DR-CAFTA: Dominican Republic – Central America Free Trade Agreement
 

Illustration ("It'll all be mine") by Tito Chamorro L.
Taken from popular education materials published by Centro de Estudios Internacionales (CEI), Nicaragua.

00 505 278 5413
cei@ibw.com.ni
www.ceinicaragua.org.ni

Find out more about the fight against “free trade” in Latin America:

   www.cispes.org
   www.citizenstrade.org
   www.bilaterals.org
   http://quest.quixote.org/news

and see the articles below:
 
 

* The Fight Against 'Free Trade' Goes On.
by Megan Rowling, Spring 2006

* The Dominican Republic – Central America Free Trade Agreement: undemocratic, unjust and corrupt.
Autumn 2005.

* The Central America Free Trade Agreement: reducing poverty – or killing the poor?
by Mike Phipps, October 2004

* 4-page illustrated special report (July 2004) click here >>  

* The Fight Against 'Free Trade' Goes On
The following article, written by Megan Rowling, appeared in the Spring 2006 issue of Central America Report, the magazine of Central America solidarity organizations in the UK and available from NSC.

El Salvador was the first country to bring the Dominican Republic–Central America Free Trade Agreement (DR-CAFTA) into effect at the beginning of March, followed a month later by Honduras and Nicaragua. Guatemala has yet to implement the deal, and Costa Rica has yet to ratify it, although the country’s new president has indicated he intends to do so. It is expected to come into force in the Dominican Republic this summer.
CAFTA was approved in the U.S. last summer after one of the bitterest trade debates in the House of Representatives in years. It was meant to come into force at the beginning of 2006, but its implementation was delayed until Central American countries had altered their laws in line with CAFTA stipulations.
Small farmers, unions and civil society groups across the region remain unconvinced of the alleged benefits of CAFTA, fearing that increased competition will erode incomes and reduce living standards for the impoverished. The day before the pact came into force in Honduras, hundreds of doctors, teachers, students and workers protested in the streets. “The treaty was designed to benefit big companies and the rich. And this system of trade, which goes against the poor, will generate massive unemployment,” said group leader Juan Barahona (quoted by Associated Press).

Crackdown on street vendors
Meanwhile, El Salvadoran street vendors have protested against CAFTA regulations that make the sale of pirated CDs and DVDs a serious crime. Some 60,000 Salvadorans working in the informal sector will be affected by new intellectual property legislation, and vendors have called on the government to help them find alternative livelihoods. So far they have received little help, and police have begun seizing goods, sparking violent protests. The Committee in Solidarity with the People of El Salvador (CISPES) argues that CAFTA is likely to drive more poor people abroad to look for work.
In Guatemala, the government continues to come under pressure from the U.S. Trade Representative (USTR) to change intellectual property laws affecting the pharmaceutical industry. According to the U.S.-based Stop CAFTA Coalition, Guatemala, with one of the largest generic pharmaceutical industries in the region, has become a target for powerful U.S. drug corporations. The U.S. wants Guatemala to tighten up regulations on the production of cheap generic versions of patented drugs, even though it has already made alterations that activists say satisfy CAFTA requirements.

Fears of rising debt
High-profile economists have warned that the implementation of CAFTA is likely to increase the indebtedness of Central American governments. Raul Moreno, an economist at the University of Salvador, and Carlos Pacheco, formerly with the Centro de Estudios Internacionales in Nicaragua, argue that the increasing elimination of taxes on goods and services will drastically reduce tax revenues. This is likely to lead to higher public deficits and debt, and lower levels of public spending, which would impact most on the vulnerable sectors of society.
The Stop CAFTA Coalition has promised to monitor the effects of CAFTA, and is calling on the U.S. media to do likewise. "As long as the people of Central America are resisting this agreement we will do what we can to assist their struggles," said Burke Stansbury of CISPES.

