COMMENTS ON THE PROPOSED
U.S. – CENTRAL AMERICA FREE TRADE AGREEMENT (CAFTA)
Testimony of Thea M. Lee, Assistant Director for International Economics
American Federation of Labor and Congress of Industrial Organizations
(AFL-CIO)
November 19, 2002
We appreciate this opportunity to offer comments on the proposed free
trade agreement with Central America, on behalf of the thirteen million
members of the AFL-CIO. The AFL-CIO welcomes closer economic ties with
Central America, but we are deeply concerned that the standard free
trade agreement model will not work for working families in Central
America and United States.
The countries of Central America – Costa Rica, El Salvador, Guatemala,
Honduras, and Nicaragua – face many obstacles to achieving robust,
stable development: high rates of poverty and inequality, unsustainable
debt burdens, declining terms of trade for many of their products on
world markets, and fragile democratic structures that are still grappling
with the legacy of decades of political violence. Any trade agreement
with the region must recognize and address these challenges.
We are working closely with trade unions in Central America to develop
proposals for an integration model based on a foundation of strong domestic
institutions, including independent, democratic trade unions and states
with the capacity to regulate employers and protect workers’ rights.
Our proposals recognize the United States’ own responsibility
to contribute to the long-term social, political, and economic development
of the region, and to work with the governments of Central America to
find common solutions to some of our common problems, such as crushing
external debt burdens and the rising pressures on immigrant workers.
Simply expanding market access and freeing capital will not stimulate
real development in Central America. Increased trade with the region
must be accompanied by improvements in workers’ rights, measures
for debt reduction, a just immigration policy, and commercial rules
that safeguard the public interest, not just private profits.
Any trade agreement that falls short of these proposals will be a failure
for Central America and a failure for American workers, and we will
work with our allies across the region to oppose it.
Workers’ Rights in Central America
Workers in Central America have too often been excluded from the benefits
of increased trade in the region, as they continue to struggle to have
their basic human rights respected in the workplace. Repeated and systematic
violations of workers’ rights retards the development of Central
American countries, and drags down standards for American workers who
are thrown into a vicious race to the bottom with their fellow workers
in the region.
Not one Central American country included in the proposed CAFTA comes
close to meeting a minimum threshold of respect for the ILO’s
core labor standards: freedom of association, the right to organize
and bargain collectively, and freedom from child labor, forced labor,
and discrimination. While the labor movement has been able to pressure
Central American governments to improve labor rights with some positive
results in a few cases, there are hundreds more where governments have
stood by while labor rights are violated, or have themselves been the
violators. There has been no significant improvement in any of the areas
discussed in the AFL-CIO’s July 17, 2000 comments on Caribbean
Basin Trade Partnership Act (CBTPA) eligibility. Some of the most troubling
cases of continued workers’ rights violations in the region are
detailed below.
Costa Rica
The Costa Rican government has fostered and promoted specific mechanisms
to undermine collective bargaining. The labor code explicitly permits
direct dealing between employers and employees over terms and conditions
of employment. It permits the formation of “Permanent Workers’
Committees” that are authorized to present complaints or requests
on behalf of the workforce. In practice, these committees are effectively
controlled by employers. And the government continues to encourage the
formation of Solidarista associations that, despite being explicitly
prohibited from collective bargaining, have increasingly taken over
functions that properly belong to unions.
Collective bargaining in the public sector is effectively prohibited.
The government has consistently interpreted the 1979 General Law on
Public Administration to prohibit collective bargaining for most categories
of public employees. Examples of workers who do not have the right to
bargain include cooks in school cafeterias, garbage collectors, highway
maintenance workers, and musicians in the National Symphony Orchestra.
Attempts to resolve public sector labor disputes through the arbitration
procedures established in the Labor Code were held unconstitutional
in 1992.
