Backroom deals enable bad trade agreement to pass

DR-CAFTA could devastate agriculture, deepen poverty in Central America Washington, DC — International aid organization Oxfam expressed concern today at the midnight passage by the US Congress of the Free Trade Agreement between the United States and Central American countries and the Dominican Republic (DR-CAFTA), as the agreement threatens to throw many poor farmers in Central America and the Dominican Republic into deeper poverty. But Oxfam pointed out that passage of the agreement by the narrowest of margins, more than a year after it was signed, indicates how little support there is for this trade agreement in the United States.

Only after many months of intense lobbying efforts by the White House involving backroom deal-making and partisan pressure was the agreement passed in the House of Representatives by two votes. “In forcing passage of an unpopular trade agreement, the administration chose to ignore widespread concerns raised by many members of Congress and their constituents, as well as by farmers, trade unions, and church and community groups in the US, Central America and the Dominican Republic,” stated Stephanie Weinberg, Oxfam trade policy advisor. “Whatever the spin, DR-CAFTA will institutionalize an uneven playing field instead of establishing fair and equitable rules for trade.”

Although the White House portrayed a vote for DR-CAFTA as a show of support for democracy and development in the region and as promoting US national security, this doesn’t face up to the facts. Widespread citizen opposition to DR-CAFTA in Costa Rica, Nicaragua, and the Dominican Republic continues to delay congressional consideration of the agreement in those countries, while strong protests accompanied the process of ratification in Guatemala, El Salvador, and Honduras, where military forces were called in to quell the mounting opposition.

“Development and democratic processes are being undermined through DR-CAFTA,” continued Weinberg. “The Bush administration bullied Central American governments into signing on to a bad agreement that will have serious repercussions for those who are already disadvantaged in these highly unequal societies where most of the poor live in rural areas, rely on income from agriculture, and must pay for medicines out-of-pocket.”

DR-CAFTA rigs the rules in favor of the interests of transnational companies. While the agreement provides virtually no new US market access to developing countries (with the limited exception of textiles), it extends monopoly rights for international pharmaceutical companies, thereby limiting marketing of generic medicines, and prohibits governments from using policy tools designed to ensure that investment provides maximum benefit to local communities. Furthermore, DR-CAFTA requires these developing countries to open their markets to the dumping of US rice and other commodities and to forbid use of adequate safeguards to ensure food and livelihood security and rural development. DR-CAFTA also blatantly ignores the fact that US agribusiness receives extensive subsidies and domestic supports, estimated to be around $24 billion this year alone, making it impossible for Central American and Dominican farmers to compete.

“Rather than setting out provisions that will foster broad-based economic growth and sustainable development, DR-CAFTA will put millions of poor people at risk of losing their livelihood in Central America and the Dominican Republic, and creates further pressure on people to migrate to cities or to the United States,” said Weinberg. “The rules set forth in DR-CAFTA on agriculture, intellectual property, and investment add up to a bad deal for farmers, workers, and consumers in these developing countries.”

Implementation is likely to continue to be contested in the region, since many aspects of DR-CAFTA will force legislative changes that will erode the policy space required for national development. “Although trade could be an important engine for development and poverty reduction, the trade rules under DR-CAFTA will become one more obstacle to achieving this goal in Central America and the Dominican Republic,” Weinberg added.