A propaganda without proposals

The absence of politics in the commercial discussions

A political perspective has been absent from the debates about the negotiations of the Free Trade Agreement with the United States. What has been said about this aspect is that these negotiations are purely technical, and that they should involve the presence of the economic actors. In these conditions, the politicians are not welcomed; on the contrary, they could become an obstacle for the negotiations.

It is clear that this kind of discourse reproduces a very fashionable opinion that seeks to disconnect, by all means, the economic activities from the state’s political intervention. Most of all, this is an effort to keep away certain sectors that do not necessarily think that the economy is a priority; that is, that the economic affairs are not necessarily more important that the demands and the needs of the society.

It is nothing new to remember that the businessmen have taken advantage of both the state and the politicians to assure their control over the society. In Latin America, the state became the guarantor of the interests of the businessmen, against the welfare of most of the population. That is why the objective of this article is to reflect over the role that both politics and the politicians could play in the discussion and the agenda of a commercial agreement with the United States, as well as the consequences of its marginalization at the negotiations.

To start with a discussion, it would be convenient to take a brief look at the mirror off the European Union, which undertook, approximately 50 years ago, a process of a common economic construction. A particular feature -which to the eyes of many guaranteed the triumph of the countries that belong to the Euro area-, has been the importance of politics over the economic interests of a small group. In the treaty of Paris, signed on April 15th of 1951 -which constitutes the Economic Community of Coal and Steel between the Federal Republic of Germany, Belgium, France, Italy, Luxemburg, and the lower countries-, such ideals are noticed.

The General De Gaulle and the Chancellor Adenauer understood that the best way to bravely face their ancient confrontations went through an intelligent political evaluation of their economic interests. The result is that in the present, five decades later, the European Union stands out as an ambitious construction of a group of countries united by geographical, cultural, and historical bonds that intend to overcome their social and their economic problems in a mutually responsible way. As many have noticed, each crucial moment of the life of this union has been in need of a political intervention in order to obtain more energy to construct the European common house.

The former considerations are necessary to look at the way the process of economic openness is conducted between Latin America and the United States. It would be convenient to compare it with the European process, which offers, without a doubt, a number of interesting elements for such analysis. It is necessary to mention that the agreements between these countries turn into the possibility of making business deals and increasing the flow of trade and capital. The economic openness becomes an opportunity to lend a hand to the less developed countries of the Euro area.

In the case of the agreement between the United States and El Salvador, for instance, the negotiations are understood as a channel for the American companies and certain local businessmen to gain new markets for their products. There is no room for politics. These negotiations are presented as a technical matter in which neither the politicians nor the society can intervene. The opinions of the political opposition or the opinion of those who do not share the optimism for the free trade agreements are ignored. The negotiation of the agreement becomes the exclusive issue of the official party, which announces it as one of its most important achievements.

However, the discussion and the signing of a trade agreement should not be taken so lightly. The rest of the political and the social actors should have the chance to speak their minds about such an important matter. The definition of the economic plan should be part of a wide national consensus that allows everyone to see what will be ignored and what will be defended in the context of a commercial negotiation. That is why the negotiation of a trade agreement should be the favorable moment for a serious political discussion of the country’s priorities.

The presence of a trade agreement in politics does not have to be understood in terms of what are the sectors that will receive most of the benefits and what are the sectors that will be subjected to the ruthless competition with the most powerful economy of the world. Politics should also be present because, on the one hand, it would give more strength to the national negotiators, and it would help to include the aspects that are now absent from the commercial agreements (which are greatly important for El Salvador). These discussions should include issues such as the immigration, the environmental protection, or the economic solidarity with the most vulnerable sectors (who are not included in the American agenda).

On the other hand, to include politics in the discussion of a commercial agreement would allow the negotiators to have an open debate about the sectors that will become the foundations of the country’s economic productivity. Since it is inevitable that some sectors win and that some others lose in a process of economic openness, the society should discuss the convenience to protect certain sectors or to abandon others. Other countries usually give more importance to the sectors of a higher level of social roots, which generate many local jobs and where the incomes can be called “national”.