The AFL-CIO filed a petition in June 2001 requesting removal of Costa
Rica from the list of countries eligible for benefits under the Generalized
System of Preferences (GSP). The government’s reaction, rather
than to respond to the serious issues of worker rights violations raised
by Costa Rican unions, was to accuse the unions of being – in
the words of a Presidential spokesman – “traitorous, ingenuous,
and evil.”
An ILO technical mission visited Costa Rica in September 2001. The
mission reported the existence of serious problems in the application
of Conventions 87 and 98, emphasizing the “confusion, uncertainty,
and even legal insecurity existing with regard to the scope of the right
to collective bargaining in the public sector.”
The Costa Rican government, in a recent letter to USTR, claimed that
it had made great progress on worker rights. In fact, the government’s
record has been one of inaction and, frankly, deception.
The government claims that it has submitted ILO Conventions 151 and
154 to the legislature for ratification. What they do not say is that
this ratification has been pending for 15 years.
The government asserts that it has proposed amendments to Article
192 of the Constitution and the General Act on Public Administration
to permit collective bargaining in the public sector. Again, similar
proposals have been pending for at least a decade with no action.
The government also touts its proposed reforms on freedom of association.
But in fact its draft amendment to the Labor Code unilaterally and significantly
weakens the reform package that was agreed on by labor, business, and
government but never enacted – because the government subsequently
demanded major concessions on wage flexibility in exchange for its support.
As well, the 2002 amendment contains numerous exceptions that render
it ineffective.
The government asserts that it has improved prosecution of anti-union
acts. But the statistics it provides on employment cases lump freedom
of association cases together with all sorts of individual employment
cases, disguising the delays of up to nine years in adjudicating freedom
of association claims.
The government purports to have reactivated social dialogue. In fact,
the new “Commission on Labor Reform” chaired by the Minister
of Justice was constituted on September 5 but has never been convened
despite union requests to do so, apparently because the government has
not appointed a new Minister. The “National Commission on Employment”
has never met. The labor-business dialogue has some union participation,
but focuses on employment policy, not worker rights.
In short, the government of Costa Rica is making the same promises
to reform it labor laws that it made in 1992, in 1995, in 1998, and
two years ago. And there is far less reason to believe these promises
now than a decade ago.
El Salvador
The government of El Salvador’s continued assault on trade union
freedoms has provoked significant social protest. On November 9, as
many as 300,000 people marched in San Salvador to support health care
unions that are striking to protest the privatization of public hospitals.
The government has sought to weaken health care unions by illegally
firing their members. In July 1999, 221 workers were fired. Despite
a Supreme Court order of reinstatement in July 2001, the government
has not allowed the fired workers to return to their jobs.
In the apparel-producing maquilas, the violations of worker rights
disclosed in a USAID-funded report by an investigative unit of the Ministry
of Labor in August 2000 continue. The most serious current case is the
TS2 factory in the San Bartolo FTZ, owned by the Taiwanese multinational
Tainan Enterprises and producing for the Gap and other U.S. retailers.
In 2000, workers began organizing a section of the Sindicato de Trabajadores
de Industrias Textiles (STIT). The organizing effort faced a series
of reprisals, including the firing of two union leaders on February
26, 2001 and continued efforts by management to force workers to join
a company-sponsored union. The union asked the Labor Ministry for legal
recognition on May 23 and finally received it on July 9. Union supporters
continued to receive threats of dismissal and physical attacks orchestrated
by the Taiwanese managers.
On October 17 2001, 109 workers from the unionized TS2 plant in Tainan
were illegally suspended. A protest organized by the union caused Tainan
to reinstate the suspended workers on November 4. STIT continued to
organize and on April 18 presented evidence of majority support required
to negotiate a collective bargaining agreement (the first case of collective
bargaining in the Salvadoran maquilas). That same week, Tainan announced
that it was shutting down its plants because its clients allegedly no
longer wished to work with unionized workers. On April 26 2002, Tainan
began breaking down its machinery in the San Bartolo factory.
