Trading with Neighbors: CAFTA Winners and Losers

Apr 19, 2005


Dr. Russell Roberts
Professor of Economics 
George Mason University 

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Efforts at creating a hemisphere-wide “free-trade” area will soon face another hurdle in the passing of the Central American Free Trade Agreement, or CAFTA.  Few issues cut across party lines as deeply as the issue of trade, and as a result, the predictions are the vote will be close.

Proponents of liberalizing trade with our southern neighbors stress the benefits to US exporters through lowered overseas barriers as well as the cultivation of political and economic ties that could plant and support democratic movements in those countries. Opponents to expanding trade in Central America point out that “free trade” in politically sensitive goods, such as sugar, apparel, corn, and dairy is noticeably absent from the agreement, and that efforts to open up American markets to cheap imports will hurt small farmers and low-skilled workers.

To help Congressional staff think through this complex issue, the Mercatus Center at George Mason University will host a seminar focused on the economic theory and reality behind trade agreements like CAFTA.  Program participants will leave with an appreciation for the economics that underlie international trade agreements, as well as a deeper understanding of what trade means for national economies, workers, and consumers.  We will address such questions as:

  • How will CAFTA create wealth?  Who will gain and who will lose from this agreement?  Are low-skilled workers in Central America getting their fair share? 
  • What are economic and political considerations for policymakers to keep in mind while evaluating CAFTA and other trade proposals? 
  • Does CAFTA benefit poor countries or exploit them?  Should there be a level playing field in wages and environmental and safety regulations?  If so how might that be achieved?
  • Which markets will be affected the most and how?  What will CAFTA mean to farmers in the United States?  To Central American farmers?  To apparel manufacturers?