Central America Free Trade Agreement

Central America Free Trade Agreement

By Mark Engler

CAFTA is a bad business that promises to extend the damaging impact of NAFTA to Mexico's weaker southern neighbors. The coming fight to stop the ratification of the agreement will likely show that opponents of corporate globalization will be in a better position than ever.

On December 17, officials from Guatemala, Honduras, El Salvador, and Nicaragua finalized negotiations with the United States on the Central American Free Trade Agreement. (ALCAC or CAFTA in English). CAFTA is a bad business that promises to extend the damaging impact of NAFTA to Mexico's weaker southern neighbors.

At the same time, promoters like US Trade Representative Robert Zoellick have prematurely declared a victory in their hemispheric "free trade" plans. A week of intense negotiations in Washington showed that developing countries are no longer as easily manipulated as in the past. The coming fight to stop the ratification of the agreement will likely show that opponents of corporate globalization will be in a better position than ever.

The CAFTA text itself shows signs of a delicate political compromise. Zoellick's office has highlighted the lower tariffs on consumer and industrial products that would go into effect with the deal. But the United States and the Central American countries exempted their most sensitive products from immediate competition. The United States maintained protection for the sugar and textile industries in exchange for exceptionally slow phase-out periods of up to twenty years for tariffs on Central American corn, dairy products, and other agricultural products.

For activists, other aspects of CAFTA should be of more concern than the much-discussed trade provisions. Removing barriers to investment will further open Central American public companies to privatization. Moreover, the agreement contains dispute resolution mechanisms similar to Chapter 11 of NAFTA, which allows corporations to sue the government in court as a result of regulations (including the implementation of local laws in defense of the environment) that companies consider that infringe your rights.

CAFTA's provisions in defense of intellectual property threaten to place AIDS treatment beyond the reach of many Central Americans in need. "Generic competition has lowered the costs of HIV drugs," says Asia Russell of the nonprofit Health GAP group. "If Bush has his way, CAFTA will force Central American countries into tough new patent regulations that will increase the cost of essential drugs and delay or impede generic competition."

Finally, Thea Lee, deputy director of the public policy department of the AFL-CIO, points out that CAFTA will diminish the defenses to the worker present in the Commercial Society Law of the Caribbean Basin. "Zoellick says this agreement includes unprecedented worker protections. That's a total lie," she says. Whereas the previous initiative forced participating countries to respect internationally recognized labor standards, the new agreement only requires governments to implement their own laws, which are often much weaker.

For these reasons, a ratified CAFTA would deal a severe blow to the working poor throughout the Americas. However, this result is not yet final. The Bush Administration has had a series of trade setbacks in recent months - the collapse of the WTO talks in Cancun, the dissolution in Miami of plans for a Free Trade Area of ​​the Americas (FTAA), and the delay in bilateral negotiations with Australia and Morocco - have left the promoters of such agreements in dire need of further momentum.

CAFTA has yet to provide it. The most developed economy in Central America, Costa Rica, withdrew from negotiations at the last minute in open defiance of North American demands that it open up its telecommunications and insurance sectors. Internal pressure - which took the form of a major strike last summer by workers in the public telephone and electricity companies - helped motivate the San José delegation to leave.

Zoellick hopes to attract negotiators from Costa Rica in the near future. But it is clear that the country has strengthened its negotiating position by leaving the meeting. Elsewhere in the region, outrage over the privatization of health care in El Salvador has placed the leftist FMLN party in a strong position to win the presidential elections in March, a fact that would weaken the country's commitment to CAFTA.

Even if the Bush Administration succeeded in improving Central American relations, it faces a daunting challenge in Congress. The 216-215 vote in the House of Representatives in June 2002 to keep President Bush's "fast lane" negotiating authority alive is a reminder of how fierce debates about trade can be. The result of a vote in the House of Representatives this year on CAFTA would be too close to be forced. The labor movement will use its strength in an election year to pressure Democrats to maintain a united front against the agreement. Therefore, in order for the President to prevent the forces from turning against him, he must demand discipline from several Republicans who have close ties to businesses affected by trade. That will not be easy. Despite the concessions in the agreement that minimize the damage to their industries, representatives of the sugar and textile companies are bitterly complaining about the prospect of opening North American markets.

The White House may express confidence in its ability to get the deal approved by a single vote, but it may not be willing to pay the necessary price. "This agreement is more of a burden than a political advantage for the Bush Administration," says Larry Birns, director of the Council on Hemispheric Affairs. Birns has joined several analysts in predicting that the President's more politically minded aides will overrule the Trade Representative's desire to force a vote on CAFTA in early 2004. "Right now, there is almost no chance of it being send it to Congress before the election, "he says.

Zoellick has already referred to the agreement as "an important milestone" for trade policy in the Americas. A milestone it may be, but in the face of the fracture of its internal coalition and international protests against the growth of the neoliberal economy, "free trade" enthusiasts may find that CAFTA represents a starting point for critics, in rather than a breakthrough on the path of corporate globalization. Only this year's turbulent battle will tell the truth.

* Writer based in New York City, he is a commentator for Foreign Policy in Focus.
Jason Rowe provided research assistance for this article.
Translated by Progreso Weekly

Video: Central America Free Trade Agreement (July 2021).