On the 19th of December 2003, after nine rounds of negotiations, the United States
reached agreement with four of the countries of Central America (Guatemala, El
Salvador, Honduras and Nicaragua) on a proposal for a Central American Free Trade
Agreement (CAFTA). Costa Rica signed up to the agreement a month later, after
two further rounds of negotiation.
The National Association of Public Employees of Costa Rica (ANEP), together
with a great number of social and political organizations from across Central
America and the United States, has initiated a campaign against the approbation
of this agreement. Para-phrasing David Ranney (Ranney, 2003, 50), ANEP believes
that CAFTA should be seen as just one more part of a global model of "free
trade" which glorifies the functioning of an unregulated market, that demonizes
government intervention and which treats human beings as consumers in a global
shopping mall. We would add, however, that this is a shopping mall which only
admits those who have the resources to consume, that is a minority of the world’s
population.
ANEP is opposed to this inaccurately named free trade agreement because it
will negatively affect both the impoverished majority of Central American people
and the working classes of the United States. The experiences of Mexico under
NAFTA and other countries that have entered into these types of agreements suggest
that CAFTA is likely to result in an increase in poverty-levels across Central
America and a decline of working conditions and employment in the United States,
whilst any benefits are likely to become concentrated in still fewer hands.
In the pages which follow we outline the reasons for our opposition and the
potential consequences of the signing of CAFTA for both sides. Our objections
to CAFTA can be grouped into two broad categories. Firstly, those relating to
the procedures and rhythm of the negotiation process and secondly those related
to the contents of the agreement itself.
2. PROCEDURAL OBJECTIONS: CAFTA WAS NEGOTIATED IN A RUSH AND ON THE BACKS OF
OUR PEOPLE
2.1 THE LACK OF DEMOCRATIC ACCOUNTABILITYAND PARTICIPATION
To the questions of who had access to information before and during the negotiation
process and who took the decisions, the answer is only a very small group of
individuals made up of the elites and powerful economic interests of our countries.
In addition, the negotiators for each country were technocrats appointed by
the executive of each participating government and these unaccountable negotiators
have signed each country up to far-reaching changes in their legal frameworks
which elected representatives will only have the chance to accept or reject
in their totality. Furthermore, once the agreement is signed, each government
will not have the authority to re-negotiate or modify it. In a region which
is attempting to construct open and democratic societies such secretism and
unaccountability in public processes is unacceptable.
If we are looking to construct and strengthen our institutions and create democratic
cultures with the active participation of our citizens, then the transparency
of procedures and the handling of information are arguably as important as the
outcome of what is negotiated. Seen in this way, CAFTA was anti-democratic from
the start, both in terms of the procedures through which it was negotiated and
in terms of public access to information. The lack of public participation in
the negotiation of CAFTA even goes against the new mechanisms of public participation
being implemented by international institutions such as the World Bank. All
Poverty Reduction Strategy programs, for example, have to be debated at length
by governments and representatives from across national civil society. Whilst
far from perfect, this process of participation has borne results. It is far
from clear why this type of public participation could not be applied to trade
negotiations which stand to have a much greater long-term impact upon economic
structures, employment opportunities and living conditions.
This lack of democratic accountability and participation are reason enough
for rejecting the CAFTA agreement as it stands. If there is to be a trade agreement
between our countries, then it must be negotiated on the basis of wide-ranging
domestic debates prior to the start of negotiations. Inclusive and permanent
mechanisms of consultation should also be established with representative participation
from the principal economic, political, institutional and social actors of each
country and, of course, each national parliament. At the very least, such consultation
should take place after each round of negotiation.
2.2 THE UNDUE HASTE OF THE CAFTA NEGOTIATIONS
A free trade treaty between the United States and Central America had not been
on the political agenda of the Clinton administration due to the limited size
of the Central American economy and the fact that the Caribbean Basin Initiative
(CBI) already existed. In January 2002, however, the Bush administration announced
their intention of aggressively pursuing such an agreement. One year later CAFTA
had been ‘successfully’ negotiated. As a point of comparison, the NAFTA negotiations
between the US, Mexico and Canada took four years. The change in US strategy
probably stemmed from the obstacles encountered in negotiating the Free Trade
Area of the Americas (FTAA) following the electoral triumph of more independently-minded
governments in various countries of the Southern Cone. President Bush hoped
that a rapid agreement with the Central American republics could, on the one
hand, be used as a trophy in his campaign for re-election and, on the other,
to strengthen his negotiating position in the wider framework of the FTAA (particularly
via the successful exclusion of the issue of agricultural subsidies from the
negotiations, Weiss, 2003).