Tainan workers have taken their case to the Gap’s shareholder
meeting and the U.S. Congress. Eleven members of Congress signed a letter
asking Gap not to “cut and run” from the TS2 factory. On
September 13, 2002, a judge of the Fourth Labor Court declared Tainan’s
suspension of its employees’ work contracts illegal. Yet Tainan
has not accepted STIT’s demand to reopen the factory.
Another case involving serious violations of worker rights occurred
at the International Airport. For several years, the union representing
workers under a collective bargaining agreement with the airport authority
has publicly opposed the government’s plans to privatize the airport.
On September 23, 2001 at 11:00 p.m., Salvadoran Armed Forces and specially
trained police assault forces entered the airport without prior warning
and proceeded to disarm airport security personnel. They informed the
workers that they had been fired and instructed them to leave the airport.
The next day, the same forces denied entrance to airport personnel who
worked in maintenance and loading zones. Military officials accosted
individual workers, demanding that they renounce their membership in
the union. On September 25, the head of the armed forces at the airport
informed workers that only those in maintenance could return and that
157 employees, all union members, were fired.
A Labor Ministry investigation of the union’s claim that the
authority was engaging in an illegal lockout documented a series of
anti-union actions including threats and denial of access to the union
office; however the Ministry refused to draw a legal conclusion or take
any further action. The union also presented its claim to a Civil Judge
in Zacatecoluca on September 24. The judge informed the union that the
court would conduct an “inspection” of the airport (a procedure
not contemplated in the Labor Code). Finding that the airport was operating,
albeit with military personnel, the judge declared on October 1 that
airport management had not violated the law. The union appealed the
decision but the appeal was denied. It also filed a complaint with the
ILO Committee on Freedom of Association, which asked the government
to investigate the case and reinstate and workers dismissed on account
of union activities. Likewise, the government’s Human Rights Procurator,
in a report dated December 20, 2001, concluded that the authority had
illegally interfered with union activities and requested that the dismissed
workers be reinstated with back pay.
In February 2002, the union and the authority reached an agreement
allowing 64 workers to form a cooperative that would be contracted by
the authority for baggage handling. These workers are now working the
same jobs as before but for less pay and without job security. On March
8, Human Rights Watch sent a letter to the President of El Salvador
urging him to ensure that union members at the airport can exercise
their right of association and requesting a thorough investigation of
the anti-union actions. However, union activists are still being pressured
to resign, as evidenced by threats received on July 5 and August 13
of this year.
Guatemala
Despite pressure from USTR, the government of Guatemala continues to
systematically violate workers’ rights to freedom of association
and collective bargaining. Guatemalan labor courts are characterized
by lengthy backlogs, delays, and above all the inability to enforce
their decisions. The United Nations Mission in Guatemala reports “serious
legal inconveniences and practices that make it impossible to achieve
effective labor norms such as prompt and thorough treatment by the justice
system.”
The AFL-CIO petitioned USTR to terminate Guatemala’s GSP benefits
in August 2000. Shortly thereafter, USTR self-initiated a review of
Guatemala’s eligibility for GSP benefits. A hearing was held in
March of 2001. USTR lifted the review following the trial of 22 persons
accused in the assault on leaders of the banana workers’ union
SITRABI and the enactment of a labor law reform bill in April.
The SITRABI trial resulted in convictions of 22 individuals, but none
had to serve a jail term. In contrast, the five union leaders who had
been assaulted were forced to leave the country and seek political asylum
in the U.S. No progress has been made to address the impunity issue
in the numerous other cases cited in the AFL-CIO’s petition or
in many other cases raised in prior petitions, including the cases of
six union members murdered since 1999.
According to a Human Rights Watch Report this year, “efforts
to form labor unions in the maquila sector have met with devastating
resistance from the industry as a whole and, at best, government negligence.
Unionization efforts have been countered with mass dismissals, intimidation,
indiscriminate retaliation against all workers, and plant closings.”
