February 2005
A Publication of the Rural Coalition
NAFTA, CAFTA, DO WE HAFTA? - Corporations vs. Farmers
The Central American Free Trade Agreement (CAFTA), advocated by the Bush administration, represents a giant leap in the direction towards a hemispheric dissolution of tools used to protect domestic agriculture industries. CAFTA has been signed by the governments of Guatemala, El Salvador, Honduras, Costa Rica, and Nicaragua, and is awaiting a vote in the US Congress. Despite opposition by labor groups, farmers in both the US and Central America, development organizations and religious groups, plans for CAFTA are going full steam ahead. There is great pressure from corporations and the administration to secure the agreements, designed to remove so-called "trade barriers" and to secure "free trade". Both the North American Free Trade Agreement (NAFTA, implemented in 1993 and including the US, Canada, and Mexico) and CAFTA are precursors to the broader proposed Free Trade Area of the Americas, which would include all of Central and South America.
CAFTA's agricultural provisions are similar to those found in NAFTA, which have proved disastrous for small, independent farmers in the United States, as well as in Mexico and Canada. CAFTA requires market liberalization for the majority of goods and services in Central America. In return, the US promises increased access to its markets for certain Central American sectors, including textiles and limited access in sugar quotas. Many analysts believe CAFTA will develop in much the same way as NAFTA: trade liberalization will attract Foreign Direct Investment, and will increase Central America's exports in certain sectors. But like NAFTA, CAFTA will have little benefit for the rural and urban poor. Concerns over workers rights, agriculture, and US job loss dominate the CAFTA discussions. CAFTA is a step backwards since it doesn't require compliance with international labor standards. Instead, CAFTA requires that domestic labor standards be enforced, which, in most of Central America, do not protect a vulnerable work force.
Farmers in Central America and the Experience of NAFTA
Few assessments have been made on the likely effects of CAFTA for Central American farmers. However, Mexico serves as a reliable predictor of what can happen to a third-world economy when it becomes a free trade partner with the United States. Prior to NAFTA, Mexico imported 17% of the rice, and 12% of the wheat it consumed. After NAFTA, it imported 53% and 35% of those commodities respectively. This wasn't because the US had a natural advantage in commodity production. Rather, US growers receive subsidies which allow rice to be sold at 22% below the cost of production and corn at 33% below production cost. As a result, almost half of Mexico's small farmers have lost the ability to make a living through agriculture. The purchasing power of the poorest groups has declined since 1994, causing the number of Mexicans living in poverty to rise from 58% to 79%. (Citizens Trade Campaign)
Agriculture was the sector most damaged by NAFTA in Mexico, and the damage may prove even more severe in Central America. There are 5.5 million people in Central America, half the population of the region, who are dependent on agriculture for their primary source of income. Central American farmers will not be able to compete with US agricultural commodities which are heavily subsidized by the US government. The Bush administration has guaranteed $170 million in agricultural subsidies over the next 10 years.
Free trade agreements also restrict the ability of governments to manage local food supplies according to local need. As corporations gain footholds in foreign markets, they decimate the domestic and subsistence farming operations within communities. Consequently, there is less food security in domestic markets, which usually increases malnutrition. Eighty percent of all malnourished children in the developing world live in countries that have switched from producing food for local consumption to export-oriented crops. Even if US agricultural subsidies were reduced or eliminated entirely, farmers in Central America would not be able to compete with the much greater technological and infrastructure advantages of the US and Canada.
US Farmers and Farmworkers
The real profits of NAFTA, and CAFTA will go to a few giant agribusinesses who benefit from the low prices they pay for the commodities that they then process and sell at higher prices. Since most commodities in the US are export-oriented, independent farmers are forced to sell to corporations that eventually "dump" the surplus in foreign markets at a price below production costs. If the world market price for a commodity is artificially low, it reduces the earnings of US small farmers. Since 1984, the real price of food has stayed constant, while the price farmers receive has dropped by 38%. Since NAFTA, farm incomes have fallen on average, and 7.2% of US farms get 72.1% of the market value of products sold. While US farmers receive an average of $21,000 annually in agricultural subsidies, small farmers get much less, if any. Large operations, however, can receive more than $500,000 annually. NAFTA has also exacerbated the continuing decline for minority and other small farmers. The lifting of restrictions on peanuts, and fruit and vegetables has had disproportionate impact on African American farmers and their rural communities. Trade agreements were a primary impetus for terminating the USDA peanut program, for example, one of the few programs that provided consistent income to African AMerican producers in the Southeast.
