May 10, 2005 2:51 PM PDT

Study: Trade pact bad for workers, inventors

U.S. tech companies are acting like pirates in the Caribbean when it comes to the proposed Central America Free Trade Agreement, a coalition of groups charged in a report Tuesday.

Two labor groups and an inventors' rights organization claimed that the U.S. high-tech industry is making false promises about CAFTA's ability to increase U.S. exports and combat intellectual-property theft. In reality, they argue, the agreement would harm people in both Central America and the United States, including American tech workers.

According to the study, the United States already has duty-free access to the bulk of the CAFTA country markets. "The negligible new access that would be gained would come through (World Trade Organization) channels, where the U.S. high-tech industry would risk being displaced by lower-cost IT-exporting countries," said the report, put out by the Washington Alliance of Technology Workers (WashTech), the Society of Professional Engineering Employees in Aerospace and the American Ingenuity Alliance. "For U.S. high-tech workers, this would sustain the pattern of job losses already experienced due to offshoring of U.S. high-tech jobs."

Tech industry organizations on Tuesday defended their support for the trade agreement. "The U.S. faces market access barriers in Central America," said Jesse Feder, director of international trade and intellectual property at the Business Software Alliance (BSA) trade group. "CAFTA will eliminate most of those barriers. We anticipate that, as a result of CAFTA, U.S. exports to Central America will increase substantially."

CAFTA is a proposed treaty that covers the United States, the Dominican Republic and five Central American nations. Under its terms, 80 percent of U.S. exports of consumer and industrial goods will become duty-free in Central America and the Dominican Republic initially, with remaining tariffs phased out over 10 years.

In some sense a sequel to the North American Free Trade Agreement signed by the United States, Canada and Mexico, CAFTA is subject to approval from Congress. That approval is by no means ensured. A group of key Democrats in the House of Representatives announced last week that it opposed the pact, citing concerns for workers' rights abroad and "eroding investment in American workers at home."

Job losses by computer programmers and other white-collar workers due to the offshore trend have become a hot-button issue in the past few years. The new anti-CAFTA report not only raised the specter of more techie unemployment, thanks to global free trade, but claimed that CAFTA has misguided provisions regarding intellectual property.

CAFTA contains similar language to NAFTA regarding piracy issues, the report argues. "Mexico now accounts for $870.2 million of U.S. industry losses due to copyright piracy, or 14 times that lost in CAFTA target countries," the report states. "In fact, far from eliminating or even reducing piracy, the amount of damages from copyright violations in Mexico tripled between 1992 and 2004.

But the BSA sees progress in Mexico. The software piracy rate in Mexico dropped at least 15 percent between 1994 and 2003, according to BSA. "Increasing dollar losses are a reflection of a growing software market, not an increase in the rate of piracy," BSA said in a report.

 

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