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Central
American Free Trade Agreement (CAFTA)
What is it?
What's
new?
Action on CAFTA
Rationale
for GA Action and Additional Background
Salvadoran perspective on CAFTA
Educational resources
What
is CAFTA?
The
U.S.-Central American Free Trade Agreement (CAFTA) is a free
trade
agreement between the U.S. and the five Central American nations
of Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica.
CAFTA is an extension of the same policies put forward in the
North American Free Trade Agreement (NAFTA). The implementation
of CAFTA is seen key by the Bush administration and multinational
corporations in obtaining the Free Trade Areas of the Americas
(FTAA), which would cover all the countries in the Western Hemisphere,
except Cuba. CAFTA is closely linked to the Plan Puebla Panama
(PPP), a 10-year long, multi billion dollar mega development
project that will construct physical and industrial infrastructure
throughout the region. Civil society groups in Mexico and Central
America see the PPP as paving the way for CAFTA and FTAA. These
groups have protested the PPP because of the devastating impact
that it will have on the environment, indigenous communities,
and local economies.
For
the government's explanation, see U.S. Trade Representative
site about CAFTA Go...
Read
the 2004 General Assembly's Action on CAFTA below
What's
New?
Missed
Deadline for Start of CAFTA 
News reports indicate that several of the CAFTA countries’
parliaments – confronted by the reality of having to make
far-reaching changes to public health and other domestic laws
required – are reluctant to implement the deal. [Read
the entire press release]
General Assembly Endorses Action on the Central
American Free Trade Agreement (CAFTA)
That
the 216th General Assembly (2004) of the Presbyterian Church
(U.S.A.) do the following:
1. Declare our opposition to the Central American Free
Trade Agreement (CAFTA) in its current form, as it fails to
adequately protect workers' rights, human rights, food security,
and environmental standards, and it limits the ability of governments
and sovereign indigenous peoples to regulate corporations to
protect the common good.
2. Direct the Stated Clerk to communicate with the president
of the United States and members of Congress the opposition
of the Presbyterian Church (U.S.A.) to the Central American
Free Trade Agreement and other free trade agreements.
3. Direct the General Assembly Council, through the Presbyterian
Church (U.S.A.) programs dealing with economic justice, hunger,
and advocacy, to promptly communicate the General Assembly position
to the U.S. trade representative, U.S. senators and representatives,
congressional committees with trade jurisdiction, and state
legislators, with emphasis on those sections of CAFTA and other
free trade agreements that negatively affect our partners.
4. Request the General Assembly Council to identify sisters
and brothers and institutional partners who have been impacted
by free trade policies, and help interpret these stories and
effects to church members through itineration in the U.S. and
inclusion of these into a congregational study guide on trade
issues and economic globalization.
5. Direct the Committee on Mission Responsibility Through
Investment (MRTI) to explore the implications of CAFTA and other
free trade agreements and advise the General Assembly.
6. Call on presbyteries, churches, and church members
to do the following:
a.
Become educated about how CAFTA, and other free trade
agreements, can further economic globalization policies that
are unsustainable and unjust, by drawing on the resources
of the Presbyterian Hunger Program, the Presbyterian Washington
Office, and other offices of the National and Congregational
Ministries Divisions.
b.
Advocate with state legislators and U.S. senators and
representatives, urging them to oppose CAFTA and other free
trade agreements in their current form.
c.
Join in coalitions with community and nonprofit groups,
including other Christian denominations, which are organizing
opposition to CAFTA and other free trade agreements with similar
provisions.
Rationale
from Commissioners' Resolution for G.A. Action on the Central
American Free Trade Agreement (CAFTA)
In
2003, numerous religious, humanitarian, development, labor,
and public policy organizations called on the United States
to honor a set of standards of fairness and justice in trade
negotiations with Central America.1 CAFTA,
as negotiated, will harm, rather than help, farmers and workers
in Central America who are struggling to overcome poverty. We
believe as well that CAFTA will not benefit ordinary people
in the United States. The CAFTA will not contribute to equitable,
just, and sustainable development in the United States or Central
America.
The
following impacts would occur in Central American countries
and in the United States:
1.
Central American Countries
a.
Destroy subsistence farming.
b.
Create a threat to food security.
c.
Create inadequate environmental protections.
d.
Cause negative impact on fair trade enterprises and cooperatives.
e.
Erode essential services.
f.
