The Central American Free Trade Agreement (CAFTA) is a free trade agreement between the United States and the Central American countries of Guatemala, Honduras, and Canada, and Mexico. CAFTA is also seen as a stepping stone towards the Free Trade Area of the Americas (FTAA), another, more ambitious free trade agreement which would encompass South American and Caribbean nations (with the exception of Cuba) as well. Canada is negotiating a similar treaty called the Canada Central American Free Trade Agreement.
The ongoing CAFTA negotiations encompass the following components:
- Services: all public services are to be open to private investment.
- Investment: governments promise to grant ironclad guarantees to foreign investment.
- Government procurement: All government purchases must be open to transnational bids.
- Market access: governments pledge to reduce and to eventually eliminate tariffs and other measures that protect domestic products.
- Agriculture: duty-free import and elimination of subsidies on agricultural products.
- Intellectual property rights: privatization of and monopoly over technological know-how.
- Antidumping rules, subsidies and countervailing rights: governments commit to phase out protectionist barriers in all sectors.
- Competition policy: the dismantling of national monopolies.
- Dispute resolution: the right of transnationals to sue countries in private international courts.
US President George W. Bush announced in January 2002 that CAFTA is a top priority for his administration, and Congress gave his administration "fast track" authority to negotiate it. CAFTA negotiations were officially launched in January 2003. Negotiations concluded a little more than a year after they were initiated, with the signing of CAFTA on May 28, 2004. Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua signed the deal. In addition, talks with the Dominican Republic have been underway to discuss the Republic's membership in CAFTA. It is expected that the Dominican Republic will finalize membership in 2004.
Because of the many activist groups, left-wing political parties, and strong unions in Central America, CAFTA is seen as a critical step towards FTAA, since imported and exported goods passing to and from the rest of Latin America will have to travel through this region. Without the participation of these countries, FTAA will be next to impossible.
As the details of the agreements become known, CAFTA has been meeting with growing opposition, both in the US as well as in Central America.
Opposition and Resistance
The US advocacy group founded by Ralph Nader, Public Citizen, says CAFTA is based on the same "failed neoliberal model" as NAFTA and serves to "push ahead the corporate globalization model that has caused the 'race to the bottom' in labor and environmental standards and promotes privatization and deregulation of key public services." Public Citizen claims that independent farmers in America, Canada and Mexico have been hit particularly hard by NAFTA, with thousands wiped out and farmland shifting into the hands of huge agrobusiness concerns such as Tyson and Cargill; the group fears CAFTA will have same effect in Central America.
In May, 2004, the Salvadoran American National Network, the largest national association of Central American community-based organizations, along with other organizations representing Central American immigrants, expressed its opposition to CAFTA:
- Our opposition to CAFTA is not ideological. As immigrants, we have a deep understanding of the potential benefits of improved transnational cooperation. We would welcome an agreement that would increase economic opportunity, protect our shared environment, guarantee workers' rights and acknowledge the role of human mobility in deepening the already profound ties between our countries. However, the CAFTA agreement falls far short of that vision.  (http://www.citizenstrade.org/pdf/sann_caftastatement_may2004.pdf)
- United States Trade Representative's CAFTA webpage (http://www.ustr.gov/new/fta/cafta.htm)
- "The Trouble With CAFTA" (http://www.thenation.com/doc.mhtml?i=20040202&s=engler) (from The Nation)
- "From NAFTA to CAFTA: Another Bad Trade Pact" (http://www.counterpunch.org/kyer0912.html) (from Counterpunch)
- "CAFTA: Part of the FTAA Puzzle" (http://www.citizen.org/trade/cafta/) (from Public Citizen)
- "A Treaty Tied by Chains: A Perspective from Costa Rica" (http://www.americaspolicy.org/commentary/2003/0302caftacr.html) (from Americans Program)