January 1, 2006

Missed January 1 Deadline for Start of CAFTA Underlines the NAFTA Record and Threats of its Expansion

As CAFTA’s End-Run Around Democratic Process Becomes Clear, Polls Show Popularity of the Deal – and Public Opinion of the United States – Plummets in Central America

WASHINGTON, D.C. – The myth that people in Central America were clamoring for the controversial expansion of NAFTA – purveyed by corporate and Bush administration CAFTA supporters – has been refuted yet again.

Days before the Central America Free Trade Agreement was to go into effect, news reports indicate that several of the CAFTA countries’ parliaments – where the reality of having to make far-reaching, retrograde changes to public health and other domestic laws required by the commercial agreement – are reluctant to actually implement the deal. In Costa Rica’s case, the Congress is simply unwilling to ratify the controversial agreement.

In reaction, the Bush administration has decided to delay the planned Jan. 1, 2006, implementation until it can push through the anti-public interest changes to each Central American country’s domestic laws.

“After sitting on the signed agreement for over a year because they knew they didn’t have the support in the U.S. Congress for NAFTA expansion, the Bush administration was able to pass the deal by a one-vote margin only after cutting shady deals that cost U.S. taxpayers billions,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Now the administration has come face to face with the reality that the agreement that it promised would bolster economic performance and democracy in Central America is in fact seriously unpopular because it forces the nations to implement an anti-development model that has proven to cause serious economic and social trauma.”

Ironically, the last-bastion argument used to shove CAFTA through Congress – that CAFTA was essential to U.S. foreign policy objectives – is being invalidated. A recent poll shows that 61 percent of Latin Americans now have little or no confidence in the United States, with President Bush receiving only a 4.8 approval rating on a scale of 10 – among the lowest for leaders in the Western Hemisphere.[1]

Plummeting Popularity of CAFTA in Central America:

Costa Rica 58% Say Renegotiate or Reject

Dominican Republic 60.8% Oppose

El Salvador 76% Says CAFTA Doesn’t Help or Makes Situation Worse

Guatemala 65% Say Will Harm Country

Honduras 77% Say Pro-CAFTA government corrupt

Nicaragua Public sees unemployment — a CAFTA-related problem — as a top concern

“For all the hot air about promoting democracy worldwide, the Bush administration’s actions tell the real story, with CAFTA as exhibit No. 1 in the administration’s repeated end-runs around the democratic process at home and in Central America,” Wallach said. “The bottom line is that CAFTA is a means to impose, top-down, an array of policies designed to engorge the profits of large U.S. drug, construction, energy and other corporations that have been rejected by the majority in these countries within their own domestic democratic processes. If CAFTA countries experience anywhere near the economic disaster experienced by Mexico under NAFTA, we should expect to see the administration’s CAFTA crusade further erode the standing of the United States in the region.”

The economic damage CAFTA is expected to cause Central America may actually decrease the prospects for stronger democracy there, as a recent poll indicated that 55 percent of Latin Americans wouldn’t mind a non-democratic government if it solved economic problems. In Mexico, and every CAFTA target country except for Costa Rica, this percentage is even higher: 70 percent in Honduras and Nicaragua, 67 percent in Mexico, 62 percent in the Dominican Republic, 57 percent in Guatemala and 56 in El Salvador.[2]

The failure to implement CAFTA has not gone unnoticed by congressional opponents of the agreement. Rep. Charles Rangel (D-N.Y.), a leading CAFTA opponent, noted that “the hastily crafted CAFTA [is] stumbling out of the gate.”[3] A letter from leading House Ways and Means Committee members – including Reps. Rangel, Benjamin Cardin (D-Md.), Sander Levin (D-Mich.) and Xavier Becerra (D-Calif.) – noted that the Bush administration appears to be forcing changes to CAFTA target country law in regards to intellectual property and agricultural market access, while failing to do the same to bring the countries’ labor laws into compliance with international standards. “The Administration once again appears to be applying a double standard when it comes to the question of including basic international standards of decency and fairness for working people in US FTAs [free trade agreements],” the four members of Congress wrote in a letter to U.S. Trade Representative Rob Portman.[4]

Public Citizen’s Global Trade Watch has launched a new CAFTA Accountability Project which will closely monitor the outcomes of CAFTA at home and in Central America. To review the information the initial investigations have uncovered regarding the deals and outlandish statements of the 30 members of Congress considered most responsible for CAFTA’s narrow passage, please visit www.tradewatch.org.

