The Central American Counterexample

One of the things that drives me most crazy about the self-congratulatory rhetoric promoters of trade deals routinely use is that free trade is awesome because of the Asian economies and so we should embrace more, more, more unrestricted free trade! There are a number of problems with this. First, this narrative totally leaves out the actual workers in Asia and their own demands on the system. Second, they serve as apologies for exploitative American corporations. Even if the ultimate claim is true, that doesn’t mean that corporations should be able to recreate the American Gilded Age in Bangladesh. 1138 workers don’t actually have to die. Quit apologizing for that.

But the other obvious problem with this rhetoric is that it totally leaves Central America out of the analysis. To say the least, trade agreements have not raised living standards or created stability in Central America. In fact, they’ve been pretty bloody disastrous. Cole Stangler and Maria Gallucci on the failure of trade agreements in Guatemala:

Things were supposed to be different in Guatemala. When the country joined the Dominican Republic-Central America Free Trade Agreement in 2006, proponents of the deal said it would improve conditions for workers, raise wages and make it easier for laborers to organize. Seven years later, Guatemala was named the most dangerous country in the world for trade unionists. Critics say basic rights of workers to form unions and speak out without facing discrimination are not enforced.

Supporters of the Trans-Pacific Partnership (TPP) are making many of the same promises. As they aim to shore up support in the U.S. Congress, proponents of the hotly contested trade deal say it will improve labor standards across signatory nations — especially in those countries known for mistreating workers and failing to enforce employment laws. According to U.S. officials the TPP “has the strongest protections for workers of any trade agreement in history.”

Cafta supporters struck a similar tone a decade ago. Seeking support from Congress, then-United States Trade Representative Rob Portman said the deal had the “strongest labor and environmental provisions of any trade agreement ever negotiated by the United States.”

Since the deal was signed, violence and intimidation of labor activists in Guatemala has spiked.

“Despite many years of promises by successive governments to take the steps necessary to respond to this crisis, the situation has only worsened with each passing year,” found a 2013 report from the International Trade Union Confederation, the world’s largest trade union federation.

Murder is a constant problem for workers who organize unions in Guatemala. Since 2007, more than 70 labor activists have been killed, according to the nonprofit Solidarity Center, which is affiliated with the AFL-CIO. Kidnappings, break-ins and death threats are fairly common as well.

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Export-oriented factories, or maquiladoras, have thrived under Cafta. While the facilities are supposed to respect labor law to receive generous tax breaks, Guatemalan authorities rarely enforce this requirement. Bosses regularly block efforts to organize unions, use subcontractors to avoid legal liabilities, demand uncompensated overtime and oversee hazardous working conditions.

At hospitals, workers can go weeks or months without a paycheck from their employer: the Guatemalan government. In Santa Elena, many of the nearly 500 people who work at the San Benito Hospital — from doctors and surgical assistants to janitors and administrative personnel — are awaiting two months’ pay. “It’s demoralizing,” said a surgeon, who asked not to be named for fear of repercussions.

Cathy Feingold, director of international affairs with the AFL-CIO, said the structure of Cafta left little incentive for the Guatemalan government to monitor and improve labor standards. It allowed Guatemala to start reaping the rewards of the trade pact without first showing evidence it was complying with the deal’s labor standards.

Critics say TPP commits the same error. Without immediately demanding that countries comply with its labor provisions, it extends benefits to countries like Malaysia, where a recent report found nearly a third of all migrant workers in the nation’s booming electronics industry are working under forced labor conditions, and to Vietnam, which bans all unions that are independent of a top-down labor federation tied to the Communist Party dictatorship.

Guatemala also suffers from the ravages of the inter-American drug trade, sends tens of thousands of migrants north a year to try and make a better life in the United States, has enormous problems with gang violence and political corruption, etc., etc. Trade agreements like CAFTA have done nothing to protect workers or union organizers, haven’t led to a better standard of living, or done anything at all they promise. Some of these problems, like the murder of union organizers, are definitely issues in Asia as well and almost certainly will be under the TPP as well. Others may be worse in Guatemala than Bangladesh. But then again, maybe not. In any case, if promoters of free trade agreements are going to make an honest argument about their benefits, they have to take Central America as seriously as they do Asia.

The reality of course is that for different reasons depending on country that different groups benefit from these agreements and that other groups do not benefit or even suffer. And certainly said trade agreements could be applied much more fairly to help people lived dignified lives. But that’s a level of complexity you rarely see from free trade prophets who would just prefer to forget that Guatemala, El Salvador, and Honduras exist when making their public arguments while being very happy to remember them when seeking to move factories around for the cheapest possible labor.