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Central America Free Trade Agreement dividing Costa Rican society

IndyBay Media | 25 September 2007

Central America Free Trade Agreement Dividing Costa Rican Society

by brendan behan of Globalize THIS!

Sept. 25, 2007 — Even after more than 13 years of environmental degradation and dramatically increasing gaps between the rich and poor which have left workers in the U.S., Canada, and México out in the cold, the Bush Administration continues to push the NAFTA model on other countries throughout Latin America.

The mistakes of NAFTA have been duplicated and codified in the text of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), which was negotiated starting in 2003 between the United States, El Salvador, Guatemala, Honduras, and Nicaragua—the Dominican Republic later joined the negotiations in 2004—and signed in 2005.

The agreement requires, among many other stipulations, that 80% of all tariffs on U.S. goods entering CAFTA-DR nations be eliminated immediately and that the remaining tariffs be phased out over the next ten years.

CAFTA-DR represents the next step toward the swallowing of the American continents by shady, back-room trade deals like those that gave rise NAFTA.

However, opposition groups in Costa Rica quickly organized to demonstrate against the agreement, citing the threat that CAFTA-DR poses to the environment, workers’ rights, economic sustainability, and Costa Rican autonomy and have successfully forced the government to acknowledge the voice of the people in the public arena.

For the first time in the history of world, a voting population will have the opportunity to vote on a free trade agreement in a referendum. Costa Rican voters will be asked to decide whether or not to accept CAFTA. The referendum is is set to take place on October 7, 2007, and if more than 30% of the voting population turns out for the vote, the results could be considered legally binding.

Submitting the Central America-Dominican Republic Free Trade Agreement to a referendum in Costa Rica is perhaps the most democratic approach to a free trade agreement that the world has yet seen in that it is the first instance in world history of a voting population’s having direct veto power over a free trade agreement. This is in stark contrast to the manner in which DR-CAFTA was negotiated, which was without public input and behind closed doors under President Bush’s now-expired Fast Track Authority.

CAFTA-DR would fundamentally change thousands of laws that are presently in place in Costa Rica, as it has already done in other countries that are party to the agreement—Guatemala, El Salvador, Honduras, Nicaragua, and the Dominican Republic—who have already ratified CAFTA-DR and begun implemention. One of the most critical legal changes required by DR-CAFTA are the elimination or substantial transformation of laws protecting natural resources from foreign purchase or control. Any one of Costa Rica’s local laws protecting natural resources, such as sub-soil energy resources, could legally be challenged under DR-CAFTA as a barrier to trade in binding international arbitration panels overseen by unaccountable, unelected trade lawyers—not elected representatives of the people—who are empowered by the agreement to render the final decision.

These provisions would seriously inhibit the power of local communities to legally prevent multinational corporations from environment pillage as DR-CAFTA would provide legal recourse to these polluters to sue government institutions seeking such protections. This represents a very profound change in the democratic structures of these localities, placing the destinies of these communities—literally, their ability to live in an environment free of toxic pollutants—out of their hands permanently.

Among other provisions in CAFTA-DR, parties to the agreement would be compelled to consider nuclear waste as a tradable good in the eyes of the law. This could potentially mean that if a private corporation in the United States, which, quite importantly, is the only party to the agreement with a substantial nuclear industry, were contracted by the U.S. government to dispose of its nuclear waste in another country, the company could sue for the right to dump these radioactive ’tradable goods’ in Costa Rica even if existing laws prohibit it, under provisions in DR-CAFTA which preclude governments from implementing laws that discriminate against certain industries or corporations. DR-CAFTA bestows the right upon these companies to sue local, regional, and national governments for not allowing such dumping of toxins and other public hazards and to also collect financial compensation from such legal bodies should the arbitration panels side in favor of the corporations.

These foreign corporations who are not beholden to these local communities do not have to bear the impact of their actions while the surrounding communities do. It has long been recognized by major economic thinkers like Joseph Stiglitz and others that the only means of preventing these corporations from perpetually hoisting these noxious externalized costs onto surrounding communities is by democratic political change, which means regulation.

In the context of Costa Rica, this presents the possibility of a new kind of internationalized environmental racism since Costa Rica’s indigenous communities and their lands were the only indigenous groups to be excluded from DR-CAFTA’s indigenous communities’ exemption clauses.

Other key features of CAFTA-DR are as follows:
- Highly subsidized U.S. agriculture gains immediate duty-free access despite the fact that these subsidies keep prices of U.S. goods at artificially low levels, which is inconsistent with free trade doctrine
- Excluding competitors from CAFTA-DR markets so as to protect U.S. textiles & apparel under the ’Yarn Forward’ Rule; summarizing the U.S. Trade Representative, the ’yarn forward’ rule requries that apparel using yarns and fabric from the United States and CAFTA-DR countries qualify for duty-free benefits. This includes fabrics, yarn, garment pockets, thread, narrow elastic fabrics, and visible linings. The legal implications are that any garments produced with fabrics originating from countries other than the U.S. (particularly China, which is a main competitor of the U.S. in this area) will be subject to tariffs, creating a protected market for U.S. textiles, yarns, threads, fabrics, and more
- Non-reciprocal & anti-free trade sanction measures allowing the United States to impose tariffs on certain goods in the event of ’import surges’
- Protection for International Investors including equal treatment for U.S. investors and CAFTA-DR domestic investors
- Corporate entities would be entitled to full compensation for the market value of any properties, natural resources, or goods that are nationalized or expropriated by Central American countries
- The right for investors to sue governments and be compensated for violations of CAFTA-DR
- Privatization of all social services and access for U.S. companies to bid on these privatized public services, including education and environmental services
- Increased protections for socially contentious patents and intellectual property rights, including trademarks, and pharmaceutical test data that is currently used to produce cheap, generic drugs that are far more affordable to the poor
- Protecting plant DNA patents and allowing for the patenting of nature; enforcement mechanisms would include requiring any farmer caught growing patented crops, whether intentionally or in the event of the unintentional ’contamination’ of their crops by genetically modified varieties, to destroy their fields or face imprisonment and/or fines
- Limiting public access to cheap, generic pharmaceuticals, which will most greatly impact poor
- Environmental protection mechanisms will be limited to market-based ’No Punishment, Voluntary Atonement’ solutions disallowing local governments from sanctioning gross violators of environmental laws
- The explicit elimination of the possibility that labor and environment violations can be punished by means of sanctioning or withholding trade access
- Labor & environment disputes are relegated to a toothless public hearings procedure with no binding enforcement mechanisms

The notion that these kinds of polluting industries have a right to force their externalized costs onto local communities is completely at odds with any basic understanding of democracy-which, one must remember, does not equate with the ’freedom to do business,’ but rather the freedom to control one’s own life within the social landscapes that one operates.

Of what value is freedom in any sense, if one cannot have the ability to maintain the safety of the most basic necessities of life: our water, our food, and our air? Communities do have a democratic right to limit corporation’s externalized costs, especially when those externalized costs do not just inhibit our freedom to live in a toxin-free environment, but also may inhibit our right to prevent those toxins from entering our systems.

 source: IndyBay