Who Will
Benefit From CAFTA?
Why The Salvadoran Government is Agreeing to
the Treaty?
Material
from Cesar Villalona, economist MPR-12, January
2004
While
it is generally said that the big winners in
this trade agreement will be American corporations,
it is important to note that there will be winners
in Central America as well. After all, the Salvadoran
government has given CAFTA its full support.
Unfortunately,
CAFTA was crafted by a very small subset of
the Salvadoran population: the politically and
economically powerful. It seems, ultimately,
that the Salvadoran government’s motive
for signing the trade agreement is not to conquer
US markets with Salvadoran exports. Instead,
its wants to consolidate the power of the import
and financial sectors of the Salvadoran economy.
This
fact is nowhere clearer than in the case of
former Salvadoran president Alfredo Cristiani.
One of Cristiani’s many business interests
is rice importation – he runs the country’s
largest rice importing company. As you can imagine,
he stands to gain a lot from CAFTA: due to subsidies,
US rice is cheaper than Salvadoran, causing
the Salvadoran rice industry to shrink and the
quantity of imports to rise. So for Cristiani,
the ruin of the Salvadoran rice farmer is not
a priority. His profits are. For him, increased
rice importation is just good business.
But
Christiani’s interests don’t end
there. He also runs the largest bank in El Salvador,
El Banco Cuscatlán. Increased imports
will also mean higher income for the banks,
who provide the bulk of the commercial sector’s
capital. When companies come in to do business
in El Salvador, they apply for large loans from
the local banks to set up their factories. For
this reason, the Salvadoran financial sector
will receive a large boost if international
corporations decide to set up production within
El Salvador’s borders.
Unfortunately,
Salvadoran banks continue to neglect small businesses
and farmers. While over 40 percent of the population
lives in the rural sector, farmers only receive
3 percent of bank loans. Again, the former President’s
interests are clear, and they are not in accord
with those of the country’s poor majority
Alfredo
Christiani is only the most visible example
of under-the-table patronage deals; this type
of corruption has been widespread in Salvadoran
politics. Moreover, in order to cloak their
influence in democratic trappings, the wealthy
beneficiaries of free trade have flooded the
media with pro-CAFTA propaganda, which they
hope will drown out the groundswell of popular
discontent with free trade reforms. Despite
being supported by the Salvadoran government,
this treaty does not reflect the interests of
El Salvador’s poor majority.
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