Global Policy Forum

Free Trade Vs. Democracy

Mark Engler *

Earlier this month, U.S. Trade Representative Robert Zoellick met with foreign ministers from Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua to launch official negotiations for the Central American Free Trade Agreement (CAFTA), a treaty that would expand NAFTA-style trade barrier reductions to Central America. The first bargaining session for CAFTA convenes in San José, Costa Rica on January 27.

Zoellick and other White House representatives would like us to believe that their efforts to open markets throughout the hemisphere will serve to "strengthen democracy" abroad. Riding the wave of patriotic sentiment, they see themselves as "Trading in Freedom."

There's only one problem with the rhetoric: CAFTA provides a perfect example of a "free trade" agreement that actually undermines democratic freedoms.

The White House asserts that CAFTA will commit Central American nations to "even greater openness and transparency." Ironically, the negotiations for the trade deal themselves are anything but transparent. Despite demands from watchdog groups, draft texts of the CAFTA proposal have not been made available to the public in Central America or in the United States, stifling open discussion and debate. The undemocratic nature of the CAFTA negotiations obscures more substantive problems. "Free trade" advocates are keeping their negotiating positions secret because they have plenty to hide. If implemented, CAFTA will erode key democratic norms such as workers' rights and the ability to legislate environmental protections.

Bush Administration officials claim that market reforms would produce "improved working conditions." The labor records of the maquiladora factories in existing free-trade zones in Central America, however, suggest otherwise. In the Guatemalan context, Human Right Watch issued a report earlier this year saying that "efforts to form labor unions in the maquila sector have met with devastating resistance from the industry as a whole and, at best, government negligence. Unionization efforts have been countered with mass dismissals, intimidation, indiscriminate retaliation against all workers, and plant closings."

Since CAFTA threatens to weaken the labor standards mandated by the Clinton-era Generalized System of Preferences (GSP) and the Caribbean Basin Trade Partnership Act, it will only encourage efforts by factory owners to thwart the freedom of association and the right to form a union. That's why CAFTA is opposed not only by the AFL-CIO, but also by a wide range of Central American labor organizations. Democratically instituted environmental safeguards are also endangered by CAFTA. Previous trade provisions, such as NAFTA's Chapter 11, grant corporations the right to sue governments for environmental protections -- and any laws -- that cut into their future profits, on the grounds these constitute unfair trade barriers. In 1998 the Ethyl Corporation sued Canada for its public health ban on MMT, a fuel additive. Canada chose to overturn its environmental provision and pay a $13 million to Ethyl, rather than risk $251 million in damages. The State of California came under similar attack for its ban on MTBE, a documented water pollutant that poses risks to human and animal health. Will CAFTA expand the reach of NAFTA's Chapter 11 provision? Probably. But since the negotiations are secret, we won't know for sure until the last minute.

Worse yet, when the agreement comes up for a vote, our legislators will not be able to use amendments to strike out such offensive planks. Last July President Bush pushed "Fast Track" trade negotiating authority through the House over the objection of 212 Representatives. The bill requires Congress to accept or reject trade policies wholesale. As Congressman Sandy Levin (D-Michigan) explains, this leaves "a minimal, meaningless and last minute role for Congress at a time when trade policy is increasingly intertwined with all areas of domestic policy."

In another calculated rush, trade ministers want to finish CAFTA negotiations by December 2003, before new elections in Central America that might produce leaders opposed to the pact. One key concern is El Salvador, where pre-CAFTA moves to privatize public services -- like health care and basic utilities -- have widely discredited the current right-wing regime. Should Salvadorans elect an opposition President in March 2004, the White House would like to have the new government locked in to the same trade policies endorsed by the ousted leaders.

So much for freedom. The truth is, CAFTA won't promote democracy. And democracy may be the best hope left for sinking CAFTA.

About the Author: Mark Engler, a commentator for Foreign Policy in Focus (www.fpif.org ), has previously worked with the Arias Foundation for Peace and Human Progress in San José, Costa Rica.