Central Americans up in arms over CAFTA

David Bacon reports on the Central American Free Trade Agreement which threatens to extend the harmful impact of NAFTA to Mexico's weaker southern neighbours.

When the Honduran Congress took up ratification of the Central American Free Trade Agreement last year, over a thousand demonstrators filled the streets of Tegucigalpa, angrily denouncing the effort. Congress ratified CAFTA anyway, but the crowd was so angry that terrified deputies quickly fled.

"We chased them out, and then we went into the chambers ourselves," says Erasmo Flores, president of the Sindicato Nacional de Motoristas de Epuipo Pesado de Honduras (SINAMEQUIPH), the union for Honduras' port truckers. "Then we constituted ourselves as the congress of the true representatives of the Honduran people, and voted to scrap Congress' ratification."

Similar demonstrations have multiplied across Central America, and just weeks ago police shot into a crowd of protesters in Guatemala, killing one. Meanwhile, however, growing controversy has not helped the treaty's main supporter, US President George Bush, to find the votes he needs to pass it in Washington.

While admittedly an act of political theatre by the leftwing Bloque Popular, the Honduran protest showed dramatically how unpopular the agreement is in Central America, at least among workers and farmers. This is quite a change from Mexico, where the promises of then-President Carlos Salinas de Gortari deceived large sections of Mexican society, especially its labour unions, into supporting the North American Free Trade Agreement in 1991 and 92. While US workers might suffer job loss, Salinas cajoled, Mexican workers would get those jobs. The country would become a "first world" economy, he promised, with first world living standards.

The truth was bitter. Currency devaluation cost the jobs of a million Mexicans in the first year after NAFTA went into effect alone. While US President Bill Clinton bailed out investors threatened by the crash, it came at the cost of Mexico's oil, which then had to guarantee the loans, instead promoting economic development. Tying hundreds of thousands of low-wage maquiladora jobs to the US economy also made them vulnerable to it. When consumers north of the border stopped buying goods during the 2000-2001 recession, 400,000 border workers were laid off. And export industry wages, far from rising, remained flat, while prices of milk, tortillas, gasoline, bus fare and most working-class necessities skyrocketed.

But the most devastating effect on workers came from privatisation, enforced by NAFTA's mandate to make Mexico more investor-friendly. As ports, railroads, airlines, mines, telephones and many other large national enterprises were sold off, sometimes for just a fraction of their worth, new private owners cut labour costs by slashing jobs and gutting union contracts. In NAFTA's first decade, Mexico's privatization created more billionaires than any other country in the world.

CAFTA is built on the same political premise. It seeks to reinforce the transformation of Central American economies, maintaining a low standard of living as a means to attract investment in factories producing, not for an internal market, but for export to the US. Understandably, this vision is hardly popular among workers and unions. But hundreds of thousands of Central American jobs are already tied to export production, and the Bush administration can and does use them as bargaining leverage, threatening economic disaster by raising the spectre of import barriers against countries that won't adopt CAFTA.

CAFTA promises to extend the harmful impacts of NAFTA to Mexico's weaker southern neighbours. Most Central American nations currently belong to the Caribbean Basin Initiative, which requires participating countries to uphold internationally recognized labour norms. Using the example of NAFTA's notoriously ineffective labour side agreement, CAFTA only requires that governments enforce their own laws, which are often far weaker.

Central American public sector workers have been especially keen observers of the Mexican experience. Honduras' longshore workers' union has twice beaten back government efforts to privatize the docks of Puerto Cortez, successfully mobilizing the whole town in the process. "We put our union's assets, like our soccer field and clinic, at the service of the town," explains Roberto Contreras, a union officer and Honduran representative for the International Transport Federation. "When the government tried to privatize our jobs, we told people that if we didn't cooperate to defeat it, the whole town would lose, not just the port workers."

In El Salvador, huge protests accompanied government efforts to privatize the healthcare system. And in Costa Rica, a massive strike by public telephone and electrical workers forced the government to withdraw from CAFTA negotiations in 2003.

On March 9, Guatemala's National Civilian Police sealed off the streets around the Guatemalan Congress after it voted to ratify CAFTA, and then used clubs and teargas against almost 2000 demonstrators. Following the vote, popular organizations began mounting highway blockades throughout the country, effectively halting commerce and travel. At a blockade in Colotenango, at the Puente Naranjales crossroads, police and the army fired on the crowd. Juan Lopez Velásquez was killed, and nine others wounded by bullets.

Ironically, the Bush administration has had more success strong-arming Central American countries than their more powerful South American neighbours, or the US Congress. In 2003 the World Trade Organization talks in Cancun collapsed amid huge protests, and later in Miami, the big South American economies of Brazil, Argentina and Venezuela told the administration they had little interest in its carefully-orchestrated march towards a Free Trade Area of the Americas.

Even in the immediate aftermath of the September 11 attacks, the administration could only muster a one-vote 216-to-215 majority in the US Congress to give it fast track trade negotiating authority. Almost all observers agree that if Bush had the votes to ratify CAFTA, he would have introduced it into Congress long ago. The fact that the agreement has been negotiated, has been ratified in most Central American countries (although amid bullets, clubs and chanting protesters), and has yet to be introduced for ratification in Washington, is the best indication that CAFTA's political support is shrinking, not growing.

While Bush and the agreement's corporate backers still want it, it's getting harder for them to point to anyone else who does.

This report was submitted by David Bacon, a freelance journalist and photographer. This account first appeared on the US-based webzine Truthout