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Equitable Trade and Central America: Does CAFTA Measure Up?
President George W. Bush and the presidents of Central America assert that a Central American Free Trade Agreement (CAFTA) will bring prosperity to the impoverished isthmus. As organizations that have followed Central America through its history of civil wars, reconstruction, and a succession of natural disasters, we share a strong hope for equitable and sustainable development in the region. In this spirit, we raise serious concerns related to the negotiations of CAFTA and offer elements and standards that are essential to a more just trade relationship between the United States and the nations of Central America. The evidence of NAFTA demonstrates that any agreement crafted along the lines of that accord would have potentially adverse environmental, economic and human consequences for many people in the United States and Central America. Democratic Participation and TransparencyThe trade text being negotiated has never been made available to the public, unlike two drafts of the Free Trade of the Americas Agreement, which were published on the official FTAA website in July 2001 and November 2002. As the established date for finalizing the text of CAFTA approaches, there is no established process for civil-society input in Central America. Meaningful public participation cannot take place when those whose lives and livelihoods that will be directly affected have no access whatsoever to the substance of negotiations. Some strides were made in civil-society participation in post-Hurricane Mitch reconstruction efforts and in the elaboration of the Poverty Reduction Strategies in Nicaragua and Honduras. The current CAFTA negotiations represent a step backwards as they are taking place with a limited and selected sector of civil society groups, largely the business sector. The CAFTA negotiation process should have mechanisms for broad and representative participation that includes workers, women, indigenous and ethnic groups and other affected sectors in both the U.S. and Central America. For this to happen, the timeline of the negotiations must be extended, as the current deadline will not allow for democratic participation. The draft text, member country proposals, and agendas must be made available to participating civil society groups in a timely, coordinated fashion in order for their participation to be meaningful. Negotiators should also meet with civil-society groups both before each negotiating session in order to discuss the proposals being advanced and afterwards in order to report back on the results of those talks. The U.S. Agency for International Development (USAID) is planning a series of public meetings in Central America that are designed solely to inform civil society participants of CAFTA’s purpose, and to discuss how NAFTA has helped and harmed the Mexican people. These public meetings are not to debate issues of content or policy, and will have no direct influence on the negotiations underway. Rather than misuse already limited resources, funds should be directed towards developing mechanisms for participation that is meaningful and substantive. Finally, the Fast Track Congressional Oversight Group in the United States should be allowed to fulfill its mandate and actively monitor the trade negotiations in order to safeguard the public interest. Worker RightsThe international community must take concerted action to create strong and effective oversight and enforcement mechanisms to protect labor and social rights. Special attention should be given to ensuring the protection of women, members of indigenous groups and farm laborers in their role as workers. For nearly 20 years the United States has included worker rights provisions in the Generalized System of Preferences (GSP) program and in subsequent trade preference programs, including the Caribbean Basin Initiative, the Caribbean Basin Trade Partnership Agreement, and the Andean Trade Partnership and Drug Eradication Agreement. These provisions have been included because of governments failures to respect or enforce labor laws. The GSP, which defines workers rights by internationally recognized labor standards, includes oversight and enforcement processes that have been used effectively at times. Of particular value is a transparent public petition process and enforcement mechanism that provide for probation and exclusion from beneficiary status should a country fail to uphold labor standards. GSP programs represent small but significant steps in the right direction of recognizing the standards established by the International Labor Organization (ILO) and creating viable global enforcement instruments. Since CAFTA would supercede the GSP program for Central American countries, these provisions will be lost. Various mechanisms have been proposed to ensure the effective global implementation of internationally recognized labor standards. Some of these are: including enforceable labor rights provisions in all trade agreements; creating a transparent petition process, as in the GSP; penalizing companies that violate labor laws; and/or strengthening the ability of the ILO to oversee and enforce internationally recognized labor rights. It is clear that the current position of the U.S. Trade Representative — to seek only a commitment from Central American countries to enforce their own labor laws — is inadequate. It is especially inappropriate for regions like Central America that have relatively weak labor laws and a tradition of non-enforcement, as clearly documented in the 2002 U.S. Department of State Country Reports on Human Rights. Small Farmers in the United States and Central AmericaIn Central America, where the highest incidences of poverty are in the rural sector, the impact of a poorly designed trade agreement could be devastating. An estimated 1.3 million people in the region currently are facing starvation. Impoverished and small-scale farmers (often female heads of households) produce primarily for national and regional markets, and are not well-positioned to compete with large agribusinesses on the local, national or world markets. Any trade agreement on agriculture must guarantee the governments’ authority to pursue tariffs and subsidies that safeguard their nations’ food security, promote poverty eradication, boost crop diversification, improve physical infrastructure and protect the environment. Countries should be able to enact legislation that excludes staple crops such as corn, beans and rice from trade liberalization. The United States government must prevent private and public dumping of U.S. grains in the region that adversely affects small farmers in Central America. Such farmers are unable to compete either in the global export market or against imported agricultural goods sold below their own production costs. Any U.S.