Under NAFTA, conditions for agricultural workers in the United States have declined drastically, and this decline is directly related to the impact of NAFTA on agriculture in both the US and Mexico. After the first decade of NAFTA, agricultural workers at the US Mexico border now receive the lowest wages and labor under the worst working conditions to be found in any sector of the labor force of United States. In the El Paso region, the average farmworker earned $6,000 a year in 1993, and $7,000 a year in 2002. According to the price index set by the Federal Government $6,000 from 1993 had the same buying power as $7,470 in 2000. This means that a worker would still need an additional $470 to retain the same purchasing power as in 1993, and brings home an annual income of only one-third the poverty line.
The decline in working conditions for farmworkers in the US is directly related to the displacement from the land of farmers in Mexico. A report by the Carnegie Endowment for International Peace, estimated that 1.3 million farm jobs have disappeared since 1993. According to Mexican campesino organizations, 600 poverty stricken peasants are forced to abandon their lands and communities every day. These farmers have no other alternative that to cross the border where more than 2,000 migrants have perished in since NAFTA took effect, even though those who make it across enter a job market where too many workers worsen salaries as well as working conditions.
THE JUICY TRUTH
Anti-CAFTA marches and protests have taken place in San Salvador, Costa Rica and the United States. CAFTA was signed on May 28th, 2004 by Guatemala, El Salvador, Honduras, Costa Rica, and Nicaragua. If CAFTA is to be stopped, it will have to happen in the US Congress. Once CAFTA is on the floor in Congress, it will be "fast-tracked," meaning that Congress will only have 90 days to consider it, and the bill cannot be amended. The White House wasn't willing to seek a vote on CAFTA before the elections due to the wide-spread disenchantment of free trade within the US. With Republicans clearly in the majority, it is likely that CAFTA and other regional trade agreements will be raised in Congress at the moment the leadership feels they have secured enough votes for passage. This may include packaging of several agreements and other procedural measures that will improve chances of swift passage. The Rural Coalition and its partners in the Campaign for a Just Food and Farm Policy worked hard during the NAFTA debate to connect our members in Mexico and the U.S. who opposed the agreement. The SuperMarket Project was created as an alternative "People to People NAFTA" that encouraged cooperation among producers in the two countries and ensured benefits directly to the people who produce and consume food. Now the Rural Coalition is beginning a new phase of trade work, focusing on CAFTA and FTAA and highlighting the relationship between trade and the displacement of people from the land.
THE FEBRUARY SQUEEZE
Put People First - Oppose CAFTA
We are asking the Senate to:
The Bush Administration has been unable to get mass support for CAFTA. However, with the start of his second term, Bush will to try and advance a key part of his economic agenda and work to fast-track CAFTA through Congress.
- Oppose the approval of the Central American Free Trade Agreement
- Reject the Free Trade Area of the Americas Agreement in its current form
What you can do:
- Call your Members of Congress and urge them to publically oppose CAFTA
- You can reach your members of Congress through the Capitol Switch Board - (202) 224-3121
- Sign your organization on to a letter to members of Congress asking them to reject CAFTA. (receive letters and other action suggestions by signing up for Rural Coalition e-alerts - see box below)
Join our e-update action alert list. Contact Bouapha Toommaly at
bouapha@ruralco.org or at the address below. For
more information,contact
The Rural Coalition/Coalición Rural
1012 14th Street, NW Suite 1100
Washington, DC 20005
(202) 628-7160 Fax (202) 628-7165
Visit www.Ruralco.org or
www.SuperMarketCoop.com.