The Central American Presidents, always compliant with Washington’s plans,
particularly those of Republican governments, allowed themselves to be brought
into Bush’s commercial strategy and his political rhythms, (ie his plans for
the FTAA and for his own re-election). It should be noted, for example, that
none of the Central American presidents had included the negotiation of a free
trade agreement with the United States as part of their electoral platform.
The speed with which Central American governments have been drawn into signing
agreements which will have profound implications on the longer-term development
aspirations of their peoples is, therefore, extremely worrying and it is crucial
that Central American civil society holds those governments accountable for
what they have negotiated. This is even more critical given that internal opposition
to the signing of CAFTA in the US is likely to be constrained by the fact that
Bush has managed to maintain ‘fast track’ negotiating authority for trade policy.
This means that Congress must accept or totally reject any trade agreement presented
before it – thus ruling out the possibility of modifying certain elements of
the treaty in response to public criticism.
3. THE CONTENT OF CAFTA: SOLIDIFYING TRANSNATIONAL DOMINANCE
3.1 GENERAL ISSUES
As always, the promoters of "free trade" say that it will solve all
of the great economic problems which confront our societies. Guided by the invisible
hand of the market and the free play of supply and demand they argue that CAFTA
will:
* Promote economic growth
* Create more jobs and better employment conditions through inward investment
* Reduce poverty
* Expand the range of goods available for consumers
* Improve the productivity and competitiveness of businesses
It should be noted that the evidence for any direct relationship between liberalization
and overall economic performance is complex and dependent on many political
and economic variables. In fact, in many cases, liberalization can have the
opposite effect, as new export opportunities are not grasped and external competition
in domestic markets increases. In this respect, the omens for Central America
are not good. Longer-term evidence suggests that, with the partial exception
of Costa Rica, previous rounds of trade liberalization since 1950 have seen
insufficient export expansion to compensate for the increasing penetration of
imports (Moreno-Brid and Perez, 2001). This is particularly worrying when one
considers that 90% of Central American exports to the US already enter tariff
free.
There is little evidence that liberalization will also address questions of
poverty and inequality. In fact, the evidence (albeit partial once again) suggests
that it may serve to intensify them. The basic issue is that we simply don’t
know what the impacts of such a profound program of liberalization will be in
a region such as Central America. The weak systems of government, the pre-existing
levels of poverty and inequality and the ecological vulnerability of the region
all point towards the potential for significant problems and the suspicious
naivety of any simple equation between liberalization and development/economic
modernization.
Our lack of knowledge of the potential impacts of CAFTA relates also to the
fact that this is by far the most unequal of all previous integration experiences.
Most forms of economic integration have taken place between nations with similar
types of economic structure – enabling real competitive advantages to accrue.
In the case of CAFTA, even more so than was the case of Mexico with NAFTA, we
are seeing the integration of two totally different economic structures which
will not necessarily respond in the ways predicted by orthodox economic theory.
The US market is much more important to the Central American nations than the
Central American markets are to the US, wage differentials for the same job
are as much as 15:1, and whilst barely 1% of the US EAP make their living from
agriculture, the figure is well over 20% for most of Central America and as
high as 35% in the case of Nicaragua. (McElhiney, 2004). One would have hoped
that if the richest nation on earth were to enter into a trade agreement with
some of the poorest nations in the Western hemisphere that it would do so on
the basis of a developmental agenda that deliberately prioritized improving
the position of the poorest, improving the labor, social and environmental conditions,
as well as the enforcement of the existing labor and environmental laws. Instead,
what we have is an agreement which is based upon reciprocity and the interests
of the powerful.