No progress has been made in taking either criminal or disciplinary
measures against the persons responsible for the assaults on workers
at the Choi Shin and Cimatextiles maquilas, who were attempting to organize
a union, on July 18, 2001.
The labor law reform approved in April is likewise flawed and inadequate.
While the law was improved by affording agricultural workers the right
to strike during the harvest, there is no evidence that workers in the
countryside (where impunity is most pronounced) have been able to exercise
this right in any meaningful way. In other areas, the bill falls far
short of the ILO’ recommendations. The President is given broad
discretion to ban strikes in the public sector, and a highly burdensome
requirement is established for the formation of industrial unions –
50% plus one of all workers in the industry.
Recent cases demonstrate the failure of the Labor Code reforms to improve
respect for worker rights. The new Article 209 is designed to protect
workers in the process of forming a union. It states that workers who
have informed the Labor Ministry of their intention to unionize are
protected from being fired. It also states that any worker who violates
article 77 (which outlines justifications for firing workers) cannot
be fired without a court’s authorization. The new Article 380
extends protection to all workers at a work site where a judge has declared
a “collective conflict.”
Both Article 209 and Article 380 have stipulations for the immediate
reinstatement of workers fired without authorization. But the government
simply refuses to enforce these provisions. A few examples:
• At the Finca Maria Lourdes in Quetzaltenango, 55 workers have
been illegally fired since 1995. The labor court has issued seven separate
resolutions ordering reinstatement for the fired workers. Each resolution
explains that the workers were fired in violation of Article 209 of
the Guatemalan Labor Code, which stipulates that workers fired without
proper authorization must be reinstated within 24 hours. However, not
one of the reinstatement orders has been enforced.
• Salama Horticulture in Baja Verapaz illegally fired 52 workers
who were attempting to organize a union on August 27, 1997. Despite
a ruling from the Guatemalan Supreme Court in 1999 ordering their reinstatement,
the employer has not allowed them to return.
• In the case of the electrical distributor DEOCSA, a labor court
ordered the immediate reinstatement of nine fired union members on October
18, 2002. However, the nine employees have not been reinstated.
The new Article 241 states that “confidential employees and representatives
of management cannot participate in a strike vote.” Yet on October
23 of this year, in a dispute between the Coca-Cola bottler EMBOCEN
and its union, a labor court judge issued an order allowing confidential
employees to vote on a strike.
These cases demonstrate that labor law reforms will be ineffective so
long as the Government of Guatemala (including all three branches of
government) lacks the will to fairly apply and effectively enforce laws
that protect fundamental worker rights.
Honduras
The Honduran government continues to tolerate a broad and systematic
pattern of worker rights violations, particularly in maquiladoras producing
apparel for export to the U.S. market. The government has failed to
adhere to the commitments made to USTR in a 1995 Memorandum of Understanding.
The government has not lived up to its undertaking in the MOU to seek
support from all sectors for reforms of numerous sections of the Labor
Code that have been criticized by the ILO as restrictive of workers’
rights. Nor have labor inspection procedures been modernized as the
MOU requires.
The Honduran Labor Ministry and its office of Labor Inspection in San
Pedro Sula continue to be problematic with respect to the enforcement
of labor rights in the maquiladora sector. Management at the Corazón
factory illegally fired union leaders within hours after the SITRACOR
union was formed on July 27. Reinstatement of the workers was secured
not by the actions of the Honduran Labor Ministry but by direct pressure
on Corazon’s owners in Korea, Yoo Yang International.
More egregious are continuing reports of collusion between local labor
inspectors in San Pedro Sula and plant management. Labor inspectors
have intervened consistently on the side of management and have refused
to respond to union requests for inspections of worker rights violations.
One inspector said that he would come to the factory only if the union
paid for his gas.
