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Central Americans Speak Out Against CAFTA
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by Karen Hansen-Kuhn
Alliance for Responsible Trade

Introduction: Why Central Americans Oppose DR-CAFTA

When the Bush Administration announced in 2002 the initiation of talks toward the establishment of a U.S.-Central America Free Trade Agreement (CAFTA, also known as DR-CAFTA after the inclusion of the Dominican Republic in 2004), it declared that the accord would advance "regional stability, democracy and economic development." Central Americans organized in unions, women's, environmental, family-farm, consumer and youth organizations and social movements, on the other hand, have expressed their alarm at the agreement's potential consequences in a series of protests, workshops, conferences and press events designed to increase public awareness about these damaging potential impacts. These events have paralleled the negotiations and the present planning for the accord's submission to the U.S. and Central American legislatures for approval, perhaps later this year.

The issues that most concern Central Americans vary from country to country. In Costa Rica, for example, there has been considerable opposition to provisions in DR-CAFTA that would serve to privatize the country's inexpensive and well functioning telecommunications system. In El Salvador, much of the protest has focused on the link between efforts to privatize public-health care and provisions in DR-CAFTA that would expedite the sector's privatization and make it permanent.

Some issues have resonated throughout the region. Central Americans look with alarm at the experience of Mexican farmers under NAFTA, realizing that their own agricultural sectors, which are the source of up to half of local employment, could be devastated by imports of low-cost farm goods from the United States. Many civil-society groups in every country in the region are also strongly opposed to provisions in DR-CAFTA on investment, services, and government procurement, among others, that would make it extremely difficult, if not virtually impossible, for local governments to respond to democratic initiatives to design and implement sustainable and equitable national development programs.

Civil-society programs to educate local populations about DR-CAFTA are more advanced in Central America than in the Dominican Republic, which was "docked in" to DR-CAFTA last year after a short series of hasty negotiations. Even so, Dominican groups are committed to broadening the public debate on the accord in their country. In February 2005, 62 civil-society organizations, led by the Dominican Medical College, held an Alternative Social Forum. Citing the agreement's potential impacts on Dominican family farmers and on people's access to low-cost medicines, participants in the Forum agreed to launch a major public-education campaign and to urge their legislators to reject the proposed accord.

The Dominican and Central American organizations opposing DR-CAFTA, like their allies in the United States, are not against increasing trade and other economic ties among our seven countries. They believe, however, that the provisions of DR-CAFTA constitute the wrong rules for regional integration. They are therefore calling for the rejection of DR-CAFTA and for the initiation of a greatly expanded public dialogue in each nation with civil society to shape a set of economic relations among the countries of the region that would lead to just and sustainable development.

Guatemala: Devastating Impacts on Agriculture and Sovereignty

As Mexico's closest neighbors, Guatemalans view the Mexican experience under NAFTA with grave concern, particularly the fact that some 1.3 million Mexican farmers have been displaced by imports of cheap U.S. agricultural goods. Agriculture makes up 23% of Guatemala's GDP and is the source of 50% of its employment. The Coordination of NGOs and Cooperatives (CONGOOD) carried out a detailed study of the potential impact of DR-CAFTA on Guatemalan agriculture, particularly on the export and import of 24 key crops. CONGCOOP concludes that the agreement could result in a net loss of between 45,000 and 124,000 jobs. The job losses among white-corn producers (who account for 38 percent of employment in the country) could be especially severe during the first year of implementation, when production could fall by as much as 80 percent.

Not surprisingly, family-farm and indigenous organizations have been at the forefront of demonstrations against the agreement. In a recent protest at the national Congress, Nery Barrios of Unity of Union and Popular Action (UASP) emphasized that, "campesinos won't be able to produce corn, beans, rice or grains, because those goods will come from abroad at lower prices. They will be genetically modified goods that will affect Guatemalans' health." Indigenous groups assert that the agreement violates their rights under ILO Convention 169 (which Guatemala ratified in 1996), which states that they must be consulted on issues that affect their rights to land or livelihoods.

