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China to bag double victory, if CAFTA fails

Jun '05
In the Multi Fiber Arrangement world of quota-free trade in yarns, fabrics, and finished textiles, the Central American Free Trade Agreement (CAFTA) represents a direct threat to China's growing power—indeed, its near-monopoly—in world textile production.

If passed, CAFTA would enhance the competitiveness of Central American factories that pay higher wages higher than China and predominantly use U.S. cotton. But if CAFTA fails, U.S. cotton exports to Central America will come to an end, while U.S. imports of Chinese textiles—with little or no U.S. content—soar.

The debate over CAFTA encompasses geopolitical as well as trade considerations. Washington's understandable focus on the War on Terror and Iraq has led to the impression in Central America that the U.S. has no time to attend the challenges that the region faces. CAFTA's uncertain passage deepens these worries.

U.S. Assistant Secretary of State for Western Hemisphere Affairs Roger F. Noriega warned last March that China has been translating its economic success—and its search for resources to fuel its economic growth—into greater influence in Latin America and the Caribbean. The real danger that enhanced Chinese influence in Central America poses is not economic, but political and strategic.

For decades, the United States has encouraged and supported forces of freedom and democracy in Central America—with considerable success. Meanwhile, China has reassured the world's despots and tyrants that “each country has the right to choose its own path to development,” whether democratic, totalitarian, or—as in the case of Cambodia in the 1970s and Sudan today—genocidal.

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