Background

After weeks of speculation in the Central American media that CAFTA would not be implemented on Jan. 1 as planned, on Dec. 19 the Bush administration reversed its stance of not seeing “any obstacle” to January implementation,[5] and confirmed that the agreement may not go into effect with all or any of the CAFTA target countries by that date, and that implementation would only occur “with those countries that the United States has determined to have taken sufficient steps to complete their commitments.”[6] Media reports have indicated that the United States is also not ready to implement the agreement, dogged by a whole set of problems such as U.S. failure to sort out new customs rules for CAFTA’s increased sugar imports.[7]The following is a summary of the status of CAFTA implementation in each target country.

Honduras and El Salvador

In an attempt to bid for Washington’s favor, the ruling parties of both Honduras and El Salvador passed sweeping legislation in mid-December that contains new super-protectionist policies benefiting U.S.-controlled industries such as digital media and pharmaceutical companies.

In Honduras, President Ricardo Maduro experienced record low approval ratings following the signing of CAFTA, with less than a third of the population rating his performance as good or very good, while 77 percent of the population rate Maduro’s government as more corrupt or as corrupt as previous governments.[8] These sentiments were captured by Cardinal Oscar Rodríguez Maradiaga, who recently was discussed as one of the probable candidates to become the next Pope. He told reporters in November that, in part as a result of such measures, CAFTA will likely produce more poverty in the country.[9]

In El Salvador, where the recent CAFTA-related overhaul of the country’s laws passed by a tiny majority, the leading opposition party walked out of Congress as the legislation was passed, pointing out that the overhaul of national law could well harm the public interest since no attempt had been made to predict the impact on local communities. The opposition party also noted that the Bush administration was demanding changes, not only to trade law, but also to criminal law and laws affecting telecommunications, security transactions and sanitary standards.[10] Polls show record opposition to CAFTA in El Salvador, where 76 percent of the population believe the agreement will not improve the country’s situation or will make it worse.[11]

Despite the passage of these draconian changes to the Central American countries’ domestic laws, the Bush administration has refused to notify the Organization of American States of its acceptance of the changes it forced on El Salvador and Honduras, leaving open the possibility of renewed pressure for further changes to domestic laws in the coming weeks. Both countries governments have suggested a new deadline of Feb. 1 for CAFTA to go into effect, but the Bush administration has not officially confirmed this delayed date.[12]

Guatemala

In Guatemala, polls found that 65 percent of respondents believed that CAFTA would harm their country.[13] When the country ratified CAFTA in March 2005, tens of thousands of people filled the streets in protest of the agreement. The government responded by unleashing the military on protestors across the country, in violation of the 1996 peace accords ending Guatemala’s civil war, which forbid the use of military action against civilians. Two indigenous campesino farmers participating in the protest were murdered. Bishop Álvaro Ramazzini of Guatemala, the president of the Central American Conference of Catholic Bishops, summarized local sentiment when he said, “CAFTA did not come down from God. It is the flawed work of man,” adding that it “may well make conditions here worse.”[14]

In recent days, Guatemala’s vice president pointed out that the Bush administration’s efforts to force changes in Central American law have taken a divide-and-conquer approach, targeting each country one by one. He added that it “makes one think that they are renewing pressure for the [Central American countries] to make more changes in their intellectual property laws.”[15]This was in reference to the Bush administration’s successful campaign to get Guatemala to repeal a public health law that allowed more generic competition in the pharmaceutical market, a reversal that “ensure(d) that thousands of Central Americans in need of such medications will have to go without,” according to columnist Harold Meyerson of the Washington Post.[16] Inside U.S. Trade reported that administration officials are now targeting for elimination Guatemalan laws that allow exemptions from the pharmaceutical industry’s data exclusivity rights “for the protection of plants, animals and the environment.” Data exclusivity rules effectively extend the period of patent protection for pharmaceutical drugs from the 20 years mandated under World Trade Organization rules to 25 years – an outrageous instance of corporate protectionism. Public health activists in Guatemala and beyond have been trying to press for exemptions from these extreme CAFTA rules for public health and environmental reasons.

