CAFTA Plus DEC A Regional Boost

In the May 16, 2005, issue of Grand Rapids Business Journal it was apparent that likely 90 percent of the general population had no idea that years of work had been given to the Dominican Republic-Central American Free Trade Agreement, nor could federal legislators tell us how they might vote on the international trade treaty, though the presidents of six nations visited Capitol Hill. The very narrow passage of CAFTA last week by the U.S. House of Representatives is welcome, especially in West Michigan. Area Republicans supported the measure, including U.S. Reps. Vern Ehlers, Peter Hoekstra, Joe Schwarz and Fred Upton. President George W. Bush will likely sign the legislation soon. His reported view of the treaty emphasizes that CAFTA is about its positive long-term economic value.

The regional West Michigan World Trade Week in late May provided ample opportunities for business owners (and anyone interested) to learn something of the proposed legislation. One expert in Grand Rapids that week was Jim McCarthy, of the U.S. Department of Commerce and senior commercial officer at the U.S. embassy in San Jose, Costa Rica. McCarthy noted the CAFTA agreement would offer particular assistance in West Michigan, telling the Business Journal, “Many sectors that Michigan specializes in or is known for, I think that they coincide nicely with the sectors that we consider to be best prospects for Costa Rica and for Central America” — and he included information technology, medical equipment and auto parts as the beginning of that list.

The agreement provides that goods produced in the United States can be exported to the Central American markets without tariffs as currently charged (though no like tariffs exist on Central American goods brought to the U.S.).

The legislators opposing the free trade agreement continue to play on and bolster the economic fears of constituents, rather than acting as leaders and providing the facts, and U.S. Sen. Debbie Stabenow is among them. Ehlers holds fast to the facts, as do others such as the National Association of Manufacturers, which has distributed statistical analysis showing that NAFTA (as it has been used in comparisons to CAFTA) has brought gains, not losses, to the U.S., and that it was the economic downturn beginning in 2000 that spurred closings and layoffs in manufacturing. Even when considering such a broad-based assumption, one must remember that oft-blamed China is not a part of the NAFTA agreement.

U.S. Commerce Secretary Carlos Gutierrez (most recently CEO of Kellogg’s in Battle Creek) provided another assist for those who look to boost profits with exports. Gutierrez approved a second district export council (DEC) in Michigan, a status enjoyed by only a few states, larger than Michigan, including Texas and California

Department of Commerce representative Thomas Maguire sees it as a coup for West Michigan, recognizing the economic differences between east and west Michigan. Indeed. So, too, is CAFTA passage.