CAFTA-DR, the trade agreement between the United States and Central American and the Dominican Republic was approved by the House about midnight last night by a whisker-thin margin (217-215). This is very good news for many reasons, and some of them have to do with the Gospel.
I am the first to admit I am a free trade fanatic. I firmly believe that free trade is a good thing and one of the most important components of worldwide prosperity. I was a correspondent for the Economist magazine in the early 1990s, and one of my charters was to write on free trade in Latin America and its many benefits. Many people who misunderstand trade think it is a zero-sum game, in other words if country A trades with country B, somebody wins and somebody loses. But people who think this way are not using common sense. Without getting into lengthy economic theory, I assert that free trade is a win-win and that the lower tariffs and other barriers to commerce are, the more people win. If all tariffs were zero worldwide and there were no barriers to trade at all, there would be a huge worldwide boom unlike anything we have ever seen.
So, if you want to solve poverty in Africa and Latin America, the best solution is free trade. NAFTA, the free trade agreement between the US, Canada and Mexico, has tripled the amount of trade. Remember Ross Perot’s prediction of a “large sucking sound” of jobs from the United States to Mexico? It never happened. When Perot made that prediction, the U.S. unemployment rate was about 6.5 percent. Now it’s about 5 percent. Meanwhile, employment has increased in Mexico, especially in the northern areas like Monterrey that are most involved in NAFTA. Mexico has huge problems — corruption, graft, greedy politicians, drug cartels, etc. — but none of them were caused by free trade.
So, now we have CAFTA — more trade with Central America and the Dominican Republic. These countries will continue to have the same types of problems as Mexico. But with free trade, businesses will grow and the middle class will begin to prosper and insist on political reforms that will hopefully bring more peace and prosperity to these countries.
Political and economic openness helps stabilize fragile democracies in the Third World. If people perceive that they can get and keep jobs, they are more likely to participate in the political system in a positive way. This also increases the likelihood that missionaries from the Church will be well-received. There has been an explosion in Church activity in Central America and the Dominican in the last 15 years. Much of the increase can be attributed to greater economic and political stability (remember that most of Central America was cursed with violent civil wars until the late-1980s).
So we have something to celebrate today. Hopefully we can arrange more free trade agreements in the years ahead.