Meanwhile, with negotiations on a Free Trade Area of the Americas stalled due to opposition by Brazil and other countries, the U.S. is working to create a bloc of deals in the Andean region. It recently signed bi-lateral agreements with Peru and Colombia, but protests against a similar pact in Ecuador have escalated.
In March, the government declared a state of emergency in four provinces to curb nine days of protests. The Confederation of Indigenous Nationalities of Ecuador has called for a referendum and says it is planning further actions “with greater radicalism”. The Bush administration’s attempt to turn Latin America into one mass market for U.S. goods and services continues to run up against some fierce resistance.

* The Dominican Republic – Central America Free Trade Agreement: undemocratic, unjust and corrupt
The following article appeared in the Autumn 2005 issue of Central America Report, the magazine of Central America solidarity organizations in the UK.

Despite impressive levels of opposition from activists in the US and Central America the Bush administration succeeded in pushing the Dominican Republic-Central America Free Trade Agreement through the House of Representatives in late July – but only just.

After a cliff hanger vote that continued late into the night, the agreement was passed by just 217 votes to 215. According the US Stop CAFTA coalition the debate on DR-CAFTA was limited to two hours during which Republicans attempted to argue that failure to approve the agreement could tip Central America into civil war. After this scaremongering Bush’s officials reportedly continued to cut deals with the reluctant Republicans until they had secured the necessary votes. They came extremely close to failure. It appears that two certain ‘no’ votes were not registered: one due to a machine failure and the second due to absence.

The intense lobbying and arm twisting of the Bush administration to force the agreement through reflects the importance they attach to DR-CAFTA as vital to ‘national security interests’ and an important step in securing a Free Trade Area of the Americas. As President Bush himself has acknowledged DR-CAFTA is of greater importance geopolitically than economically to the US. On 29 September, Tom De Lay, Republican majority leader of the House, was forced to stand down after being indicted on a charge of criminal conspiracy relating to election funds from corporations. He was a key player in the political manoeuvrings and bribery that forced through DR-CAFTA through the House.

‘This is a tragedy for the people of the US, and even more so for the people of Central America and the Dominican Republic’ said Tom Ricker of the Quixote Center in a Stop CAFTA coalition press release. ‘For three years, we have worked with our brothers and sisters in the region to build a broad based cross border movement against this agreement, only to see the Bush administration and the Republicans up to dirty tricks to secure its approval.’ The way in which the vote was forced through is certainly typical of the blatant disregard for democratic processes that have been evident throughout the DR-CAFTA negotiations and the ratification efforts in both the US and Central American countries.

At the end of August the Dominican Republic also ratified CAFTA, joining Honduras, Guatemala, El Salvador and the US. The treaty was approved despite widespread fears that an increase in cheap imports from the US will harm Dominican farmers. Thus, among DR-CAFTA countries, only Nicaragua and Costa Rica have still to ratify the treaty. In Nicaragua, the US ratification met with mixed reactions: Minister of Trade and Commerce Aucena Castillo, reflecting the views of the government and Constitutionalist Liberal Party (PLC), said it would bring a bright future with ‘dignified employment’. However, the FSLN is opposed and is using its power in the National Assembly to delay ratification until 11 laws have been approved to protect vulnerable sectors against the negative effects of DR-CAFTA.

At the beginning of September more than 20,000 Nicaraguans demonstrated against DR-CAFTA ratification in a protest organised by the Civil Society Coordination (CCR). Participants included trade unionists, the National Association of Agriculturists and Livestock Producers (UNAG) as well as social, student and other civil society organisations. Orlando Nunez, a member of the organizing committee, told Prensa Latina that DR-CAFTA would affect more than three million Nicaraguans, especially those who rely on agriculture for their livelihood.

However, with the PLC and President Bolanos supporting DR-CAFTA, it looks likely that it will be approved by the National Assembly in the coming months. On the streets and in the media the government has mounted a campaign proclaiming DR-CAFTA equals employment. In response graffiti reflects the views of the FSLN, trade unions, NGOs and social movements: DR-CAFTA equals exploitation and unemployment.

