CAFTA: A Perspective from Costa Rica
A Treaty Tied by Chains
José Merino del Río | February 20, 2003
In January last year, President Bush announced that a free trade agreement between the United States and Central America would be a top priority for his administration. This statement by a president occupied exclusively with an all-out war on terrorism initially caused some astonishment. But the hawks in the White House had by then begun drawing the outlines of what would subsequently be the new security doctrine of the United States, based on military supremacy and the global expansion of free trade. Elevated to official status last September, the national security doctrine reaffirmed the notion that, for starters, the free trade agreement with Central America was the centerpiece for meeting the objective of creating the Free Trade Area of the Americas (FTAA) in 2005.
Why Central America? The FTAA negotiations stalled, and the Plan Puebla-Panama (PPP) was underway, with the expectation of multimillion-dollar investments to create the Mesoamerican corridor and facilitate a new war of conquest for the resources of the region by transnationals. Central America is thus becoming the natural territory of expansion of the North American Free Trade Agreement that already links Canada, the United States and Mexico, to which the region is tied through the Plan Puebla-Panama. Investments in PPP take on meaning in the legal framework of a free trade agreement that subordinates the national legislation of each Central American country to the supranational accord with the United States, thereby spurring and ensuring the interests of the multinational companies that now operate and those that would operate in the region–the great majority of them U.S. The vulnerability of the countries of Central America and the propensity of their current governments to subservience are recognized by officials of the Bush administration as elements that favor the "little-by-little" expansionist strategy, so as to weaken the opposition to the FTAA in the southern regional bloc headed by Brazil, and at the same time to favor the U.S. position in the multilateral Doha Round of negotiations, being carried at the World Trade Organization (WTO).
U.S. Trade Representative Robert Zoellick has said that nothing will be left off the table in the free trade negotiations with Central America. The negotiation model is practically identical to that of the FTAA. In summary, there are to be nine negotiating groups:
Services : All public services are to be open to private investment.
Investment : Governments promise to grant ironclad guarantees to foreign investment.
Government procurement : All government purchases must be open to transnational bids.
Market access : Governments pledge to reduce and to eventually eliminate tariffs and other measures that protect domestic products.
Agriculture : Duty-free import and elimination of subsidies on agricultural products.
Intellectual property rights : Privatization of and monopoly over technological know-how.
Antidumping rules, subsidies and countervailing rights : Governments commit to phase out protectionist barriers in all sectors.
Competition policy : The dismantling of national monopolies.
Dispute resolution : The right of transnationals to sue countries in private international courts.
U.S. representatives have already let their Costa Rican counterparts know that the Central American Free Trade Agreement (CAFTA) is incompatible with our position on telecommunications, energy, fuel, insurance, and banking. Similarly, they have warned that if our growers attempt to exclude a series of products or maintain certain protectionist measures and safeguard provisions, there will be no trade agreement. Nor have education and health services escaped such threats, and irritation has been expressed over Costa Rica’s hope to include a chapter of environmental guarantees in the Constitution to curb the plundering of our natural resources and our biodiversity.
Meanwhile, the United States is not renouncing its policy of agricultural subsidies–$180 billion over the next 10 years–or other protectionist measures that it considers necessary. Our country does not need a free trade agreement to know what the United States is capable of if it deems that its interests are in danger, as we have seen in the case of electricity cogeneration and the humiliating threats of the Overseas Private Investment Corporation (OPIC), an agency of the State Department that protects American investments against political risk in other nations.
CAFTA seeks to intensify the three fundamental components that guided the structural adjustment policies of neoliberal globalization over the two last decades:
Market opening : This is an attempt to radicalize the liberalization of the markets for goods, services, investments, and intellectual property rights and to eliminate import tariffs and subsidies on domestic production.
Deregulation : This component seeks to reduce to a minimum the functions of the state in regulating and managing a national development strategy, eliminating all restrictions on market players, fundamentally transnationals.
Privatization : This element seeks to promote a radical process of eliminating public ownership.
It is not difficult to foresee that this three-fold process, which has already caused major political, economic, social, and environmental devastation in our country, is leading to the headlong dismantling of the domestic economy and of those of the other countries of Central America, in the face of the power of the United States and its transnational corporations. This places our national states at the service of those supranational, imperialist interests. It fuels fierce competition to attract investment to our countries on the basis of abundant and cheap labor and the savage deregulation of the labor market and the environment.