However, the Salvadoran negotiators of the trade agreement with the United States seem to ignore such problems. They are worried about assuring certain advantages for their companies or the ones of their friends, and not necessarily worried about resolving the most crucial social problems. In addition, the propaganda about the alleged benefits of a free trade agreement with the United States blurs the vision of the most critical perspectives. The propaganda keeps the political opposition and the discontent social sectors in control.

Everything seems to fit perfectly with the commercial logic of Washington. The American politicians and the businessmen are not willing to promote the economic agreements with the style of the European Union. They would not be comfortable with a country united by its economic and its social objectives. They are convinced that the few sectors that will become stronger with the exportation to the North American market have enough political influence in their countries as to materialize the agreement, independently form its negative effects for the most vulnerable social sectors.

CAFTA: the chronicle of a commercial policy without justice

When commerce becomes an objective in itself, and it is not the means to bring welfare and development, its impact could become a knife that cuts both ways. The undue insertion of the Salvadoran economy into the global market seems to be the only and the absolute economic strategy followed by the government. In fact, in the words of the director of the National Foundation for Development (FUNDE, in Spanish), Roberto Rubio, “the Ministry of Economy has turned into a simple Ministry of External Commerce, neglecting its role. The industrial policy has been abandoned, since the Direction of the Industry has been suppressed. These deformations do not allow an adequate insertion in the external market”.

To rubricate the free trade agreements in a compulsive way with any nation willing to play the Neoliberal game (of the market’s openness), is not enough for this country to become automatically inserted into a process of sustainable development. Therefore, it is necessary to consider that to receive the benefits of a strong external insertion –El Salvador has already signed or it is about to notify five free trade agreements with the Dominican Republic, Mexico, Chile, Panama, and Canada –it is indispensable to improve the conditions of the country’s internal potential market.

The importance of a free trade agreement of Central America with the United States (CAFTA), goes beyond the technical and the economic context. The free trade agreements sometimes involve legitimate frictions: each sector demands to see the promotion of its interests or to defend those interests. That is why the lobbying activities of the business companies have been multiplied in each of the countries’ economic sectors –the agricultural sector, the telecommunications sector, the sector of the micro and the small business companies-, which will be affected somehow by such agreement.

It is important to say that the original motivation to rubricate a free trade agreement has a political and economic connotation, behind which the national elite is hidden. It would be enough to remember the efforts of the United States (which began in 1994) to build the Free Trade Agreement Area of the Americas. According to Colin Powell, the Secretary of State of the Bush administration, the primary objective was to –and still is- “guarantee for the North American companies the control of a territory that goes from the Arctic Pole to the Antarctica, and the free access, without any obstacles or difficulties to our products, services, technology, and resources in all of the hemisphere”. That is why this is not just about unifying the economic tissues to liberalize the markets. The problem goes beyond that line.

Since January 16th of 2002, President Bush formally announced that his administration would find the way to sign a commercial agreement with the region and “strengthen the economic bonds that we already have with those nations (…) to inject dynamism to their progress towards the economic, the political, and the social reform (…), and take a step forward to the Free Trade Agreement Area of the Americas”. This statement explains the role that the CAFTA plays for the Americans: it is one more step for the “empire of commerce” of the continent. More than a mechanism to exchange merchandise, we are facing a unrestrained process of economic imperialism directed by a powerful country against the “small” countries that have a smaller economic productivity and less competitiveness. That is why to negotiate a free trade agreement with the United States in less than a year –as the Central Americans intend to do- can lead to a set of violent changes that could be dangerous.

In the game of an unregulated trade, the historical tendency has been related with an “economic Darwinism”, a feature of the Neoliberal models. This refers to the imposition of the law of the strongest, a perverse game where the most competitive companies end up leading the weaker companies to bankruptcy. This is how the monopolies and oligopolies are shaped. The direct consequence is unemployment and the marginalization of the majorities that depend on sectors such as the agricultural one, or the micro, the small, and the medium business companies.