Create loss of national sovereignty.
2.
United States
a.
Increase forced migration of people from Central America to
the United States.
b.
Increase militarization of the border between Mexico and the
United States.
c.
Export additional jobs from the United States.
The
Central America Free Trade Agreement builds on the foundation
of the North American Free Trade Agreement (NAFTA), which went
into effect in 1994. Ten years of NAFTA are indicative of some
of what can be expected under CAFTA. Additional information
is available online at www.citizenstrade.org,
which includes signatures from forty-eight organizations, including
the PC(USA) Washington Office.
- Under
NAFTA, more than a million Mexican farmers and their families
have had to abandon their land and livelihood because they
are unable to compete with subsidized food crops from the
United States. They migrate to cities, where jobs are scarce
and wages low, or migrate to the United States, through
dangerous border crossings.
- Between
1994 and 2003, the percentage of the Mexican population
living in poverty rose from 58 to 79 percent. This represents
a 36 percent increase in the poverty suffered. For women-headed
households, poverty increased by 50 percent. Increasing
poverty both arises out of, and leads to, lower wages, sweatshop
conditions, deterioration of health, increased marginalization,
and instability.
- Food
security has been threatened by the export to Mexico of
subsidized corporate foodstuffs from the U.S. and Canada,
undercutting local producers in Mexico.
- Threats
to the environment have increased as industrialized agriculture
has replaced small farms, and export-driven economic growth
has led to over-use of natural resources. Dumping of hazardous
wastes near factories has caused birth defects in children
and other illnesses.
- Foreign
corporations have been allowed to bring lawsuits against
governments that pass labor, public health, or environmental
laws that reduce corporate profits.
In
addition, the Central American Free Trade Agreement:
- does
not include adequate enforcement for violations of internationally
recognized labor and environmental standards;
- threatens
essential services, in that it promotes privatization and
deregulation of services including education, health care,
postal service, construction, energy, transportation, and
water supply;
- specifically
discriminates against products of nongovernment organizations
and producer cooperatives. This would include fair-trade
enterprises such as Equal Exchange and Just Coffee, which
provide a living wage to farmers and producers.
The
trade agreement was not negotiated within a framework of democratic
accountability and did not include broad-based citizen participation.
The text was only made public after the negotiations were completed.
There were no social reviews or impact assessments by independent
bodies on the potential impact of CAFTA on workers, people living
in poverty, women, indigenous and ethnic groups, or the environment.
The CID Initiative, a Central American coalition that participated
in a side room of the negotiations, called for a moratorium
mid-way through the process, due to the limited participation.
WORKER
RIGHTS: The
agreement merely states, “[a] Party shall not fail to effectively
enforce its labor laws, through a sustained or recurring course
of action or inaction, in a manner affecting trade between the
Parties.”2 For countries where labor
violations are egregious and systemic, this clause is insufficient
to guarantee protection of workers’ rights. Although fines
may be levied against a trading partner, the money collected
is not required to be used to remedy the labor rights violation,
but is designated vaguely for “appropriate” labor
initiatives. Suitable labor initiatives are never defined. The
CAFTA allows a trading partner to re-impose import duties if
the violating government does not pay the fine, but not for
failure to correct the labor rights violation. The labor provision
in CAFTA will also replace the Generalized System of Preferences
(GSP), which includes a petition process, leading to the loss
of a useful, if modest enforcement mechanism. Finally, no protection
systems are established for rural or urban workers adversely
affected by the trade agreement.
AGRICULTURE:
Central
American countries will be required to eliminate import tariffs
on rice, beans, yellow corn, and dairy products, staple products
on which the livelihoods of 5.5 million small and medium producers
depend. The U.S. refused to negotiate the agricultural subsidies
and supports it provides that enable U.S. agribusinesses to
export goods at below the costs of production, undermining Central
American farmers. Without the compensating protection of tariffs,
Central America’s doors will be opened to the dumping of
U.S. farm products, risking massive displacement of rural workers
and increased food insecurity in Central America.
TRADITIONAL
KNOWLEDGE & THE RIGHT TO ACCESS TO MEDICINE: CAFTA
provisions on intellectual property threaten to place HIV/AIDS
treatment beyond the reach of many Central Americans in need.
CAFTA provides for expanded patent rights for brand-name medicines
and new restrictions on using inexpensive generic versions.
