CAFTA: Here We Go Again

Ruckus’ Guide to Screwing Poor Countries
with Nicolás Pinel, In Ruckus [Vol. 8, Iss. 2, December 2004]

Step 1: Misname your plan.

Give your plan a deceptive name like ‘Free Trade Area’ (FTA) or ‘Free Trade Agreement’. This makes people think your plan is about fair and simple trade, instead of corporate ownership of foreign economies.

Step 2: Decide on which countries to screw.

If possible, select entire regions. The more countries within a region can be amalgamated into a FTA, the better. This prevents countries outside the agreement from starting up their own trade network, outside of your control. The Central American FTA, CAFTA, would apply to the US, Guatamala, El Salvador, Honduras, Nicaragua, Costa Rica, and perhaps the Dominican Republic.

Step 3: Eliminate public opposition.

Unfortunately, the citizens of the Third World are becoming forever less amenable towards FTAs. The good news is that their governments and upper-tier citizens are amongst the few who stand to gain! Get them to imprison, torture and/or kill union leaders first. This instills fears against organizing amongst workers. Students can also be a problem, but university shut-downs and bloody terminations of student protests will put a quick stop to that. You might want to consider setting up special training camps to help the local militia quench popular uprisings. The folks at the Western Hemisphere Institute for Security Cooperation (formerly the School of the Americas) at Fort Benning, Georgia are the ones to contact.

Step 4: Buy up essential social services.

FTA agreements go hand-in-hand with privatization. Get your multinational corporations to buy up essential services like electricity, telecommunications, water, and so on. Let whatever is left of social welfare, healthcare and education collapse by itself.

Step 5: Leave the rest to history.

Great job! You have successfully opened a new market and acquired a source of cheap labor. No more worrying about environmental restrictions, human rights, safe working conditions, minimum wages, retirement funds, and so on.

The need exists for a new breed of lexicographers who can help decipher and catalogue the language of global politics in the dictionary of doublespeak. Therein would rest the new meanings of traditional terms as used by international bureaucrats and policy makers. Democracy could be defined as “form of government practiced by individuals who are easily manipulated, and characterized by imposed dogmatism and covert control of the institutions by special private interests”. Morality as a “system of beliefs devoid of logical consistency and barren of all connection with reality, frequently used to rally up people for political benefit”. Finally, free, when used in conjunction with trade, could be explained as “state of oppressive control over small-scale economies by transnational economic conglomerates aided by policies ignorant of their own past nefarious consequences”.

This last entry would cite as an example the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA), likely to be considered by the US Congress in the near future.

Labor unions and social groups, as well as numerous policy makers have expressed opposition to the free trade agreement from its inception on January 27, 2003, with an estimated 10,000 people protesting the opening meetings in Costa Rica[1]. On November 13th of this year, the Committee in Solidarity with the People of El Salvador (CISPES), and the Community Alliance for Global Justice (CAGJ – Seattle), brought to Seattle some of the opposition voices as part of the “Derail CAFTA Northwest Tour.” Speakers included Angelica Morales from the Border Women Workers’ Committee, Mexico; Carmelina Contreras de Guzman, General Secretary of the Salvadoran Union of Telecommunication Workers; and Lynne Dodson, president of the Seattle Community College Federation of Teachers.

DR-CAFTA was signed in May 2004 by the trade representatives of the US and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. The Dominican Republic subsequently joined the group on August 5th. Approval by the corresponding legislative assemblies is pending for DR-CAFTA to come into effect.

As a proposed extension of the North American Free Trade Agreement (NAFTA), DR-CAFTA negotiators should have learned from the experiences of its predecessor. Free trade agreements are touted by their proponents as the conduits to prosperity and development[2]. While Robert Zoellick, the US Trade Representative has argued for the value of NAFTA in the development of the economy of Mexico, Canada, and the US[3], a study by the Economic Policy Institute released in November 2003 reveals that the net effect of NAFTA has been multilateral economic and social services deterioration[4].

Nearly 900,000 US jobs have been lost to low-wage laborers and manufacturers in Mexico. Mexican farmers have been driven into poverty by the dumping of US corn. Canadians have seen a drop in social investment due to intense economic competition with the US.

The growth of the US trade deficit accelerated with the inception of NAFTA. The increases in US imports from Canada and Mexico due to the liberalization of the markets greatly surpasses the rise in exports to these two countries (by 20.1% and 100.1% respectively). Yet, CAFTA is being promoted by its supporters onthe same failed promises and faulty logic that engendered NAFTA twelve years ago.