Rather than investigate anti-union activities, the Labor Ministry has
accepted a highly questionable application for recognition by company-backed
union. This application is being used to deny workers their basic right
to form a union, and again raises questions of collusion between management
and Honduran labor officials.
Nicaragua
Labor rights violations in the Las Mercedes FTZ continued unabated.
According to Nicaraguan unions, ten unions have been busted in the Las
Mercedes Free Trade Zone this year. Two union leaders fired from the
Mil Colores factory have not been reinstated. At the Hansae factory,
the plant manager made death threats against workers to try to get them
to renounce their union. At the Won Mi factory, a union was legally
recognized on July 25; the company immediately fired all but one member
of the union executive. Workers have not received payment for overtime
worked, in some cases 24-hour shifts.
Workers’ Rights in CAFTA
With continued severe violations of workers’ rights in Central
America, it is extremely troubling that the administration’s proposal
for a free trade agreement with the region could dramatically and irreversibly
weaken the current labor rights conditions contained in the GSP and
CBTPA, while extending additional market access to Central American
countries. This would provide a perverse incentive to Central American
governments, and rob Central American workers of one of the few tools
they have to fight for recognition of their basic human rights in the
workplace.
The U.S. labor movement and our allies in the region have been able
to use the labor conditions of U.S. unilateral trade preference programs
– flawed though they are – to achieve some important but
isolated improvements in workers’ rights in Central America. The
GSP and CBTPA require countries to provide internationally recognized
worker rights; domestic laws must not only be effectively enforced,
but they must also conform to substantive international standards. The
programs also contain a public petition procedure to allow interested
parties, including trade unions, to initiate complaints about workers’
rights violations, and they allow for the withdrawal of trade benefits
in the case of such violations.
The administration’s reading of the Trade Promotion Authority
act, as evidenced in its proposed labor language for free trade agreements
with Singapore and Chile, is a huge step backwards from the modest labor
conditions of GSP and CBTPA. The administration’s proposal would
only require countries to enforce their existing labor laws, no matter
how inconsistent those laws are with internationally recognized worker
rights. Their proposal contains no public petition procedure, and it
may even reduce the amount of sanctions now available under GSP and
CBTPA. Such a drastic dismantling of labor rights conditions, accompanied
by an increase in market access, is completely unacceptable and would
set back the struggle for workers’ rights in the region for decades
to come.
The U.S. has long recognized that Central America’s labor laws
are not up to international standards. A lone obligation to enforce
existing labor laws will not provide sufficient guarantee that core
workers’ rights are actually respected in the region. The labor
provisions of the Central America FTA must be stronger than those found
in the Jordan FTA (and much stronger than those proposed for the Singapore
and Chile agreements). The Jordan FTA’s labor provisions were
acceptable for Jordan, because Jordan’s labor laws substantially
meet ILO standards. These same provisions would be woefully inadequate
in the Central American context, and in any other context where labor
laws fall far below ILO norms. The Central American governments must
reform their labor laws to meet international standards, and continued
compliance with these standards and effective implementation of domestic
laws must be enforceable obligations in any regional trade agreement
with Central America.
Anything less would render the references to promoting ILO standards
in the recently passed Trade Promotion Authority act meaningless. It
would send a signal to other countries that routine violations of workers’
rights present no obstacle to graduating from the benefits of a trade
preference programs to participation in a free trade agreement. And
it would lock workers in the region into a system of competition based
on weak laws and even weaker enforcement, where workers are unable to
exercise their basic human rights and denied access to their fair share
of the benefits of expanded trade.
Finally, it is essential that the dispute settlement and enforcement
mechanisms for the labor and environmental provisions of an agreement
be the same as those mechanisms for the commercial provisions of the
agreement. The labor and environmental provisions must be in the core
of the agreement, not in a side agreement. To the extent that the agreement
outlines precise procedures to strengthen enforcement in other areas
such as intellectual property rights protection, it ought to do the
same for the enforcement of labor and environmental measures. Any monetary
enforcement mechanism must contain strong rules to ensure that fines
are large enough to deter violations, and any fines spent to remedy
enforcement problems must truly fulfill that goal. At the end of the
day, if fines do not fully remedy workers’ rights violations or
are not paid, there must be recourse to trade sanctions to enforce the
labor provisions of an agreement.
