Why We Reject CAFTA

On Feb. 26, tens of thousands of Costa Ricans took to the streets in a demonstration to block ratification of the free trade agreement and reject approval to implement legislation demanded by the United States. Costa Rica is the only country included in the Free Trade Agreement between the United States, Central America, and the Dominican Republic (CAFTA-DR) that has not yet ratified the agreement. A broad grassroots movement in the country is trying to make sure it stays that way.

Following a brief negotiation in 2003, the governments of Nicaragua, El Salvador, Honduras, Guatemala, and Costa Rica (and later the Dominican Republic) signed a free trade agreement with the United States. The CAFTA-DR, as it is known by its initials, is part of the Bush administration’s strategy to bilaterally impose a dependent free-trade regime, given its failure to achieve its objectives in multilateral forums such as the World Trade Organization or the Free Trade Area of the Americas (FTAA).

Costa Rica’s adherence to CAFTA has detonated a huge discussion throughout the country and catalyzed a diverse and growing grassroots movement that questions the essence of the economic model promoted by the North, and seeks to open doors to a more congruent model of development-one that’s consistent with the history of Costa Rica and the needs of the countries of the South. Given the staunch support for CAFTA coming from the federal government, which seeks to impose the agreement at all costs, the year 2007 promises to be a defining moment for the future of this Central American nation.
Our Point of Departure

Contrary to most Latin American countries, where the Washington Consensus was applied nearly to the letter, in Costa Rica public investment in social services and strategic sectors of the economy has been a determining factor in achieving a relatively higher quality of life compared to its neighbors. We are talking about a country with no army that-when much of Central America was fighting civil wars for basic human rights-invested instead in healthcare, insurance, and education; and in strategic infrastructure like energy and telecommunications.

As a result, Costa Rica’s human development index is 0.838, occupying 47th place worldwide. The poverty level has remained around 20% for the last 15 years, without decreasing but also without significant increases. Illiteracy is scarcely 7.4%, open unemployment hovers around 6%, and health insurance covers approximately 82% of the population. A full 75.7% of the population has access to drinking water, and 98.3% to electricity. Telephone services reach 60% of Costa Ricans and Internet serves the far corners of the nation. In fact, the country has some of the lowest rates on the continent for electricity, telephone, mobile phone service, and Internet.1

This has been possible thanks to a Constitutional Social state, based on constitutional obligations to guarantee that certain strategic services be provided by the government in the logic of solidarity and ample coverage-independently of the buying power of families.

Civil society marches in protest of the FTA with the United States.However, the structural adjustment programs of the 80s marked the beginning of a sharp turn in this model. Over the last 25 years-and in spite of the negative effects for the majority of the population-the neoliberal project has been gaining ground. The government has played a major role in implementing these changes, steadily decreasing its intervention in the national economy, and ceding space to the “free market” as the regulator of not only economic but also social, political, and cultural relations.

This tendency has resulted in a serious deterioration of public institutions, as government spending limits dry up public investment, and corruption and impunity have grown. There is now enormous pressure to transfer remaining activities to the private sector. The rationale is that the public sector is inefficient and needs private initiative to take direct charge of services that up to now have been in the hands of the state as administrator of the collective interest.

The changes in the economic model over the past years have also resulted in an almost exclusive focus on exports and foreign investment as dynamic mechanisms of the economy, to the detriment of public policies directed toward small and medium businesses, or the growth of the domestic market. However, this model has developed alongside growing unemployment and has demonstrated its inability to generate or distribute wealth, since the export-economy produces almost no fiscal productive chains or social linkages to the national economy as a whole.

Concentration of wealth in the country has also been on the rise: Between 1988 and 2005, the income of the poorest 20% of the population fell 13.9%, and that of the top 20% increased 67.9%. As for employment, the informal sector still experiences the largest growth each year, creating 65% of all new jobs in 2005. The replacement of a strong formal economy labor pool with a burgeoning informal economy leads to erosion in working conditions for the majority of workers in the country. In this context, the FTA with the United States expresses the consolidation of a tendency that is not new and that has shown itself to have enormous limitations in generating a sustainable, solidarity-based, and fair system. The FTA will mandate that these negative tendencies become permanent and practically the only permitted route to “development.”
Negotiating the Future

The negotiations on the FTA took place in nine rounds along with the other Central American countries in 2003, and one additional round in 2004 just between Costa Rica and the United States. They were led by a team of professionals from the Ministry of Foreign Commerce (Comex) with close ties to corporate interests. It later came to light that several of the Costa Rican government’s negotiators received their salaries from the Costa Rica-United States Foundation (CR-USA)-an agency specially created to channel funds from USAID (the U.S. Agency for International Development). The CR-USA Foundation administers money from the U.S. government and spent US$901,460 to support the Costa Rican FTA negotiating team.2 The country deposited a strategic negotiation in the hands of a staff paid for by the other side.