-Central America trade agreement must recognize governments’ authority to determine and implement publicly legislated safety standards for imported food products. Governments must not be required by trade treaties to permit entrance of food or agricultural products treated with specific forms of technology that are of public concern, such as genetically modified organisms and irradiated foods. Finally, any trade agreement must contribute to rural development strategies that promote family farms in the U.S. and Central America that enhance food sovereignty and are environmentally sustainable. Current U.S. domestic farm policy, despitesubsidiesof billions of taxpayer dollars, is destructive of small and medium producers as well as the environment. A decline in commodity prices has forced U.S. farmers to expand production or revert land to grain production in order to produce inexpensive corn for vertically integrated livestock factories, both of which are environmentally unsustainable. Traditional Knowledge & the Right to Access to MedicineLocal and indigenous communities and farmers make enormous contributions to the conservation and development of plant genetic resources. Small-holder farmers fear that the patenting of life forms, especially seeds, may prevent them from accessing genetic information and materials they developed over years of saving, planting and exchanging seeds in rural and indigenous communities. Nothing in newly negotiated trade agreements should interfere with the rights of farmers and indigenous communities to use plant genetic resources for food and agriculture. Further, these sectors in the United States and the region should have the right to participate in making decisions at the national level on matters related to the conservation and sustainable use of plant genetic resources for food and agriculture. Any agreement should also reflect the sovereign right that States have over their own biological resources, as well as government’s responsibility to conserve and use biological resources in a sustainable manner. These rights are affirmed in the Convention on Biological Diversity and signed by the Central American governments and the U.S. government in 1992 and 1993 respectively. Although the U.S. did not ratify the convention, it should not interfere with the other countries requirement to fulfill their obligations. Any trade agreement should also respect Governments’ responsibilities to protect and promote farmers rights as they relate to plant genetic resources for food and agriculture, as expressed in the Treaty on Plant Genetic Resources for Food and Agriculture. This Treaty affirms the rights of farmers to save, use, exchange and sell farm-saved seed/propagating material. Furthermore, any trade treaty must not diminish Central American countries’ rights or abilities to exercise the flexibilities granted them in the WTO TRIPS agreement to secure access to affordable medicines. The United States must not pursue any "TRIPS plus" provisions such as restricting compulsory licensing or preventing access to test data that thwart States’ ability to protect and promote public health or peoples’ access to affordable medicines. A trade agreement should not undermine the 2001 World Trade Organization (WTO) Doha Declaration, which promotes public health and people’s access to existing and new medicines. For small market countries like those of Central America, it is urgently important that a mechanism be established for importing generic versions of medicines when there is little or no in-country manufacturing capacity. Investment and Capital FlowsAny trade agreement should preserve government authority to regulate foreign investment in order to achieve national sustainable development policies. Governments should be able to establish performance requirements in order to support an emerging productive sector or meet community development plans. Equally, governments should be able to impose capital controls to protect their economies and citizens from destructive flows of speculative investment. The rights established under international human, labor and environmental agreements and conventions should take precedence over investor rights. The Investor-State clause in NAFTA, the U.S.-Chile FTA and the proposed Free Trade Area of the Americas (FTAA) grants foreign investors the right to sue governments for compensation over public-interest laws that could undermine their potential profits. Alarmingly, 27 cases have been brought under NAFTA, many against local environmental laws. This provision has also been used to threaten governments considering new laws or regulations for public health and safety. Any trade agreement should reject investor-to-state lawsuits and require foreign investors to work within the laws and court systems of the host country. Disputes between countries should be resolved in an accountable and transparent manner, and with the participation of all affected parties. Essential ServicesEssential services are services that help meet peoples’ right to food, education, health and basic utilities. Essential public services should be exempt from the "national treatment" standards. "National treatment" mandates that foreign service providers be treated at least as well as domestic providers. In Central America there is deep concern that requiring national treatment standards for the provision of essential services would make it impossible for governments to adequately subsidize the provision of those services, resulting in price increases that are prohibitive to consumers. It is also important that negotiators utilize a "positive list" approach for any agreements liberalizing services. This approach liberalizes only those sectors specifically included in the negotiations. Specific sectors should be "listed" only after careful consultations with all affected populations. A blanket "negative list" approach to liberalization, which would apply to all services not specifically excluded by the state party, should be rejected. ConclusionThese elements and standards are essential to a just trade agreement, and CAFTA negotiations must be evaluated on the basis of their inclusion. Lamentably, indications are that current CAFTA negotiations do not include these provisions. This is a matter of grave concern to all who seek equitable trade relationships between the United States and the nations of Central America. July 21, 2003 Initial Signers:
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