The inclusion of enforceable workers’ rights provisions is necessary
to make a trade agreement with Central America a successful model for
economic integration, but it is not sufficient. The agreement must include
equitable and transparent market access rules that allow for effective
protection against import surges or other trade law violations, and
must include enforceable protections for the environment. NAFTA-style
commercial provisions that protect corporate rights at the expense of
public health and safety, the environment, essential human services,
and equitable economic development must be reformed. Some of these provisions
are outlined below.
Immigration
Immigrant workers from Central America make important contributions
to the U.S. economy, to their communities, and to their workplaces.
Many of these workers are vital and active members of our American labor
movement. Yet these workers face routine violations of their rights
to organize here in the U.S. The Supreme Court’s Hoffman Plastics
decision is just the most recent example of how immigrant workers’
legal status is used to deny them their basic rights in the workplace.
The AFL-CIO supports a legalization program for immigrant workers that
is based on the creation of permanent legal status, full protection
for workers’ labor rights, and vigorous enforcement of labor laws.
The kinds of expanded guest worker programs that have been proposed
in the Chile and Singapore negotiations will not provide the security
or rights that immigrant workers need, and will not stimulate the development
that Central American economies require. Without adequate protections
for the fundamental rights of both migrant and domestic workers, temporary
entry programs become an easy way for corporations to circumvent domestic
labor laws and to weaken the ability of workers to join unions and demand
fair compensation. Proposals to do away with the few protections that
exist in our current temporary entry program – lists of professional
categories, prevailing wage provisions, and requirements to reach out
to domestic workers and not undermine labor conditions in the domestic
market – have absolutely no foundation in the Congressional negotiating
objectives of Trade Promotion Authority and have no place in a fast-tracked
trade agreement.
No solution to the immigration problem is possible unless an integration
agreement enables the countries of Central America to pursue real, sustainable
development that will create economic security for rural populations
and good jobs for Central American workers. Equitable economic development,
based on strong workers’ rights and robust domestic demand, is
the only way to relieve the pressure on workers in the region to leave
their homes and their families in search of work.
Debt and Finance
An agreement with Central America must allow countries to regulate the
flow of speculative capital in order to protect their economies from
the kind of excessive volatility that has led to financial crises in
Mexico and Argentina and now threatens Brazil. In addition, the agreement
must address the possibility of massive currency devaluations and the
impact these devaluations have on fair competition in the region. Any
agreement should include debt relief measures that will allow Central
American countries to adequately fund education, health care, and infrastructure
needs, thereby contributing to closing the gap between rich and poor
within and between nations, and diminishing the financial instability
caused by mounting debt burdens. Finally, U.S. development assistance
to the region should increase significantly.
Investment
NAFTA gives corporations the right to challenge our laws in secret tribunals
and to demand compensation from governments. NAFTA’s investment
chapter is seriously flawed, and multinational corporations have exploited
these flaws to challenge legitimate government regulations designed
to protect the environment, shield consumers from fraud, and safeguard
public health. The AFL-CIO strenuously objects to the inclusion of investment
measures modeled on NAFTA Chapter 11 in a trade agreement with Central
America.
Investment rules should not grant investors any rights greater than
those rights that domestic investors already enjoy under U.S. law. Only
direct expropriations of real property – not regulations that
diminish an investor’s returns – should be disciplined by
trade rules. Minimum treatment obligations should be limited to the
procedural fairness requirements of customary international law.
