The Houston Round of CAFTA Negotiations: What’s At Stake

From October 20^th – 24^th, Houston Texas will host negotiations for the Central American Free Trade Agreement (CAFTA.) The talks themselves are being held in secret, so it is not possible to directly ascertain what is going to be discussed. What is known is that CAFTA has become much more important for U.S. government and transnational corporate interests since the collapse of the World Trade Organization (WTO) negotiations in Cancun this September. The success of the multi-pronged free trade offensive being waged by the Bush Administration, other wealthy countries’ governments and transnational corporations is contingent on and strengthened by the success of each of its components. Likewise the failure of any of its parts jeopardizes the entire enterprise. A advance in one institution, say WTO granting new rights for the biotech industry to impose patents on living things, creates a scaffold from which new rights of similar type can be demanded within that institution (the right to enact retaliatory tariffs against countries who block genetically modified foods, as the U.S. is doing against the European Union.) Also successes for the corporate globalization process in one arena create bridges for those successes to be spread virally into every arena, and as free trade agreements have power to overturn domestic laws, consequently into every country’s legal system all the way down to local/municipal government. So if the United States and Europe had succeeded in Cancun in forcing the WTO to accept their proposals on “trade in services,” allowing transnational water, electricity, telecommunications and health care corporations (mostly U.S. and EU based) to take over public services in Global South countries, those policies would have become a fait accompli, a given, for any regional trade agreements (like the proposed Free Trade Area of the Americas or CAFTA.) The logic is relentless and brutal: any advance they achieve in any forum will in all likelihood spread through the entire system. It is from its interlocking, mutually reinforcing nature that the free trade machine is capable of steam-rolling its agenda over massive opposition by the public, and increasingly the elites of Global South countries and elites in marginal regions of the North. 

            The system’s great strength is also its great weakness, because just as every victory supports further success, every defeat encourages further failure. The successful conclusion of the WTO talks in Cancun would have been a powerful statement to the countries involved in the negotiations of the Free Trade Area of the Americas (FTAA) that the United States government would get what it wanted one way or the other, either through multilateral (WTO) processes, regional processes (FTAA) or unilateral processes (action like the 2002 Farm Bill, giving billions more to subsidize U.S. agribusiness.) Consequently, Global South countries’ best strategy would be to offer carrots to the United States in exchange for preferential treatment for their countries and avoid being excluded totally. The U.S. can play “good cop – bad cop,” forcing nations to concede on some issues with the understanding that it can make things much worse for them, that they are already trapped, and that they whether they go quietly or put up a fight, the result will be the same, so they had better get the best terms that they can – terms dictated by the U.S.

            This was the intended role of CAFTA in the negotiations for the FTAA. Its goal is to “lock in” the Central American countries into the U.S. negotiating position for FTAA, so that when the United States negotiates with larger economies like Brazil and Argentina it can say, “look, we already have agreements with Central America, they’re getting our investment, not you, so either accept our position or be excluded.” Making deep concessions will be construed as “getting the best deal possible” in a game rigged by the United States for its benefit.

            The participation of the Guatemalan and Costa Rican governments in the “G-21,”[1] the block of nations that walked out of the WTO negotiations in Cancun, killing the ministerial, has disrupted this scheme. Not only did large, relatively self-reliant countries defy the wealthy nations, but small, very dependent Central Americans did. This shows that resistance to corporate globalization is possible, even by those in relatively vulnerable positions, and this has understandably provoked a desire on the part of the U.S. government to punish these countries for their disobedience. This has already been seen in the mass defections from the G-21 provoked by threats and bullying by U.S. Trade Representative Robert Zoellick, who kicked El Salvador out before Cancun and subsequently forced Guatemala and Costa Rica to pull out. This has been reinforced domestically by talk in the U.S. Congress of excluding Guatemala, and especially Costa Rica, from CAFTA. This serves two purposes: One, it is intended to scare the economic elites of these countries, who are by and large not opposed to CAFTA per se, to the U.S.’ potential to remove them from their privileged positions to become mere employees of the transnationals or otherwise isolate them from benefits gained by elites in other more subservient CAFTA countries. If Guatemala or Costa Rica are locked out, foreign investment could flee to their CAFTA neighbors, harming their ability to compete regionally and globally and subsequently harming their wealth and power. The second, primary reason is to give an example to other nations, especially the nations negotiating the FTAA: “If you resist us, this is what could happen to you. We’ll cut you off. You won’t be able to export to us. You’ll lose your investment. We’ll ruin you.” This is the “bad cop” manifesting itself, the “stick” replacing the “carrot.” It also shows just how fragile and brittle the free trade machine is, how any resistance to it threatens the whole system, and can spread virally to all other arenas almost instantaneously. A localized “No” can quickly become a global “No.” In Cancun the process literally took Zoellick by surprise, who was giving a press conference explaining the positive progress of the talks when someone burst in the door of the conference room to announce amid sounds of cheering outside the room, that the Kenyan negotiator had walked out of the talks and dozens of other nations had joined him, terminating the ministerial.[2]

