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El Salvadorans Ask: do we CAFTA?

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August 25, 2004

El Salvadorans Ask: do we CAFTA?

by Jen Pierce

Delegates from signing countries gather in San Salvador to protest CAFTA. photo: Chiapas Indymedia

SAN SALVADOR — In the shiny offices of the Organization of American States (OAS) headquarters in Washington, DC, far from the streets full of protesters outside and in other capital cities, representatives from five Central American nations and the United States signed the Central American Free Trade Agreement (CAFTA) on Friday, May 28th. After a year and a half of negotiations and amid criticisms from unions and politicians alike, CAFTA (or TLC by its Spanish initials) is one step closer to official implementation. . In the months since then, the campaigns for and against the agreement are digging in for the next battle: ratification in the Congress and Legislatures. In practice, however, the ideology and some of the key steps embodied in the agreement are already well-entrenched in the signatory countries. As the consequences of these policies unfold, though, the opposition groups are allying themselves across borders to prevent the ratification and promote an alternative vision.

El Salvador is perhaps the most dramatic regional example of the "opening" to foreign investment and market forces that CAFTA promotes. The privatization of several public services and the conversion to the US dollar as the official currency are among the crowning achievements of outgoing former President Francisco Flores, who consolidated 15 years of structural adjustment programs in the country. His government promoted CAFTA as the country´s "best hope for success" and the US Embassy has declared that "the stage is set for growth." As a farewell gesture, recorded telephone calls from exiting President Flores inform households across the country of the advantages of the accord. Incoming President Tony Saca, who owns a major Salvadoran media corporation, has promoted even more loudly that El Salvador must "advance with the times." These optimistic projections ring hollow to the many consumers and workers who wonder where competition and economic gain are to be found among the ever-increasing rates on utilities bills and food, while the minimum wage fails to keep pace. According to the Centre for the Defense of the Consumer, minimum wage income in urban areas covers only one fifth of basic living expenses, and many people subsist on the volatile income of the informal economy.

The promised benefits of competitive markets proved elusive when foreign companies bought out the national electricity service of El Salvador and established what some refer to as a "monopoly in private hands". Two US companies have divided up control of the sector between them, and rates have shot up by as much as 85% in the last ten years. Massive and unregulated foreign investment is the basis for expanding the textile industry, which runs out of maquilas in "free trade zones" on the outskirts of cities. The maquila industry is already strongly established in El Salvador, and the demands of competition have already created infamously low labour standards in the factories. Factory owners regularly oblige overtime hours, pregnancy tests, dismiss and blacklist workers suspected of union organizing. They can also resort to "cut and run" tactics– shutting down a factory without paying severance pay and reopening under a different name. Lawsuits fighting this practice remain unresolved. There is only one unionized clothing producer in the country, and it faces another sort of blacklist – international clothing brands unwilling to honour or make orders with this factory.

Former Economy Minister Lacayo declared that CAFTA would actually strengthen labour rights through enforcement of existing laws, and current Economy Minister Yolanda de Gavidia has said that CAFTA will "contribute to the recognition of Central America as a region committeed to Labour Rights" (23/07/04).. Unions in El Salvador and the US reject the fundamental principles of CAFTA on labour issues, pointing to the dismal labour rights record in Mexico after ten years of the rules established by NAFTA. Following NAFTA's precedent, CAFTA promotes investor rights (including expanding the definition of investor to include past and potential investors) over ensuring adequate and independent regulation of labour, environmental, and indigenous culture issues. Instead, CAFTA raises the stakes in the race for the cheapest labour, pitting neighbouring nations against each other and overseas giants: the trail of maquilas that once moved from Texas to Mexico now leads to Central America, and the next destination appears to be China. The fact that owners have unlimited mobility and workers have almost none is not lost on maquila workers who have lost their jobs to overseas factories.

An unlikely partner to the maquila industry in the pro-CAFTA headlines is the pupusa, the national food of El Salvador. The export of frozen pupusas to the millions of Salvadorans living in the US is held up as El Salvador´s starring role in globalization, where culture is commodified, in this case as a plastic-wrapped "ethnic product." The suggestion that this product might be an economic salvation for the damage caused by the global coffee crisis is indicative of the truth-stretching that posits El Salvador and the United States as equal partners in trade and negotiation. While the US continues to heavily subsidize its agricultural industry, many small-scale farmers in El Salvador rely on remittances from family members living in the US; these remittances are the largest source of income in El Salvador, dwarfing the coffee and textiles and certainly the frozen pupusa industry.

The main stage for implementing CAFTA will be its ratification process in the US Congress. Opposition to the agreement in the US is divided among those who are nervous of more job losses to overseas markets, those concerned that CAFTA needs stronger labour and environmental regulations (a sentiment which Democrat candidate John Kerry has taken up), and those who see CAFTA as another link in the chains that multinational corporations hold over social and ecological well-being. The coming months will tell whether these streams of dissent will form an effective block to ratification. The risk of a No vote in Congress prior to the November elections is high enough that the Bush Administration is unlikely to even table the bill without secure numbers. The Canadian government is watching these proceedings carefully, as negotiations for a Canada-Central America free trade Agreement are underway.

Meanwhile, Central Americans are left to gather in protest around empty government buildings as their trade representatives meet behind closed doors in Washington. The People´s Declaration Against CAFTA points out the "lack of opportunity the countries of Central America have had to exercise their right to self-determination and the construction of a different Central America." These opportunities are now further restricted in El Salvador since the recent application of so-called "anti-disturbance" measures, which take up the language of the PATRIOT act , particularly threatening leaders of unions and other social organizations. As the war on terror globalizes the crackdown on civil society´s voices, and the spectre of further social and environmental deterioration is bringing together diverse sectors. The Fifth Mesoamerican Peoples' Forum, a gathering of 1,500 regional activists in San Salvador in July, declared that the policies of CAFTA and related initiatives (especially the Free Trade Area of the Americas and Plan Puebla Panama) "have generated devastating impacts on the people and natural resources of the region, submitting our lives to the logic of profit and the interests of transnational companies." A regional day of protest is planned for October 12th. In the meantime, the actual statutes of CAFTA bear signatures but are stalled in the limbo of the US election campaigns, while the machinery of corporate pressure bears down on popular resistance.

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