The Bush administration is also upset that proposed Guatemalan law on copyright protection “does not clearly state that there are no limits on criminal sanctions in the case of intellectual property rights” [emphasis added].[17]In other words, the administration has insisted on new domestic laws that would throw people in jail for listening to recorded copies of music if that recording were made by someone else in violation of CAFTA copyright rules and the listener thus was an unknowing listener to “pirated” materials. However, the proposed law to implement this extreme policy apparently has not gone far enough for the Bush administration, which wants to do away with any limitations on the criminal liability of end-users of “pirated” materials. Such changes to domestic law could theoretically open up music listeners to long prison sentences and absurdly steep fines.

The latest press reports indicate that Guatemalamight be ready to implement CAFTA in February.[18]

Costa Rica

CAFTA still has not been ratified by the legislature of Costa Rica, a country which the U.S. State Department describes as the oldest and strongest democracy in the Central American region.[19] Inside U.S. Trade has reported that a vote is unlikely until May 2006, after national elections take place.[20]

Here too, the Bush administration is attempting to run rough-shod over the domestic political process. The recent USTR announcement declared that only countries which ratify and implement CAFTA by April 1 will be eligible for certain agricultural benefits.[21] Meanwhile, Rep. Gregory Meeks (D-N.Y.), one of the few Democrats who supported CAFTA, implied that Costa Ricashould not expect to see continued benefits under an existing trade program called the Caribbean Basin Initiative. Rep. Rubén Hinojosa (D-Texas), another CAFTA supporter, echoed this sentiment when he said, “If Costa Rica does not join this pact, while the other 5 countries have approved it, the opportunity will pass you by.”[22] Hinojosa also said that only the Bush administration will decide whether Costa Rican laws meet CAFTA requirements, which he added are “not negotiable.”[23]

Fortunately, Meeks and Hinojosa’s threats, made on a recent delegation of U.S. congressional CAFTA supporters to Costa Rica, are only ill-informed bluster, as it would require an explicit act of Congress to eliminate the CBI program, which was made permanent some years ago. However, the claim parrots the line employed by the Bush administration throughout the CAFTA debate to bully Central American countries into accepting a CAFTA many in Central American deemed against their interests. For instance, in March 2005, Ways and Means ranking Democrat Charlie Rangel attempted to dispel the CBI threat – first perpetrated by the Bush administration – by pointing out that CBI is a “congressionally mandated program [whose] benefits are guaranteed on a permanent basis, unless the Congress amends current U.S. law.” Rangel announced that he would oppose such an amendment of U.S.law, characterizing the administration’s remarks as “thinly veiled blackmail.”[24]

According to a September 2005 poll by the University of Costa Rica, 58 percent of that country’s population thinks CAFTA should be renegotiated or rejected outright, while a solid majority of the population – 69 percent – believes that the agreement should be put to a binding national referendum.[25] Former President Rodrigo Carazo Odio (1978-1982) shared these conclusions, telling a Washington audience that, “Costa Rica wants to maintain its friendship with the United States, but CAFTA, as it currently stands, is not in the best interest of Costa Rica and should therefore not be approved.”[26] Opposition to CAFTA is also evidenced by the continued strength of presidential candidate Ottón Solis, who is running on an anti-CAFTA platform, and won over a quarter of the votes when he ran for president in 2002 – an extraordinary showing for a third-party candidate.[27] On the other hand, Abel Pacheco, the president who signed CAFTA, is set to leave office in February with record low approval numbers.[28]

Apparently concerned that the already heavy-handed tactics in Costa Rica were not being adequately understood by local officials, the Bush administration’s ambassador to Costa Rica, Mark Langdale – appointed in October 2005 after being one of the largest donors to Bush’s past campaigns and president of a hotel management company with extensive interests throughout Latin America[29] – has started waging a campaign in the local press to raise the volume of the already-loud threats. According to wire service reports, Langdale has said that “it will be easy to lose your reputation” if CAFTA does not pass in Costa Rica, adding that “the first thing that will suffer is its reputation as a preferred investment location in Central America” if CAFTA is not ratified by May 2006. He also said that it would be “very unusual” for a country to continue to enjoy CBI benefits if it “rejects a treaty already approved by the [U.S.] Congress.” Finally, he implied that Costa Rica should subordinate its own internal democratic process to the Bush administration’s interests, saying that “Costa Rica has the right to carry on its democratic process, but always in reference to what is going on around it” [emphasis added].[30]