This will drive up the cost of lifesaving drugs, and delay or
obstruct generic competition. It will become almost impossible
for Central Americans to acquire affordable medicines for HIV/AIDS
and other diseases. In addition, CAFTA will place restrictions
on Central America farmers’ ability to use and save certain
seeds, undermining traditional agricultural practices. The CAFTA
goes beyond World Trade Organization (WTO) regulations, and
violates the spirit of the Doha Agreement and the Convention
on Biodiversity.
INVESTMENT
RULES:
Under CAFTA, national development needs will be secondary to
the rights of foreign investors. A USTR fact sheet on free trade
with Central America states that U.S. investors will enjoy “in
almost all circumstances the right to establish, acquire and
operate investments in Central American countries on an equal
footing with local investors, and with investors of other countries.”3
Accordingly, governments will not be able to harness foreign
investment for economic development strategies that promote
domestically oriented growth or support new domestic industries.
“Furthermore, CAFTA includes NAFTA-like investor-to-state
lawsuits, which will allow corporations to sue governments over
regulations that they believe infringe on their business interests.”
Finally, investors do not have binding responsibility to comply
with International Labor Organization (ILO) standards.
ESSENTIAL
PUBLIC SERVICES: CAFTA
negotiators did not exempt essential public services from the
national treatment standards. Governments will lose the flexibility
to subsidize these services and guarantee adequate provision
of these services to citizens.
As
Presbyterians, we affirm the right of all people to meet their
basic needs, including enough food, clean water, housing, healthcare,
and education, all of which presuppose a living wage. We affirm
the right of farmers to make an adequate living on their lands,
and of local businesses to succeed without the threat of competition
of large foreign corporations. We affirm the rights of nations
to set their own standards for labor, public health, and the
environment, without the threat of lawsuits by corporations.
We support trade that is fair. We therefore stand in opposition
to the Central American Free Trade Agreement.
Endnotes
1.
These standards were expressed in two documents: “Principles
of Unity on Trade with Central America,” October 2003,
and “Equitable Trade and Central America: Does CAFTA
Measure Up?,” July 2003.
2.
See http://www.ustr.gov/new/fta/Cafta/text/index.htm).
3.
See http://www.ustr.gov/new/fta/Cafta/2003-12-17-factsheet.pdf
10
Reasons to Say No to CAFTA? (PDF, Adapted
from CISPES)
CAFTA’s
Debt Trap
Buried in the technical language of the CAFTA agreement
are rules that would make it more difficult for the six nations
that have signed the trade deal with the United States to escape
heavy debt burdens or to prevent or recover from debt crises.
[Read
article online or download
printer-friendly pdf version]
Written
by FPIF policy
analyst, Aldo Caliari, Coordinator of the Rethinking Bretton
Woods Project a the Center
of Concern.
Joint
Statement on CAFTA 
by the Bishops' Secretariat of Central America (SEDAC) and the
Chairmen of the Domestic and International Policy Committees
of the United States Conference of Catholic Bishops (USCCB)
CAFTA
Draft Text
The draft text of the Central America Free Trade Agreement
(CAFTA) has been released by the Office of the US Trade Representative
Go...
-
CAFTA
Negotiations End: More Poverty, Less Development
December
22, 2003 Analysis from Oxfam USA. Go...
-
Administration
Reaches Accord On Free Trade with Central American countries,
minus Costa Rica. Dec. 18, 2003 - House struggle expected
early in 2004. (If you haven't already registered to view
the Post online, there is a short form to fill out) Go...
Additional
Background
(thanks
to NISGUA):
Negotiations for CAFTA began in January and have continued
on a monthly basis. CAFTA is the extension of the core principles
of the North American Free Trade Agreement (NAFTA) to the
Central American countries of Guatemala, Honduras, El Salvador,
Nicaragua, and Costa Rica. The disastrous effects of NAFTA
on both Mexican and U.S. workers has been conclusively documented,
and now the Bush administration wants to extend this devastation
throughout Central America. CAFTA will have a particularly
negative impact on small farmers in Central America. If these
small-scale producers are forced to compete with heavily subsidized,
corporate dominated U.S. agriculture, the rural economies
of Central America, already reeling from years of depressed
coffee prices, will collapse. And as we have seen from NAFTA,
CAFTA will do little to help small farmers in the U.S.
