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This letter was sent today to the members of the Senate Finance Committee by Alan Reuther on behalf of the UAW. It articulates our position on this trade agreement.

June 27, 2005

The Honorable Charles Grassley, Chairman
Senate Finance Committee
219 Dirksen Senate Office Bldg.
Washington, D.C. 20510

The Honorable Max Baucus, Ranking Member
Senate Finance Committee
219 Dirksen Senate Office Bldg.
Washington, D.C. 20510

Dear Chairman Grassley and Ranking Member Baucus:

On Tuesday, June 28, the Senate Finance Committee is scheduled to markup the implementing legislation for the United States-Dominican Republic-Central American Free Trade Agreement (CAFTA). The UAW urges the Committee to reject this legislation because the CAFTA deal negotiated by the Bush Administration unfortunately follows a pattern of failed trade deals that have saddled our nation with a precarious trade deficit, escalating job losses and stagnant wages.

The UAW objects to CAFTA because it fails to include strong, enforceable protections for worker rights. The labor provisions in CAFTA are actually weaker than the current labor conditions that apply to Central American countries under our unilateral trade preference programs, the Generalized System of Preferences (GSP) and the Caribbean Basin Initiative (CBI). They are a step backwards from the labor rights provisions of the U.S.-Jordan Free Trade Agreement, which passed Congress unanimously in 2001. Unlike the Jordan agreement, CAFTA excludes the vast majority of its labor rights obligations from the accord s dispute settlement and enforcement mechanisms. Under CAFTA, only the requirement that countries enforce their own labor laws is subject to dispute settlement and enforcement, but this is rendered meaningless by the fact that CAFTA does not require countries to maintain even minimal labor standards like child labor laws.

Moreover, CAFTA relegates violations of labor rights provisions to a significantly lower status than violations of intellectual property and commercial rights. Under CAFTA, only violations of the agreement s commercial provisions can lead to trade sanctions or punitive fines. Labor rights violations cannot lead to trade sanctions, and fines are capped at an arbitrarily low dollar amount, without regard to the harm caused.

The current account deficit for the U.S. is a staggering $780 billion, annualized from the first quarter of this year. The U.S. economy has lost over 2.8 million manufacturing jobs since January 2001. Wages for American workers are stagnant, while fuel costs spiral upward. These alarming facts have been caused, in large part, by our failed trade policies, including past flawed trade deals and the Administration s failure to address China s manipulation of its currency, which undercuts our nation s ability to export U.S.-made goods and unfairly lowers the cost of goods imported from China.

In light of this mounting evidence, it would be a grave error for Congress to repeat the mistakes of the past by approving yet another flawed trade deal. Accordingly, the UAW urges you to oppose CAFTA when it is taken up by the Senate Finance Committee this week.

Sincerely
Alan Reuther
Legislative Director



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