This stage was not easy. From the beginning, various sectors demanded the right to participate in the definition at least of the minimum floors or maximum ceilings for the negotiations, and to be allowed to observe and monitor the process. Their request was denied and instead Comex established a “consultation” mechanism through which it received hundreds of recommendations, without committing definitively to any. The contents and specific texts of the rounds of negotiation were officially declared confidential, “to not divulge national strategy.” Even congressional representatives who demanded access to official texts were denied them.

Costa Ricans only found out about the contents of the agreement when the FTA had already been signed. Even then, they did not have access to the documentation corresponding to the negotiation process-government officials claimed it had “been lost” with the change in ministries from the previous administration.

Then-president Abel Pacheco insisted from the beginning of the FTA negotiations that they would not include publicly owned insurance and telecommunications companies. However, both sectors were opened up to “free” competition in the last round of negotiations. In that round Costa Rica also committed to subscribe to the UPOV-91 agreement, which establishes private intellectual property rights on plants, and that also was originally to be excluded from negotiations, according to official documents.

Throughout the year, the Costa Rican people were kept in the dark about the important and definitive decisions that a small group of government officials was making on their behalf. In January of 2004 the FTA negotiations were concluded and the agreement was signed by the president that August. Pacheco then formed a commission of prominent citizens to analyze the signed text. The commission concluded that the FTA was neither positive nor negative in itself, but also that it should not be implemented without first adopting a series of measures to mitigate its predictable negative impacts on the poorest sectors of the country.

The growing debate and pressure from the social and popular movements, the resignation of nearly the entire negotiating team when it was publicly revealed that their salaries were paid by CR-USA, and the insistence of the president on the need for a fiscal pact to allow for redistribution of the supposed benefits of the FTA as a prerequisite to its approval-all contributed to a delay in sending the FTA text to the legislature. Finally in October of 2005 the executive branch sent the text on to congress for ratification.
The Legislative Situation

The final push for the FTA came from the current administration of the Arias brothers-president Oscar and Rodrigo, his chief of staff-that took power in May of 2006. Arias took power in the midst of a huge mobilization rejecting the results of an extremely close election (just a 1% margin over the Citizen Action Party-PAC). This was the first time in Costa Rica’s history that an election had been popularly contested, amidst serious questioning of the Constitutional Court decision to annul a 1969 legislative statute that prohibited presidential reelection. Oscar Arias previously held the presidency from 1986-1990. CAFTA is a vital issue for the Arias administration and it is prepared to get it approved in any way possible.

The discussion in Congress began in June 2006. The FTA was initially presented to the Commission on International Affairs, which held hearings for five months. The commission refused to admit more than 60 groups opposed to the agreement. It also rejected the idea of conferring with indigenous groups, as recommended by legislative advisors to comply with Convention 169 of the International Labor Organization (ILO).

After little more than a month of reviewing seventy motions regarding clauses in the initial chapters of the agreement, without substantial discussion and approving only 17, the majority of the Commission decided to reject the remaining 300 pending motions and emit a favorable finding on the FTA on Dec. 12, 2006.

Currently the opposition in Congress is made up of two representatives of the Broad Front and Access without Exclusion Parties and 17 representatives of the Citizen Action Party, who have formed a legislative front against the FTA and support a unified struggle in the Assembly. On the other side, the FTA is supported by the 25 representatives of the National Liberation Party (PLN) and six of the Libertarian Movement, with the support of the Social Christian Unity Party (five representatives), the National Restoration Party (one representative) and the National Union Party (one representative). This majority of 38 votes approved granting “fast track” to various bills related to the FTA calculates that the agreement itself will be ratified in at most a month. A measure to reform legislative procedure to apply the same “fast track” procedure to the FTA is currently up for approval, despite the fact that the mechanism is being challenged in Constitutional Court on the basis of how it was instituted and how it is used, because it violates legislative rules.