These outrageous statements have further inflamed Costa Rican public opinion, with the country’s largest labor union denouncing Langdale’s “intervention” in the country’s internal affairs, calling it “an unacceptable attempt to psychologically blackmail the country.”[31]

Dominican Republic

Like Costa Rica, the Dominican Republic is also at risk of losing some agricultural benefits as threatened by the Bush administration if it does not implement the trade agreement by April 1; recent press reports indicate the government will delay CAFTA implementation until July 1, 2006.[32] Dominican government officials have indicated that they have already sent “all the documentation” requested by the Bush administration, but that they have been told that the U.S. Trade Representative’s office has been busy and that it has been “impossible” to read the papers that the USTR itself had requested of the Dominican government.[33]

Polls show that 60.8 percent of the population opposes the agreement,[34] while 65 percent think the country’s economy is headed in the wrong direction following CAFTA ratification.[35]

Nicaragua

In Nicaragua, the Bush administration used the threat of removal of foreign aid and withdrawal of diplomatic relations to force a realignment in Nicaragua’s domestic politics that it considered unhelpful to the CAFTA cause. In September, Rep. Dan Burton (R-Ind.), a strong supporter of CAFTA and the Bush administration, implied that Nicaragua would lose trade preferences if CAFTA were not ratified, saying that “a failure to sign CAFTA would put in jeopardy many jobs in the free trade zones,”[36] in reference to the exports that received preferential access to the U.S. market under CBI that would merely continue under CAFTA.

Deputy Secretary of State Robert Zoellick flew to Central America to further interfere in domestic politics there by attacking a Nicaraguan political coalition comprising two major parties as a “corrupt pact” that represents “Nicaragua’s past.” “I want to be frank,” he said. “That’s a path that will lead Nicaragua to lose the Millennium Challenge Account assistance, to lose the opportunity of CAFTA, to lose the opportunities of investment, to lose the opportunities of integration with your neighbors […] Relations with the United States will depend on the commitment to democracy and constructive links with the United States along the development and democracy agenda that I’ve outlined.” As if declaring that he ought to dictate Nicaragua’s domestic policies was not a sufficient outrage, Zoellick went on to endorse a set of candidates for the president whom he approvingly described as a “Third Waymovement.”[37] The Latin American Weekly Report, a publication that calls itself the “leading source of political and economic intelligence on Latin America since 1967,” characterized the move as “Washington’s most overt intervention in a Latin American electoral process since 1946.”[38]

Polls also indicate that the No. 1 concern of Nicaraguans is economic woes such as unemployment,[39]problems likely to be exacerbated by CAFTA.

Most recently, a Nicaraguan official has indicated that the government hopes to have CAFTA implemented by February or March but that the Bush administration has as of yet refused to give “feedback” on the qualification status of Nicaragua’s laws. The official added that “after April, it will be more difficult to put CAFTA into effect,”[40] echoing the Bush administration’s threat heard first in Costa Rica.

For more information on the consequences of CAFTA implementation for the United States and Central America, click here.

ENDNOTES


[1]Indira A.R. Lakshmanan, “Cool Bush Welcome Seen at Latin Talks,” Boston Globe, Nov. 4, 2005.

[2]“The Latinobarómetro Poll: Democracy’s Low Level Equilibrium,” The Economist, Aug. 12, 2004.

[3]Rep. Charles Rangel (D-N.Y.), “Hastily Crafted CAFTA Stumbling Out of the Gate,” Congressional Press Release, Dec. 19, 2005.

[4]Letter from Representatives Charles Rangel (D-N.Y.), Benjamin Cardin (D-Md.), Sander Levin (D-Mich.), and Xavier Becerra (D-Calif.) to USTR Rob Portman, dated Dec. 15, 2005. On file with Public Citizen.

[5]“Gutierrez, speaking at the same press conference in the Salvadoran presidential palace, remarked that ‘it’s a matter of work, of implementation, of doing some pending things,’ but he added that ‘we don’t see any obstacle’ to CAFTA’staking effect at the beginning of next year.” See “CentAm leaders meet w/ US trade official, OK CAFTAstart date,” EFE English, Oct. 20, 2005.

