logo logo

Lift the Veil of Secrecy on Stalled Central America Trade Deal, Demands Civil Society

Embassy, Canada

Lift the Veil of Secrecy on Stalled Central America Trade Deal, Demands Civil Society

28 June 2006

By Lee Berthiaume

The Tory government says a free trade agreement with Central America, on ice since 2004, will eventually be debated in the House. One academic doesn’t mind the delay, worrying the deal could be bad news for some nations, while industry officials worry Canadian firms may lose interest before the deal is reached.
Once it’s done, Canada-Central American Free Trade Agreement will be debated in the House of Commons, Conservative MPs said last week, but there are no guarantees draft agreements will be available to civil society organizations or other third parties.

Responding to concerns voiced by non-governmental organizations at a Standing Committee on International Trade hearing last week, the Parliamentary Secretary for International Co-operation Ted Menzies said the government "said international agreements will be debated in public in the House of Commons."

Some 150 solidarity groups from Latin America and Canada have signed an open letter urging Ottawa to lift what they say is a veil of secrecy on the Central America Four Free Trade Agreement, or CA4.

The letter, which was mailed to International Trade Minister David Emerson’s office yesterday, also asks for an informed public and political debate on the commerce pact, which aims to knock down tariff barriers and encourage investment.

Mr. Menzies said Canada has contributed millions of dollars in development funds to Honduras, Nicaragua, El Salvador and Guatemala: the four countries involved in the negotiations.

"We don’t want to force a bad deal on these countries," he said. "We didn’t invest in these countries to hurt them with a free trade agreement."

However, a few minutes later, Helena Guergis, Parliamentary Secretary for International Trade, said while previous governments have released free trade agreement negotiation documents to civil society organizations in the past, "I know we’re changing a lot of other things."

Last week’s hearing was the first on the proposed agreement after a meeting scheduled for June 12 was cancelled. The next hearing is not scheduled until Parliament resumes in the fall.

The June 21 hearing included testimony from two Canadian sugar industry lobbyists, an official from McCain International, a human rights worker and an economist and trade activist from El Salvador.

Negotiations have been stalled since 2004 and, in the interim, the United States inked its own deal with the four countries and the Dominican Republic.

Canadian government officials have indicated the southern countries have insisted the contents of the agreement, which the parties may resume negotiating sometime this summer, remain secret to sustain bargaining power.

Drawing on his country’s experiences with a free trade agreement signed with the U.S. last year, Raul Moreno, an economist from the University of El Salvador, warned MPs during last week’s meeting that free trade agreements affect the political as well as economic wellbeing of a country.

"Free trade agreements are political instruments that go beyond trade issues," Mr. Moreno, speaking in Spanish, told MPs through an interpreter. "One of the main risks of [the CA4] is the privatization of public services."

Since El Salvador entered into its agreement with the U.S. (with Guatemala, Honduras, Nicaragua and the Dominican Republic also party to the agreement), many public hospitals in El Salvador are now offering private, American-run health clinics, which are affecting the quality of services that can be offered to the general population.

Mr. Moreno says there are also concerns the water systems will be privatized, which will drive up prices, which the poorest people will be unable to afford.

"When all these services are privatized, we are denying these rights to the poor," he says.

Speaking to Embassy after his presentation, Mr. Moreno also says free trade agreements lower or eliminate tariffs and taxes that the government needs to function, which in turn weakens the state’s ability to deliver essential services.

While he acknowledges that some companies in Central America will benefit from the free trade agreement because they will be able to increase their exports, typically only "very large companies, and there are only a few of them, will benefit."

Rusa Jeremic, Coordinator of the Global Economic Justice Program at civil society organization KAIROS, cautioned the government to proceed slowly with the agreement to ensure the "small, vulnerable economies" will not cause problems in the four Central American countries.

"Canada is under pressure to establish bilateral trade agreements," she said. "We have to acknowledge the Canadian market is not that big. It doesn’t mean it’s not important, but it provides an opportunity to think through the agreement."

The two sugar industry lobbyists also called on the government to weigh all the benefits and risks.

Following the completion of Canada’s free trade agreement with Costa Rica, sugar beet farmers were told that if they didn’t like the agreement which opened up the sugar market to the smaller country, they could switch crops, said Merrill Harris, president of the Canadian Sugar Beet Growers’ Association.

"Please do not ask us to grow something else for the [Central American] negotiations," he said. "A good free trade agreement should increase market access, not decrease it."

But Andrew Young, Director of Marketing for McCain International, which exports about $10 million worth of goods to the four countries, encouraged committee members to speed the negotiations along before Canadian companies start to lose their competitiveness to American companies that already have a deal.

"Canada has been negotiating with Central American countries since 2001 and despite some progress, we have not finalized the agreement," he said. "In the meantime, the American government has negotiated and finalized a Central American free trade agreement.

"McCain and other Canadian companies are at a disadvantage," he added. "The tariff is too burdensome."