3.2 EVIDENCE FROM NAFTA
In many ways, CAFTA is a geographical extension of NAFTA. For that reason, it
is worth considering the evidence of the impacts that NAFTA has had on Mexico
and the United States (even though the asymmetries between Mexico and the US
were much less extreme than those currently existing between the US and the
Central American republics). Whilst it is important to recognize that NAFTA
is not the origin of all of the difficulties Mexico has faced since 1994, it
is clear that it has not improved many of the problems that it was supposed
to resolve (unemployment, poverty). In fact, if anything, it has aggravated
them. As such, the Central American republics would do well to consider the
proposed agreement in considerable detail before allowing their governments
to ratify it.
Looking at the evidence in more detail, it is clear that NAFTA has not had
a major impact on overall levels of economic growth in Mexico (average per capita
GDP growth has been weak averaging only 1% per annum since 1994). Whilst export
growth has admittedly been strong, the trade surplus with the US must be put
in the context of Mexico’s growing trade deficit with Asia and Europe (which
has increased by 600% and 400% respectively since 1994; Nagal, Aguayo and Chavez,
2003). Furthermore, whilst about 8.1 million new Mexican jobs have been created
since 1994, this figure only represents 53.4% of the jobs that would have been
needed merely to provide employment for those newly entering the labor market
over this period. Furthermore, even in the manufacturing sector, employment
creation has not kept pace with the numbers of jobs lost in out-competed domestic
industries – to the extent that there are now 9,4% less people employed in the
sector than was the case prior to NAFTA. Perhaps even more significantly, the
quality of the employment that has been created has been extremely poor; a significant
proportion (about 55%) does not include minimum labor rights, such as social
security, paid holidays, pension schemes or Christmas bonuses. A last point
here is that Mexican wages have fallen in real terms by 36% since 1994, although
workers have increased their productivity by 53%. (Arroyo, 2003, 44-46)
In the US case, between 1994 and 2002 an estimated 525,094 workers were certified
as eligible for the NAFTAA-TAA (Transitional Adjustment Assistance) program
between 1994 and the end of 2002. From the start of 2003 to the present, another
215,706 workers have been certified under the revised TAA program – a sizeable
part of this number also relates to those affected by NAFTA (www.citizen.org/trade/forms/nafta).
The level of job loss is generating considerable labor instability and has had
other negative effects such as the use of reallocation as a threat against workers
who complain about worsening labor conditions and the weakening of trade unions.
In fact, the percentage of unionized workers in the US fell from 16% to 13%
over the course of the 1990s. Over the same period US labor productivity rose
25% whilst the level of real wages only rose by 8%. At the end of the 90s, employment
levels began to rise but most of the new jobs were created in enterprises that
paid low salaries. The outcome of these trends has been a lower quality of life
for US workers (Ranney, 2003, 51-56).
3.3 THE EMPLOYMENT IMPACTS OF CAFTA: THE INTENSIFICATION OF CURRENT DEVELOPMENT
PATTERNS
CAFTA will not, as is argued by its proponents, establish a new pattern of
development in Central America. Instead, it will deepen and accelerate the model
which has dominated the region since the 1980s – that of Neoliberal structural
adjustment. Under the influence of the international financial institutions,
the region has already seen wholesale reductions in public spending and the
coverage of basic social services, the widespread privatization of public enterprises
(and increasingly of public utilities) wide-ranging trade liberalization and
intensive labor market de-regulation. CAFTA stands to deepen many of these processes.
In relation to trade, for example, CAFTA will solidify, with some modifications,
the current Caribbean Basin Initiative (CBI, 1983-2008). As such, it is useful
to reflect upon the major outcomes of these existing reforms, as a way of getting
an idea of the potential scenarios that would follow the final approval of CAFTA.
The first thing to note is that these types of policies have, at best, not
contributed towards tackling the endemic poverty of the Central American region
and, at worst, substantially worsened it. In 2001, for example, 50.8% of the
Central American people had insufficient income to cover the minimun requirements
for an adequate standard of living (see Figure One). 23% of these people were
living in conditions of extreme poverty which means that they were not able
to cover even their most basic needs. The incidence of poverty was 69% amongst
peasants and agriculture workers, 40.4% in the informal sector, and only 18.7%
amongst the formal sector workers (Proyecto Estado de la Nación, 2003,
47-48). It is worrying that it is precisely those rural sectors which are already
so riddled by poverty which are projected to be most adversely affected by CAFTA
(see the discussions on agriculture below).
