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Council On Hemispheric Affairs
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Monitoring
Political, Economic and Diplomatic Issues Affecting the Western Hemisphere
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Memorandum to the Press 04.73
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Word Count: 2350
Monday, 18 October 2004
U.S. Investors and Its Multinationals Will
Emerge As Main Winners from CAFTA Ratification
• As part of the Bush administration’s
move to expand and legitimize the interests of U.S. investment capital
throughout the hemisphere, on May 28 Washington signed a multilateral free
trade accord with five Central American nations that, if ratified, threatens to
adversely affect living standards for a large percentage of the region’s
population.
• Although the Central American Free Trade Agreement (CAFTA) clearly and
forcefully addresses the most pressing demands of multinational corporations,
such as protecting investor and intellectual property rights, it fails to
ensure the enhancement and enforcement of labor rights and environmental
regulations and limits the exercise of national sovereignty.
• CAFTA’s provisions undermine Central America’s sovereignty because they establish a set of
supranational mechanisms that, by their very definition, supersede laws
promulgated by each respective country’s legislative branch. These
CAFTA-implemented mechanisms will mainly protect the economic interests of
international and domestic investment sources, but will offer worker and
environmental groups little protection or right of redress.
• CAFTA will exacerbate the unequal economic relationship that
currently exists between the world’s largest economy and Central America’s
underdeveloped societies, by eliminating the only recourses the latter possess
to protect their national interests, to politically determine governmental policy
and to mobilize social reforms.
• CAFTA advocates in Congress may attempt to ratify it in a lame duck
session before the legislative chambers officially reconvene next January.
On May
28, 2004, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, together with the United States, signed a free trade accord whose underlying principle
is the aggressive protection and expansion of individual and corporate investor
rights. These privileges come at the expense of environmental protection,
legislative independence, and a nation’s right to autonomously determine social
and economic policy. Despite the assurances of its proponents, the Central
America Free Trade Accord (CAFTA) is not likely to translate into a significant
improvement for the region’s atrocious labor rights record because it does not
institute the fixed penalties and incentives required for such a profound
change. The absence of such provisions is especially distressing in Central
American societies that, in a twisted and deadly caricature of respectable
collective bargaining, have historically witnessed hundreds of labor leaders
gunned down and intimidated by hired hands on the payrolls of land owners and
factory managers.
The agreement’s limited and unbalanced scope is a result of a heavily delimited
negotiating process that lacked any sense of transparency and only involved
government-sponsored experts. In its present form, CAFTA represents a very
significant undermining of the traditional sovereign rights of nations and
exposes a lamentable deference on the part of Central American governments.
This clearly demonstrates their intent of mainly serving privileged elements of
their societies at the expense of the generality of their populations. Once
implemented, CAFTA will, in fact, likely condemn the area’s agricultural,
service and industrial workers to further marginalization, with the
accompanying risk that they might fall into abject poverty. Most likely,
comparable Central American enterprises will be hard-pressed to successfully compete
with foreign competitors because they lack the economies of scale, investor
control, access to low interest loans, investor pool and an outreach to skilled
management which is readily available to transnational commercial entities.
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This analysis was
prepared by Gabriel Espinosa Gonzalez, COHA Research Associate.
October 18, 2004
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