But the main news in Cincinnati was the broadside of proposals
the US fired at the Central Americans. Said chief Costa Rican
negotiator Anabel Gonzalez about the proposals, "In many cases
they do not reflect our interests." She said those differences
would not be revealed formally until her side delivers
counterproposals at the third round in El Salvador from March 31 to
April 4.
Gonzalez acknowledged that the countries of the isthmus have
little clout against the most powerful country on earth, but thought
they might have some leverage around the fact that CAFTA is, for the
northern giant, little more than prelude to the vastly more
significant Free Trade Area of the Americas (FTAA). That agreement
will encompass 34 countries and has a US-imposed startup date of
2005. To stay on track, CAFTA must be ready for ratification in
December 2003, and, for ratification to go smoothly, the final
document must appear "sustainable and balanced" to the
congresses of the six countries.
Among those upset with the US proposals are the textile and
generic-drug sectors. The textile producers see the US strict
demands on rules of origin as shutting them out of the larger
market, while the drug manufacturers see US demands as extending the
monopolies of the transnational pharmaceutical companies. The
reservations of these two sectors take on added significance because
they have come so early in the process. If there is this much
disagreement in only the second round, other producers in the
private sphere wonder what lies ahead for them. So far, they have
not even seen the lists of products that will be allowed duty-free
entry. Their only certainty is, as one businessman said, "It's
our money they're negotiating."
The US still has not shown its hand. Producers as yet have no
idea what lies ahead in telecommunications, labor rights, or in
agriculture. That will be made clear, said chief negotiator Regina
Vargo, between the third and fourth rounds, when the US will have
presented all that it plans to discuss. A preliminary list of 24
products that the US was interested in for FTAA negotiations has
been circulating among the wary Central Americans, but they have no
way of knowing what part these will play as CAFTA unfolds.
That list pertains mainly to the sugar industry. Sugar is not
included in the Caribbean Basin Initiative. The US treats sugar
separately under a quota system that permits the importation of 1.1
million metric tons worldwide. Of this, Costa Rica, for example, can
export 15,596 MT.
Prior to the El Salvador round, the isthmus players will meet in
Guatemala March 17-19 to plan their response. They expect a
difficult meeting. They left their illusions in Cincinnati. The
negotiators, representatives of their respective governments, will
meet separately from the businesspeople, who do not negotiate, but
only consult with the negotiators.
They will have to decide on a response to the US demand that
clothing, a major export from the maquilas, must, under CAFTA, not
be made of cloth from a nonsignatory country. This requirement would
almost certainly be ruinous to an industry that was once the hope of
Central America as an answer to poverty and widespread unemployment,
utilizing its comparative advantage of cheap, plentiful, and usually
compliant labor. Maquilas continue to be major employers throughout
the isthmus. They export finished goods, but do not manufacture the
cloth from which they are made. Nor do the countries have
infrastructure for the manufacture of fabric on the scale that would
be required by the industry.
The paucity of information from either the US or the Central
American sides available to private-sector strategists leaves them
at a disadvantage in formulating plans ahead of the Guatemala
meetings. The sector recently created the Consejo Empresarial
Centroamericano de Textil y Confeccion (Cecatec) for just that
purpose.
Cecatec coordinator Miguel Schyfter said that it was his
understanding that the US demanded the right to impose a quota under
which it could refuse imports of Central American apparel upon
finding that they damage the US internal market. Equally dismaying
for the sector, said Schyfter, is that the US could also suspend
imports on nothing more than the suspicion that finished products
contain foreign cloth.
Cecatec, in its haste to determine the facts, is getting little
help from government negotiators, who, although they were present at
the negotiating table, claim also to be in the dark with respect to
the US position. Eduardo Ayala, vice minister of economy of El
Salvador, said that the official delegation did not have details of
the text and had, therefore, been so far unable to provide crucial
information. Schyfter is currently relying on explanatory comments
offered by US negotiators.
Schyfter's group had anticipated an outcome very much different
from what they appear to have gotten in Cincinnati. They were
seeking a deal superior to that negotiated by Mexico in the North
America Free Trade Agreement (NAFTA), that is, free trade for items
made with regional fabric and higher quotas for those made with
material from any third country. They referred to their position as
"NAFTA Plus."
At present, importation of clothing items from Central America is
governed by the CBI. CBI rules allow free access only to clothing
items produced with US-made fabric and thread. There are quotas for
products made with regionally manufactured cloth, but with US
thread.
Negotiators and the parties on whose behalf they labor expect
that succeeding rounds will lay bare other sensitive areas and give
rise to other non-negotiable confrontations with reality.
Agriculture will be one such area. As harbinger of things to come,
assistant US negotiator Christopher Padilla named this sector as one
"which will have to be worked through in minute detail."
He acknowledged that the US has some sensitive agricultural
products, like sugar, which North American producers have asked to
be removed from negotiation. "Nevertheless," he said,
"we don't want any product left out, and we're asking for
reciprocity in the Central American region."
The comment was not likely to inspire confidence among regional
growers, who have expressed concern that they would be wiped out by
the combination of vastly superior US productivity and agricultural
subsidies. These growers have seen the panic among Mexican producers
as they recently became exposed to the full might of US agricultural
exports, heavily subsidized by the US Farm Bill of 2002 (see
SourceMex, 2003- 02-12), which gives US$180 billion to US producers
over a ten- year period.
Also under the rubric of agriculture, but outside the
negotiations themselves, environmentalist groups in El Salvador have
begun a campaign for the promulgation of a Law of Biosecurity that
would exclude from CAFTA the importation of genetically modified
products for public health and ecological reasons. One such
organization, Red Ciudadana Frente a los Transgenicos, has suggested
that the most efficient solution would be to drop agriculture from
the negotiations since, said spokesman Javier Rivera, much of what
the US exports is genetically manipulated.
Generic drugs was the subject of still another US demand in
Cincinnati that bodes ill for the region. The US wants, say critics,
its intellectual property rights to reign in the region with the
result that Central American countries will lose their right to
manufacture some generic drugs and be forced to import branded
equivalents from the US at higher prices to consumers, to the ruin
of regional manufacturers. Guatemala is especially vulnerable on
this front, having only recently passed a law of industrial property
that reduces the period of patent monopoly to the shortest in the
world, according to reports. [Sources: La Nacion (Costa Rica),
02/20/03; Notimex, 02/23/03; 02/27/03; La Prensa,(Panama), 02/27/03;
Diario de Hoy (El Salvador), La Prensa (Nicaragua) Prensa Libre
(Guatemala), 02/28/03]
