“DR-CAFTA Year Two: Trends and Impacts,” is the English title of a report presented by the Red Regional de Monitoreo de DR-CAFTA in September in San Jose. The Red is a group of more than 15 organizations from the CAFTA countries, including the Confederacion Guatemalteca de Federaciones de Cooperativas (CONFECOOP), the Centro de Estudios en Inversion y Comercio de El Salvador (CEICOM), the Coalicion Hondurena de Accion Ciudadana (CHAAC), the Movimiento Social Nicaraguense, and the Comision Nacional de Enlace de Costa Rica. And it paints a dismal picture of the impacts of CAFTA on the region.
The Central America countries and the Dominican Republics have seen their trade balances wit the US reversed. Export growth from the region to the US since the retification of the treaty were: El Salvador 3.7%, Honduras 5.7%, Nicaragua -.1%, and Dominican Republic –12.7%, while imports from the US grew 11.2% for El Salvador, 26% for Honduras, 27.5 for Nicaragua, and 13,5 for the DR. (numbers reported in Semanario Universidad).
At the same time, foreign direct investment decreased by 42%in the region. That means -$180 million in El Salvador, -$180 million in Honduras, -$23.4 million in the DR. Nicaragua received a total of $56 million during that time.
The report argues that "the parties to the agreement are experiencing an overall worsened trade balance with the US. Imports of US agricultural products to the region have outpaced exports, Central American and Dominican producers fail to compete against subsidized US agricultural goods." Central American farmers cannot compete with subsidized agricultural products from the US, and the vast majority does not posses the resources to even contemplate exporting the US, as the investments necessary to comply with the phytosanitary standards required by the US. As a result of the inability of small and medium sized producers to compete, the region is entering into severy food security problem, as it is losing the ability to feed itself and becomes increasingly dependent on US imports. Partly due to the biofuel trend, however, food, especially corn prices are already rising. The price of white corn in El Salvador, for example, increased by 81.6%. The Consumer Price Index rose by 5.1% in Guatemala between June 2006 and April 2007; the price of corn rose 26%, rice, 9.3%, bread, 9.5%. In the same June 2005 to April 2006 period prior to CAFTA those numbers were, 2.4%, 1.2%, and 2.4%.
The promises regarding employment have also not been fulfilled: According to the report 22 textile companies left the region since CAFTA implementation, causing the loss of some 50.000 jobs. In Nicaragua, alone, seven new maquila factories have opened and created 1,993 new jobs in 2007. But at the some time, other factories have shut down costing the country 4,000 jobs.
http://lasolidarity.org/CAFTA_report/CAFTAYear2_monitoring_eng.pdf
The report also includes a paper by Costa Rican economist and professor at the UCR Marta Trejos analyzing the provisions of CAFTA and its impact on Costa Rica. I pasted an excerpt from the article “Region has Squandered its Balance of Trade under CAFTA, Says Report” from the Latin American Database, summarizing her findings:
“In her paper, CAFTA in Costa Rica Would Cause Deepening Inequality, Trejos notes that the opposition in the country, which is formidable, is based on the advanced development of social services, which far outstrip the rest of the region. The people, she says, know they have a lot to lose, and she riffles through CAFTA's thousands of pages to parse out the most significant potential losses:
On biodiversity, Chapter 15 on intellectual property permits patenting the genes of living organisms, while Chapter 10 prohibits requiring knowledge transfer, so that multinationals "can conduct research into our native species and maintain any knowledge they might acquire in secrecy." The loss of sovereign control accrues to the benefit of cosmetic and pharmaceutical industries.
On water and natural resources, she shows that Chapters 10 on investment, 17 on environment, and 20 on dispute resolution, when taken together, enable multinational corporations to sue the government of Costa Rica should it take measures they might consider equivalent to expropriation or that affect their earnings. "With this," she writes, "businesses' access to the water and natural resources and their 'right' to profits take precedence over any measure (whether human or social) that might be taken by the government or municipalities."
On culture and knowledge, Chapters 15 and 10 allow multinationals to own the seeds of a species and traditional knowledge of plants and animals.
On markets, the early chapters allow subsidized imports from the US to enter while denying Costa Rica a tariff option. The case of Mexico under NAFTA provides an example of how agricultural jobs disappear as food from the US replaces nationally produced food without lowering national food prices. "In fact, the price of essential foodstuffs has risen while ruining the livelihoods of rural workers."
On current public investment, the strictures on water and natural resources also apply to public services including telecommunications and the insurance industries, so that the multinationals can sue the country for affecting their profits or expropriation, or for any restriction or attempt to maintain them under public dominion. In addition to the chapters cited for these rights, there is also Annex II, Non-Conformant Measures, Costa Rica list.
On cheap labor, Chapter 16 limits redress, except in limited instances, to labor violations that harm companies, but not those that harm workers. The country is committed to prevent violations "if commerce is affected."
On national sovereignty, CAFTA provisions prevail over national law, such that no law can be passed or remain in force that conflicts with a CAFTA precept. Transnationals take their demands to arbitration courts whose decisions can "modify both the decisions of internal courts and of state organisms at any level, taking into account only that which is stipulated in the agreement and not in the Costa Rican Constitution." CAFTA leaves the state with the authority to take measures to protect health and life, "as long as they do not affect commerce."
Most of these provisions, save those having to do with Costa Rica's telecom and insurance state monopolies, put the country in the same boat with its neighbor CAFTA countries. But Trejos emphasizes that Costa Rica is the only country that did not make any provisions to protect its small producers, poor women, native peoples, or its poor. She argues that a treaty that does not protect its most vulnerable sectors affects women disproportionately because women already constitute a disadvantaged sector. So, female small farmers who feed their communities "may now encounter obstacles in the continuation of their traditional practices, not only because the intellectual property stipulations in CAFTA enable the multinational companies to patent plants and animal species, but also because the treaty reinforces multinational property rights on their seeds."
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