Caving in to White House threats and bribes, the Senate approved the Central American Free Trade Agreement (CAFTA) on June 30, by a vote of 54 to 45.

Deaf to the appeals of farmers, manufacturers, and workers who have been devastated by previous trade agreements, and indifferent to the growing danger these pacts pose to U.S. sovereignty, President Bush pulled out all stops in a major effort to ram CAFTA through the Senate before the July 4 recess.

The Senate vote, hailed as a major victory for the president, came after months of bitter wrangling and several vote postponements. However, the relatively narrow margin of victory — one of the slimmest ever for a trade agreement — is a testament to the growing disenchantment with so-called free trade and globalization.

On the same day that it passed the Senate, CAFTA also was approved by the House Ways and Means Committee by a vote of 24 to 11, setting the pact up for a floor vote in the full House after Congress returns from recess on July 11. The House fight, which is expected to be even closer and more hard-fought than the Senate battle, is seen by most analysts as too close to call.

The Central American Free Trade Agreement proposes to expand NAFTA (the decade-old North American Free Trade Agreement between the U.S., Mexico, and Canada) to include Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. The Bush administration has been clear that it sees CAFTA approval as essential to building momentum for approval of the Free Trade Area of the Americas (FTAA), which would include all the nations of our Western Hemisphere.

Most media accounts of the congressional CAFTA fracas give the false impression that the only significant opposition to the agreement comes from domestic sugar producers fearing an avalanche of cheap sugar from the Caribbean and Central America. The sugar beet lobby, a major source of campaign funds for both Republicans and Democrats, has indeed presented formidable resistance to CAFTA, pointing out that massive sugar imports would jeopardize more than 300,000 jobs in 19 states. However, an even larger number of textile jobs are at stake, as well as hundreds of thousands of other agriculture, manufacturing, and service jobs.

The Bush administration wielded both the carrot and the stick to overcome this growing opposition and whip senators into the CAFTA corral. As the New York Times reported on July 1, "[A]fter intense negotiations between White House officials and leading lawmakers, wavering Republicans settled for modest extra protections and heeded veiled warnings about reprisals to those who balked." The Times continued: "To placate sugar producers, White House officials agreed to limit imports for another two years by paying Central American producers not to export to the United States. The United States would pay with surplus farm products accumulated through its other subsidy programs."

Backing From Corporate One-worlders

The Bush White House and its pro-CAFTA contingent in Congress have received indispensable support in the push for CAFTA from the Business Roundtable, the U.S. Chamber of Commerce, and other industry groups dominated by corporate globalists associated with the Council on Foreign Relations. AT&T, the Bechtel Group, Coca-Cola, Ford Motor, Hewlett-Packard, Home Depot, IBM, Tyson Foods, and Xerox are but a few of the corporate heavyweights propelling the CAFTA bandwagon. Employing deceptive rhetoric laced with false appeals to "free market" and "free trade" principles, they have lured many Republicans and conservatives into supporting trade pacts that amount to major subsidies by U.S. taxpayers and consumers for the participating corporations and foreign governments.

Lined up against this imposing pro-CAFTA corporate lobbying force are a relatively few large companies that do not want to move their operations out of the U.S., including some of the major textile manufacturers, as well as an assortment of independent business and industry groups. Many small and medium-sized U.S. businesses, which provide most of America’s jobs, stand to lose big under the CAFTA accord. On June 21, the U.S. Business and Industry Council (USBIC) released a letter signed by 24 business organizations across the country urging President Bush to scrap CAFTA. The business groups, which speak for some 8,500 companies in dozens of industries, also called for a new national trade strategy that encourages production and employment in the United States. The letter’s signatories include: the American Brush Manufacturers’ Association; the American Manufacturing Trade Action Coalition; the American Mold Builders Association; and the National Textile Association.

"Although you promise that CAFTA will open big new foreign markets for U.S.-made goods, the opposite is clearly true," says the USBIC letter. "The results of the outsourcing deals that have dominated U.S. trade policy over the last fifteen years are in: gargantuan trade deficits, shuttered factories, and formerly middle class Americans sliding down the job and wage scales. CAFTA is simply the latest in this series of outsourcing deals that are gutting our domestic manufacturing base."

According to USBIC President Kevin L. Kearns, the letter shows that opposition to CAFTA extends far beyond textile and sugar interests and organized labor. "The anti-CAFTA and anti-outsourcing stances expressed by this letter represent the broadest business opposition to a trade initiative in decades," Kearns noted. "The emergence of a large business constituency against current U.S. trade policies is a watershed in the politics of globalization." Just as important, Kearns added, "This business opposition to CAFTA makes clear that outsourcing-dominated groups like the National Association of Manufacturers and the U.S. Chamber of Commerce have lost their claims to be exclusive spokesmen for American business on trade and globalization policy."

Outsourcing Sovereignty

As important as the loss of jobs is to America, there are additional downsides to CAFTA that have not been brought to the attention of the American people by the media, says John F. McManus, national chairman of the John Birch Society’s Stop CAFTA and Stop the FTAA campaigns (www.stopcafta.com and www.stoptheftaa.org).