Over the past few months, a new issue has emerged: the Guatemalan Congress's right to establish laws regarding the production and marketing of generic medicines. The Congress approved legislation in December 2004 that eliminated a five-year ban on the use of test data on pharmaceutical products. Under the old ban generic producers were forced to conduct their own trials on the safety of medicines in order to gain marketing authority, which is prohibitively expensive. The office of the U.S. Trade Representative has threatened to remove Guatemala from DR-CAFTA unless the five-year protection on the use of test data is reinstated. Luis Velazquez of the Association of Pharmaceutical Industries of Guatemala (ASINFRAGUA) called this pressure "an abuse" and said that it violates the country's sovereignty.

Guatemalan organizations have also protested the lack of public debate on DR-CAFTA and have insisted on a public consultation on the accord. The Mesa Global, a multisectoral coalition on trade and development, has, in working with other organizations, gathered 25,000 letters to legislators demanding that they convene a public consultation on the ratification of this accord. They urge the Congress not to rush through a vote but instead to carefully consider the potential consequences for the country's future economic and social development.

Guatemalan Demonstrations against CAFTA

12 October 2002: Mobilizations against CAFTA are held throughout Central America. A thousand indigenous Guatemalans block the Pan-American Highway at Huehuetenango, and 6,000 protestors block highways, airports and border crossings in Petén.

12 May 2003: Hundreds of farmers protest outside the site of the fourth round of official negotiations in Guatemala City. "We want to continue working without the threat of an invasion of subsidized U.S. products, as occurred in Mexico under NAFTA," the protestors announce in a press statement.

26 November 2003: 20,000 Guatemalan family farmers and indigenous people march to demand changes in the government's agricultural and land-tenure policies and to protest CAFTA, the FTAA and Plan Puebla Panama.

23 March 2004: Thousands of Guatemalan farmers, women, workers and youth march and block roads to protest CAFTA, Plan Puebla Panama and recent price increases on consumer goods.

31 March 2004: More than 10,000 indigenous Guatemalans organized by the Mayan Wagib'Kij march to demand that the government cancel permits for mining on their lands and that it review CAFTA, the FTAA and PPP and initiate a process to redefine those agreements in consultation with indigenous peoples.

8 June 2004: Thousands of Guatemalan farmers, workers and indigenous peoples block highways and border crossings, protesting violent land evictions, proposals for regressive taxes and CAFTA (now known as DR-CAFTA after the addition of the Dominican Republic). The government agrees to a series of commitments in response to the protests, including a promise to hold public hearings on DR-CAFTA throughout the country.

12 October 2004: Nearly 12,000 Guatemalans, led by indigenous and campesino organizations, march in Guatemala City against DR-CAFTA. "The FTA will only bring more poverty to our country," said Daniel Pascual of the National Coordination of Campesino Organizations (CNOC, quoted in La Prensa).

11 January 2005: Several hundred representatives of the National October 20 Coalition protest at the U.S. Embassy against pressure by the U.S. government to rescind legislation on patent protections to make the Guatemalan law consistent with DR-CAFTA.

11 February 2005: More than 300 representatives of unions and family-farm and other civil-society organizations demonstrate at the national Congress to demand that the legislators authorize a popular consultation on the agreement rather than ratify it.

1 March 2005: More than 8,000 Guatemalans march to the Plaza of the Constitution to demand that legislators vote against DR-CAFTA and mining concessions to foreign companies.

El Salvador: Health Care, Labor Rights and Democracy

Despite the fact that El Salvador was the first country to ratify DR-CAFTA, it has also been the site of massive protests against the proposed accord. Hundreds of thousands of Salvadorans have participated in numerous protests against DR-CAFTA, expressing concerns about the potential impacts on the country's public health-care system, labor rights, and its future democratic development.

Perhaps the most explosive issue in recent years in El Salvador has been the proposed privatization of public health care. Since the late 1990s, the government has moved to weaken unions in the sector through huge layoffs and to contract out certain health-care services to private companies. In response, local unions organized a series of protests, culminating in a demonstration in March 2003 by some 250,000 people from a broad variety of sectors. The government was compelled to back down on those plans, although it has yet to fulfill promises to rehire workers who went on strike or to end private concessions being granted at public hospitals.

