Fact Sheet: CAFTA’s Tragic Legacy in Central America: Failed Trade Policy That Drove Millions From Their Homes

By Public Citizen's Global Trade Watch

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After more than a decade of the Central America Free Trade Agreement (CAFTA), the region has seen hardship for workers and farmers, corporate attacks on health and environmental laws, and political instability leading to deplorable human rights conditions. President Trump is scapegoating Latin American immigrants for the economic insecurity facing many Americans with his racist attacks and xenophobic obsession with building a wall along our southern border. But it is the same U.S. trade policies that harm working people in the United States that also have left many in Central America with no option but migration as they struggle to feed and care for their families.

After observing the devastation that the North American Free Trade Agreement (NAFTA) caused in Mexico’s countryside in the 1990s, many Latin American nations rejected the NAFTA model. This became evident in 2003, when negotiations for a U.S.-proposed hemisphere-wide NAFTA expansion called the Free Trade Area of the Americas (FTAA) collapsed. But the big pharmaceutical, agribusiness, oil and retail corporations that were reaping windfall profits under the NAFTA model wanted more. Plan B for the George W. Bush administration was to seek NAFTA-style deals with a subset of Latin American countries they dubbed the “coalition of the willing.”

Among those agreements was CAFTA. It expanded to Guatemala, El Salvador, Honduras, Costa Rica, Nicaragua and the Dominican Republic the agricultural provisions included in NAFTA that had devastated Mexico’s rural economy. Oxfam predicted that up to 1.5 million people in Central America whose livelihoods were connected to rice production alone could face displacement. Early in the negotiations, Central American immigrant advocacy groups warned that CAFTA could destroy millions of livelihoods and were ignored by the Bush administration. CAFTA faced fierce resistance by U.S. Latinx organizations, including the League of United Latin American Citizens and the Labor Council for Latin American Advancement, and much of the Congressional Hispanic Caucus. Despite this, CAFTA passed Congress in 2005 by one vote.