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Argument: Developed country export markets lose in free trade with poor countries

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Supporting evidence

  • Lou Dobbs. "Free trade at all costs?". March 4, 2005 - "But this agreement represents the same free trade at all costs policy that has led to a 70 percent increase in the trade deficit since 2001. We're not signing trade agreements to open new markets for our exports. Instead we're continuing to enter into outsourcing agreements with countries that cannot possibly buy our goods.
If you add up the gross domestic products of the six CAFTA economies, the total market comes to about $85 billion, according to the latest available figures. That's only slightly larger than the economy of New Haven, Connecticut and less than a fifth of the size of New York City. As such, expanding trade with this bloc cannot possibly be a serious growth driver for the $11 trillion U.S. economy.
The CAFTA trading partners are simply too poor and too small to serve as major consumer markets for anything made in America, if indeed we still are manufacturing anything in this country. But with 40 percent of workers in Central America earning less than $2 a day, CAFTA will pit the working poor of these countries against American workers, especially textile workers and small farmers. U.S. multinationals don't exactly have a great track record when it comes to keeping jobs at home in the face of cheaper labor overseas.
More than 35 percent of all U.S. goods exports to the six CAFTA countries consist of turnaround exports, which are unfinished textile, apparel and other materials that are not ultimately consumed in these countries. These "round-trip" imports are assembled by low-wage workers and exported right back to the American marketplace.
As a result, U.S. exports to CAFTA countries generally produce greater imports to our market, which further swells the worsening record trade deficit. In fact, turnaround exports have contributed to the U.S. trade deficit with the six CAFTA nations rising by nearly 60 percent from 1997-2004, according to the U.S. Business & Industry Council."

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