Costa Rica is the country where there has been the most widespread popular opposition with many fearing that the agreement will lead to privatisation of the country’s health service as well as the telecom and insurance sectors. President Abel Pacheco, whose four year term is coming to an end, has said that DR-CAFTA will not be submitted to the National Assembly unless he is convinced that it will not harm the poor.

Following the US ratification, Oxfam America pointed out that the passage of the agreement by such a narrow margin, more than a year after it was signed demonstrates how little support there is in the US. Oxfam argues that implementation is likely to continue to be contested in Central America, because it will force legislative changes that will restrict governments’ ability to make policies in support of national development. In El Salvador, for example, the FMLN has launched a legal challenge to the treaty, arguing that it violates the country’s constitution and national sovereignty. Oxfam policy advisor Stephanie Weinberg warned:’ Whatever the spin, DR-CAFTA will institutionalise an uneven playing field instead of establishing fair and equitable rules for trade.’
Megan Rowling

* The US – Central America Free Trade Agreement: reducing poverty – or killing the poor?
by Mike Phipps, October 2004

Magda Lanuza from the Centre for International Studies in Nicaragua was in Britain in September to raise awareness about the impact of unfair terms of trade on Central America and to participate in the Trade Justice Movement mobilisation in Brighton. Mike Phipps asked her why popular organisations there are saying no to the Central America Free Trade Agreement (CAFTA).

The Central American Free Trade Agreement is misnamed. It’s not Central American – it’s between the US and Central America; it’s not free, but imposed by the US with the aim of guaranteeing freedom to invest for multinational companies; it’s not about trade – 95% of Central America’s exports already go to the US – rather, it’s an attack on our sovereignty. Nor is it an Agreement – that’s what it is for the US, but for us it will be a binding treaty, which will have to be written into our national laws.

It will impose a restrictive economic model on Central America – we’ve already had twelve years of the Washington consensus. Yet we’re continually told by the government and the unelected functionaries working on the Agreement that there is no alternative. Economic growth, they say, only works through trade liberalisation – even though scholars like Joseph Stiglitz disagree.

The negotiations were held totally in secret, with some involvement of Central American business elites. The document was completed last December in Washington DC and signed by the Central American governments. However, because of the US elections, it has yet to be ratified by Congress or the National Assemblies of Central American countries.. The backlash against CAFTA has been so strong in Costa Rica all the functionaries involved in the negotiations have left the government.

We have a number of concerns about the impact of the Agreement on the poorest sectors of Nicaraguan society. One clause allows companies to sue governments for lost revenue caused by strikes. All government procurement must be open to foreign competition. Nicaragua will be obliged to import highly subsidised US grain, which will have a devastating effect on local farmers. This will also open the door to GM crops.

The US has told Nicaragua there are 27 national laws that need reformed and even abolished to conform to the Agreement. For example, our entertainment law that requires national artists to be on the bill alongside international acts is considered a barrier to free trade. The Agreement also violates 17 articles of our constitution.

The Agreement requires the privatisation of public services, including opening the door to foreign investment in pre -school education. Since 1998 we have been fighting water privatisation. At first the government denied that water was included, but it is. The US is seeking to import 20% of its water from Latin America by 2020. Intellectual property rights in medicines are also covered, going beyond the rules of the World Trade Organisation. According to a recent study in Costa Rica, laboratories producing generic medicines will be forced to close and the price of medicines will increase 250%. .

We are trying to fight this through education and mobilisation. In Nicaragua, we have linked the issue to foreign debt, because it is the same international financial institutions behind both. In Costa Rica, one poll showed 82% of people opposed, indicating that once the population is well informed about the implications of CAFTA they are opposed to it. .

The Central American Popular Bloc has been set up, involving NGOs, farmers, trade unions and so on, to carry our popular education to explain the issues to local communities. Even private sector businesses are concerned: the poultry industry and beer companies fear the influx of multinational corporations. Our alternative is to say no to CAFTA, linking up with our allies in the US. We oppose not the details, but the principles of the Agreement. We are going to defend our economic and social rights as stated in our constitution. Our people have the right to grow their own food and farm their own land. Those behind the Agreement talk about reducing poverty: in fact, they mean killing the poor.