[6]Statement of Christin Baker, USTR Spokesperson Regarding the Implementation of the U.S., Central American, Dominican Republic Free Trade Agreement, Dec. 19, 2005.

[7]“DR-CAFTA Implementation Lagging As USTR Flags Host Of Problems,” Inside U.S. Trade, Dec. 9, 2005.

[8]Angus-Reid Global Scan, “Hondurans Review Government Corruption,” Feb. 8, 2005; Angus-Reid Global Scan, “Few Satisfied with President Maduro in Honduras,” May 27, 2005.

[9]“TLC producirá más pobreza,” EFE, Nov. 19, 2005; “Oscar Rodriguez Maradiaga, Honduras,” Washington Post, April 16, 2005.

[10]“Parlamento hondureño inicia aprobación leyes para vigencia de TLC,” EFE, Dec. 14, 2005; “Parlamento salvadoreño ajustó leyes para entrada en vigencia TLC,” EFE, Dec. 15, 2005; Statement of the Frente Farabundo Martí para la Liberación Nacional, “El FMLN rechaza y condena el paquete de leyes aprobadas por la derecha de El Salvador,” Dec. 15, 2005; “FMLN Legislators Walk Out in Protest to Assembly Vote on CAFTA Reforms,” CISPES Update, Dec. 19, 2005.

[11]Angus-Reid Global Scan, “Many in El Salvador Wary of CAFTA,” Dec. 8, 2005.

[12]“El Salvador: CAFTA comenzaría a operar en febrero,” Associated Press, Dec. 24, 2005; Iván Vásquez, “CAFTA sería hasta el 1 de febrero,” El Heraldo (Honduras), Dec. 27, 2005; Claudia Contreras and Miguel Álvarez, “País ya notificó ante OEA, Estados Unidos aún no,” La Prensa (El Salvador), Dec. 28, 2005. According to Contreras and Álvarez, CAFTA will go into effect 30 days after the Bush administration notifies the OAS, creating the possibility for yet another delay.

[13]Cited in Matthew Kennis, “Despite Ratification Anti-CAFTA protests Continue in Guatemala,” IRC Americas Program, (Silver City, NM: International Relations Center, April 13, 2005).

[14]Bishop Álvaro Ramazzini, “Bishop Ramazzini: CAFTA likely to hurt poor Central Americans,” National Catholic Reporter, Nov. 17, 2005.

[15]“Las citas que lleva a cabo el Departamento de Comercio estadounidense con las naciones del Istmo, una a una, ‘hace pensar que existe una nueva presión para que se hagan otros cambios en la Ley de Propiedad Intelectual,’ reconoce Stein.” See Beatriz Lix, “Sector privado de Guatemala propone negociar en bloque tratado con EEUU,” Siglo Veintiuno, Dec. 14, 2005.

[16]Harold Meyerson, “CAFTA’s Profit Motive,” Washington Post, March 30, 2005.

[17]“DR-CAFTA Implementation Lagging As USTR Flags Host Of Problems,” Inside U.S. Trade, Dec. 9, 2005.

[18]According to a Honduran official, “Guerrero aseguró que Guatemala y Nicaragua aplazarían también por un mes su incorporación al CAFTA-RD.” See Freddy Cuevas, “Honduras no se incorporaría al CAFTA-RD en enero,” Associated Press, Dec. 28, 2005.

[19]According to the U.S. State Department, “Costa Rica is a democratic republic with a strong system of constitutional checks and balances,” and “An era of peaceful democracy in Costa Rica began in 1899 with elections considered the first truly free and honest ones in the country's history.” The State Department notes only two exceptions to that rule, and neither one of them were in the 1980s, or indeed even after 1948. See Bureau of Western Hemisphere Affairs, “Background Note: Costa Rica,” U.S. Department of State, Oct. 2005.

[20]“In Costa Rica, the legislature has not formally begun its deliberation of the DR-CAFTA and there is little interest in doing so before the February elections, according to Central American sources. The new Costa Rican government will come into power in May, at which point legislative action on DR-CAFTA would be likely, sources said.” See “DR-CAFTA Implementation Lagging As USTR Flags Host Of Problems,” Inside U.S. Trade, Dec. 9, 2005.

