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Trade and Development
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CAFTA Introduction

Over the last two years, the U.S. government has negotiated, without serious public participation or consultation, a free trade agreement called the Dominican Republic – U.S. – Central America Free Trade Agreement, better known as CAFTA. Modeled along the lines of NAFTA, CAFTA promotes the “rights” of corporations at the expense of local populations.

CAFTA is intimately linked to the Plan Puebla-Panamá (PPP), a 10-year long, multi billion-dollar series of mega development projects to construct massive physical and industrial infrastructure for corporate development throughout Mesoamerica (southern Mexico and Central America). CAFTA is the legal counterpart to the PPP, designed to provide the necessary legal framework through which the rights of corporations and PPP investors will be guaranteed.

In a divide and conquer strategy, the Bush administration pushed CAFTA with great vigor in hopes of using it to isolate other countries and pressure them into moving forward with the hemisphere-wide Free Trade Area of the Americas (FTAA). However, because of growing U.S. public outrage, this plan has been thwarted for the moment.

Congress has been reluctant to vote on CAFTA due to the increasing voices of opposition to this once secret agreement. And we need to recognize, we’ve won a tremendous victory in this regard – time. The Bush administration expected to have this agreement wrapped up and in place well before the 2003 elections; instead, they haven’t been able to make a move on it in Congress.

However, this victory does not represent the end of the struggle. Many in Congress would like to vote on CAFTA when their constituents aren’t paying attention, possibly in a Lame-Duck session immediately after the election. CAFTA's proponents figure members will vote "Yes" if they don't have to worry about re-election or pressure from their constituents.

Please read on to learn more about why CAFTA will be so devastating to Central America, the Dominican Republic, and the United States, and then support our efforts to derail it altogether by taking action.

CAFTA – What is it?
Ever since they first gained access to the CAFTA text – nearly 1½ years after negotiations first began – progressive analysts have predicted that CAFTA will, if passed, devastate Central America and the Dominican Republic, wreaking social and economic havoc on millions. More than a mere trade agreement, it is a corporate tool to chip away at the entire concept of the nation-state as protector of the public, ensuring full deregulation and privatization of all activities and services, leaving everything to the free market and failed neoliberal policies that were never followed in the U.S. the way U.S. negotiators are now ramming it down the throats of others.

Yet on April 19, 2004, U.S. Trade Representative Robert Zoellick issued an op-ed in the Washington Post, publicly defending his beleaguered CAFTA and the numerous benefits he purports it will bring to the region. To give a sense of the misrepresentations the U.S. Trade Representative’s office has spread in order to win support for CAFTA, it is useful to examine, for a moment, how Zoellick described labor conditions – a subject of special controversy among congressional leaders.

Remarkably, he held Guatemala up as a model of labor improvements, noting, “During negotiations on….CAFTA, Guatemala markedly improved the application of its labor laws in export processing zones, including combating violence against trade unionists.” He left the readership of the Washington Post to extrapolate that all was well with the Guatemalan labor situation.

Perhaps the Trade Representative had forgotten to read the 2003 Country Report on Human Rights Practices issued by the State Department’s own Bureau of Democracy, Human Rights, and Labor on February 25, 2004. According to that report, of the more than 125,000 workers in the export zones and maquila sector, only 1,300 were able to obtain two collective bargaining agreements with employers. The report attributes this low bargaining success to “employer intimidation and pressure.”

The report also observes that women continue to receive significantly lower pay than men, “in many cases one quarter to one-half the salary for the same work;” “more than half of workers engaged in day-long employment in the rural sector do not receive the wages, benefits and social security allocations required by law;” and approximately 507,000 children age 7-14 years (20% of this age group) are engaged in work.”

The report notes that Guatemalan law does provide for freedom of association and the right to form and join trade unions, but “in practice, the Government did not…. effectively…. protect workers who exercised their rights.” Labor courts vindicated the majority of workers’ claims, but “employers complied with the court decisions in only a small number of cases;” “[o]ften employers were not disciplined for ignoring legally binding court orders.” Although the Ministry of Labor issued 4,009 fines worth a total of $1.6 million dollars in 2003, employers paid only 535 of these, worth just $194,000.

Employees were generally reluctant to exercise their right of association for fear of reprisal, and their fears were hardly unjustified. The report notes that “[r]etaliation, including firing, intimidation, ‘blacklisting,’ and sometimes violence, by employers and others against workers who tried to exercise internationally recognized labor rights was common and usually went unsanctioned.” “Labor leaders reported death threats and other acts of intimidation,” and the General Union of Guatemalan Workers reported “a pattern of death threats received by union leaders for payment of minimum wages on agricultural plantations.” Shockingly, on at least one farm, children of labor leaders were recently beaten and raped in retaliation for their parents’ attempts to pressure their employer to pay the minimum wage.

To hold Guatemala up as an example of improved labor conditions in any respect misrepresents the brutal conditions the majority of impoverished Guatemalans are subjected to. But Trade Representative Zoellick’s insincerity is NOT limited to the labor field.

The Trade Representative claims that majorities in Central America and the Dominican Republic want CAFTA, because it will lead to development that will benefit most people in these poverty-stricken countries. He asserts the region will benefit in two important ways. First, the U.S. market will be opened to goods from Central America and the Dominican Republic, which will lead to a thriving export sector that will raise levels of employment in the region. Second, Zoellick argues that foreign direct investment will also increase employment and will spread technological advances necessary for the region to deepen its industrial capacity.

What Zoellick fails to acknowledge, however, is that the U.S. market is already open to most products from the region. For example, in the case of Guatemala, the U.S. already allows free entry of 86% of Guatemalan products. Although CAFTA may offer limited opportunities for some sectors of Guatemalan society, the true beneficiaries of this agreement are U.S. multinational corporations that will gain much greater access to Central American markets.

Furthermore, CAFTA explicitly prohibits governments from imposing performance requirements, such as job creation or technology transfer, on foreign investors. This will limit the ability of the Central American and Dominican governments to advance public policies that respond to domestic objectives and priorities, and will significantly decrease any potential benefits of foreign direct investment.

In contrast to U.S. Trade Representative Zoellick’s assertions, Central Americans opposed to CAFTA number in the tens of millions, and they believe the agreement will:

• Bankrupt millions of small farmers and deprive Central American countries and the Dominican Republic of the ability to grow their own food;
  
• Destroy small businesses, making them prey to large transnational corporations;
  
• Hurt women, in particular, who endure poverty wages and abusive treatment in the maquila sectors;
  
• Accelerate the privatization of essential public services, making them unaffordable;
  
• Increase immigration to the U.S. as Central Americans and Dominicans lose any ability to make a living in their own countries;
  
• Subject the region’s natural resources to patent by large multinational corporations; and
  
• Cripple the ability of governments to pass regulations protecting the health, safety, environment and labor of their citizens.

So what can you do about this? Join our campaign against CAFTA.

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