Based on the experiences of other countries that have privatized public-health services, Salvadorans are concerned that such plans will result in a sharp rise in prices for those essential services. The privatization plans are seen as precursors to DR-CAFTA, since once a service has been opened to contracts with private providers, the trade agreement would ban restrictions on foreign investment in that service. In addition, if a future government were to decide to reinstate the public provision of health care, under the terms of the agreement's investment chapter, it would be subject to potentially ruinous lawsuits by private companies alleging that such moves would undermine their potential profits.

Salvadorans have also expressed concerns that the proposed agreement would weaken protections for labor rights. Just before the vote in the Salvadoran Assembly, Human Rights Ombudsperson Beatrice Alamanni de Carrillo issued a public letter urging the Assembly not to rush through a vote on the accord. In the letter, she stated that her office had carried out an in-depth analysis of DR-CAFTA "that reflects the serious impact of the Agreement on the right to work and to organize trade unions -- despite the fact that the Agreement includes chapters on labor and the environment." The multisectoral Sinti Techan network issued a similar statement, decrying the fact that, rather than improve on existing labor-rights review mechanisms under the Generalized System of Preferences and the Caribbean Basin Initiative, "the agreement eliminates the verification of labor rights issues, instead substituting a rhetorical and unenforceable 'Labor Chapter'. As a result, the legitimate aspirations of millions of workers in the region for improvements in their working conditions become even more distant."

In February 2005, the Sinti Techan network presented a legal challenge to the ratification of DR-CAFTA, alleging that the agreement violates constitutional guarantees for labor rights, health care and other economic and social rights, and that it contradicts existing international commitments on regional integration and environmental protection. Despite its ratification in December in a legislative session held in the middle of the night, the public debate on DR-CAFTA in El Salvador is far from over.

Demonstrations against DR-CAFTA in El Salvador

24 March 2002: "Another Central America is Possible" forum is held in San Salvador. Hundreds of activists from the region gather to discuss the potential impacts of CAFTA. The forum results in the formation of the Central American Popular Bloc, which coordinates actions on CAFTA throughout the region.

17 September 2002: Salvadoran health-care workers declare a national strike against privatization, union busting and CAFTA, which they see as inter-related.

12 October 2002: Mobilizations are held throughout the region. Some 13,000 Salvadorans march and peacefully obstruct 11 border crossing points to protest CAFTA, Plan Puebla Panama and the FTAA.

22 October 2002: More than 150,000 Salvadorans march to protest plans to privatize health care and electricity, which are seen as key elements in the government's plans for CAFTA and Plan Puebla Panama.

9 January 2003: Tens of thousands of Salvadoran activists protest the formal initiation of CAFTA negotiations, which begin that week in Washington, DC. The protesters in San Salvador blockade roads and bridges, occupy the city's cathedral and block entrances to three factories controlled by transnational corporations.

6 February 2003: Some 125,000 Salvadorans march against the privatization of health care and CAFTA.

13 March 2003: Nearly 250,000 Salvadorans march again against the privatization of health care and CAFTA.

2 April 2003: Tens of thousands of protesters from all over Central America hold a rally outside the official CAFTA negotiating session being held in San Salvador.

10-12 December 2003: Over 2,000 Salvadoran farmers, students and other citizens' groups march to the capital to protest the final round of CAFTA negotiations being held that week in Washington, DC.

19-21 July 2004: Social movement leaders from throughout Central America meet in El Salvador at the fifth Mesoamerican Forum. Representatives of more than 700 organizations sign a petition against DR-CAFTA.

12 October 2004: Thousands of people mobilize against DR-CAFTA. Similar mobilizations are carried out on this day throughout Central America.

16 December 2004: Representatives of the MPR-12 network peacefully occupy the National Congress to voice their opposition to DR-CAFTA. Hundreds more gather outside the Congress.

22 December 2004: Activists block highways at ten locations across the country to protest the Salvadoran Assembly's ratification of DR-CAFTA.

Honduras: Trading Away Farms to Save Sweatshops?

