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Public Citizen
MARCH 10, 2005
2:04 PM
CONTACT: Public Citizen  
Main Office: 202-588-1000
U.S. Chamber of Commerce Distorts NAFTA Record, Hides Potential CAFTA Costs to California, Central America
New Study Analyzes Chamber of Commerce Report, Demonstrates Flawed Methodology, Misleading Numbers on NAFTA, CAFTA

WASHINGTON -- March 10 -- While Central American ambassadors visit California as part of a U.S. Chamber of Commerce-sponsored public relations tour to promote a proposed Central America Free Trade Agreement (CAFTA) North American Free Trade Agreement (NAFTA) expansion, a new study by Public Citizen calls into question many of the Chamber’s claims about CAFTA’s potential implications for the United States and Central America.

In early 2005, the Chamber released a study projecting possible gains from CAFTA to the United States and several state economies, including California. CAFTA would extend NAFTA to six additional countries: Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua.

“We heard the same projections about new jobs and economic gains from NAFTA, and now a decade later we know these were lies,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Here’s the same source using the same fraudulent methodology to try to sell us old NAFTA wine in new CAFTA bottles.”

The Chamber claims that CAFTA would create 20,000 U.S. jobs in its first year and 100,000 jobs over its first nine years – including nearly 14,000 in California alone. Yet these rosy projections for employment gains stand in sharp contrast with more than a decade of actual net job losses during the previous decade of “free trade.” From 1989 to 2002, California lost more than 315,000 jobs as a result of NAFTA and increased trade with China, according to the non-partisan Economic Policy Institute. This number, unlike the numbers given in the Chamber study, is the balance between jobs gained due to increased exports and jobs lost due to increased imports. Almost 100,000 California workers qualified for trade adjustment assistance, a narrow program providing benefits to certain categories of workers who have lost jobs to trade. Given the limited scope of the program, these numbers indicate the real cost to Californians of misguided trade agreements.

There are major methodological failures in the Chamber study. It assumes that there would be no new imports from Central America – an assumption out of touch with NAFTA’s 11-year record with the bizarre implication that Central America would not stand to gain anything from the agreement. It also assumes a level of growth in U.S. exports to Central America that is far out of line with the developing countries’ ability to absorb.

“For the assumptions of the Chamber study to become reality, by 2013 as much as a third of Central America’s economies – and nearly 90 percent of the Honduran economy – would have to be absorbed by U.S. export sales,” said Todd Tucker, research director for Public Citizen’s Global Trade Watch. “Such absurd numbers for such poor countries defy logic and arithmetic, let alone political reality.”


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