            The explosive potential of resistance to free trade explains why CAFTA, once a secondary issue, overshadowed by WTO and FTAA, has become a central component, and something of a liability, of U.S. trade policy. U.S. Trade Representative Zoellick took over CAFTA after the Cancun debacle, indicating the importance the agreement is now being given.[3] The appearance of George Bush Senior and Congressman Tom Delay at the Houston Round of talks further underscores how serious CAFTA now is for the U.S. government. If the United States’ demands can be successfully defied by countries like Costa Rica, then the obvious conclusion, that other countries less dependent on the U.S. like Brazil, Argentina or Venezuela can do the same and more, will threaten the U.S. government’s attempt to force its position on the Western Hemisphere this November at the FTAA Ministerial in Miami. 

            Costa Rica is especially disturbing to the U.S. government for several reasons. For one, it was historically the darling of the U.S. in Central America, having neither guerilla movements nor particularly odious (and embarrassing) dictatorships and pursuing an export-oriented economic model that benefited American agribusiness. It was, however, a source of irritation for the United States too, disbanding its military in 1948, refusing to embrace the national security state model adopted by many of its neighbors at the behest of the U.S. military. (Contrary to the supposed benefits to security these militarized states would gain, they were beset by insurgencies throughout the second half of the 20^th Century, in contrast to demilitarized Costa Rica.) Costa Rica’s president Arias led the peace process in Central America in the 1980’s, which also provoked the anger of the U.S. government that wanted to destroy through violence, not legitimize through diplomacy, the leftist government of Nicaragua. Currently the United States State Department plans to base in Costa Rica a police school called the International Law Enforcement Academy.[4] The school is designed to facilitate the militarization of Central America’s borders to cope with increased flows of undocumented workers and illegal trafficking in the wake of CAFTA’s passage. Critics accuse the school, funded and coordinated by the U.S. government, as violating Costa Rica’s Constitution, which outlaws the military.

Costa Rica boasts the highest standard of living in Central America, based in large part on an extensive public sector in such industries as telecommunications, insurance, and electricity. In addition to its role in the G-21 in Cancun, Costa Rica’s refusal to open up its public companies to foreign control in CAFTA has produced anger in the U.S. government and business community. The logic is simple: Costa Rica, through holding up trade in services, threatens the strength of the U.S. negotiating position on trade in services in FTAA, and consequently threatens access to these services by U.S.-based transnationals, a market potentially worth many hundreds of billions of dollars. It is therefore not difficult to see why Costa Rica is being targeted for such abuse, and possibly expulsion from CAFTA. This abuse has extended into outright economic extortion, evidenced by the recent suit by Houston-based Harken Energy against Costa Rica for $57 billion over environmental protections that affected Harken’s investments in Costa Rica. Other CAFTA countries with different priorities, like Nicaragua which has privatized most services but retain large parts of their population in rural subsistence agriculture, are relatively quiet about trade in services but are resisting CAFTA’s agricultural provisions. Costa Rica, with its export-oriented plantation agriculture and small peasant sector, has not resisted the agricultural component of CAFTA.

            This crisis or “contagion” in the dynamics of world trade represented by the G-21 has made the Houston round of CAFTA negotiations very strategic, if not imperative, for the U.S. government and business community. That they are being held in Houston is illustrative of the “Borderless Market” envisioned by the architects and supporters of CAFTA. Houston is something of an unofficial Capital of the United States’ Empire, a city with intimate ties to the Bush family and administration, the home of Enron (chief U.S. negotiator Robert Zoellick’s former employer) and Halliburton, one of the most polluted cities in the United States, congested with successive rings of massive interstate highways, one of the world’s largest concentrations of petrochemical industry, and polarized along class and racial lines by large blighted areas and exclusive shopping centers and gated subdivisions.

