Central America Free Trade Agreement (CAFTA)

The Central American Free Trade Agreement (CAFTA) is a trade and investment agreement between the U.S., the Dominican Republic, and the Central American countries of Guatemala, Costa Rica, El Salvador, Nicaragua, and Honduras. Following a bitter fight, CAFTA was narrowly approved by the U.S. Congress in the summer of 2005.  A separate trade agreement with Panama was negotiated in 2006 and is waiting for Congressional action.

CAFTA is effectively an extension and expansion of the North American Free Trade Agreement (NAFTA) implemented in 1994 that has been linked to substantial job loss in the U.S. and economic upheaval in Mexico, especially among peasant farmers.

CAFTA has been approved by every country except Costa Rica but implementation with other countries was delayed beyond the scheduled January 1, 2006 start date because the U.S. government required that Central American governments pass separate and controversial "implementing" legislation mandated by last-minute changes agreed to after the formal negotiations were concluded.

The Bush Administration and Central American governments concluded negotiations on CAFTA in December 2003 but strong opposition during the 2004 elections forced the Administration to delay a vote until 2005.

CAFTA Deficient 

The agreement falls far short of the minimum threshold on worker rights protections advocated by USLEAP and most trade unions in the region as well as in the U.S. Passage of CAFTA largely replaces current U.S. trade programs with Central America (such as GSP, CBTPA, and CBI) that have much stronger worker rights protections. The approval of CAFTA sharply reduces the leverage of worker rights advocates like USLEAP to pressure Central American governments to improve and enforce labor laws protecting the basic rights of workers.

Human Rights Watch has an excellent critique of the worker rights provisions of the agreement.

During Congressional debate on CAFTA, the U.S. Trade Representative (USTR) issued a set of documents on its webpage defending CAFTA against worker rights criticisms. The AFL-CIO then issued a rebuttal of USTR's defense and members of Congress rejected USTR's position that Central American labor law is adequate in a spring 2005 letter.

CAFTA is also deficient in other areas, including environmental protections and safeguards for small farmers. A comprehensive critique of CAFTA is available from the Alliance for Responsible Trade. An overall evaluation of CAFTA signed by 48 organizations, including USLEAP, is available on the website of the Washington Office on Latin America.