The Threat of Not-So-Free Trade
Por Jorge Alberto Grochembake
Few in Central America are celebrating the end of the ninth round of free trade treaty negotiations with the United States. Peasant farmers warn of the loss of thousands of rural jobs and an increase in poverty, which already affects more than half of the region's population.
GUATEMALA CITY, (Tierramérica).- Just over a year ago, the United States proposed a free trade treaty to five Central American countries as a means to develop their economies and eradicate poverty by creating jobs in this region of 37 million people.
But after nine rounds of talks, which wrapped up on Dec. 17, the promising outlook turned threatening.
U.S. insistence on certain delicate trade issues prompted Costa Rica on Dec. 16 to postpone negotiations until January. A day later, the delegations from Guatemala, El Salvador, Honduras and Nicaragua decided in Washington that the talks were done.
Costa Rica's withdrawal reached a tense moment when President Abel Pacheco said his country would not sign the free trade agreement of the United States maintained its position of "colonizer".
The free trade agreement "is for the well being of the Costa Ricans, it is help generously given by the United States to the Central Americans, (but) if it consists of a colonization process, no thanks," said Pacheco.
Costa Rica's decision came in response to U.S. insistence on liberalization of its state-run insurance and telecommunications monopolies.
Robert Zoellick, the U.S. trade representative, said the process would continue with the four countries. Washington hopes that Costa Rica would join the treaty, but the parties are not going to wait, he said.
The documents produced in the treaty negotiations will be made public in April, when the deadlines arrive for ratification by the respective national legislatures and for signatures from the presidents.
If the accord enters into force in January 2005 as planned, more than 80 percent of U.S. manufactured goods would be immediately free of tariffs in Guatemala, El Salvador, Honduras and Nicaragua.
In exchange, Washington would grant similar treatment to nearly all industrial and consumer goods from the four Central American nations, which in practice implies consolidating the benefits already in place as part of the Caribbean Basin Initiative.
More than half of U.S. agricultural sales to the signing countries would also be free of tariffs. This provision would cover A-quality beef, cotton, wheat, soy, wine and other products.
But in Central America, few are celebrating the treaty. Civil society groups, led by peasant farmers, cite the warnings they issued at the beginning of the year: that the accord could cost thousands of jobs and aggravate poverty, which already affects more than half the region's population.
"That is the experience we have seen in Mexico, which signed the treaty (North American Free Trade Agreement - NAFTA) with the United States and Canada," says Daniel Pascual, head of CNOC, a national umbrella group of peasant farmer organizations in Guatemala.
"There is no free trade involved, because there are great inequalities in production, technology, equipment, and because of the U.S. protection for farming with subsidies and tariff and health barriers," says Pascual, whose organization works in alliance with its counterparts in the other Central American countries.
As the proposed treaty stands today, "it is just the opening of Central American borders for the United States market," he said.
He added, "In political terms, it means the region-by-region advance of the Free Trade Area of the Americas," the hemisphere-wide treaty that the United States is negotiating with 34 countries -- all except Cuba -- and slated to take effect in 2005.
According to Pascual, Washington is only interested in eliminating import tariffs on maize and beans, Central America's traditional crops. "It would be the annihilation of thousands of Guatemalan farms, it would eliminate food security and cultural traditions."
The five Central American countries involved in the negotiations tried to obtain special agricultural safeguards to protect the region's farmers from having to compete with the subsidized U.S. products coming to market.
But because the negotiations were conducted behind closed doors, little is really known about the outcome.
"They have told us that the agricultural safeguard was left in place, but we are ignorant of the details. We don't know if it is favorable or not because it is all so complicated," a spokesperson from the Guatemalan Chamber of Agriculture told Tierramérica in a phone conversation from Washington.
"We had to fight for everything, on issues like maize, rice, beans, beef, pork, chicken, milk, sugar, and in our specialty, textiles and apparel," said Juan Carlos Paiz, head of an association of exporters of non-traditional products.
Textiles and clothing will be tariff free and quotas retroactive to Jan. 1, 2004, but only if they comply with the treaty's rules of origin, that is, if the raw materials all come from countries party to the agreement. The scheme allows for some exceptions.
As for bean imports, Milton González, of Guatemala's National Coordinator for Basic Grains, says the United States set a deadline for reaching zero tariff.
"Our proposal was that for every quintal (100 pounds) of imported beans, local companies should have 10 quintals in the domestic market. Now the diet of Guatemalans and thousands of agricultural jobs are in danger," said González.
"We were sacrificed. Now we are going to have to compete under unequal conditions with U.S. pork producers," complains Federico Fernández, head of a pork association in El Salvador.
He said the United States would be able to export 1,500 tons of pork to each of the countries of the treaty annually, with a 10 percent increase each year.
"The quota granted to the United States is double what we had proposed to our negotiating team," said Fernández.
The conclusion of the negotiations seems to prove right the civil society groups, led by Indians and peasant farmers, that challenged the supposed benefits of the free trade agreement.
But still pending is the battle for ratification of the agreement in each of the national legislatures.
"We are just beginning another phase: the internal and regional fight, so that with protest marches or other means the congresses do not ratify a treaty that will bring only misery, hunger and death," said Guatemalan peasant leader Pascual.
* Jorge Alberto Grochembake is a Tierramérica contributor.