Meanwhile, the full legislature has been meeting twice a day, often until midnight, trying to accelerate the procedure and wear down representatives who bravely continue to oppose the agreement by calling for substantive debate-something that still has not taken place.

The administration is pressing for an FTA vote before March, during the vacation period for schools and universities, in an attempt to neutralize the teachers’ union and student movements, and before May, when Congress begins a round of regular hearings and the presidential office will have less influence on the agenda.
Unconvincing Arguments Give Way to Scare Tactics

A meeting between security forces and peaceful protesters. The Costa Rican people have been bombarded daily with a multi-million dollar media campaign apparently financed by the large transnational pharmaceutical companies and backed by the president’s office, Comex and the group Por Costa Rica-a foundation created by the ex-negotiators of the FTA. At its outset, official publicity claimed that the FTA would create new exporters and generate half a million jobs, in the “Jobs for Costa Ricans” campaign. However, the FTA offers Costa Rica practically no additional benefit aside from those it already has in terms of trade with the United States, and a positive impact on employment has been belied by technical projected impact models.

Currently the pro-CAFTA camp alternates between promises of new opportunities and a fear campaign about the commercial repercussions from the Untied States if the agreement isn’t ratified, despite the fact that U.S. congress members have indicated, and reiterated, that cutting off current trade benefits is not a possible course of action. At the same time, the mainstream media and governmental representatives insist that the only “democratic” way is to respect the decision of the majority, supposedly expressed in the electoral triumph of Oscar Arias and his majority control of Congress. However, as popular protest grows, so has the conflict between the strict legality of the legislative process and its legitimacy to make a decision so vital to national interests.

At the same time there is a dangerous process of criminalization of social protest underway, including repression and intimidation of those who openly manifest doubts about the agreement. Recently propaganda has appeared that paints those who oppose the FTA as disguised terrorists and promises to apply “the full force of the law” against those who demonstrate. The opposing sectors, including academics and political activists, are labeled as “out-of-touch leftists” and “opponents of development and national interests.” Arias has compared them to “children who don’t know what’s good for them and should be obligated by their parents-the government-to accept it.”

Anonymous documents circulate defaming movement leaders, convictions and investigations of individuals who participate in marches and protests or report corrupt acts have increased, and a relationship is suspected between the rising numbers of break-ins and robberies of computers and property belonging to people related to the struggle against the FTA, including through violent incursions at union offices. The most recent occurrence is a priest accused of reporting the shady sale of two rural properties that ended up in the hands of Arias. He was finally absolved, but only after a long and painful trial.

For a country in which historically the president has been able to walk the streets of the capital without extraordinary security measures, the protests that take place each time Arias appears in public have led to the use of a 200-meter police blockade for every official event and several screening areas so that only authorized individuals can get close. Although the popular movement calls for pacifist actions, the media insists on using violent terms to describe the conflict. Undercover police infiltrate the manifestations and provoke confrontations and threaten the leaders. In rural areas police recruitment has increased, as well as training in conflict techniques.

Recently it was announced that security personnel of the Legislative Assembly will be trained in shooting techniques, use of explosives, and bomb threats. Paradoxically, this takes place during the administration of a Nobel Peace Prize Winner, and although these measures reflect the fear of the government of the discontent that it is generating, it is also clear that its decision is to impose the FTA through state power and the use of force. The government strategy is to ignore not only the message of popular protests, but also the basic questions that social organizations, academics, politicians and business continue to raise.
The Resistance is Alive and Grows Every Day

If the FTA has had anything positive about it, considering it is such a big threat, it’s that it has permitted the articulation of the opposition in one of the most broad and diverse movements in Costa Rica’s history. Although Costa Rica doesn’t usually appear in the news because of internal conflicts, it has always had significant popular movements around environmental, productive, and gender issues, defense of labor rights, and against the privatization of goods and public services. One of the most important occurred in 2000 when the movement supported by hundreds of thousands of people obligated the government to table a measure that would allow the private sector to control the electrical and telecommunications systems, currently still run by the State through the Costa Rican Electrical Institute.

However, the struggle against the FTA transcends any other previous experience and has fostered coalitions among a wide range of groups and people. Their alliance goes beyond sectorial issues and interests: it is the defense of Costa Rica as a sovereign nation, the chance to revise and improve the model of the Social State and consciously rethink the future of the country.

