Development & Aid, Economy & Trade, Headlines, Labour, Latin America & the Caribbean, North America

TRADE: Delays Hit US-Central America Pact

Emad Mekay

WASHINGTON, Jan 13 2006 (IPS) - The growing unpopularity of a free trade model marketed by Washington and U.S. pressure on Central American countries to further open up their markets have delayed the implementation of a trade pact with those nations, watchdog groups say.

The Central American Free Trade Agreement (CAFTA-DR), touted by the George W. Bush administration as a tool to promote freedom and democracy in Central America, was supposed to be implemented on Jan. 1.

However, Washington said the deal will have to be delayed as it weighs progress made by the Latin nations in relaxing trade barriers and adopting greater business protections that will benefit U.S. companies.

“Now the administration has come face to face with the reality that the agreement that it promised would bolster economic performance and democracy in Central America is in fact seriously unpopular,” said Lori Wallach, director of Public Citizen’s Global Trade Watch, a group that opposes CAFTA.

The deal, she explained, “forces the nations to implement an anti-development model that has proven to cause serious economic and social trauma”.

In a statement announcing the delay on Dec. 30, a spokesperson for the United States Trade Representative said the countries involved the deal – Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic – needed to finish their internal procedures first, but did not give an estimate of when that might happen.

Groups that monitor the U.S. foreign trade agenda say progress has been thwarted in various countries mainly because Washington insists on the need for sweeping constitutional reforms, further deregulation and greater intellectual property rights that will shield U.S. companies, like the powerful U.S. pharmaceutical industry, from cheap local generics.

The USTR’s statement said El Salvador was the closest to start implementation. But even in El Salvador, President Tony Saca has said that clashes within the Salvadoran Assembly could block implementation until at least February.

In Costa Rica, the parliament has yet to bring CAFTA to a vote, despite pressure from the United States. Guatemala has complained that drug companies were asking for too much.

“The problems associated with implementing CAFTA demonstrate what we’ve been saying all along: this agreement goes beyond trade in requiring dramatic changes in domestic laws that grant new rights to transnational corporations at the expense of working people,” said Tom Ricker of the Quixote Centre, a group critical of the deal.

“The fact that legislatures throughout Central America and in the Dominican Republic are now struggling to change laws governing intellectual property, services, and investment – in order to receive U.S. certification for joining CAFTA – makes clear the undemocratic nature of this agreement.”

Activists fear that Washington sees only the interests of U.S. corporations and is blinded to the concerns of the poor and workers in its southern neighbours.

“From day one, the Bush administration has been trying to ram CAFTA down people’s throats, with little substantive debate and despite voices of tremendous opposition,” said Burke Stansbury from the Committee in Solidarity with the People of El Salvador (CISPES). “In Costa Rica they have failed, and in other countries it took repression and dirty tactics to ratify CAFTA.”

Activist groups in the United States fault the administration not only for its style but for its model. Many argue that the model, as seen in the North America Free Trade Agreement (NAFTA), which knocked down barriers among the United States, Canada and Mexico, is essentially defective and caters to big business.

“The bottom line is that CAFTA is a means to impose, top-down, an array of policies designed to engorge the profits of large U.S. drug, construction, energy and other corporations that have been rejected by the majority in these countries within their own domestic democratic processes,” Wallach said.

U.S. groups warn that unpopular deals could hurt the U.S. standing in those nations.

“If CAFTA countries experience anywhere near the economic disaster experienced by Mexico under NAFTA, we should expect to see the administration’s CAFTA crusade further erode the standing of the United States in the region,” she added.

The deal had already proved controversial in the United States with a bloody battle in Congress that lead to legislators narrowly passing the deal by just two votes.

Officials from the Bush administration appear to recognise the unpopularity of the trade deal, but still think that neither CAFTA nor their free trade model are harmful to U.S. interests. According to a transcript of an interview to be aired over the weekend, USTR Robert Portman said the controversy surrounding CAFTA has not dented his country’s ambitious trade agenda.

“And as you’ve seen on Capitol Hill with the CAFTA-DR vote, with other votes, there’s a political concern about trade,” Portman said on John McLaughlin’s show “One on One”. “The reality is if we pull back, it will hurt our economy, hurt jobs and hurt Americans.”

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