Niko Kyriakou

WASHINGTON, Jun 17 2005 (IPS) — Congressional House and Senate committees voted in favour of the Central American Free Trade Agreement (CAFTA) this week, even as the former president of Costa Rica visited the U.S. capital to deliver an impassioned plea against the pact.

CAFTA, also known as DR-CAFTA, is still in a mock mark-up approval stage and faces overwhelming Democratic, and even some Republican, opposition in the broader U.S. Congress.

However, Pres. George W. Bush has declared the agreement this year’s top trade priority and is pressing for its ratification before lawmakers recess on Jul. 4.

"CAFTA has been advanced and promoted by the very few who would profit from it, in both the United States and the region," said Rodrigo Carazo Odio, one of the few former Costa Rican presidents untouched by corruption scandals.

CAFTA does not bear "people’s interests and well-being as the main objective," and its main outcome would be "the reign of investors’ interests," he said.

Carazo, who was president from 1978 to 1982, has stayed out of Costa Rican politics since the end of his term. The former president told IPS that a viable alternative to CAFTA would be an agreement that promotes "free and fair trade," and which is limited to trade.

Fights over the agreement have become supercharged as U.S. businesses threaten to cut campaign contributions to lawmakers who oppose the pact, and Latin American leaders face widespread protests and mounting public opposition, estimated at 65 percent in Guatemala by a recent Gallup poll.

Pres. Bush has weighed in heavily saying that CAFTA would help U.S. workers, farmers and small businesses by removing tariffs on about 80 percent of U.S. exports to CAFTA countries, including El Salvador, Honduras, and Guatemala, which have already ratified CAFTA, as well as Nicaragua, Costa Rica and the Dominican Republic, which have not.

Labour, farm and sugar lobbies in the U.S. have all opposed the agreement, but a recent study on CAFTA by the United States International Trade Commission (USITC) said the agreement would have a negligible impact on the U.S. economy.

The emphasis on sugar and other areas of U.S. markets distract from the real impact of the agreement, says Viji Rangaswami, an associate at the Carnegie Endowment for International Peace, which hosted the event with Carazo.

"This emphasis on impacting the U.S. is somewhat unfortunate because the major ramifications of this agreement will not be on the U.S. economy, or for that matter the vast majority of people in our country," Rangaswami said.

The real impact, she said, would be on Latin America.

Former President Carazo, who also headed his countries oil refinery and central bank, says CAFTA would change the entire framework of social life in Latin America.

"The trade agreement is not limited to trade. It has to do with everything in our countries, from the constitutional framework, to the Costa Rican and Central American way of life, to investments and exports and imports," Carazo said.

CAFTA is only one step on the way to a more comprehensive Free Trade Agreement of the Americas (FTAA), and is part of the wider Caribbean Basin Initiative, a pro-trade instrument that has shaped Central American economies over the last 20 years.

It is the first such agreement the U.S. has negotiated with some of the poorest countries in the hemisphere, two of which have annual per capita incomes below 1,000 dollars.

The international charity Oxfam says that for 50 years, multilateral trade negotiations have agreed not to reduce trade barriers in countries where the effect would be damaging to development, until now.

Under CAFTA, "countries must eliminate import tariffs on virtually all agricultural goods, including those food essentials that are most important for small farmers’ incomes – rice, yellow corn, beans and dairy products," Stephanie Weinberg from Oxfam America told the House Committee on Ways and Means last April.

"At the same time, the agreement requires Central American countries and the Dominican Republic to open the door for dumping of highly subsidised U.S. agricultural exports at prices below their cost of production," she said.

The result "is a bad deal for millions of farmers, workers, and consumers in Central America and the Dominican Republic," she said.

Carazo estimates that as a result of an implemented CAFTA, the number of Nicaraguans pouring into Costa Rica in search of jobs and services would probably double, raising their proportion in the Costa Rican population from 17 to 34 percent.

CAFTA would also lift investment regulations and increase protections for foreign and private companies working in Latin America, even allowing them to sue governments for violations of the agreement, Weinberg said.

Carazo stressed that Costa Rica is not opposed to free trade agreements with the U.S., which is the largest consumer of Costa Rican goods.

"But we would like to add a very simple word," he added. "Free and fair trade negotiations."

Carazo says that subsidies for U.S. agriculture constitute neither free nor fair trade.

CAFTA would launch Latin America at "a most intense velocity" into an economic competition where only the "fittest" can survive, Carazo said.

"We do not want to be forced to open the possibility of the exploitation of natural resources. We declared our country an oil-free country and gold-free country, because we want to protect our environment so that future generations will be able to exist," Carazo said.

Costa Rica, which has no army, has significantly less poverty than its Central American neighbours, with levels estimated at about 20 percent, compared with about 70 percent in Honduras and 64 percent in Nicaragua, Carazo said.

CAFTA would also prevent access to cheaper, generic medicines in Central America.

The agreement would extend patent periods on drugs from 20 to 25 years, prolonging a patent holder’s monopoly, and requires testing periods of 10 years on new drugs, further delaying the introduction of generic drugs into the market. It also forces national drug registration authorities to handle crackdowns on generic producers, a burden carried by the patent holder under U.S. law, Weinberg said.

Cesar Viera, a doctor and chief of the unit of Policies and Strategies at the Pan American Health Organisation, told IPS that CAFTA would "definitely" raise drug prices due to the exclusion of cheaper generic drugs from the market, thus preventing access to drugs by poor people, most of who currently pay for drugs "out of pocket".

Viera said no study has yet been done on the cost to human life these restrictions to affordable drugs could have.

Central America has the second highest death rate from communicable diseases in the Latin American region, and more than 165,000 people there are living with HIV/AIDS, according to Oxfam America.

The Washington Post reported last Sunday that some of the biggest winners of an approved CAFTA would be pharmaceutical companies.

Other beneficiaries include high-tech and telecommunications industries. Some of the agreements most vocal supporters include the World Bank, the Business Coalition for U.S.-Central America Trade, and the Business Roundtable.

The Costa Rican Congress plans to debate CAFTA in the second week of July.