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Testimony of Lori Wallach on Proposed Central American Free Trade Agreement NAFTA Expansion before the House Ways and Means Committee

By Public Citizen's Global Trade Watch

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On behalf of Public Citizen’s 200,000 members, I thank the Committee for the opportunity to share my organization’s views on the proposed Central America Free Trade Agreement (CAFTA) NAFTA expansion. Public Citizen is a nonprofit citizen research, lobbying and litigation group based in Washington, D.C. with offices Austin, TX and Oakland, CA. Public Citizen, founded in 1971, accepts no government nor corporate funds. Global Trade Watch is the division of Public Citizen founded in 1995 that focuses on government and corporate accountability in the globalization and trade arena.

CAFTA, signed in May 2004, would expand the economic model established in the North American Free Trade Agreement (NAFTA) to five Central American countries and the Dominican Republic. If approved, CAFTA, like NAFTA, would require its signatory countries to conform their domestic policies and practices to a broad array of non-trade dictates, for example regarding the regulation of service sector companies and foreign investors’ operations in other economic sectors operating within a signatory nation’s territory. It would require signatories to provide certain patent medicine and seed protections that have been criticized by health and consumer groups worldwide as undermining consumers’ access to these essential ‘goods.’ It even sets constraints on how countries and other political entities may spend their own tax revenues. In addition, CAFTA contains the same model of interconnected trade rules and foreign investor protections that together create incentives that motivate business operations seek out the most profitable sites and processes for production, even if these are often contrary to the public interest.

An analysis of CAFTA’s provisions reveals that it replicated NAFTA’s provisions to a high degree – often with identical language. Thus, there is much that we can learn from the 11-year record of NAFTA, which CAFTA would expand to additional nations.