Figure 1. Central America: Total and Relative Poverty, 2001.
| Poverty |
Central America (2001)
|
| Total Poverty | |
| Total |
50.8 |
| Urban Areas |
33.6 |
| Rural Areas |
67.9 |
| Extreme Poverty | |
| Total |
23.0 |
| Urban Areas |
10.8 |
| Rural Areas |
35.1 |
Source: Proyecto Estado de la Nación, 2003, 53.
The question is not simply one of poverty, however. There is considerable evidence
that trade liberalization, even where it brings economic benefits (and the case
for this is by no means established for CAFTA), tends to enhance levels of inequality.
This might be acceptable in situations where pre-existing levels of inequality
are reasonable but Central America is already considered to be one of the most
unequal regions of the world and this appears to have worsened under the Neoliberal
adjustment policies of the past ten to fifteen years. These worrying circumstances
are illustrated in Figure 2:
Figure 2. Central America: Indicators on inequality.
| Central America population | Population (millions) | Income per capita (US$) | Total Income participation | |
| 40% poorest | 10% richest population | |||
| Total |
36.1 |
1,843 |
15.3 |
29.4 |
| Costa Rica |
4.0 |
3,948 |
13.8 |
32.1 |
| El Salvador |
6.3 |
2,104 |
12.8 |
40.3 |
| Guatemala |
11.4 |
1,680 |
11.8 |
36.5 |
| Honduras |
6.5 |
909,0 |
10.4 |
40.5 |
| Nicaragua |
5.1 |
472,0 |
12.9 |
37.1 |
Source: Proyecto Estado de la Nación, 2003, 69.
In this context, the argument of those promoting CAFTA is that any potential
‘teething’ problems relating to intensified poverty or inequality will be offset
by employment creation. The argument used by the Central American governments
is that the increased presence of maquilas (combined with the export-oriented
activities generated by the free trade agreement) will be a very important generator
of jobs and, over time, improvements in productivity and increases in real wages.
They point to improved official employment figures from the past few years to
justify this position and argue that CAFTA will intensify this form of employment
creation. However, even where official figures do show some reductions in unemployment
levels, these must be treated with some caution. Reductions in official measurements
of unemployment frequently mask increasing levels of under-employment, they
also ignore worsening labor conditions amongst those who are working and the
increasing impacts of out-migration from the region to de United States. A recent
study shows that, in the event of CAFTA approval there will be a negative impact
on the employment figures in Costa Rica (Castro, Martinez, 2004). There also
remain severe question marks over the accuracy of official statistics.
Another important point to highlight is on the quality of new jobs created
under the CBI and Structural Adjustment umbrellas. The Estado de la Región
(Proyecto Estado de la Nación, 2003) indicates that between 1990 and
1999, precarious employment and informal economy have been increased. It is
calculated that for every 100 new jobs that were generated in this period, 31
were in the formal sector, 12 in agriculture and the 57 in the informal sector.
The experiences of the last ten years of the development of free trade zones,
maquiladoras, and export-oriented agro-business in Central America indicate
that, for a variety of reasons, maquilas are unlikely to be the solution to
unemployment in the region and will not offset the job losses likely to occur
in other sectors.
In Costa Rica, the foreign investment has produced over the past 25 years only
35.000 jobs, which represent 2.5% of the EAP. (Nowalsky y Ruiz, 2001).
Just to take the case of textiles, whilst CAFTA will extend the provisions
of the CBI, allowing duty-free access to textiles produced in the region using
local materials and some access for textiles utilizing a proportion of external
inputs, the longer-term outlook for Central America’s textiles maquilas is not
rosy. CAFTA will allow the Central American governments to continue to offer
incentives in the existing export processing zones until 2009. At that point,
with the end of those incentives and the likely onslaught of duty-free access
from Chinese producers after 2005, the Central American textile sector is likely
to take a significant nose-dive – hardly the beacon of hope for the future claimed
by CAFTA’s proponents (McElhinney, 2004).