The National Coordinating Committee Against the FTA (CNL) was formed as an operative and strategic mechanism for articulating actions between diverse sectors and organizations. The groups that form part of the CNL converge nationally on a number of platforms and policies, and the Regional Struggle Committees organize the structure and resistance in different areas of the country. There are also fronts organized in other sectors, for instance the National Front Supporting the Struggle Against the FTA, led by the rector of the Technological Institute-one of Costa Rica’s four public universities. The organization includes individuals involved in politics, academia, culture, and other national figures. Another example is the Front Against the FTA within the National Liberation party that reflects the internal fracturing in this governmental party on this issue.

The opposition to the FTA expresses a diversity and multiplicity of proposals and actions, which is one of its greatest strengths. This fight has been joined by rural campesinos, teachers, communes, unions, indigenous, environmentalist, student, academic, religious and cultural groups, women, cooperatives, businesses, politicians.

Although there are still many people unaware of the implications of the agreement, there has been an enormous effort from the sectors that oppose the FTA to provide information and encourage discussion in all corners of the country. Only with full public awareness and participation can the opposition be truly solid and thoughtful. Their actions have led to a steady increase in opposition to the FTA reflected in opinion polls. Institutions like the University of Costa Rica, the National University, the Citizen’s Defense, and the Episcopal Conference have all called attention to the negative impacts of the FTA through official announcements.

In the capital and other regions hundreds of forums and debates have been held. Comex consistently refuses to attend if officials know beforehand that the FTA opposition will be present. Citizens have organized marches and protests, labor stoppages, highway blockades, distribution of flyers and educational materials, books, manifestos and analytical documents, documentaries, songs, community meetings, networks and websites, picketing at state events, and meetings with legislators. Some groups are working to promote a referendum and others take information to communities through concerts and cultural activities.

The National Coordinating Committee called a national strike that paralyzed the economy, and the most recent activity-a huge march in San Jose on Feb. 26-as well as activities in other states. The country has taken up discussion on the options for another development path based on the principles of the Social State, and as an alternative to the model expressed by the FTA.

However, a truly profound public debate on the development models seems to remain suspended, given the difficulties of objective dialogue with the government and an inevitable confrontation nearing every day.

The interests involved in the FTA are so powerful that it is almost impossible that the government will give up implementing it without enormous popular pressure. But the potential impact of the agreement is tremendous and as sectors realize what it implies they have no option other than to react.

As a result of its history and institutional development, Costa Rica is probably the Central American country with the most to lose with an FTA. Today it faces a historic moment-one that expresses the confrontation between the development model imposed by groups in power in recent years, and the well-being of the majority. The neoliberal model is at stake, and at a breaking point in Costa Rica today. Whatever happens, the country will never be the same afterwards.

If the FTA is approved it is easy to imagine what the country will look like in 15 years-and it is not a scenario that the great majority of Costa Ricans want. If the popular resistance, diverse and alive, manages to turn history around, the future panorama is more uncertain but also more hopeful. We would still have the possibility to deepen what we’ve learned over our history, and build a more inclusive, fair, and solidarity-based country.

Today’s struggle is to have, at the very least, the chance to give it a try.


1. Data taken from: Foro Mundial sobre Educación, Educación para Todos, country report. At www.unesco.org; Programa Estado de la Nación. At: www.estadonacion.or.cr: Fumero Paniagua, Gerardo. “El Estado solidario frente a la globalización. Debate sobre el TLC y el ICE”, San José, Costa Rica, 2006.

2. The CR-USA, whose mission is to “promote collaboration between the peoples and governments of Costa Rica and the United States,” received a start-up fund of US$56 million. Source: Aportes de EE. UU. sufragan gastos del país en el TLC, Ernesto Rivera, La Nación.

Translated for the IRC Americas Program by Laura Carlsen and Katie Kohlstedt, IRC.

EVA CARAZO VARGAS works for the Costa Rican Organic Agriculture Movement and forms part of the Biodiversity Network coordinating team. She supports various social organizations especially related to agriculture, biodiversity, and intellectual property, and participates in the National Committee against the FTA. She is a trade and agriculture analyst with the IRC America’s Program. She can be: evacarazov@gmail.com


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