Nevertheless, the CAFTA is a tempting option. A brief radiography of the United States shows that the wealthiest country of the world represents for Central America a potential market of 38.6 million of Latin Americans, which are expected to become 56 million for 2010. The United States is also the most important commercial partner of Central America. The value of the Central American exportation to the United States reached $3,964.9 million for 2001, against $8,265.1 million in importations for the same year. The commercial statistics between El Salvador and the United States suggest that the latter acquires 65.4% of the Salvadoran goods that are sold outside this country; and, that at the same time, it provides 49% of the goods that this country exports. The tendency to concentrate in the American market was increased during the nineties, when the maquila exportations eventually replaced the coffee exportation.

On the other hand, the tax exemption on the imported merchandise has taken place at an accelerated rhythm as a part of the Neoliberal policies, going from tariffs of 290% in 1989 to a 5-10% for 2003. However, during the last 40 years, while the importations have increased form 20% to 40%, the exportations only register an increase of 3%. It seems as if the country went from a model that substituted the importations, encouraged during the sixties, to a model that substituted the local production with importations. Under this scheme, it would be necessary to ask how can a free trade agreement be signed with the United States without reinforcing the existing technology of the weakest productive sectors of the country in order to avoid its destruction with the arrival of the new foreign investments? It is upsetting to admit that despite that El Salvador is one of the most open nations, in terms of free trade, this country hardly stands on the 64th position of the world’s competitiveness rank (from a total of 75 countries). This is not a very flattering position if the objective is to compete with the countries that have such high standards and high subsidies.

As for the external economic policies, it should be necessary for El Salvador to have a legislation of free competition that regulates the inevitable imperfections and the injustice of the markets, not to close them but to turn them even more competitive. In reference to this situation, the Minister of Economy, Miguel Lacayo, says that a law of free competition “is not one of the priorities for the present government” (La Prensa Grafica 1-13-03). Therefore, all that can be expected from the CAFTA are the increasing differences and a “savage capitalism” of oligopolies and monopolies. Those who are after this kind of markets are only willing to defend their own interest and their high profits. This means that while the intention is to integrate the country into a non-regulated market, this country will become more vulnerable to the ever-changing market.

The United States approved a certificate of $41.3 million destined for the Central American region –foreseeing how painful it could be for Central America to become a part of the CAFTA-. And the World’s Bank has announced a monetary injection of $16 million, to stimulate the activities of the small Central American companies.

The governments and the business elite are based on a classic supposition: the free trade agreement will encourage the exportations of the different sectors, and this measure will create employment, it will increase the productivity and the income per capita. This will allow the country to obtain a higher economic growth. However, the weakness of the mechanisms to redistribute wealth is impressive. They are based on a false equation: growth equals development. There is a possibility for the national economy to grow with the free trade agreement, but no one can expect that the welfare of the people is automatically strengthened along with the Human Development Index, and the stimulation of equity, or that the marginalized sectors are rescued from extreme poverty.

According to some of the organizations of the civil society, the implementation of the CAFTA brings the following implicit dangers:
- The promotion of the privatization of both the public assets and the public services.
- More unemployment, mostly for women.
- The concession of employment without respecting the labor legislation.
- Obstacles for the free migration of the laborers.
- The destruction of the local agricultural economies, which are already suffering a crisis.
- The destruction of the environment and the biodiversity.
- The increase of the poverty levels and the inequality of the most vulnerable popular sectors.

The government, therefore, is showing its compromise with the search for the economic growth, but not with the achievement of a sustainable development for this country.

The academic world of the different American universities reports that the free trade has a limit when it comes to promote the economic growth, and how the emerging markets are prone to collapse when they open their financial markets. It has also reported how the lax authorities and the weak regulations of bankruptcy can end with a local economy that has recently opened its doors to the world’s economy. Joshep Stiglitz, a professor of Columbia University who received the Nobel Prize of Economy in 2001, says that “an economy that opens itself too fast, brings an imposed austerity to the poor countries that actually need encouragement, that is why the crisis grow inside the so called emerging economies”. The openness is a process of the globalization which “could become a force to generate wealth; however, technically, it has injured many of the poorest countries and the emerging markets”.