In terms of the quality of the jobs created in the maquila enclaves, there
are three points to emphasize:
1) The salaries paid are frequently less than those required for minimum subsistence
levels
2) Many companies employ over-exploitative working conditions:
a) Physical and psychological maltreatment.
b) The violation
of basic labor rights, including the prohibition of union organization and over-long
working days.
c) Unpaid salaries.
d) Sexual assault.
e) Arbitrary sackings, without redundancy payments and a high level of rotation
of the workforce.
3) Often companies do not provide even the most basic of worker’s benefits:
Social Security, and ten days of paid holiday per year.
These types of issues are highlighted by a number of studies by a range of
different organizations. The National Catholic Reporter (1999) summarize the
issues well:
"Ironically, while maquila employment had grown to 200,000 workers in
Central America (1996), this had made only a slight impact on massive unemployment.
Between 80 and 90 percent are new workers, women and children who were not previously
in the labor force. Applicants for employment are screened carefully. The younger,
and therefore less likely to complain, the better. Even 14-year-olds are accepted
if they say they are 16. Over 24, rejected. If "too fat," rejected.
Proof that the woman is not pregnant is demanded. Pregnancy is in most maquilas
a cause for firing. Some maquilas in Honduras, according to Charles Kernaghan,
director of the New York-based National Labor Committee, periodically give shots
of the contraceptive Depro Provera, saying it is for tetanus. There is no written
contract. Workers can be fired arbitrarily and without notice. Many maquilas
fire a worker before she becomes entitled to vacation time or the extra month’s
salary due in December. There is thus a constant movement from one employer
to another. A worker who attempts to form a union or is otherwise "a problem"
goes on a blacklist that is shared with others. Few survive the unhealthy working
conditions, poor ventilation, lint-heavy air and the harassment, verbal abuse,
strip searches and sexual harassment for more than six or seven years. Doctors
say most common illnesses are allergies, abortions, depression and tuberculosis.
They report pronounced bronchial hyperactivity and asthma from the cloth dust."
The appalling working conditions in these factories are accompanied by very
low levels of remuneration. Figure 3 below from the Maquila Solidarity Network,
for example, records average wages paid in maquilas across Central America in
1998, suggesting that wages in maquilas were as low as $64 a month in Nicaragua
in that year.
Figure 3:
|
Country |
Maquila and garment workers |
Wage (monthly) |
|
Guatemala |
180,000 |
$ |
|
El Salvador
|
69,000
|
$ 126
|
|
Honduras
|
238,923
|
$ 83
|
|
Nicaragua
|
28,097
|
$ 64
|
|
Costa Rica
|
75,816
|
—
|
Source: Maquila Solidarity, 2001.
Some of the apologists for CAFTA claim that provisions for the monitoring of
labor standards under the agreement will actually go a long way to addressing
these types of concerns over the working conditions in maquilas. They argue
that CAFTA will, for example, go further than the US-Chile free trade agreement
in addressing labor standards. US negotiators even claimed that the agreement
will be ground-breaking in its treatment of labor issues. However, historically
national labor frameworks in Central America have been high on rhetoric and
short on action and these are precisely the legal frameworks which will be relied
on under CAFTA. Despite government commitments to improving working conditions,
pernicious exploitation of labor under atrocious conditions has continued to
be rife in Central America and, if anything, has worsened as the maquila boom
has continued. It seems rather naive to rely on ‘good faith’ co-operation and
improvements in these existing national arrangements to improve working conditions
in the region. Even worse, when the proposals are read in detail, we find that
there are a number of elements which are actually a step backwards from even
the current situation. For example, the verification of meeting labor standards
will be carried out by governmental commissions, rather than independent bodies.
Furthermore, there appears to be no role for the active participation of trade
unions or grassroots organizations in the presentation of claims against companies
breaking regulations and any sanctions applied in proven cases will be directed
against governments rather than the companies concerned (Pensamiento Solidario,
2004). And further more the CAFTA proposals will not enforce the labor and environmental
rights that have been broken.