"The Bush administration has made it quite clear that it is using CAFTA as a steppingstone for the FTAA, the Free Trade Area of the Americas, which would include all 34 nations of this hemisphere," McManus notes. "In fact," he points out, "the Preamble of the CAFTA text explicitly states that the parties to the pact pledge to: ‘Contribute to hemispheric integration and provide an impetus toward establishing the Free Trade Area of the Americas.’ This should provide all the impetus that any real American needs to jump into the fight against CAFTA. We have already seen the broken promises and devastating impact of NAFTA — lost jobs and production, huge trade deficits, increased illegal immigration — but the far greater threat in the long run is the threat these agreements pose to our independence and sovereignty. NAFTA and WTO [World Trade Organization] courts and regulations are already being used to supersede our state and federal laws and constitutional protections. CAFTA and FTAA would multiply and expand these subversive assaults."

According to McManus, "All anyone has to do is look at the CAFTA text itself to see that it is loaded with commitments that further entangle us in a thicket of controls under the WTO and UN." He points to the following examples:

• CAFTA’s subservience to the World Trade Organization (WTO). According to the Preamble and Chapter 1 of the CAFTA text, parties to the agreement pledge to: "Build on their respective rights and obligations under the Marrakesh Agreement Establishing the World Trade Organization...." Also, "The Parties affirm their existing rights and obligations with respect to each other under the WTO Agreement...."

• Loss of U.S. independence to the supranational CAFTA Free Trade Commission. Chapter 19 of the agreement states: "The Parties hereby establish the Free Trade Commission, comprising cabinet-level representatives of the Parties.... The Commission shall: (a) supervise the implementation of this Agreement; (b) oversee the further elaboration of this Agreement; (c) seek to resolve disputes that may arise regarding the interpretation or application of this Agreement; (d) supervise the work of all committees and working groups established under this Agreement; and (e) consider any other matter that may affect the operation of this Agreement."

• Loss of U.S. independence to World Bank and United Nations tribunals. CAFTA’s Chapter 10 provides that: "a claimant may submit a claim … (a) under the ICSID Convention [World Bank’s International Centre for Settlement of Investment Disputes]...." Chapter 20 stipulates: "A Party shall be deemed to be in compliance … if it is a party to and is in compliance with the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards...."

• Loss of independence of U.S. federal, state, and local governments to regulate service professions and businesses to CAFTA’s "Cross-Border Trade in Services" provisions. According to CAFTA’s Chapter 11: "Cross-Border Trade in Services … applies to measures adopted or maintained by a Party affecting cross-border trade in services by service suppliers of another Party. Such measures include measures affecting: (a) the production, distribution, marketing, sale, and delivery of a service; (b) the purchase or use of, or payment for, a service; (c) the access to and use of distribution, transport, or telecommunications networks and services in connection with the supply of a service; (d) the presence in its territory of a service supplier of another Party; and (e) the provision of a bond or other form of financial security as a condition for the supply of a service.... For purposes of this Chapter, ‘measures adopted or maintained by a Party’ means measures adopted or maintained by: (a) central, regional, or local governments and authorities; and (b) non governmental bodies in the exercise of powers delegated by central, regional, or local governments or authorities...."

"The NAFTA/CAFTA/FTAA agenda is one that spells the death knell for American prosperity, independence and freedom," says McManus. "Opposition to FTAA is definitely growing. If we lose CAFTA in the House we can still stop the FTAA. But if we defeat CAFTA, we will gain critical momentum to defeat the FTAA. That is why the CAFTA fight is so important. This is going to be one of those razor-thin margins in the House where each letter, e-mail, or phone call to your representative will have a huge impact. CAFTA can be defeated if only a few thousand more Americans take the time and make the effort to express their opposition."

Unconstitutional NAFTA Courts

by William F. Jasper

"The future direction of the judicial branch arouses fierce debate. The president and Congress are battling over their relative roles in determining the composition of the federal bench.... In the midst of these discussions, however, the potentially most dramatic transformation of the judicial branch has gone virtually unnoticed: the establishment of special litigation processes applicable only to foreign investors."

So wrote John D. Echeverria, executive director of the Georgetown Environmental Law & Policy Institute at Georgetown University Law Center, in a March 8, 2004 Legal Times article entitled "Who Will Decide for Us? Our trade agreements are undermining the principle of an independent federal judiciary." Addressing the looming threat posed by secret, private, international judicial panels, Dr. Echeverria wrote:

These so-called investor-state litigation processes are an increasingly common feature of U.S. trade agreements, including the North American Free Trade Agreement and many other recently adopted and pending compacts. Because they could fundamentally change the judicial function within the U.S. system of government, they are almost certainly unconstitutional. It’s time to address this latest threat to judicial independence.

It is a very serious question, says Echeverria, whether the NAFTA arbitration process "violates Article III, which requires that the judicial power of the United States be vested in an independent judiciary with life tenure and guaranteed salary. Our independent federal judiciary is central to our system of government. It helps prevent ‘the accumulation of all powers … in the same hands,’ which The Federalist No. 47 termed ‘the very definition of tyranny.’ By providing a check on the executive and Congress, it also protects states’ authority."

"[I]f the panels are exercising the Article III ‘judicial power,’" he notes, "they are plainly unconstitutional."