While
many concerns about the content of this treaty have been raised
by civil society throughout the United States and Central
America, and by legislators in all six countries, the Bush
administration, in similar fashion to its response to the
popular movement against the Iraq war, is choosing to ignore
the demands of the majority in favor of meeting their own
narrow, self-interested agenda.
There
are several themes that are of concern with CAFTA, and many
of these concerns are also present with ongoing debates on
the Free Trade Areas of the Americas (FTAA) and the recently
signed Free Trade Agreement with Chile.
Transparency:
Despite widespread protest, there has been little or no input
from civil society during the course of the CAFTA negotiations.
In fact, even many members of the US Congress have not heard
about it, and many of those that have heard about it have
not seen any of the text of the agreement.
Labor
Rights: One of the biggest concerns with this agreement
is the devastating effects it will have upon worker rights
in both Central America and the United States. In April the
House Democratic leadership wrote to the Bush administration
declaring that CAFTA needed to have stronger labor rights
provisions than the recently signed Chile-US Free Trade Agreement.
Yet, the Bush administration apparently ignored them by tabling
a labor provision identical to the Chile FTA during the fourth
round of CAFTA negotiations in Guatemala in May. In the "race
to the bottom," only those who are willing to work for
the least amount and under the worst conditions will have
a slim shot at survival. Since NAFTA, more than 700,000 decent
paying jobs have been lost in the U.S.
Agriculture:
One of the other greatest concerns about CAFTA is the negative
effect that it will have on the agricultural sector in Central
America. One needs only to examine the devastating effects
of NAFTA on agriculture in both the United States and in Mexico
to understand the effects it will have throughout Central
America. Since NAFTA took effect in 1994, millions of peasant
farmers have been driven off the land and the percentage of
the Mexican population living in poverty has risen from 58%
to 79%.
Corporate
Privilege: In its infamous "Chapter 11" clause,
NAFTA established the right of companies to sue governments
over public-interest laws that may limit their profits. In
CAFTA, this "right" will be extended to all of Central
America and will strengthen corporate power at the expense
of local governance. The following example from NAFTA is particularly
compelling:
In
1999, Methanex, a Canadian corporation that produces methanol,
sued the U.S. government for $970 million after California
banned the substance. Even though studies confirmed that leakages
into ground water were causing cancer, under NAFTA's Chapter
11, Methanex could sue for lost profits. If Methanex wins,
American taxpayers will be forced to pay the corporation $970
million for the right of California lawmakers to protect the
very health of its own citizens (globalexchange.org).
Public
Services: Another important concern with CAFTA is that
it will establish rules that will make it impossible for governments
in Central America (and the U.S.) to give preferences to public
providers for services. There is widespread opposition to
the further privatization of energy services, water services,
health and education throughout North and Central America,
and CAFTA will only continue to ignore such protest.
A
Perspective on CAFTA from El Salvador
From
SHARE Foundation: Building a New El Salvador Today
El Salvador is similar to the other nations of Central America
in that it has no agricultural policy to speak of. The few who
control most wealth in El Salvador have embraced “free
market” oriented economic policies. As faithful followers
of the “neo-liberal” model, they have privatized the
banks, eliminated the agricultural development bank and are
shifting resources away from the traditional agricultural products
of the nation: coffee, cotton and sugar, and have established
import companies in their place. The imports are televisions,
refrigerators, automobiles and now even basic grains. The fact
that few Salvadoran families can afford imported products is
offset by family remittances (money sent back by Salvadorans
living abroad). There are over 1 ½ million Salvadorans
living in the United States and one in every four Salvadorans
lives outside the country. However, an economy based on remittances
and imports is highly unstable and the loss of food self-sufficiency
puts the very sovereignty of a nation at risk.
The
tendency towards privatizations, a dependency on imports and
increased immigration that began with the implementation of
the neo-liberal model a decade and a half ago, will only worsen
if CAFTA is approved by regional governments and the U.S. Congress
early next year.
To read more Go...
Winners
and Losers in El Salvador: A Window on Our Future -
Report of the October
2003 El Salvador Reality
Tour
A
new report based on a delegation tour by PICA (a Presbyterian
Hunger Program grantee for its work promoting SweatFree) that
explores the social and economic effects of free trade on El
Salvador and its people. Destructive trends witnessed in El
Salvador are compared with economic developments in the U.S.
(PDF; 315KB) Go...