A more hopeful direction might have been to tie market access to demonstrable
improvements in labor conditions or, at the very least, to leave Central American
workers with some recourse to authorities outside of the control of their national
governments (McElhinny, 2004). This kind of proposals were elaborated in Costa
Rica by a coalition of employers, unions, agriculture organizations, professionals
and cooperatives (Tercera República, 2003).
3.4 CAFTA AND AGRICULTURE
Any trade agreement between the United States and Central America must recognize
that significant proportions of the poorest sectors across Central America still
make their living from agriculture. As such, any claims for the developmental
and anti-poverty credentials of CAFTA must demonstrate how rural poverty and
unemployment are going to be impacted by CAFTA.
The evidence from the Mexican experience under NAFTA suggests that Central
America’s rural communities are likely to face an extremely uncertain future
under CAFTA. Some of the larger-scale Mexican farmers and transnational agribusinesses
have exploited new agricultural opportunities since 1994 (particularly in terms
of the opening of new processing pants in horticulture). This success, however,
hides the fact that smaller subsistence farmers have been decimated by the onslaught
of cheap subsidized grain imports from the US. Overall, rural inequality has
sharply increased, rural poverty and out-migration intensified and environmental
degradation (through panicked over-production on unsuitable lands) accelerated
(Henriques and Patel, 2004). US corn exports to Mexico have doubled since 1994
but prices have dropped by more than half. This has its corollary in the environmental
destruction wrought in those zones of the US which have been turned over wholesale
to industrial scale grain production (see Miller and Shannon, 2002).
Furthermore, it is not poor family farmers that receive the lion’s share of
the US subsidies but rather some of the world’s largest corporations.
It is only the richer and more organized farmers that are able to take advantage
of the new opportunities that market liberalization embodies. This is precisely
the area that has been so lacking in many Central American countries. Governments
have abandoned the productive sector to the private sphere and private banks
have starved producers of credit – particularly the poorest farmers. In addition,
to respond to new opportunities and challenges requires not only capital but
also technical expertise – again something that has been less and less available
under the brutal government spending cuts of the past ten to fifteen years and,
as mentioned above, there is little talk of the US investing in these types
of measures in Central America over the implementation of CAFTA.
This of course assumes that there are new opportunities to respond to. In reality,
in return for opening up their economies to imports of US agricultural produce,
Central American countries have gained very little in the way of improved access
for their own agricultural produce to the US market since most agricultural
products already reach the US market tariff free under the CBI. The bigger barriers
are those relating to health and other quality-related restrictions which will
only be addressed through investment in the appropriate processing and packing
technologies (and enhancing the capacity of Central American producers to respond
to export opportunities). Although the security of the access that they currently
enjoy would at least be guaranteed. The problem is, however, as was the case
in Mexico, the bringing down of import protection leaves the way open for subsidized
US grain producers to drive down prices in Central American markets. This obviously
has positive impacts for the urban poor but it is not in the long-term interests
of the region’s agricultural producers. The likelihood is that it will lead
to increasing numbers of farm failures and increasing rural unemployment which
will not be offset by the creation of jobs in the industrial sector (WOLA, 2003).
These, of course, will have an immediate impact on the United States jobs and
labor standards, as well as a increase on the migration rate from Central America
de the United States.
These very serious worries mean that if the US does not address their subsidization
of agriculture (set at a level of $180 billion over the next ten years) then
the basis of CAFTA must be rejected and the Central American governments must
pursue a policy of subsidization of their own. At the very least they must be
free to impose tariffs on imports of subsidized US grains and other subsidized
goods. It seems bizarre for Central American governments to liberalize their
agricultural markets under CAFTA in circumstances where the US government has
placed the subsidization of their producers outside of the negotiation framework.
Even more so, when Central American governments had participated in the so-called
Group of 21 developing countries headed by Brazil and India at the Cancun meeting
of the WTO. It would seem most sensible to remove agricultural produce from
the negotiations until agreement has been reached at the WTO.(a point made by
the Nicaraguan economist Nestor Avendaño, el nuevo diario 31.05.2003)
The Central American governments and a variety of regional producer federations
did make some attempts to treat agricultural issues separately. There were,
for example, attempts to have agricultural issues dealt with in a separate chapter
of the agreement according to different rules (an idea rejected by the US).
