WASHINGTON-A U.S.-Central American trade pact already steeped in controversy and critical to the Bush administration’s trade agenda has become a battleground for a dispute between organized labor and high-tech companies-including those prominent in the wireless Internet space-over claims the deal will benefit U.S. telecom and tech sectors as well as lead to better protection of intellectual property rights.
The Communications Workers of America last week disputed industry’s contention that the Central American Free Trade Agreement would significantly boost U.S. tech exports, arguing any gains would be minimal relative to the worldwide market and would set a bad precedent for digital copyright protection.
“Despite this record of off-shored jobs and stagnant U.S. high-tech wages, the U.S. high-tech industry has launched a campaign to push Congress into approving the same failed trade policies that contributed to the current problems,” a CWA report stated.
Top tech lobby groups, including the Information Technology Industry Council and the Business Software Alliance, argue CAFTA-which would constitute the second-largest export market in Latin America (behind Mexico) and the sixth-biggest growth market for U.S. goods and services worldwide-would lay the foundation for increased sales of Internet and telecom gear in Central America.
ITI took direct aim at CWA’s bearish tech appraisal of CAFTA.
“This report should really be called The Sideshow, Straw Man and Red Herring Report,” said ITI President Rhett Dawson. “Rather than accept the many ways in which CAFTA benefits high-tech, the authors of this report are manufacturing false arguments that have little to do with the actual agreement or the actual facts.”
The high-tech industry asserts the trade deal could save more than $75 million annually by reducing tariffs as high as 30 percent in Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica and the Dominican Republic. For the White House, CAFTA represents a political high-wire act. Failure to win congressional approval of CAFTA could undermine President Bush’s efforts to further liberalize global trade during the remainder of his second term. Such an outcome could indirectly hurt U.S. wireless and tech sectors.
The administration is getting various officials to lobby wavering Republican lawmakers-particularly those with constituents in sugar and textile states-and pro-business Democrats to support CAFTA. Some lawmakers are quoted as saying the votes for CAFTA are not there today. Last Thursday, President Bush, joined by presidents of the six countries covered by CAFTA, made the case for CAFTA in the Rose Garden.
Organized labor points out that CAFTA countries account for only 1.4 percent of all U.S. information technology exports to the world, and the vast majority of information technology sales to those Central American nations and the Dominican Republic already enter duty free. The reality, according to CWA, is CAFTA would open markets in only four countries-the Dominican Republic, Guatemala, Honduras and Nicaragua. Combined IT exports to those four nations in 2004 was $687 million, said CWA.
But congressional approval of CAFTA could lead to greater telecom and tech trade opportunities in South America. The Bush administration is trying to build on the U.S.-Chile trade agreement by seeking a free trade pact with the five Andean nations of Bolivia, Colombia, Ecuador, Peru and Venezuela. If CAFTA is defeated on Capitol Hill, it could hamper progress toward a U.S.-Andean Free Trade Agreement
CTIA, the U.S. cell-phone trade group, recently urged the U.S. trade representative not to meddle with foreign mobile termination fees in the context of the Andean Free Trade agreement absent evidence that U.S. consumers are being harmed.
On a related front, House lawmakers last week examined use of technical standards as trade barriers in China and Europe and how the United States might respond.