One of the sectors poised to take a potentially deadly blow from the liberalization of the local economies is agriculture. As in NAFTA, CAFTA countries will be victims of the dumping of heavily subsidized crops from the US. Rice farmers in Costa Rica fear the flood of Californian rice, a product that received $1.3 billion in subsidies last year[5]. Honduras, staying ahead of the game, decided to eliminate rice quotas in the early 1990’s. The market was flooded by US rice, and the number of local rice producers has decreased from circa 25,000 to 2,000[6]. Under CAFTA, provisions for bringing down rice import quotas have been negotiated, but there are no provisions addressing governmental subsidies to this sector.

From a self-centered position, it would appear that a free-trade agreement allowing us to export the overflow of subsidized crops into other countries would be a benefit to the US economy. However, more than three quarters of all agricultural subsidies in the US are received by only 10% of all farmers. Moreover, the 10% who receive these subsidies are generally those farmers practicing large, industrial-scale agriculture; smaller-scale local family farms are excluded from these benefits[7].

Beyond subsidies, CAFTA appears to be the first free trade agreement that, by mandate, excludes fairly traded products. A provision in Chapter 3 on National Treatment and Market Access for Goods prohibits allocating product quotas to non-governmental organizations and producer groups. This means that products such as fair trade coffee would not be allowed to participate in the allotted quotas[8].

A fundamental component of free trade agreements is the opening of local industries, social services and public utilities to privatization. Carmelina Contreras de Guzmán described the experiences of her co-workers in a Salvadoran telecommunications company as it was privatized to Telecom France in 1998. 500 employees, including most of the union leaders, were laid off in an effort to make the national company attractive to foreign firms. During its history as a private company, first as part of Telecom France, and subsequently as a part of American Mobil (a Telemex subsidiary), roughly 5700 jobs have been eliminated from the industry.

One of Lynne Dodson’s objections to CAFTA cited the disregard of free trade agreements for democracy and education, and their exclusive focus on profits. Her concerns are justified. CAFTA extends NAFTA’s Chapter 11 provision allowing private companies to sue local governments over policies that are perceived to interfere with profit making (the latter perceived by companies as their fundamental “right”), such as “barriers to trade”, even when such policies are aimed at protecting the environment or at developing social infrastructure[9].

CAFTA, as a good pupil, surpasses its mentor. While NAFTA mandates (at least in theory) that the participant countries adhere to international standards of labor laws, CAFTA asks merely that the countries enforce their own standards. In Central America, labor laws are usually well below international standards. Trade agreements are an appropriate occasion for demanding that the parties rise to the highest political, social, and environmental standards possible in order to receive the perceived economic benefits of trade. In contrast, the approach delineated in CAFTA reflects a disregard and lack of concern for the human components of the trade process.

Authors from the CATO institute have touted CAFTA as a potential “powerful tool for promoting peace, stability, and democracy in the region”[10]. Two crevasses can be found in their logic.

First, informed by history, we know that free trade agreements lead to the degradation of social infrastructure, environmental quality, and workplace conditions as the assets and revenues of the countries flow into the pockets of private companies. With surges in poverty, and patent injustices peace and stability grow improbable. This can be illustrated by CAFTA’s provision
to impose intellectual property rights laws on drugs. In so doing, generic drugs would become inaccessible to Central American patients. Also, patent rights over new plant varieties would destroy the millenary practice of seed-saving by farmers, and would pave the way for the creation of agricultural monopolies by seed-producing companies (potentially forcing GM foods without public input on Central American markets). Furthermore, when superior legal powers are given to multinational corporations rather than to the voice of the people, and the level of social well-being is dictated by profit, democracy in the traditional sense becomes unattainable.

Second, free trade is not free. Free trade can be the means to stability, justice, and democracy. But it must be truly free. It must be free of manipulation of the markets by special interests and powerful economic conglomerates. It must be free of protectionist measures disguised under the cloak of intellectual property rights that guarantee a monopoly of markets for transnational corporations. It must be free of the one-sided demands for liberalization. Free trade must maintain the freedom of the people to make trade decisions according to their economic, social, and cultural values. It must ensure that the trading field is as leveled as possible, so that ten drops of sweat are paid their worth, regardless of who sweated them. When free trade reincorporates the true meaning of free, only then will it become fair, and serve as a “valuable tool for development and prosperity”.









8 Why We Say No to CAFTA: Analysis of the
Official Text. Raúl Moreno, ed. Bloque Popular Centroamericano,
Alliance for Responsible Trade, Hemispheric Social Alliance. March,

9 Ibid.

10 Griswold, D. & D. Ikenson. (2001)
The Case for CAFTA: Consolidating Central America’s Freedom
Revolution. Trade Briefing Paper. CATO Institute.

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