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Corporate Globalization Resistance

CAFTA and the Drug Industry
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By Harold Meyerson

Spreading democracy is one thing. But do we really want
America to be known for spreading the pricing practices
of our drug companies?

In Guatemala, the United States has become the sales
rep for the pharmaceutical industry. Citing urgent
public health concerns, the Guatemalan legislature
enacted a law last year that permitted the marketing of
generic drugs alongside their brand-name equivalents.
Citing the Central America Free Trade Agreement
(CAFTA), whose ratification congressional committees
will begin to consider next week, the U.S. trade
representative then told the Guatemalans that any such
drug legislation would stop CAFTA dead in its tracks.
If the five Central American nations (plus the
Dominican Republic) that had signed CAFTA wanted it
ratified, Guatemala would have to repeal the new law.
Reluctantly, Guatemala obliged.

Though the rules laid down by the World Trade
Organization permit generic competition, CAFTA imposes
a five- to10-year waiting period on generic
competitors, unless they conduct their own
time-and-money-consuming clinical trials for the very
same drugs that have already passed such trials. CAFTA
thus effectively ensures the drug companies an
extension of their monopoly on high-priced medications.
It also ensures that thousands of Central Americans in
need of such medications will have to go without.

This is just one of a number of cautionary tales
illustrating the fundamental reality of most of our
trade accords: They are designed to maximize corporate
profits no matter the cost to the peoples of the
signatory nations. Consider our experience with NAFTA,
after which CAFTA is modeled. In the 12 years since
NAFTA was ratified, the yearly U.S. trade deficit with
Mexico and Canada has grown from $9.1 billion to $110.8
billion. Yet, while close to a million jobs have been
lost in the United States, it's not as if that money is
flowing into Mexicans' pockets. Since NAFTA was
enacted, real wages for Mexicans have declined, the
nation's poverty rate has increased, and illegal
immigration to the United States has soared. For both
Mexican and American workers, NAFTA has been a
lose-lose proposition. For the U.S corporations that
have outsourced their work to Mexico, though, NAFTA has
been a clear profit center.

Now comes CAFTA, which promises Central American
workers the same kind of raw deal. CAFTA would actually
weaken the not very formidable labor standards that
currently exist in the Central American nations. Under
the current Generalized System of Preferences, those
nations are required to take steps "to afford
internationally recognized worker rights." Should CAFTA
pass, the nations will be required only to enforce
their own worker-protection laws, which they'd be
perfectly free to repeal. That's the primary reason why
the major union federations in Central America have
joined the AFL-CIO in opposing CAFTA's ratification.

Labor is not alone in its opposition to CAFTA. For
years, the issue of trade has divided the Democratic
Party. But the experience with NAFTA and now the
concentration of global manufacturing in China seem to
have awakened virtually every Democrat in the House to
the perils of a new economic order based on the
protection and promotion of cheap labor. In 2002, 21
House Democrats supported the administration's
fast-track legislation. This year the estimate of the
number of Democratic congressmen who will back CAFTA is
no higher than 10. That's partly because Republicans
have defeated such Democratic free trade champions as
Charles Stenholm, who lost his seat in Tom DeLay's
great Texas Demo-cidal district redrawing. But it's
also because Democrats have finally realized the
futility of supporting labor and environmental
protections domestically, only to see them threatened,
and American jobs eliminated, by trade accords that
eviscerate such standards internationally.

That means that Republicans will have to be unified in
order to pass CAFTA, and by all indications, they're
anything but. As was not the case with previous trade
accords, agricultural interests are lining up against
CAFTA, a change that Republicans from rural districts
have duly noted.

Trade debates, finally, are concerned with the emerging
global order; our trade policies are as clear an
expression of our global vision as our foreign policy.
For those who see America's mission as enforcing the
drug companies' profit margins, CAFTA is the treaty for

Harold Meyerson is editor-at-large of The American
Prospect. This column originally appeared in The
Washignton Post. Copyright 2005 by The American
Prospect, Inc.