Since Honduras was devastated by Hurricane Mitch in 1998, the economy has been slowly recovering, although the government estimates that nearly a third of the economically active population is still either unemployed or underemployed. Many of the arguments being made now in favor of DR-CAFTA's ratification assert that provisions in the agreement will save jobs in the country's maquila sector. They ignore, however, the potential impacts on the agricultural sector, which is the source of 36.6% of employment.

Some 120,000 people work in the Honduran maquila sector, primarily in textile exports. The recent expiration of quotas under the Multi-Fibre Arrangement means that those goods are now forced to compete with exports from China, where wages are even lower than in Honduras (and other Central American countries). DR-CAFTA's promoters insist that the tariff reductions under the agreement would give local textile exports a cost advantage that would allow those goods to continue to compete with the Chinese goods.

Honduran unions, family-farm organizations and other social movements question, however, the wisdom of continuing to favor that sector at the expense of agricultural production. During the 1990s, when agricultural tariffs and public support for agriculture were slashed, the maquila sector received tax holidays and subsidized services, including energy, port and other facilities. In a January 2005 letter to members of the Honduran Congress, four labor federations, the Honduran Popular Bloc, the National Campesino Council and 14 social movements state that, "it was a mistake to dismantle our national productive sector, destroying the agrarian reform process and the social sector of the economy and essentially betting everything on the maquilas. DR-CAFTA will not lead to any substantive changes in the maquila scheme. To the contrary, it will reinforce its current logic, making jobs even more precarious and demanding even more subsidies from the State (our people) in the hope of competing with China."

Raf Flores, a local analyst, points to the experience of rice production under the trade liberalization that has already taken place. Honduras was once self-sufficient in rice production; next year it will produce a mere 20 percent of local demand. Flores warns that if DR-CAFTA is implemented, some 700,000 farmers and their families could be thrown out of work and forced to seek employment elsewhere. In essence, he explains, provisions in the agreement could potentially protect 120,000 jobs at the expense of those 700,000.

These issues, as well as concerns that the agreement contradicts the Honduran constitution and would severely constrain the government's ability to implement development policies, are being echoed in the Honduran Congress. In a September letter to the U.S. Congress signed by 31 members of the Honduran Congress from all major political parties, the legislators assert, "DR-CAFTA is a pre-announced Mitch. The negative impacts on the Honduran population will be equal to or greater than the disasters caused by that hurricane in 1998...We urge you to vote no on DR-CAFTA."

Key Demonstrations against DR-CAFTA in Honduras

22-23 June 2002: Over 1,000 representatives of social movements from Nicaragua, El Salvador, Guatemala and Honduras meet in Choluteca, Honduras at the Mesoamerican Forum. They declare their rejection of CAFTA, the FTAA and Plan Puebla Panama and develop plans for public education and mobilization.

12 October 2002: Mobilizations are held throughout the region. In Honduras, marches in Tegucigalpa, San Pedro Sula and Choluteca draw thousands of people protesting CAFTA and the privatization of health care, water and education.

21-24 July 2003: More than 1,500 activists from Central America and Mexico attend the Fourth Mesoamerican Conference, "For People's Self-Determination and Resistance," in Tegucigalpa. The conference culminates in a march to the presidential palace attended by more than 10,000 people opposed to CAFTA and Plan Puebla Panama.

5 February 2004: More than 15,000 Hondurans mobilized by the Bloque Popular Hondureño demonstrate against CAFTA.

8 March 2004: Hundreds of Honduran women march in Tegucigalpa on International Women's Day, demanding greater political representation in the country and voicing their rejection of CAFTA.

12 March 2004: Some 3,000 Honduran consumer activists demonstrate against recent price increases and CAFTA.

20 March 2004: Some 4,000 Honduran activists, including a large contingent of indigenous people, demonstrate against CAFTA and the Iraq War.

1 May 2004: Demonstrations commemorating Labor Day take place throughout Central America. Some 15,000 Honduran workers take to the streets and present a list of 12 demands, including a call on the government not to ratify CAFTA.

2 July 2004: Honduran students, teachers and workers blockade streets in Tegucigalpa to protest the lack of any response by the government to the demands presented on 1 May.

