Cerrar ventana

Truths that refute the FTA between the United States and Central America

By María Victoria Veldés Rodda
Alcaabajo.cu
2004

Contrary to government propaganda, the Free Trade Agreement (FTA) between the United States and Central America, instead of the “dreamed-of” benefits, will also bring many disadvantages.

That is the issue for the 5th Meso-American Forum scheduled San Salvador July 18-21. There, representatives from popular movements in Mexico, Guatemala, Honduras, Nicaragua, Costa Rica, Panama and El Salvador will define strategies for dealing with that perspective.

As they are the hosts for the event, the Salvadorans are meeting during these days for important theoretical debates on what that trade agreement would mean for their lives once it is established. From that analysis emerges the assessment of researcher and Professor Cesar Augusto Sención Villalona, who maintains that the FTA’s true logic is not to conquer the U.S. market with new exports, but to strengthen private large capital - both domestic and foreign - at the expense of thousands of poor people.

THE FACTS SPEAK FOR THEMSELVES

The mirage of maquiladora products from El Salvador flooding the U.S. market vanishes on taking into account that Salvadoran industries lack the competitive ability to face a rival as strong as the powerful Northern industry.

According to the Association of Small and Medium-sized Salvadoran Businesspeople (AMPES), many of its members went bankrupt due to the cost of technology. Within 10 years, the textile, shoes, plastics, graphic arts, furniture and printing industries will all face the number one enemy: zero tariffs on U.S. exports, which - with that backing - will erode domestic Salvadoran production.

The same will occur in the agriculture and livestock sector, and with investment of private capital. Regarding the former, Villalona states that outside of fruit and sugar cane production, all other crops - as well as meat - will suffer a growing deterioration brought about by a decline resulting from neoliberal economic austerity policies. With reduced tariffs, stability would change and the dollarization of Central American society has favored imports for nearly two decades.

One of the biggest and most acutely felt losses will be felt by the cultivators, producers and exporters of rice, corn and beans, involving some 400,000 people. But in the United States the future of rice, highly valued as a food staple, has a promising future, precisely thanks to the FTA. By virtue of the trade agreement, under which U.S. exporters are exempt from 40% of tariffs, the Salvadoran market will be flooded with some 68,000 tons of the grain. This is possible, as trade experts in Washington admit, given rice overproduction there (they export 27% of their harvest).

Moreover, the domestic meat industry will not do well at all, particularly pork producers.

Based on the treaty negotiations initiated by the outgoing government of Francisco Flores, some 1,950 tons of pork will make their triumphant entry into El Salvador with the 40% no-tariff benefit. Meanwhile, the possibility of pork exports to the United States has already been disallowed for fear of porcine fever.

And, as for private investment, the loss of sovereignty is evident, given that foreign businesses will enjoy similar rights to domestic ones, which in spite of the apparent solidity of equality, is a legal trap favoring foreign capital.

“U.S. investors will enjoy the right to establish, buy and manage investments in Central American countries, on the same footing of equality as national investors,” reads part of the text of the agreement established during Round 23 in December of last year.

And with privatizations, the state will lose its weight in terms of its ability to help businesses under its mantle, including small and medium-sized ones in the hands of private owners.

Foreign transnationals, the big fish in this scenario, will be the winners par excellence because they will have the power to do business without any obstacles in their path. Via government contracts, they will become the owners of the maquiladoras, certain services and the funds of various important Salvadoran institutions.

WHO BENEFITS IN EL SALVADOR?

According to Villalona, it is not hard to identify who will benefit from the TLC, given that they have names and last names that can be spelled out, together with the country’s large oligarchies.

Those that stand out in that respect are the importers, maquiladora owners, sugar mill owners, major shrimp exporters and the banking sector. The latter will channel up to 30% of loans toward trade, compared to a miniscule 3% for the agricultural sector, which means the more it is linked to imports (by those companies that manage to be competitive), the larger its dividends will be.

And, likewise, this is a very well-hatched plan, Villalona explains: in El Salvador, the major importers, bank owners, insurance company owners and pension fund owners are all the same people.

FORUM OF MESO-AMERICAN RESISTANCE

“We are meeting in San Salvador to strengthen, articulate and coordinate strategies of struggle against the policies and programs of investment that will only benefit the large transnational corporations and will damage the interests of our peoples,” affirms the Meso-American Forum’s Coordinating Committee.

However, the movement is not new. It dates back to 2001, during the World Social Forum in the Brazilian city of Porto Alegre. At that time, in conjunction with the Continental Social Alliance (currently based in Brazil), the first forum took place in May 2001 in the border city of Tapachula in Chiapas, Mexico.

Now, due to pressures from the White House and the servility of regional governments, the social movements -with four years’ experience - are renewing their anti-FTA and anti-FTAA positions. In spite of the positive factor of dignified positions taken by the governments of Venezuela, Brazil and Argentina against those thieving treaties, the forum is aware of the essential large-scale mobilization of all layers of society.

The issue is being followed with interest by some of the media, especially in El Salvador. The independent El Mundo daily raises the idea that men and women opposed to that “free” trade monster, while not having an easy task, may take advantage of the uncertainties of an electoral year in the United States, where the treaty has been questioned by the Democratic Party.

And even Robert Zoellick, the U.S. trade representative, said just two months ago that the electoral conjuncture for a trade issue such as this one makes the panorama even more complex.