[21]“Moreover, U.S. partners for whom the Agreement enters into force by April 1 can retain their full-year agricultural quotas for 2006; treatment of quotas after that date will be determined, as appropriate.” See Statement of Christin Baker, USTR Spokesperson Regarding the Implementation of the U.S., Central American, Dominican Republic Free Trade Agreement, Dec. 19, 2005.

[22]“Por su parte, Gregory Meeks comentó que Costa Rica no puede depender de la Iniciativa de la Cuenca del Caribe (ICC) porque fue diseñada mientras se negociaba un TLC, el cual, según él, va a generar más empleos e inversión.” “Hinojosa manifestó en una rueda de prensa que ‘es muy difícil hacer un cambio. Si Costa Rica no entra a este acuerdo, donde los otros cinco países ya lo aprobaron, se le va a pasar la oportunidad.’” See “Congresistas EEUU se reúnen con homólogos de Costa Rica por TLC,” EFE, Dec. 19, 2005.

[23]“El congresista advirtió, además, que las condiciones establecidas en esa negociación ‘no son negociables’ y que Washington decidirá también qué países han dado pasos para cumplir con el acuerdo pues sólo entrarán aquellos que adapten sus leyes a sus normas.” See “Denuncian injerencia estadounidense en Costa Rica,” Prensa Latina, Dec. 24, 2005.

[24]Rep. Charles B. Rangel, “Rep. Rangel Reacts to Reported ‘Threat’ from Administration Official to CAFTA Countries,” Congressional Press Release, March 22, 2005. Rangel’s release cited a Bush administration official’s quote in Costa Rica’s La Nación newspaper from March 18, 2005: “Allow me to be absolutely clear on this point: in order to benefit from duty-free access to the U.S., the countries of Central America and the Dominican Republic will have to ratify CAFTA.”

[25]Larry Luxner, “Free Trade Agreement Divides Costa Rica,” Washington Diplomat, Nov. 11, 2005; Leland Baxter-Neal, “New Poll Shows Mixed Support for CAFTA,” Tico Times (Costa Rica), Sept. 20, 2005.

[26]Comment by Rodrigo Carazo Odio at a Carnegie Endowment for International Peace forum entitled “CAFTA-DR: A Look at the Regional Impact,” recorded by Jennifer Maul, June 16, 2005.

[27]“Costa Rican candidates face apathy, each other,” Associated Press, April 5, 2002.

[28]Angus-Reid Global Scan, “Costa Rica’s Pacheco Will Depart with Low Numbers,” Dec. 18, 2005.

[29]“Mark Langdale,” Listing in Sourcewatch.org, Center for Media and Democracy, website accessed Dec. 28, 2005.

[30]EEUU dice reputación Costa Rica se verá afectada si rechaza TLC,” EFE, Dec. 23, 2005.

[31]“La Asociación de Empleados Públicos y Privados (Anep) calificó como ‘inaceptable el intento de chantaje psicológico al país.’” See “Critican a embajador de EEUU en Costa Rica,” Associated Press, Dec. 26, 2005.

[32] “Dominican Republic delays entry into CAFTA-DR until July,” EFE English, Dec. 21, 2005.

[33]“Gobierno insiste cumplió requisitos de TLC aunque pospuso entrada,” EFE, Dec. 26, 2005.

[34]AII Data Processing, Ltd., “Dominican Republic’s Chamber of Deputies Ratifies CAFTA,” Latin America News Digest, Sept. 7, 2005.

[35]Angus-Reid Global Scan, “Country Following Wrong Path, Say Dominicans,” Dec. 4, 2005.

[36]“Burton: ‘Si triunfa Ortega veremos si trabaja con democracias,’” EFE, Sept. 20, 2005.

[37]Robert Zoellick, “Press Availability with President Enrique Bolaños,” U.S. State Department Press Transcript, Oct. 4, 2005.

[38]“Zoellick brings US into electoral process,” Latin American Weekly Report, Oct. 11, 2005; Latin American Weekly Report Website, “About Us” section, accessed Dec. 22, 2005.

[39]Angus-Reid Global Scan, “Unemployment Tops List of Worries in Nicaragua,” Dec. 19, 2005.

[40]Gustavo Ortega Campos, “DR-Cafta sin fecha de vigencia,” La Prensa (Nicaragua), Dec. 28, 2005.