Views on CAFTA's "human" face

UNCLAS SECTION 01 OF 02 GUATEMALA 002693 SIPDIS DEPT PASS USTR SENSITIVE E.O. 12958: N/A TAGS: ETRD ECON EINV SOCI PGOV PREL GT CAFTA SUBJECT: Views on CAFTA's "human" face ¶1. (SBU) Summary: Judging from a November 23 conference, views on the social and human aspects of CAFTA by top opinion makers are mixed. Concerns range from including the poor in CAFTA's benefits, to the asymmetries between Guatemala and the US and Guatemala's ability to compete. Supporters focus on the stable framework CAFTA should provide in many areas and the institutionalization of trade benefits. End summary ¶2. (U) At a November 23 panel discussion sponsored by the Opus Dei affiliated Universidad del Istmo entitled "The Human Balance Sheet of Trade," top Guatemalan leaders expressed a panoply of views on CAFTA, from sharply critical to strongly in favor. The panelists included Vice President Eduardo Stein, President of Congress Jorge Mendez Herbruger, President of the business association CACIF Marco Augusto Garcia, former Supreme Court President Rodolfo Molino, Head of the Association of Municipalities Roel Perez Argueta, Secretary General of the labor union federation, Jose Pinzon, and indigenous academic and activist Alvaro Pop. ¶3. (SBU) Stein, who was instrumental in CAFTA ratification, surprisingly started off by saying that CAFTA was a negotiation of elites imposed on Central America by the United States (note: the conference was closed to the press). He added that several years ago Central American leaders had proposed a free trade deal to the US and were ignored, if not ridiculed. However, the US did not count on problems with the FTAA and therefore turned to CAFTA-DR. He granted that CAFTA would be beneficial overall and gave it his support. However, he criticized the US on several counts. For example the US should not preach to Central America about the environment while being the largest producer of greenhouse gases and pulling out of Kyoto. Similarly, if the US wants to promote human rights, the US Congress should ratify the OAS' American Convention on Human Rights (note: 27 OAS members have.) Comment: Stein, who has been a close collaborator of the Embassy, is considered left-of-center within the conservative Berger administration. He may have been addressing leftist NGO representatives in the audience. End comment). ¶4. (SBU) Most of the other speakers stressed the importance of focusing on the human dimension of CAFTA. Mendez Herbruger said that CAFTA should be evaluated on more than statistical grounds, and that to compensate the poor it must have a complementary agenda including rural development and micro- finance. Perez Argueta focused on developing small firms, and called for more guidance and funding from the central government to help Guatemala's 332 municipalities. Molina, perhaps addressing Opus Dei supporters, stressed that Guatemala had lost its values during the civil war. CAFTA, by providing a strong framework for development, could help Guatemala regain those values. It is neither good nor bad in and of itself, he said - everything depends on its implementation. ¶5. (SBU) Predictably, the most critical of CAFTA was union boss Pinzon. He cited a recent World Bank study as saying that "trickle down" economics does not work. He criticized alleged plans to promote competitiveness by keeping salaries low, and asked how Guatemala can compete globally when half the population is illiterate. Solidarity should be with the masses of workers, not with capital, he emphasized, adding that CAFTA will be "hara-kiri" for small firms. CAFTA was not only imposed on the government by the US but also on the Guatemalan congress. ¶6. (SBU) Alvaro Pop, widely recognized as the foremost indigenous academic and activist, was more measured in his views. Although he questioned how Guatemalans who don't have a reading culture and may be illiterate are able to understand a 4,000-page agreement, he called CAFTA a good structure to fortify the state and thus help human and social development. However, he rejected the concept of CAFTA "rescuing" Guatemalan values or human development as had been suggested by another panelist and in a study commissioned by the conference, since these have never existed in Guatemala. He also cautioned that CAFTA will be trade between unequal partners, and claimed that NAFTA had not helped reduce poverty in Mexico or lessened emigration. He called on the government to focus on the indigenous, migrants and women during the CAFTA implementation process. ¶7. (SBU) As expected, and in a prominent spot as last panelist, CACIF president Garcia staunchly defended CAFTA. He called it a positive national agenda that will define the rules of the game and allow Guatemala to compete. While there may be only 20 Guatemalans who truly understand the text, and CAFTA and free trade won't resolve all Guatemala's problems, it is a good start. Up to now Guatemala has had to rely on renewable trade preference regimes and quotas. CAFTA gives a much better long-term guarantee of market access. It is in Guatemala's interest to take advantage of CAFTA and not leave trade agreements with the US to other countries. Garcia compared CAFTA support to the notoriously high drop out rate in Guatemalan schools. At first the classroom is full, but when the going gets tough and exams loom most drop out. What Guatemala lacks, he emphasized, is optimism. CAFTA is a chance to regain it. Wharton