out of the fish bowl...

“Our opposition to CAFTA is not ideological. As immigrants, we have a deep understanding of the potential benefits of improved transnational cooperation. We would welcome an agreement that would increase economic opportunity, protect our shared environment, guarantee workers' rights and acknowledge the role of human mobility in deepening the already profound ties between our countries. However, the CAFTA agreement falls far short of that vision.”

(Salvadoran American National Network, May 2004)

Unlike what the acronym seems to imply, CAFTA isn’t an agreement solely between Central American countries. It is an agreement between Guatemala, Honduras, Costa Rica, El Salvador, Nicaragua, the Dominican Republic, and the United States. Modeled after NAFTA, the goal of CAFTA is to liberalize markets by reducing trade barriers, facilitating the flow of goods and money. The neo-liberal economic views believe that artificial economic supports or restrictions, such as tariffs, subsidies, quotas, corporate regulations, etc., hinder the process of development within countries.

Although free trade might work well between nations having similarly competitive economies, it’s difficult between unequal partners - the *combined* GDP of Central America (CA) is only equal to 0.5 percent of US GDP. You might say that you could make the playing field more even by adding certain protectionist measures while eliminating others or weighing it in favour of the disadvantaged, but that is not the case here. The asymmetrical agreement is much more in favour of the advantaged requiring “market liberalization for the majority of goods and services in CA - including agriculture, manufacturing, public services and government procurement. In return, the U.S. has promised increased market access for certain sectors in Central America, including textiles and a limited increase in sugar quotas”.

What the people of CA are afraid of:

There will indeed be benefits for people in CA, but the question is “For whom?”. When multinational companies set-up factories or businesses, they are only required to comply with minimum work and environmental standards. For them, profit is the main goal, not human development. Similar to the impacts of NAFTA displayed in Mexico, CAFTA will mainly benefit the well established rich, but push the poor into deeper poverty and weaken human rights, labour and environmental laws. What’s more, is Chapter 10 of CAFTA, based on Chapter 11 of NAFTA, transnational companies are granted the right to sue for any loss or potential loss in profits resulting from any governmental law, regulation or court decision. This includes those that might be intended to protect public health, worker’s rights, or the environment.

CA citizens also afraid of being inundated with cheap imported agricultural goods threatening the livelihood of farmers and traditional culture. As part of the agreement, CA governments will not be allowed to place tariffs on these artificially low-priced foods large US agricultural corporations are able to produce through mass production and government subsidies. And although privatization may bring about better education and health services, many are afraid that these essential services will become inaccessible to a large portion of the population. Many people live in poverty and can barely afford much more than basic life necessities. This would have a particularly severe impact on women who depend heavily on these public services.

There also exists a provision in CAFTA that outlines "test data exclusivity" for pharmaceuticals. Producing test data is expensive and can generally only be afforded by large companies. Smaller companies tend to reuse the test data to produce low-cost, generic medications. But “test data exclusivity” means when a pharmaceutical company submits test data to a regulatory agency to approve the safety and effectiveness of a medicine, smaller companies will be forbidden to reuse that test data to create low-cost, generic versions of the drug. As a result, it would be possible for companies based in rich countries to hold an effective market monopoly and prevent the accessibility of life-saving medications to many poor.

There will also be negative impacts within the US as well, not just in CA. When NAFTA was implemented, 766 000 jobs were lost in the US. But the main differences are there exists a social system to help those who become displaced and there are many more opportunities to find other livelihoods.

The CAFTA controversy:

NAFTA took over 7 years to be negotiated while CAFTA was completed in one calendar year. CAFTA negotiations were aggressively pursued by the Bush Administration on a very short timeline following the approval of “Fast Track”, a bill approved by Congress to give the White House “Trade Promotion Authority”. Under “Fast Track,” Congress is only allowed an up or down vote and cannot amend a trade agreement. What’s more, CAFTA was approved by the House of Representatives by a narrow vote of 217 to 215 around midnight on July 28, 2005, after keeping the voting process open for an additional 47 minutes to garner the necessary support to win.

It is also a little disturbing that these CA governments are agreeing to ratify or have ratified the treaty despite widespread opposition and protests.

There are 12,701,000 people in Guatemala living on 42,042 sq miles of land. 32,225,000 people populate 3,849,670 sq miles of land in Canada. Guatemala rates 117 on the Human Development Index. Canada rates 5. Canada’s GDP is $1.023 trillion while Guatemala’s is $59.47 billion.

Canada is having a hard time fighting in the Canada-US Lumber Dispute that violates NAFTA rules. If Canada can’t deal with proper fair trade between us and its southern neighbour, is it fair to expect countries like Guatemala to be able to?

I am not necessarily opposed to CAFTA or market liberalisation per se, but I think a better job could be done with the rules of engagement.