CAFTA:

1. CAFTA: Paving the way for the FTAA Prepared for the By: Labor Education Service, University of MN Minnesota Fair Trade Coalition (April 2005)

2. Why CAFTA? Why now? • FTAA expansion deadlocked • 2003: Miami & Mexico talks collapse • Political pressure here and abroad and South American opposition • Alternative strategy • Bilateral and smaller regional agreements • Isolate recalcitrant countries • Jump start FTAA and WTO talks

3. DR-CAFTA (Dominican Republic - Central American Free Trade Agreement) • Covers 5 Central American countries • Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica – plus the Domincan Republic • Extends NAFTA model to Central America • Negotiated quickly – less than a year • Up for vote in 2005

4. “Five small countries took a courageous decision last year to seek a free trade agreement with their giant neighbor to the North. They placed their faith in free markets, in openness, and in democracy. We have worked with them to produce an agreement that will bring benefits to workers, farmers and consumers in all countries.” -- Robert Zoellick U.S. Trade Representative

5. “Every human institution … should be for the development of life and not to the contrary; and what does not contribute to life is not Christian and is undesirable. … [A]n economic system that is not capable of nourishing the entirety of its population under its care … goes against the justice of the kingdom of God. Considering these theological foundations, we denounce the Free Trade Agreement between Central America and the United States.” • -- Pastoral Letter • (Church representatives from Nicaragua, Costa Rica and Panama)

6. Trade liberalization has already failed the United States and Central America.

7. NAFTA Lessons: Workers have been hurt • 750,000 U.S. jobs lost to NAFTA • U.S. wages have stagnated • Threats of plant closure used against U.S. workers • 10% drop in Mexican manufacturing wages

8. NAFTA Lessons: Farmers and rural communities hurt • Small and medium farmers hurt • ADM and Cargill profits have doubled and tripled • 1.3 million Mexican farmers displaced

9. NAFTA Lessons: Environment and Civil Society hurt • Corporations have filed 42 cases for $28 billion in damages under Chapter 11 • Most cases attack policies protecting public health and the environment

10. Investment in education and public services Productivity Malnutrition, poverty, income disparity Debt Central America Lessons: Trade liberalization has occurred in Central America for two decades with devastating results.

11. Q: A: Who wins under CAFTA? Ask who wrote the rules.

12. Who loses? The farmers, workers, and local communities who had no say.

13. Farmer and rural communities. Who loses under CAFTA? • Free trade has hurt small and medium sized farmers • Commodity dumping by large agribusinesses like Cargill and ADM has hurt U.S. farmers and farmers in other countries. • CAFTA opens up U.S. farm markets to illegal dumping.

14. Case Study: Minnesota Sugar Beet Industry

15. Case Study: Minnesota Sugar Beet Industry • Sugar industry supports small farmers and communities • U.S. = 11,000 farmers and 146,000 indirect jobs; • MN = 2,500 farmers; $2 billion economy • One of the few commodities not subsidized by federal government • Prices controlled through supply management programs, steep tariffs and import quotas • Most of U.S. sugar produced domestically

16. Case Study: Minnesota Sugar Beet Industry • CAFTA erodes sugar policy • Opens door for 2 million more tons of dumped sugar – 25% of market • Will drive prices down 60+% • Would devastate Red River Valley • May also reduce corn prices • Cheap sugar substituted for corn fructose • Potential $1.5 billion loss

17. Who loses under CAFTA? Worker and labor rights • No meaningful labor rights protections • Procurement rules like the FTAA • Covers purchasing by federal government and 21 states (not Minnesota) • Limits bid specifications only to the supplier’s technical and financial ability to do job • Prohibits any further requirements on how a good is made or a service provided

18. Case Study: Government purchasing policies • Preferences for local workers • Prevailing wage and project labor agreements • Labor peace agreements • Human rights based purchasing • Living wage agreements • Green purchasing, renewable energy, and recycled content laws

19. Who loses under CAFTA? Environmental protection • CAFTA’s Chapter 10 • Like NAFTA’s Chapter 11 • Allows foreign corporations to sue a government over regulations they see as limiting their right to make a profit • Case heard before secret trade tribunal

20. Case Study: Harken Costa Rica Holdings

21. Case Study: Harken Costa Rica Holdings • Costa Rica announces moratorium on oil exploration and open pit mining • Harken Costa Rica Holding (close ties to Harken Energy of Texas) wants to drill off Talamanca coast • Secures a waiver conditional on an environmental impact review • Fails environmental assessment and Costa Rica denies them the permit

22. Case Study: Harken Costa Rica Holdings • Harken sues Costa Rica under World Bank rules for $57 billion – 11 times its annual budget • Since Costa Rica had not signed the specific agreement, the case was sent back to Costa Rica courts • Under CAFTA, Harken could have sued under Chapter 10 investor protection rules and the case would be heard before a secret trade tribunal

23. Who loses under CAFTA? Public services • Mandates privatizing public services • Covers all services unless specifically excluded • U.S. has excluded all services not already under the WTO • Central America to open up health care, water, education communications among others

24. Case Study: Costa Rica Telecommunications

25. Case Study: Costa Rica Telecommunications • Costa Rica Telecommunications Services • State run; high functioning • Internet and cell phone revenues subsidize rural phone service – 97% coverage • Popular support to keep system public • CAFTA specifically opens Costa Rica’s cell phone and internet services to privatization by U.S. corporations

26. Who loses under CAFTA? Affordable medicines • Extends 20 year intellectual property patent protections • Creates “test data” protections • Test data is data used to test a drug’s efficacy • Ban effectively prohibits making generic drugs for 5 years • Poor countries can’t afford name-brand drugs

27. Case Study: Guatemala and generic drugs • 2004: Guatemala repeals 5-year ban on test data • Had been put in place under earlier trade liberalization programs • Ban made it almost impossible to market generic drugs • Popular support demanded its repeal • U.S. Trade Rep: reinstate the ban or risk being left out of CAFTA • CAFTA contains 5-year test data ban

28. What can be done? • We can beat CAFTA! • educate your membership • write opinion piece or letter to editor • write articles for local newsletter • Winning on CAFTA helps us defeat other issues • Social Security privatization • FTAA • Permanent tax cuts for the wealthy • Contact Congress • write Congress about specific issue • encourage your organization to contact Congress

29. Key Minnesota Congressmen Sen. Norm Coleman Rep. Mark Kennedy Rep. John Kline Rep. Gil Guteknecht

30. Join the Minnesota Fair Trade Coalition more than 60 allied groups fighting to make respect for working people, family farmers, our environment, and our democracy an integral part of the global economy Contact: Octavio Ruiz612-276-0788 x19oruiz@americas.org See also:www.citizenstradecampaign.org