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FTAA/CAFTA
UPDATE - FOR IMMEDIATE RELEASE
Doctors Without Borders/Médecins
Sans Frontières (MSF)
For more information, contact Kris Torgeson: +1
212-655-3764 or +1 917-913-0183
Provisions in CAFTA Restrict Access
to Medicines Latin American and Caribbean Countries
Urged Not to Include Such Provisions in FTAA
New York, February 3, 2004 - As 34 Latin
American and Caribbean countries gather in Puebla, Mexico,
to resume negotiations of the Free Trade Areas of the
Americas (FTAA), the international humanitarian medical
organization Doctors Without Borders/Médecins
Sans Frontières (MSF) continues to call on countries
to make public health a priority and insist that intellectual
property provisions be excluded from the FTAA agreement.
The new round of FTAA negotiations comes days after
the final text of the US-Central American Free Trade
Agreement (CAFTA) was made public, confirming fears
that higher levels of intellectual property protection
will restrict access to medicines in the region.
Under CAFTA, Costa Rica, El Salvador,
Guatemala, Honduras, and Nicaragua will be obliged to
extend pharmaceutical patent terms beyond the 20 years
required in World Trade Organization (WTO) rules; prevent
the marketing approval of generic medicines if a patented
version of the product is registered; and grant additional
exclusive marketing rights by prohibiting drug regulatory
agencies to use original pharmaceutical test data for
the registration of generic medicines, a restriction
referred to as "data exclusivity." These same
provisions, all of which exceed WTO standards, are in
the draft FTAA agreement, and will severely restrict
or block generic competition, the only proven mechanism
for reducing the prices of medicines.
Provisions related to marketing authorization
are particularly worrisome. For instance, if an existing
AIDS drug is not registered in one of the five CAFTA
countries because the manufacturer has no interest in
the market, under CAFTA, registration of generics would
be prevented for five years, even if the drug is not
patented, and until the end of the patent term if it
is. Unlike with patents, which authorities can redress
through compulsory licensing, there is no recourse to
provisions restricting marketing authorization.
"People with HIV/AIDS in Central
America do not have five years or more to wait for affordable
AIDS drugs to become available," said Antonio Girona,
Head of Mission for MSF's AIDS treatment program in
Honduras. "Thousands are dying now, and many will
die within one or two years of first developing symptoms
of AIDS."
The outcome of CAFTA negotiations shows
that, when negotiating with the US bilaterally or in
small groups, countries are likely to agree to stringent
intellectual property provisions that exceed international
standards. MSF urges other countries in the Americas
not to agree to such overly restrictive measures in
the FTAA or in other bilateral or plurilateral agreements.
"CAFTA negotiators have given in
to US pressure and failed their people by agreeing to
measures that place profits above people's lives,"
said Rachel Cohen, US Director of MSF's Campaign for
Access to Essential Medicines. "FTAA negotiators
must not follow suit. The only way for countries in
the FTAA region to uphold their obligation to protect
public health is to refuse to negotiate intellectual
property provisions altogether."
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EDUCATIONAL
RESOURCES
1)
Enough for Everyone's Coffee
Project and Sweat-Free
T
2)
PHP's Food and Faith: Global
Food Systems
3)
Globalization and Trade Study Papers
from PC(USA)'s Advisory Committee on Social
Witness Policy (ACSWP)
The
ACSWP has developed a series of four study papers on globalization
and trade issues impacting the church and the world as the
new millennium dawns. They serve as a basis for the development
of a Resolution anticipated for the 216th General Assembly
(2004). They are the following:
4)
Global Discipleship CD
This free CD-ROM (PC and Mac compatible) from the Presbyterian
Hunger Program is intended for use in your congregation's
high school and adult study classes to learn more about our
roles as Christians in a global economy.
Go to the PC(USA) Marketplace
and in the search field enter the words - global discipleship.
5)
FTAA for Beginner's Workshop from United for a Fair Economy
Go...
6)
ACTION TOOLS: Take Action Against Unfair Trade from Witness
for Peace Go...
BACKGROUND
DOCUMENTS
The
"Green" Promises of CAFTA Go...
MAKING
GLOBAL TRADE WORK for People
UN Development Programme
This report presents a far reaching reassessment of the current
multilateral trade regime and examines how it can be improved
in order to contribute genuinely to human development Go...
Your
reactions and ideas are encouraged. Please email
or call (888) 728-7228 x5388.
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