TLC: Tratado de Libre Comercio
DR-CAFTA is a comercial treaty between the US, Central America and The Dominican Republic. The treaty was signed by Guatemala in 2003 without referendum (of the Central American countries only Costa Rica will have a referendum). The US's official motive to enter the comercial treaty is to help limit corruption, drug trafficing and immigration. The US can't use the term "Comerce" as a motive, because Central America only makes up 0,5% of the US's international comerce and the agreement will therefore have no consequences for the US as a whole. On the other hand, Guatemala (and Central America in general) exports 40% of their goods to the American market and imports 45% of their goods from the US. Guatemala is also more dependent on the comerce with the US and the growing latino population in the US make up and important and promising market for the region as a whole.

Then what is the motive for the US's involvement in the DR-CAFTA treaty?

The American presence in Central America is, and has always been, controversial. When the US in 1990 cut of their economic aid and sales of weapons to the Guatemalan military because of repeated violations of the human rights, CIA continued backing the military in question "in secrecy". The US is torn between the country's interests and its image toward the rest of the world, which makes the politics an history in Guatemala confusing and comlicated. Nevertheless, it is easily concluded that Guatemala's (Latin america's) past, present and unfortunately also the future, was, is and will be dictated by the US and American interests. The US interest in Guatemala and Central America is, of course, not anywhere near a humane worrying or a wish for sincere improvement in the region. Their interest is economical and political! The treaty makes life easier and cheaper for the big American coorporations, who also hold high positions in American politics.

Some main laws within DR-CAFTA:

1. Intellectual Property: Patent on medicin developed by the chemical and farmaceutical industry af in the US or products developed from plants etc. This will have severe consequences for the population who prior to the agreement have been able to by copy medicin a lot cheaper.

2. Prohibition against sale of replicas. Which means that the part of the population making a living of selling fake Nike products or burned CD and DVD replicas will have to find other work. The majority of al negotiation in Guatemala is "black", street markets etc., as the people have no chance of buying music if they would have to by originals (or medicin, clothing etc.). In the beginning of 2007 the police in Guatemala initiated an agressive raid in order to get rid of the sale of replicas in the larger cities. It is absurd to see the massive effort and manpower used on this, while violence and crime rates are high and uncontrolled.

3. Universal monetary standard in the region (so far not really part of the debate, but part of the PPP = Plan Pueblo Panama, a united Central America).

4. An International Court consisting of representatives from the US and the Central American states whos job will be to solve legal conflicts between government (the US) and the (American) companies. Meaning that if an American company feels that the Guatemalan (as an example) government passes a law that might favor the Guatemalan state, a Guatemalan company or just negatively influence the American companys profits, they will be able to take legal action in the Internation Court. On the other hand the Central American governments, not surprisingly, won't be able to sue an American company. So far the big companies have won the vast majority of cases (seen in the International Court in NAFTA, the trade agreement between USA, Canada and Mexico)!

Advantages for American companies

1. Some advantages are pretty obvious after reading the main laws of the TLC, but there are more and many that I don't know of.

2. The so called Free Trade Zones makes production cheaper for companies, as they won't have to pay taxes to the country in question. In theory the company can import all necessities, exploit the cheap labor and afterwards carry the products and profits to another market and/or country. Sadly this is becomming all too common!

3. The companies can move around their capital through mother companies only to place it in a daugther company located somewhere with low tax requirements.

Disadvantages for Guatemala:

1. Again, several disadvantages are obvious after reading the main rules of the TLC.

2. The companies that open "sweat shops" in the free trade zones are able to obtain a loan in the country in question, because the government is very much interested in international investment. This means that there will be less money for national companies. Furthermore, as mentioned earlier, the international companies avoid leaving behind capital, which means that the government ends up paying for the foreign investment.

3. An even greater disadvantage is that the countries become locked in their current state and that their only possibilities of progress is dictated by the US, which probably is part of the US's tactics.


4. Agriculture is in no way limited. The subsidies the American farmers receive from the state make it possible for them to sell their products cheaper in Central America, than the average Central American peasant. Within several areas the TLC includes quotas on the amounts of American export to Central America (to avoid a complete invasion), but these quotas will be minimized year by year only to seize existing. This means that the average peasant or grocer in Central America won't be able to compete with the American products and thereby won't be able to survive.

Debate

Unfortunately the CAFTA debate in Guatemala and Central America only sat sail after the signing of the contract. There are several reasons for this, but the main reason is the lack of information and availability of information in the countries.

In the case of Guatemala there's a few themes especially interesting. The first one is corn. The Guatemalans grown a lot of corn and also consume great parts of it. The US has now initiated a production of genetically engineered corn in the US (it is said that they only do this to export their products as there doesn't exist a domestic market for corn in the US) while they at the same time hand out free engineered corn to the Central American peasants. The engineered corn can be replanted only twice, whiche means that the peasant will have to invest in a new round of corn to seed, while the corn the peasants grow today has no limits. The idea with the free distribution is 1. to eradicate the Guatemalan corn and 2. to create a dependency on the American corn. This means that once the peasant has planted the engineered corn, he will have to rebuy corn from the American companies every other year. One might wonder why the peasants accept the engineered corn? It is bigger! But it is said that the American corn does not hold the same nutrition as the Guatemalam corn, but that's a whole other problem.

The debate about the African Palm is also hot. The American companies also distribute free African Palms, which are used to produce biodiesel. The problem with the African Palm is

1. it exhausts the soil (by replanting the same over and over again),

2. it demands large areas (most peasont don't have much land) and

3. it needs a long process before reaching the final product (Biodiesel).

This means that the peasant replants all his land with the African Palm, waits years for it to grow, and when the palms are ready, the peasant has no other choice than to offer his palms to someone who knows about the further process. This way there are many steps between peasant and comsumer and this worsens the situation of the peasant.

In very simple terms the development of the peasants can be described as follows: Earlier a peasant would have his security in his land. As long as he owned some land, he and his family was secured survival. With the CAFTA agreement this changes. The Peasant won't be able to compete with the new products from the north and will be forced to sell their land and seek work in the cities. The situation in the cities is already critical, marked by unemployment and poverty and the situation will worsen with the peasants crowding in. The peasant's land left behind will probably be bought by an American company for a bargain.