            Corporate interests in Houston, Texas, organized into the Greater Houston Partnership,[5] an organization connecting the largest business, university, and government officials in the region and funded by ExxonMobil, ShellTexaco, JPMorganChase, and SBC Communications, will hold a “U.S. / Central America Business Week” during the week of secret negotiations. For $95, business people can attend a conference, entitled “Business Without Borders: New Ties Between the U.S. and Central America” [6] to learn how to exploit the opportunities free trade with Central America will create. The conference is sponsored[7] by Continental Airlines, interested in displacing Central American airlines like Grupo Taca for the Central American transportation market, Bank One, interested in expanding its financial empire to Central America and buying up banks there, the Port of Houston Authority, which has obvious interests of increasing trade, Riviana Foods, interested in increasing exports of dumped U.S. agricultural goods on Central America, British Petroleum (BP) which has interests in exploiting oil deposits in Central America, and an assortment of local financial companies and hospitals, also eager to profit from CAFTA.

The events[8] will begin with a tour of Houston on October 20^th that will include the up-scale Galleria Shopping District to showcase the consumeristic lifestyles of Houston’s elite and the “exclusive River Oaks neighborhood” to demonstrate the siege mentality and paranoia of the wealthy who simultaneously wall themselves into gated communities of privilege while attempting to create “A Market Without Borders.” Tours organized by the Mayor’s Office, U.S. State Department, and local business interests during the New Orleans round of CAFTA talks displayed similar landscapes of opulence to Central American media in town for the negotiations, with the implied point being that if their countries adopt free trade, then they will be able to have the nice things “we” have in the United States. (It should be noted that encouraging isolation and fear among Houston’s elite is a daily chore of the Greater Houston Partnership. Their page on “Houston Life”[9] in their CAFTA negotiations site includes a link to HoustonPrivateSchools.com, encouraging residents to abandon the public school system and public life in general, a sentiment that is consistent with the goal of CAFTA to open up public services like education to privatization.)

            On the 21^st , participants will learn how to negotiate import and export regulations, how to “target the U.S. Hispanic Market,” and how to receive government marketing support (subsidies, which will continue after “free trade” is imposed) for exports to Central America. That evening they will hold a gala reception at an as-yet unannounced location.

On the 22^nd, major U.S. banks will explain how private sector investment will bring “stability” to Central America and the president of Riviana Foods, a large agribusiness corporation, will talk about expanding U.S. corporate operations in Central America. The keynote address of the conference will be delivered by George Bush Senior, who will speak on the topic “Towards the Borderless Market.” Demonstrating solidarity between private and “public” financial institutions, Bank One, the Inter-American Development Bank, the World Bank, the U.S. Import-Export Bank, the Overseas Private Insurance Corporation, and the U.S. Agency for International Development will talk about “Financial/Project Opportunities” in Central America. To prove that CAFTA will give something to the “little people,” the Houston business community managed to locate one small business in Houston that they claim has actually benefited from free trade, ignoring the hundreds that have been devastated. This business’ owner will be paraded before the crowd to demonstrate to the media that the globalization process is good for small business, while the room is packed with officials of multinationals who know full well that the process is destroying, as intended, independent entrepreneurs in Central America and the U.S. for their benefit.

During the afternoon of the 23^rd, corporate lobbyists will explain how the business community is building support for CAFTA in the U.S. Congress. Perhaps to underline the tactics that will be used to gain Congressional support, Representative Tom Delay of Texas redistricting infamy will then offer closing remarks.

On Thursday there will be tours of the Houston international airport, to show off the trade-related infrastructure Houston has to facilitate the realization of CAFTA. Major hospitals in Houston will also be toured. Health care is one of the public services in Central America eyed by transnational corporations in trade in services provisions, and the use by wealthy Central Americans of U.S. health care facilities is a source of profits for hospitals throughout the Southeast United States.

Rounding out the week, on Friday the 24^th there will be a tour of agribusiness research facilities at Texas A&M. The industrialization of agriculture towards an export-oriented model will be one of the central consequences of CAFTA’s agricultural provisions, and U.S. agribusiness corporations are positioning themselves to profit from this, supported by government-subsidized university research.

