade. Rather than consult widely and develop a consensus, the Administration has decided to go for a narrow victory with disturbing implications for the possibility of bipartisan trade agreements in the future. In a time when Americans are facing increasing economic anxiety, trade is often viewed with suspicion. An Administration which fails to consult and pushes for trade agreements which are unable to get bipartisan support undermines public support for international trade as a tool for economic development and greater prosperity. Even if the Administration is successful in gaining passage of DR-CAFTA, I fear that this victory will be hollow as the anxiety over international trade continues to grow. In the end, the Administration’s strategy to ignore consultation and consensus in its trade policy may do more harm for the cause of international trade than the purported benefits of this agreement.

While it is inevitable that some will benefit more than others from open markets, we have a responsibility to ensure that the basic rules of the game are fair. In previous trade agreements, this balance was achieved. And I voted for those agreements. DR-CAFTA fails this test.

This is a sad day for supporters of free and fair rules-based trade. Our relationship with our Central American neighbors is a critical one. The right CAFTA deal would strengthen ties between the U.S. and these nations. I urge the Administration to reopen the CAFTA negotiations and re-establish the broad, bipartisan coalition for trade.


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