CAFTA Voting Record for Representatives

Oxfam America Briefing Notice, November, 2003 

There is a growing awareness among Latin American civil society and governments that the

trade rules at the World Trade Organization (WTO) and in the proposed Free Trade Area of the Americas (FTAA) will have serious negative consequences for national development and poverty reduction strategies.

While the WTO and FTAA negotiations falter, the US government has adopted a strategy to prioritize bi-lateral trade agreements such as the US-Central American Free Trade Agreement (CAFTA). These agreements are an attempt to lock countries into commitments that go further and deeper than the WTO and pave the way for the FTAA.

Representatives of the Bush Administration have stated that a desired outcome of CAFTA is to advance economic development and combat poverty in the participating nations. Oxfam believes that eliminating poverty and promoting development in Central America requires radically different rules than those proposed in CAFTA.

Under the North American Free Trade Agreement (NAFTA), market liberalization and deregulation have led to falling commodity prices, dumping of US surplus production on Mexican markets, and the monopoly control of agricultural trade by large agribusinesses. Nearly 15 million small farmers throughout Mexico have lost significant income, and the crisis prompted a broad small farmers’ movement to take to the streets in 2003 to push for renegotiation of NAFTA’s agriculture agreement.

CAFTA would limit the options for Central American governments to address the existing food security crisis and combat rural poverty.

Following weeks of negotiations, the Mexican government agreed to an extensive evaluation of the impact and implementation of NAFTA’s agricultural provisions as well as restrictions on imports of key food security crops, such as maize and beans, in order to address food security and food sovereignty needs.

Central American countries have similar needs regarding their agriculture sectors that include ensuring access to food for their poorest citizens and providing sustainable livelihoods for their large rural populations. One in four Central Americans (a total of 8.6 million) suffer from hunger. These needs would not be addressed under a CAFTA-liberalization agenda. Instead, Oxfam believes that CAFTA would limit the options for Central American governments to address the existing food security crisis and combat rural poverty.

At the same time, the US government is encouraging Central American governments to further open up their economies under CAFTA in order to attract more Foreign Direct Investment (FDI)—an offer such resource-strapped countries cannot ignore. Oxfam believes that when appropriately linked back to the local economy, FDI can be a positive force for development, with the potential to reduce regional inequalities, transfer technology, improve competitiveness of productive sectors, and generate employment and economic growth.

CAFTA would further increase the vulnerability of public policies targeting social welfare and environmental sustainability.

CAFTA investment rules, however, would restrict Central American governments’ ability to make FDI play this positive role. They focus on increased investor rights and deregulation. Unregulated investment pursues the maximization of profits and non-sustainable development goals. In order to attract investment, Central America is already engaged in a “race to the bottom” by ignoring or failing to enforce already weak labor and environmental standards.

The investor-state dispute mechanism adopted in NAFTA has enabled transnational companies to sue governments for public policies that defend the public interest over the drive for private profits. The extension of this widely condemned precedent to CAFTA would further increase the vulnerability of public policies targeting social welfare and environmental sustainability.

The intellectual property (IP) rules that the US wishes to include in CAFTA are another cause for serious concern. Access to knowledge, research, science and technology is essential for development and poverty reduction. Yet CAFTA is likely to increase their cost substantially. Ordinary people will feel the effect through paying more for medicines or textbooks. Small businesses will pay more for software, and farmers will pay more for seeds.

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Oxfam’s Make Trade Fair campaign seeks to change international trade rules so that trade and investment can contribute to sustainable development and reduce poverty. In the framework of this campaign and based on our program experience in Central America and the United States, Oxfam proposes a different type of integration with radical changes to those proposed in CAFTA. Focusing on three key themes of agriculture, investment and intellectual property, this document illustrates the reasons why Oxfam says no to CAFTA and outlines the policy and practice changes that we recommend.

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