It was also suggested that products which were particularly sensitive (e.g.
basic grains, dairy and pork) be exempted from the liberalization provisions
(again rejected by the US). Finally, some Central American governments pressed
for some form of compensation from the US government for the continued presence
of US subsidies in the agricultural markets to be liberalized under CAFTA, which
was rejected by the US negotiators. However, the problem with such a strategy
is that it is palliative and temporary, rather than a long-term solution to
rural problems. In addition, experience teaches us that this compensation would
be unlikely to reach the farmers who had been driven out of business by the
presence of cheap imported grain from the US. In the end all that was really
achieved by the Central American negotiators was a fifteen to twenty year period
of ‘grace’ for the liberalization of certain sensitive agricultural commodities
and a safeguard mechanism which would only kick in after it was clear that a
particular product sector has suffered severe problems. In essence the Central
American governments capitulated, moving from a unified regional strategy to
best protect the region’s agricultural producers to a bilateral strategy where
each was bullied into submission independently (McElhinney, 2004)
3.5 EFFECTS ON THE ENVIRONMENT
For all of the money ploughed into pan-Central American environmental initiatives
over recent years (the projects of the Mesoamerican Biological Corridor, regional
disaster awareness projects, the CCAD etc.) it appears that environmental considerations
have not been central to the issues debated by the CAFTA negotiating teams.
There is clearly a need for effective sustainability assessments of the implications
of CAFTA but the speed of negotiation has precluded this. The experiences of
NAFTA where side agreements were negotiated suggest some of the environmental
problems that may occur. An even less regulated and under-resourced attitude
towards natural resource management in Central America does not bode well for
the future of Central America’s fragile environments. – Expansion of production
of agricultural exports. – Pesticides. – Pollution in maquila zones etc. – Illegal
trade in endangered species threatening biodiversity (such trade increased between
Canada and the us following the 1988 free trade agreement).
In addition, under CAFTA national environmental safeguards may become untenable.
For example, several US TNC´s have used Chapter 11 of NAFTA to sue Canada
for public health bans on their products.
3.6 EFFECTS ON MIGRATION
As a consequence of the increasing inequality, as well as high levels of poverty
and lack of decent employments, documented and non-document out-migration towards
the United Stated has been increased. At the end of the 90s, 2.7 million of
Central American immigrants were living in the United States, of which almost
1 million were undocumented. (Orozco, 2003, 5) The greater exodus is from El
Salvador (25% of its population), followed of Nicaragua (15%) and Guatemala
(8%). (OCAM, 2000; Pretty, 2004).
For that reason, the exclusion of migration from CAFTA is other major limitation
of regional trade liberalization of this type is the lack of accompanying labor
market liberalization in terms of the free mobility of labor. A fully integrated
market of the type adopted in the EU presupposes the free mobility of labor.
A factor notably absent from the CAFTA proposals. As such, there is an inbuilt
maintenance of the differential remuneration of labor which makes a mockery
of the supposed free hand of the market.
3.7 EFFECTS ON PUBLIC SERVICE DELIVERY/REGULATION
The prioritizing of CAFTA trade laws over other national levels of regulation
is also extremely worrying. A set of provisions called "disciplines on
domestic regulation" look set to limit the ability of governments to regulate
their own service sectors. This has much in common with the international attempts
being made to pursue the liberalization of services under GATS with one important
difference – under GATS individual governments are, at least in principle able
to nominate which sectors they wish to liberalize in a continual process of
negotiation, under CAFTA the whole ‘bundle’ has been negotiated at once (Weiss.
2003). In addition, the liberalization of services will also demand the wholesale
privatization of many sectors of those Central American public services that
still exist in state hands (e.g. water, energy, telecommunications, health,
higher education and postal services). In Costa Rica, the existing public services
systems, have been extremely important in order to reduce the effects of the
lowering wages and the increase of poverty. CAFTA impact on these systems will
function as an agravating condition on the Costa Rican living standards.
Under CAFTA the ability of Central American states to properly regulate their
own affairs looks to be under significant threat. Important issues include the
ability to control the spread of GMO foodstuffs and the ability to maintain
public delivery of basic services.
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