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Blind man's bluff: free trade is coming to Central America, but few understand what's on the table.

Free-trade debates on the streets of Central Americas capitals sound like tales of the chupacabra, the mysterious, dog-like beast that can fly and drains livestock of their blood, wreaking financial havoc on pour campesinos.

No one has ever seen the chupacabra, but farmers from Puerto Rico to Mexico to Chile--even in Miami during the late 1990s--have filled the vacuum of evidence with gory details of its destructive power. In the same way, understanding Central America's free trade talks with the United States, the U.S.-Central American Free Trade Agreement (CAFTA), means filling in the blanks.

The reason: Very few people have seen drafts of the potential US$24 billion trade deal. That's thanks, in part, to U.S. negotiators' insistence that Central America's side, representing Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, swear to a Mafia-like oath of omerta.

"I hope that CAFTA is ratified and I hope it is good, but I don't know what CAFTA is and I don't think anyone else knows either," says former Costa Rican Planning Minister Otton Solis, an economist and founder of the Citizen Action Party.

Some governments have allowed sections of the texts to be seen by the public. In Nicaragua, for example, the Finance Ministry allows accredited citizens to see a full version of the trade proposal. The Ministry makes the texts or excerpts available in special reading rooms, where taking notes or making photocopies is prohibited. When visitation hours are over, interested parties are left with the challenge of trying to analyze and communicate the information to others by memory.

"The U.S. changed its draft proposal from the third round of negotiations to the fourth round, and now we are in the fifth round and we still don't know what texts are being discussed or what they say," says Amado Ordonez, director of Nicaragua's Humboldt Center, a development and environmental protection organization. "Most. Nicaraguans are indifferent or passively worried about CAFTA. But, 40% of the population is illiterate and does not, understand what is going on."

Bare knuckles. The normal messiness of bare-knuckles trade talks has not helped. The 11-round negotiations started last January in San Jose and are scheduled for completion in December. During the third round in Washington, D.C., the United States presented part of its first-draft trade proposal, which was fiddled with and reintroduced during the final day of the fourth round of talks in Guatemala. That's when Central American negotiators noticed it did not include some products currently traded tariff-free under bilateral trade pacts, such as the 1984 Caribbean Basin Initiative and the U.S. Generalized System of Preferences.

Regina Vargo, the U.S. chief trade negotiator, tried to mollify the Central Americans by hinting that the United Slates would sweeten its deal during the subsequent rounds. Central America's head negotiators met in Managua in May to draft the region's counterproposal, which was presented during the fifth round of talks in mid-June in Tegucigalpa.

Then Guatemala added confusion to mystery three days before that round when its negotiation team, led by Salomon Cohen, announced it was breaking Central American consensus and presenting its own, more aggressive proposal. Under the original terms, approximately 58% of products would trade freely upon signing the deal, while some of the remainder would phase in over five or 10 years and still others would remain effectively untouched by the talks. The Guatemalan proposal instead puts 78% of the region's products under immediate free-trade terms.

Though CAFTA advertised the promise of economic matrimony fur Central America, Guatemala's defection has challenged the regions already shaky integration process and forced the United States to negotiate in an awkward "4 plus 1" format. "Guatemala's position on the trade pact is worrisome, but what is even more worrisome is that the U.S. is taking Guatemalan position seriously," says Rafael Carrillo, president of Costa Rica's Chamber of Industries.

Last harvest? Due to the secretive nature of the negotiations, much of the free-trade discourse in Central America instead revolves around a 10-year case study of Mexico under the North American Free Trade Agreement (NAFTA). The United States has promised Central America that CAFTA will help them just like NAFTA helped Mexico. However, critics of U.S.-brokered agreements claim that this is just the kind of "help" Central America doesn't need.

"Free trade is the best recipe to impoverish the region," says NAFTA critic Victor Suarez, director of Mexico's National Association of Commercial Farms. According to Suarez, since NAFTA went into effect 40% of Mexico's small, rural farmers have lost their jobs or been forced to sell their land. "We used to be the children of the corn, but now we are the children of the chingada," Suarez says.

Jorge Bucaro, the Guatemalan executive director of the Central American and Caribbean Agricultural Federation, says that Guatemalan farmers are equally leery. "We don't now what the final trade accord is going to look like, but we are afraid it is going to be like NAFTA, which has massacred the campesinos in Mexico," Bucaro says.

The lack of concrete information has, perhaps intentionally, hampered protest. The opening round of talks in Costa Rica was met with marches and street demonstrations, but, starved of substance to oppose, protests of subsequent rounds have fizzled.

Some, feeling protected, wax philosophic about the deal. Alvaro Badilla, president of the Guatemalan Rice Association, says his country's version of the trade proposal gives Guatemalan rice 10 years of protection from free trade and, most likely, will maintain the status quo for rice farmers in the long term. Guatemala's current policy allows the importation of rice only during the off-season, ensuring domestic producers non-competitive access to local consumers during their growing season.

Badilla says he doesn't think rice will ever be affected by the free-trade pact. Nevertheless, he is worried. "There is still a lot of time left before CAFTA is finalized, and we don't know what is going to happen between now and then," he says.

Even those in favor of CAFTA, however, insist that the agreement must protect agriculture. Nicaraguan business leader Enrique Zamora, president of Latin American Financial Services, notes that Nicaragua and its neighbors are primarily agricultural countries, and that clear norms must be established to protect campesinos in order for CAFTA to work.

Salvadoran Economy Minister Miguel Lacayo, a free trade advocate, says that CAFTA will help Central American farmers, many of whom harvest non-traditional fruits and vegetables not grown in the United States. The deal will also stem the flood of Salvadorans migrating to the United States for work, Lacayo says, as well as strengthen the younger democracies on the isthmus. He remains optimistic.

"We are already exporting a lot of non-traditional products to the community of 2 million Salvadorans living in the U.S.," Lacayo says. "This is our beachhead in the North American market, and from there we will expand with CAFTA."

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Title Annotation:Trade
Author:Rogers, Tim
Publication:Latin Trade
Geographic Code:1USA
Date:Sep 1, 2003
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