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TRADE: U.S. Reaches Pact With Central American Nations

Emad Mekay

WASHINGTON, Dec 17 2003 (IPS) - The United States and four Central American countries reached a so-called free trade agreement (FTA) on Wednesday, a deal critics say will cost U.S. jobs and transfer wealth from the already impoverished Latin nations to U.S. corporations.

The United States and four Central American countries reached a so-called free trade agreement (FTA) on Wednesday, a deal critics say will cost U.S. jobs and transfer wealth from the already impoverished Latin nations to U.S. corporations.

“Negotiations began last January, and today we have fulfilled that vision with a cutting edge, modern FTA designed to tear down the tariff walls that block trade between the United States and Central America, between friends and neighbours,” said U.S. Trade Representative Robert B. Zoellick.

U.S. partners in the deal are El Salvador, Guatemala, Honduras and Nicaragua. Washington plans to include the Dominican Republic in the FTA in 2004.

Costa Rica, however, withdrew abruptly from the talks on Tuesday, a setback to the ambitious U.S. trade agenda. That country’s officials said they still had concerns over the fate of telecommunications and insurance industries, and agricultural and textiles sectors.

A statement from Zoellick’s office described the CAFTA (Central American Free Trade Agreement) plan as a step in the push for “trade liberalisation hemispherically through the Free Trade Area of the Americas (FTAA) and globally in the Doha talks in the World Trade Organisation (WTO)”.

The United States wants to set up a free trade area in the western hemisphere that would include all countries except Cuba. But talks last month in Miami aimed at advancing the FTAA were only partially successful, stalling over Washington’s refusal to discuss subsidies to U.S. farmers, among other issues.

“Step by step, country by country, region by region, the United States is opening markets with top-notch, comprehensive FTAs that set the standard,” Zoellick said.

Washington already has FTAs with Israel, Jordan, Singapore, Canada and Mexico, and is angling for future deals in the Middle East, southern Africa and Latin America, among others.

“The United States is committed to opening markets around the world because American farmers, workers, consumers and businesses want to sell our world-class goods and services,” Zoellick added. “CAFTA will streamline trade.”

Even though the draft text of the agreement will not be released until January, the deal is known to be modelled after the North American Free Trade Agreement (NAFTA) among Mexico, Canada and the United States.

But some recent research has shown that NAFTA did not improve the lives of millions of poor Mexicans and has cost the jobs of workers in Canada and the United States.

Last month the Carnegie Endowment for International Peace, a Washington-based think-tank, said foreign direct investment in Mexico led to the creation of 500,000 manufacturing jobs from 1994 to 2002, but that the country lost at least 1.3 million jobs in the agricultural sector alone, where one-fifth of Mexicans still work.

Activist groups opposed to CAFTA say it is similarly flawed and would carry hefty social costs.

Last week, Oxfam America, the American Federation of Labour-Congress of Industrial Organisations (AFL-CIO), the Washington Office on Latin America (WOLA), World Vision, Health GAP and more than two dozen U.S. church groups vowed to fight the trade deal.

Much of their opposition stems from the United States’ history of protecting U.S. farmers to the detriment of other nations’ agricultural sectors, imposing its own corporate-backed agenda and failing to protect the environment, public health and labour rights in trade deals it negotiates.

“CAFTA is deeply flawed,” said Vicki Gass of WOLA. “It is not the development strategy needed in a region where 62 percent of the people live on less than two dollars a day.”

“CAFTA will hurt small farmers, who are the poorest and most vulnerable people in the region. After NAFTA was signed, 1.3 million farmers in Mexico lost their livelihoods. We are concerned that something similar will happen in Central America,” she added.

Gass also warned that CAFTA could weaken the burgeoning democracies of the region by forcing governments into what she called “economic and policy straitjackets”.

According to the plan, more than 80 percent of U.S. exports of consumer and industrial goods will become duty-free in Central America immediately, with remaining tariffs phased out over 10 years.

Key U.S. export sectors will benefit, such as information technology goods, agricultural and construction equipment, paper products, chemicals and medical and scientific equipment.

The Central American countries will also give substantial market access to services, including in lucrative areas like telecommunications, express delivery, computers, tourism, energy, transportation, construction and engineering, finances and insurance.

The deal would offer protection and non-discriminatory treatment to digital products, such as U.S. software, music, text and videos, while beefing up protection for U.S. patents and trademarks.

Despite the benefits to powerful U.S. multinational companies, activists are still hopeful they will be able to beat the deal in the U.S. Congress, where some members have already expressed concerns over labour issues in the deal and the possible transfer of jobs from the United States to low-paying markets in Central America.

Democrats in Congress, which must approve CAFTA before it comes into effect, are concerned the deal lacks provisions to protect workers and the environment, while some Republicans who represent areas with substantial textile, sugar and dairy industries – to name a few vulnerable sectors – that have suffered job losses under previous trade deals fear even more unemployment.

“People in this country are already losing their jobs,” said Gretchen Gordon, director of Citizens Trade Campaign. “We’ve lost 760,000 jobs to NAFTA already. In an election year, is this Congress really going to jeopardise thousands more actual jobs and job opportunities by voting for this agreement?”

The U.S. presidential election is scheduled for November 2004.

WOLA’s Geoff Thale said Costa Rica’s withdrawal could alert more members of Congress to the deal’s weaknesses.

“CAFTA won’t have an easy time in the U.S. Congress,” he said. “Costa Rica’s decision not to finish the negotiations, even under enormous pressure from the United States, will make it more difficult to present a bill before the U.S. Congress in 2004, and (will) highlights areas of real concern in the agreement.”