The Congressional Hispanic Caucus Should Lead on Updating CAFTA-DR
Ross Maza | 9/13/2021, 4:38 p.m.
The Congressional Hispanic Caucus (CHC), consisting of 38 congressional Democrats of Hispanic and Latino descent, is taking the lead on the redistricting fights in key states and a comprehensive immigration reform plan. But there is a key issue we need the CHCs leadership on that is getting little attention, which is updating the Dominican Republic–Central America Free Trade Agreement (CAFTA-DR).
CAFTA-DR was originally established to promote free trade in the region by reducing tariffs and other trade barriers to promote industry development and job creation. The CHC actually opposed CAFTA-DR when it came before Congress in 2005, because the agreement was based on the “disproportionate damage the NAFTA model had done to Latino workers in the United States and the widespread economic and social disruption NAFTA has caused in Mexico.” The assumption, rightly, was that since CAFTA-DR was modeled after NAFTA, the negative effects would be similar. Because of these valid concerns, CAFTA-DR barely passed through the U.S. House of Representatives by a 217-215 vote and was opposed by then senator, now President Joe Biden.
But while NAFTA has been updated to address the concerns of workers, CAFTA-DR has remained as is, which is why we need the leadership of CHC members to make updating this agreement a priority for Congress.
Without these updates, instability in the region and the lack of job opportunities will continue to drive immigrants to travel hundreds or thousands of miles on foot through harsh terrain, risking gang violence and other physical threats, in search of a better life. Given that we have seen immigration on the southern border increase, it is clear that there is still more work to do. Updating CAFTA-DR is a key component of both promoting job creation in Central America and increasing stability in the region.
When looking at what mutually beneficial changes could be made to CAFTA-DR, Congress needs to look no further than the “Rules of Origins” requirements contained in the agreement. In order to receive the benefits of the free trade agreement, “U.S. goods exported to the partner countries must qualify as originating as prescribed under the Rules of Origin section of the Agreement.” This means that the goods must be wholly obtained or produced entirely in one of the agreement’s member countries.
While the “Rules of Origins” requirement has been detrimental to many industries in the region, it is especially obvious in the apparel industry.
The apparel industry is a key driver of jobs and economic opportunities, particularly for women, in Central American countries. The apparel Rule of Origin requirements protected upstream American producers, but in turn have diminished the competitiveness of Central American garment exporters by making it more cost effective to produce garments in Asia.
We saw something similar happen after NAFTA was signed. Mexico’s textile and apparel sector boomed right after the agreement was put into place, but has been continually weakening since 2001.
In the end, the rule of origins requirement has led to a drop in apparel exports to the United States. In fact, apparel exports to the United States from Honduras, El Salvador, and Guatemala have fallen 21 percent since before CAFTA took effect. This is detrimental for economic growth and development in Central America, but can be fixed by updating the Rule of Origin requirements to decrease the cost of goods and allow businesses to reinvest in their labor force.
Thankfully, Congress has the power to update this agreement without requiring a renegotiation of CAFTA-DR by updating the rules for apparel though proclamation authority, which is already allowed for products other than apparel.
Given Congress’ authority on this issue, our local members of Congress are in a critical position to lead and enact effective change. Hopefully, CHC members like Reps. Jimmy Gomez (D-34-CA), Linda Sanchez (D-38-CA), Lou Correa (D-46-CA) and Senator Alex Padilla (D-CA), as well as my local Representative Judy Chu, will work together to update CAFTA-DR so it can better accomplish the outcomes it intended to - job creation for the member countries that will have lasting benefits for generations to come.
Ross Maza currently serves as a City Council Member of Alhambra, California.