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