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Costa Rica and CAFTA

by LAURA CARLSEN

An internal memo leaked to the press shows the lengths to which the Costa Rican government and pro-business forces will go to secure ratification of the Central American Free Trade Agreement (CAFTA).

The memo recommends, among other things, inventing labor leaders to serve as pro-CAFTA figureheads, launching a publicity blitz (Costa Rican press reports that the proponents have already spent $500 million dollars on publicity compared to anti-CAFTA expenditures of $30 million), and conducting a smear campaign against the opposition.

The memo also recommends threatening local government officials with a cut-off of funds and an end to future political aspirations: “… any mayor who doesn’t win his canton will not get a penny from the government in the next 3 years.”

The memo was written by Vice President Kevin Casas to President Oscar Arias. The resulting public outrage forced Casas to resign in an attempt at damage control.

The core of the proposed strategy is a fear campaign that, according to the memo, would stimulate four kinds of fear: fear of loss of jobs, fear of attack on democratic institutions (“make NO the equivalent of violence and anti-democracy”), fear of foreign influence (“insist on the connection of NO with Fidel, Chávez, and Ortega”), and fear of the impact of rejection of CAFTA on the government (financial instability, lack of governance). The memo calls for uniting big business behind the agreement, while presenting a public face conformed of civil society members.

In its Oct. 1 edition, the Wall Street Journal followed the advice of point number three and issued a dire warning that a NO victory would be a triumph for Venezuela’s Hugo Chávez.

Fear campaigns have become the latest, and often very effective, forms of manipulating democracy at the urns. The suggestions contained in the CAFTA memo follow the model developed by U.S. political strategists like Dick Morris, who consulted on Felipe Calderón’s fear-based smear campaign for the Mexican presidency and pushed for CAFTA’s passage in the U.S. Congress in 2005.

Public exposure of the fear campaign did not keep a desperate President Arias from resorting to hyperbole. According to a Reuters dispatch, he recently referred to a NO vote on CAFTA as ” collective suicide.”
NO Gains Strength as Vote Approaches

Opposition to the agreement received a shot in the arm following the memo leak.

Since massive public education efforts began, the margin in favor of ratifying the agreement began to shrink and following the memo polls reveal a much faster reversal of the previous comfortable lead for CAFTA proponents. Experts now say that with mere days before the referendum, the vote appears to be a “technical tie.”

NO supporters led a huge demonstration to close their campaign on Sept. 30. Press reports estimated over 100,000 people in the streets of San José calling to reject CAFTA. Some dressed as skeletons, others wore George Bush masks. Many emphasized the impact on job loss in small and medium-sized industries, and social welfare programs.

The remarkable coalition of public employees, farmers, small business owners, intellectuals, and assorted citizens has already changed Costa Rican politics regardless of the outcome of the referendum vote. The capacity for mobilization and unity, and public awareness of competing economic models and their impact on society have increased significantly.
Costa Rica’s Example

The opposition claims that what’s at stake is the future of Costa Rica’s public welfare model.

Statistics bear out their contentions. In a region wracked by violence and poverty, Costa Rica’s model has worked surprisingly well at ensuring peace and raising overall standards of living over the past decades.

While other Central American nations spent money and lives on civil wars and fighting off foreign intervention, Costa Rica abolished its army and invested public funds in social programs to guarantee a basic standard of living for the entire population. Later when other countries clamored to create duty-free manufacturing zones, privatize state industries, and liberalize trade, Costa Rica maintained control of strategic public services.

The results are impressive. In the period of rapid economic integration between 1990 and 2003, the four other Central American countries saw an increase in malnutrition from 17% to 20% of the population, adding 2.4 million people to hunger counts.1 In Costa Rica, only 6% of children under five suffer from chronic malnutrition, compared to 19% in El Salvador, 20% in Nicaragua, 29% in Honduras, and a tragic 49% in Guatemala.

Costa Rica consistently comes out at the top on all regional social indices. Iilliteracy, hunger, food security, per capita income-show far more positive results under the more state-controlled model of Costa Rican development. Clearly, other factors come to bear on the differences, but all signs indicate that Costa Rica has been doing something right.

CAFTA’s Lasting Legacy

If CAFTA is finally ratified by the Costa Rican Congress, the fight doesn’t end there. Nor do the changes required of Costa Rica by the trade agreement.

The next step is a rush to push through what has euphemistically been called “implementing legislation.” Far more than rules to assure that the clauses of CAFTA can be put into place in practice, implementing legislation even more deeply restructures the economy and assures that the orientation toward an export-oriented, free-market (read corporate-controlled) economy is complete.

What are some of the examples of the legislation that the USTR has demanded from its CAFTA partners? In the realm of intellectual property, Guatemala-like a slow pupil-was forced to change its intellectual property legislation not once, but several times, before U.S. trade representatives were finally satisfied that it complied with their strict demands on royalties, protection, and enforcement of almost exclusively U.S.-owned intellectual property. The current legislation demands that rounding up poor people who sell home-made movie and music CDs become a national crime-fighting obsession. In cities where real crime has eroded the fabric of society and made the phrase “public security” sound like a bad joke, the priority is worse than misplaced.

In the Dominican Republic, “implementing legislation” meant figuring out a way to make up for the approximately $823 million dollars in government revenues lost after eliminating tariffs to imported U.S. goods. The government’s answer was to apply consumer taxes on gas and food. Millions of dollars that used to be paid by some of the wealthiest transnational corporations in the world must now be paid by Dominicans struggling to feed their families. The resultant increase in the cost of living led to a national strike Oct. 2-the second protest this year.

Implementing legislation cuts as deeply into national sovereignty as the more well-known clauses of the trade agreement itself. Other examples include limitations on the use of generic drugs and further privatization of services. Some requirements appear to be positive-a delegation of members of the Democratic Party recently made a big show of requiring Panama to comply with labor regulations inserted in its pending FTA. They might have scored points for future passage of the FTA in the U.S. Congress but they apparently failed to make a big impression in Panama-two labor leaders were murdered in broad daylight a week after their visit. Despite window-dressing on human or labor rights issues that Democrats have recently included to pass pending FTAs, most implementing legislation has been adopted to make business even easier and more lucrative for the companies planning to expand in free-trade countries.
“If it’s not broken, don’t fix it”

The Central American Free Trade Agreement prescribes radical and irrevocable changes to the Costa Rican economy, society, and political structure. An even cursory look at the effects of the model in other developing countries suggests that the course is risky at best, and likely harmful to the country’s most vulnerable families and overall standard of living. Meanwhile, international indicators reveal that the current model has functioned remarkably well and existing trade agreements cover the export needs of the nation.

There’s a simple folk-saying: “If it’s not broken, don’t fix it.” Adopting an economic model designed to benefit the economically powerful is not a good way to allocate the abundant natural and human resources of Costa Rica. Locking future generations into a set of laws they did not make and cannot change is unfair and unwise.

Organizations of public employees, farmers, teachers, students, and others have fixed their attention on Costa Rica’s referendum. Already Costa Ricans have flexed the muscles of a strong grassroots democracy by actually voting on what are usually behind-the-scenes negotiations. They have taken on the task of learning what the agreement says and what it means. The ability of citizens to chart their own course will affect nations around the world.

LAURA CARLSEN is the director of the Americas Policy Program, at www.americaspolicy.org, in Mexico City. She can be reached at: lcarlsen(a)ciponline.org

End Notes

1. Food and Agricultura Organization’s Special Program on Food Security in Central America

 

 

More articles by:

Laura Carlsen is the director of the Americas Program in Mexico City and advisor to Just Associates (JASS) .

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