All of these activities will occur completely apart from the negotiations, which are a compartmentalized, secret process not only outside the purview of the public but from the business community too. To participate in the corporate festivities takes 1) $95 and 2) several days during a work week to devote to attending the meetings. Most working people in Houston do not have both of these, and there would be precious little for someone outside the business community to do (other than observe and take notes on what they’re up to) considering that no public interest forums are offered. There are no official debates, forums, educational events, or other means of involving the public of Houston, the state of Texas, the United States, or the nations of Central America in the process. The negotiations exist inside an insulated sphere, a secret space surrounded by police and intelligence officers and obscured by the constellation of corporate propaganda encircling it. Based on this, I feel an intelligent strategy for activists is to delegitimize and expose the talks for what they are: the selling of democracy, sustainable agriculture, public services, the countries of Central America, their people, many people and places in the United States, in a private, invitation-only auction of what is essentially stolen property: things that are rightfully owned by the public but have been appropriated by private interests.

The nature of this “slave auction,” how we are all sized up on the auction block, is explained by the Greater Houston Partnership. In a section of their CAFTA negotiations website called “Country Profiles,”[10] each of the five CAFTA countries is rated for its “competitive advantages,” “major companies,” and “investment incentives.” “Competitive advantages” include Nicaragua’s “competitive” labor and energy rates, a “large and reliable” labor force in El Salvador, and a “highly educated, versatile and productive work force at only $1.40 per hour” in Costa Rica. The two former quotes are euphemisms for the tremendous exploitation of labor and natural resources available to foreign investors in strictly anti-union free trade zones. The latter quote speaks for itself.

“Investment incentives”[11] include a wide range of 100% exemptions for taxes on imports, exports, profits, income, capital gains, dividends, value added taxes, and unlimited repatriation of profits abroad. The “major companies” of Central America appear at first glance to be somewhat out of place: many of them are not only publicly owned and thus supposedly outside the purview of international investors, but many would not by most people be considered companies at all. The National Autonomous University of Honduras is listed as one of its major companies; the Ministry of Education is listed as one of Costa Rica’s. The involvement of multinationals in “educational services,” or the privatization of education, is one of the components of the trade in services provisions of CAFTA and other trade agreements. The Costa Rican Power and Light Company[12] is on the list despite its being publicly owned and strongly against CAFTA,[13] which will force the company open to privatization, foreign investment and takeover. Is this list intended as a foreshadowing of the rewards that U.S. business will receive if CAFTA is passed?

            In a press release from the Greater Houston Partnership, James T. Edwards, member of the Partnership’s board and Chairman of the Port of Houston Authority, said “Houston could see benefits under CAFTA similar to those realized since the signing of NAFTA in 1993.”[14] According to statistics for workers who applied for Trade Adjustment Assistance,[15] some 48,227 Texas workers lost their jobs directly to NAFTA. This does not include the many thousands of workers ineligible for such assistance, such as farmers or fisher people, both harmed severely by NAFTA through agricultural imports, falling prices, and dumping on the U.S. market.[16] Nor does it include the many workers who did not file for such assistance or those whose wages or benefits have been cut, production sped up and/or hours cut in the wake of NAFTA, or the myriad other impacts NAFTA has had on democracy, regulation, and sovereignty for all three treaty countries. It certainly does not include the many hundreds of thousands of other U.S. and Canadian jobs lost through NAFTA,[17] and says nothing about the millions of Mexican farmers and workers devastated by the treaty.[18]

            CAFTA has in the aftermath of the Cancun debacle become a strategic terrain to be contested by global justice activists interested in defeating free trade in its many guises. One of the emerging phenomena of the age of neo-liberalism/neo-conservatism is the increasing openness, brazenness and arrogance of corporate power and their governmental representatives in expressing their agenda to create a “Borderless Market” serving their interests and subordinating all other social priorities and groups to this agenda. They have shown no moral compulsions against using extensive and habitual lying, deceit, intimidation, secrecy, violence and militarization at all levels of social life, from the local to the global, in pursuit of this agenda. This is a project of global corporate empire, a world of “Business Without Borders” coexisting with a multitude of physical and ideological barriers, traps and cages to contain all expressions of dissent or independence. It represents not only a threat to democracy, economic and social justice, but an opportunity to expose “free trade” for what it is, using the evidence that free trade’s advocates supply us. As the Bible says, “Pride goes before disaster, and a haughty spirit before a fall.”[19]

The free trade agenda has overextended itself, demanded too much too soon, and as a result has provoked open resistance from the normally subservient governments of the Global South. These governments have been encouraged to defy the agenda in part by pressure from the Global Justice movement. Exposing the total lack of democracy in the CAFTA process and the agenda of the business community supporting it is a means of expanding this resistance with the objective of derailing the entire free trade agenda and opening up spaces for the construction of alternative models of social and economic life.

Brian Marks

bmarks1@lsu.edu

October 16, 2003