An agreement with Central America should contain a broad carve-out
allowing governments to regulate corporate behavior to protect the public
interest. Government regulations that are reasonably related to legitimate
policy aims such as environmental protection, public health and safety,
consumer protection, the regulation of anti-competitive practices, and
the protection of human rights and workers’ rights – including
protections necessary to fulfill a government’s obligations under
ILO conventions and international human rights instruments – must
not be subject to challenge under and agreement.
A trade agreement should rely on government-to-government rather than
investor-to-state dispute resolution. If a private right of action for
investors is created, it should at a minimum require exhaustion of domestic
remedies and an opportunity for home states to intervene in disputes
involving their investors. All dispute resolution mechanisms should
be fully transparent and accessible to interested members of the public.
Services
NAFTA and WTO rules restrict the ability of governments to regulate
services – even public services. The U.S. company UPS is arguing
that Canada’s public postal service violates NAFTA, because governmental
support for the postal service is an unfair subsidy. Increased pressure
to deregulate and privatize services could raise the cost and reduce
the quality of such basic services as health care and education. Any
agreement with Central America should contain a broad, explicit carve-out
for important public services, including those provided on a commercial
basis or in competition with private providers. There should be no pressure
on governments to open their pension systems or other public services
to more private competition, or to lock in private competition in these
sectors. Services rules should be negotiated sector by sector, and should
preserve the ability of national, state and local governments to regulate
private service providers in the public interest.
Procurement
NAFTA and WTO rules on procurement restrict the public policy aims that
may be met through procurement policies at the federal, state, and local
level. For example, in the Executive Order banning the federal purchase
of goods made by forced child labor, signatories to these procurement
agreements were specifically exempted from the order out of fear that
the order would violate trade rules. The U.S. should focus on revising
– not extending – this flawed model. Trade agreements should
not constrain those procurement rules that serve important public policy
aims such as environmental protection, local economic development and
social justice, and respect for human rights and workers’ rights.
Governments have a right to invest their tax money in local firms and
to use procurement policy to pursue broader social goals.
Intellectual Property Rights
An agreement with Central America should allow all parties to take full
advantage of the flexibility available under WTO Trade Related Agreement
on Intellectual Property Rights (TRIPs) to compel the licensing of life-saving
pharmaceuticals in a public health crisis. Any agreement, rather than
constraining this flexibility, should clarify the TRIPs exception to
ensure that public health crises are considered national emergencies
within the agreement, and to ensure that if a government uses this exception
it will not be subject to sanctions under the free trade agreement or
any other trade law.
E-Commerce
If the CAFTA commits the Parties to refrain from “imposing unnecessary
barriers on electronic transmissions, including digitized products,”
as does the Jordan FTA, we believe it is important that the agreement
clarify that such a clause would not be a barrier to any future state
initiatives to tax goods sold over the Internet or other non-discriminatory
tax measures. We are aware of the ample precedent in international trade
law for exempting non-discriminatory taxation schemes from commercial
agreements. We are also aware that there is a common understanding among
trading partners that most destination-based consumption taxes are not
viewed as barriers to trade. However, we believe it is important to
make this understanding explicit under any agreement with Central America.
We therefore request that the agreement explicitly exempt existing state
sales tax regimes and non-discriminatory taxation more generally from
any new disciplines on e-commerce.
Democracy
The FTAA negotiators made a significant step forward before the 2000
Summit of the Americas in Quebec and again this year in Quito by releasing
draft texts of the FTAA. We hope for the same kind of transparency in
the negotiations with Central America. Citizens in the region have a
right to know not only what the draft CAFTA proposals are, but which
ones their government is supporting and opposing. Once the agreement
is concluded, dispute resolution measures should also be open to the
pubic. A transparent, inclusive, and democratic process, both for the
negotiation of the agreement and for its eventual implementation, is
essential to ensure the legitimacy of the process.
Thank you for this opportunity to submit our views on the proposed
free trade agreement with Central America. We believe that the agreement
can only succeed if it takes into account the needs of workers and their
families in the region, and includes the reforms we have presented here
today.
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