A dignified and patriotic position must demand respect for some guiding principles with which to assess a trade agreement:
Democracy : This means information, debate, citizen participation, transparency, and popular consultation through a referendum. These processes are not taking place in the current negotiations on this treaty. On the contrary, the rule is secrecy, nighttime negotiations without stenographers, a shameful ruse that is being hidden behind the screen of "cosmetic consultations" and "suggestion boxes."
Fairness : There is no real recognition of the asymmetries between nations with abysmal disparities of resources that will exacerbate existing, odious inequalities and introduce new ones, as well as discrimination and injustice against our countries and peoples. There is no differentiated treatment among nations that are so unequal in development and there are no countervailing measures or preferential treatment. Nor does the agreement address the problem of fairness within each nation. Social programs are completely absent.
Sovereignty : The power of national governments to carry out policies decided democratically by their peoples is drastically reduced. CAFTA operates as a straightjacket that prevents governments from acting or changing course, subjecting national legislation to supranational commissions controlled and monitored by multinational companies, with the threat of penalizing any state that does not heed its policies.
Sustainability : There is a prevailing tendency toward exploitation and exportation of natural resources and environmental deregulation in investment. The agreement intends to guarantee access to strategic resources such as water, forests, petroleum, minerals, and biodiversity, which would deal a mortal blow to a policy based, beyond its rhetorical claims, on sustainable human development.
In the face of these historic challenges for Costa Rica and the other nations of Central America, Abel Pacheco’s government placed the "negotiations" in the hands of a team of neoliberal fundamentalists, recruited at the temples of the Costa Rican Investment Board (CINDE) and the Central American Institute for Business Administration (INCAE), which renders boundless praise to the benefits that Costa Rica would reap with the signing of a free trade agreement between Central America and the United States. Twenty years of experience with neoliberal adjustment recipes in our country and the rest of Latin America and their results have availed us of nothing other than more hunger, more inequality, more exclusion, more unemployment, and more corruption. The "negotiating" team named by President Pacheco argues that the problem is that the prescribed dosage has been insufficient: A free trade agreement with the United States would, finally, oblige Costa Rica to abandon its policy of treading water and advance without complexes on the glorious path of privatization, deregulation, and liberalization: the holy trinity of that market fundamentalism that has converted the slogan "free trade" into an act of faith and a weapon of conquest at the service of the transnationals and the business circles.
As in any war of conquest, we hear of winners and losers in Costa Rica. We are told that those who know how to use the weapons of competitiveness and efficiency will be saved from the generalized shipwreck; the rest will drown or barely stay afloat. But survival will depend not on warlike zeal, rather on the class structure and relations within each country and the class alliances established at the international level.
A high official of the U.S. Treasury Department told a U.S. economist, Faux: "What you have to understand is that we are negotiating with persons who belong to the upper classes of those countries and who share a large number of economic and political interests with us." (Faux: Rethinking the Global Political Economy, EPI, 2002).
That is what we must understand. The "neoliberalism of war," as González Casanova has called it, has brought hunger and inequality to a very large number of Costa Ricans and Latin Americans, but there are social classes both in the North as well as in the South, and in fact 20% of the wealthiest persons of the world are members of the dominant classes of the South. Someone is negotiating in Costa Rica, but not on our behalf; rather they are defending the interests of the powerful of the North and of the powerful of the South. The Costa Rican "negotiators" have always defended the privatization of the Costa Rican Electricity Institute (ICE), the National Insurance Institute (INS), the Costa Rican Petroleum Refinery (Recope), state-owned banks, health, education, airports, wharves, railways, prisons … . In the negotiations with the United States, will they stand up for what the majority of our people wants and defends?
Neoliberalism faces a crisis of credibility, of governance, and of overproduction, which it attempts to manage and solve through new policies of control and through the appropriation of the world’s resources, and also through the increased control of governments and nation states. FTAA, Plan Puebla-Panama, CAFTA, Plan Colombia, the war against Iraq . . . all of these are part of the same macabre game, in which peoples must form national, regional, and international alliances that will allow them to resist and construct another possible Costa Rica, another possible Latin America, another possible world.
José Merino del Río < josemerino@racsa.co.cr > is the coordinator of Foro de Acción Política "Otra Costa Rica es posible, otro mundo es posible."
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Published by the Americas Program at the Interhemispheric Resource Center (IRC). ©2003. All rights reserved.
Recommended citation:
José Merino del Río, "CAFTA: A Perspective from Costa Rica," Americas Program (Silver City, NM: Interhemispheric Resource Center, February 20, 2003).
Web location:
http://www.americaspolicy.org/commentary/2003/0302caftacr.html