28 September 2004: Members of the Bloque Popular deliver over 18,000 letters to the National Congress demanding that the legislators reject DR-CAFTA.

23-27 December 2004: A series of demonstrations and marches occur to protest plans to ratify DR-CAFTA during the holidays. Members of the Bloque Popular peacefully occupy the Congress to prevent a secret middle-of-the-night vote on the agreement.

11 February 2005: Hundreds of people attend the "People's Congress", urging legislators to reject DR-CAFTA.

Nicaragua: Agriculture and Water

Many Nicaraguans are deeply concerned that DR-CAFTA would devastate the country's food production and limit citizens' access to water, a commodity that many argue should be considered a basic human right.

The Nicaraguan economy is highly dependent on agriculture, even more so than other Central American economies. According Nicaraguan economist Adolfo Acevedo, agricultural production accounts for 28 percent of the country's GDP and 42 percent of employment (compared to an average of 26 percent in the rest of Central America). Corn, rice and beans are essential crops for many farmers, both as sources of income and food for their families.

Under the terms of DR-CAFTA, these farmers, most of whom lack credit, technical assistance and access to irrigation, would be forced to compete with highly productive, highly subsidized U.S. goods. According to Oxfam International's Carlos Galian, U.S. exports of corn to Nicaragua under DR-CAFTA could increase by 10,000 percent the first year alone. "In the final analysis," Acevedo concludes, "what is at stake for the long term is not just the possibility of preserving a large part of the national food production, assuring food sovereignty, or of losing the possibility of developing a multifunctional and sustainable rural economy, which on its own has fundamental importance, but the fate of the labor force itself, and, more deeply yet, the fate of the human beings linked to this production."

Nicaraguans are also concerned that the agreement would further the privatization of water, a proposal currently being promoted by the Inter-American Development Bank. The IDB water "modernization" proposal includes contracting out the management of water systems. Carlos Pacheco, Executive Director of the Center for International Studies, explains that, despite the government's claims that the agreement would not mandate privatization, the government procurement provisions in DR-CAFTA would require more than one third of the country's municipalities to open the management of their water systems to bidding by private, including foreign, companies.

So far, this proposal has been stalled because of massive public resistance. Ruth Herrera, coordinator of the Consumers' Defense Network, explains, "More than half of all Nicaraguans lack potable water in their homes. This vital service must be expanded and administered solely by the public sector in our country in the interests of the people and their household and productive activities and not as a commodity to be sold for profit. The Consumers' Defense Network is fighting against the privatization of water and water distribution management which is being pushed by the Inter-American Development Bank, the World Bank and the International Monetary Fund and now by the provisions of CAFTA. We see access to water as a basic human right."

Protests against CAFTA in Nicaragua

16-18 July 2002: Third Mesoamerican Forum is held in Managua. More than 1,000 representatives from citizens' groups in Central American and Mexico gather to discuss strategies around CAFTA and Plan Puebla Panama.

12 October 2002: Mobilizations are held against CAFTA throughout the region. Thousands of Nicaraguans rally in Managua.

12 January 2003: Nicaraguan environmental and union activists gather outside the National Assembly to protest CAFTA. The groups call on legislators to reject the privatization of water (seen as a first step in the CAFTA process) and to demand genuine public participation in the CAFTA talks.

3-4 June 2003: More than 600 people representing the Central American Popular Bloc gather in Managua for a two-day strategy session on CAFTA. The meeting coincides with a round of official CAFTA talks, and protests are held in front of the hotel where the talks are being conducted.

18 September 2003: Some 10,000 Nicaraguans from unions and family-farm, women's youth, consumer, environmental and other citizens' organizations gather to protest the official CAFTA talks being held in Managua.

12 October 2004: Thousands of Nicaraguans march to protest water privatization and DR-CAFTA.

18 September 2003 March against CAFTA.

Costa Rica: Undermining Democracy and the Environment

Costa Rica is known for its long history of democracy, its relatively low levels of poverty, and its pristine national parks and natural resources. Unfortunately, each of these achievements could be threatened if DR-CAFTA were to be implemented.

