Central American Trade Bill No Boon for the Poor
27 May 2004
US to Sign CAFTA Trade Agreement
WASHINGTON DC (May 27, 2004)—On May 28, US Trade Representative Robert Zoellick will join officials from Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua to sign the Central American Free Trade Agreement (CAFTA). While officials from Central America and the US toast the fruits of negotiations, more than 15 million Central Americans who live on less than $2 per day have nothing to celebrate.
"Trade has an important role to play in helping developing countries achieve economic growth and poverty reduction. But CAFTA will only hinder, not help the poor benefit from trade," said Stephanie Weinberg, Trade Policy Advisor at Oxfam. "Under CAFTA, millions of small farmers in Central America will be unable to compete with US subsidized rice, corn, and beans, all of which are staple crops in Central America."
Since NAFTA went into effect in 1994, 15 million Mexican corn farmers have faced enormous hardship due to the drop in corn prices by 70 percent. This was largely due to the dumping of subsidized corn on the Mexican market by large US agribusinesses. NAFTA was supposed to benefit Mexico, but today, half of the rural Mexican population lives in extreme poverty.
In addition to agriculture, CAFTA will also have significant negative consequences for public health. The agreement will require Central American governments to impose very stringent patent protection on the production of pharmaceuticals, putting at risk the ability to manufacture affordable generic medicines. New rules under CAFTA will strengthen the rights of patent holders, yet limit competition by generics producers, giving pharmaceutical companies a stranglehold on the drugs market.
"The result is almost certain: drug prices will rise. In Central American countries with little or no health insurance and limited public health-care coverage, this will simply mean that poor people will go without medicines they need that could save their lives," said Weinberg.
A third major source of concern is CAFTA's rules protecting foreign investors. CAFTA sets out strict rules for investors' rights, but does little to outline their responsibilities. Nor does CAFTA protect governments' right to pass laws to protect the environment, health, safety, and welfare of their citizens. In contrast, investors who believe their profits have been harmed by such government actions can sue under international tribunals, bypassing national judicial systems entirely.
Oxfam America has supported the effort to stop CAFTA by encouraging thousands of US citizens to express their concerns to their Members of Congress. Oxfam's partners in Central America have mobilized across the region to demonstrate their opposition to CAFTA to their elected officials. North and South, this growing movement demands that its representatives weigh the limited benefits CAFTA will bring to US corporations against the devastating costs it will have for millions of ordinary citizens.