The proposed opening of the telecommunications sector to foreign investment under DR-CAFTA has generated extensive public opposition. Costa Rica has a publicly owned electricity and telecommunications system that provides telephone services to 97 percent of the population at prices comparable to those in the United States and lower than those in any other Latin American country. Under the current system, profits from internet and cell-phone services are used to subsidize rural telephone services and internet services in public schools. Under DR-CAFTA, the internet and cellular phone services (the most profitable sectors, which are projected to grow the most in the next few years) would be opened to competition from foreign companies, leaving the public system with only regular phone service. This would likely result in sharp increases in prices to consumers and massive layoffs.

Costa Ricans were astonished that these provisions were included in the agreement, given the turmoil caused by a similar proposal just two years earlier. In 2000, President Miguel Angel Rodríguez (now charged with corruption arising from payments he received from Alcatel, a French telephone company), proposed the privatization of the Costa Rican Electricity Institute (ICE), which provides both energy and telecommunications services. People took to the streets in a series of massive protests and roadblocks lasting over two weeks, leading the national Congress to reject the proposal. The privatization plan appeared to have died until it suddenly appeared in the DR-CAFTA text during the last few days of negotiations.

Many Costa Ricans are also concerned that the investment provisions in DR-CAFTA could threaten the country's high environmental standards. The Costa Rican government recently denied the U.S.-based Harken Energy Corp. a permit to conduct offshore oil exploration because of a very negative environmental impact assessment of the proposed project (a normal requirement under Costa Rican law). Harken attempted to sue the Costa Rican government for US$57 billion (a figure that far exceeds the country's entire GDP) under the World Bank's International Convention for the Settlement of International Disputes (ICSID). Because Costa Rica is not a party to ICSID and has not signed a bilateral investment treaty with the United States, the government was able to avoid the ICSID arbitration process and remove the matter to its the local court system for resolution.

Ottón Solís, a former finance minister and current head of the progressive Partido de Acción Ciudadana said, "The U.S. promotes CAFTA as a tool to enhance democracy, but it would actually weaken our democratically built judicial institutions by creating supra-national mechanisms for U.S. companies to bypass our courts and sue governments when they believe their profits are being harmed by regulations." Solís, along with members of Congress from the three major political parties and tens of thousands of Costa Ricans who have taken to the streets to protest such measures, demand that DR-CAFTA be rejected and new talks for sustainable trade and development begin.

Key Mobilizations against CAFTA in Costa Rica

27 January 2003: Hundreds of Costa Rican activists from social movements, unions and environmental groups hold a peaceful protest against CAFTA parallel to the round of official negotiations being held in San Jose.

20 October 2003: More than 3,000 Costa Rican students, workers and activists march to the Congress to demand that it reject CAFTA.

21 November 2003: 5,000 Costa Rican telecommunications and insurance workers (sectors that would likely be privatized under CAFTA), along with students and other activists, march to Congress and to the Presidential Palace to express their opposition to CAFTA.

1 May 2004: Demonstrations commemorating Labor Day take place throughout the region. More than 6,000 Costa Ricans march against the privatization of public telecommunications and insurance services and the signing of CAFTA.

31 May 2004: Some 20,000 Costa Ricans march to the National Assembly to express their opposition to CAFTA. Legislator Gloria Valerín (PUSC, the majority party) vows to vote against the agreement, adding, "I am pleasantly surprised by the massive support for this effort by the Costa Rican people. Now it is our job to make sure more Deputies vote against CAFTA." (La Nación, 1 June 2004)

23-30 August 2004: Tens of thousands of Costa Ricans bring the country to a halt in demonstrations against a foreign company's control of vehicle inspection services, against the possible ratification of DR-CAFTA and for much needed wage increases. The government accedes to several of the protesters' demands, leading to resignations by four ministers (including the trade and finance ministers) and other top economic advisors.

12 October 2004: Nearly 30,000 Costa Ricans protest against DR-CAFTA and corruption scandals involving foreign investment in public utilities, especially the tele-communications sector. Two former presidents are charged with accepting bribes from foreign firms interested in investing in strategic sectors.

12 October 2004 march. Banner says "Let's Free Our Peoples from Free Trade!"