CAFTA: More Exploitation and Misery for the Peoples of Central America - For a Socialist Alternative to Restrain U.S. Imperialism!

Toward the middle of December, 2003, the bourgeoisie of Central America celebrated the signing of the Central American Free Trade Agreement (CAFTA) with US imperialism. This new trade agreement is presented as the "road to the development of Central America" and as a means to overcome the economic backwardness of the region. But is this certain? Will there be any type of benefit for Central American workers and peasants?

If there is any region of Latin America where the failure and bankruptcy of capitalism are more than evident, it is Central America. To illustrate this it is sufficient to point out that the entire production of Central America equals 70% of the economy of Colombia and 95% of that of Peru - and these two nations by themselves are already poor.

During the past decade Central America experienced a period of economic expansion where the region's exports grew from US$7,915 million in 1994 to US$11,666 million in 1998, among other things. Nevertheless, the benefits for the approximately 35 million Central Americans were extremely limited. During the past decade, of every ten jobs created, six were low-income.

This result is not surprising in the context of all those nations that play a subordinate role in the world market and in the international division of labor. Given these factors, we must add that at the same time as the region's exports reached the quantity mentioned above in 1998; in that same year the total foreign debt of Central America reached US$22,916 million dollars. This is equivalent to 196% of the value of exports. During the period in question, the debt meant, and still means, an enormous burden and bleeding for the economy of Central America, in which the workers and peasants were forced to pay a very high price. Today one out of every four Central Americans suffers hunger.

NAFTA and the bitter Mexican experience

Toward the middle of December, 2003, the bourgeoisie of Central America celebrated, with a great deal of noise, the signing of the Free Trade Treaty (CAFTA) with U.S. imperialism. "Now the road to the development of Central America is indeed open!" these bourgeois boasted loudly after the signing of the treaty, which will take effect in 2005.

But is this certain? Is it true that with CAFTA the countries of the region will overcome economic backwardness? Will there be any type of benefit for
Central American workers and peasants? Obviously, it is easy to answer "No!" to each of these questions. It is enough to look at Mexico, a nation whose economy is stronger than that of all of Central America, a nation that, together with Canada and U.S. imperialism, established a free-trade treaty (the North American Free Trade Treaty, NAFTA) that has existed for the last ten years. After all this time, the results for
Mexico, and especially for the workers and peasants, have been disastrous. Agriculture is in ruins, jobs are tremendously endangered, and more than 60% of the population lives in poverty. These are only some of the phenomena that appeared in Mexico under NAFTA.

However, together with this, in Mexico, a profound process of concentration of the wealth of the country has made and continues to make Mexico one of the principal producers of multimillionaires, according to specialized magazines like Forbes and Fortune. This has been the reality of NAFTA for the Mexicans, and it is very far from the promises of development and well being made by then President Salinas after the signing of the trade treaty with President Clinton.

The reality of the matter is that the Central American oligarchy, relying on the Mexican experience, sees in CAFTA the opportunity to follow the example of the Mexican multimillionaire Carlos Slim, who has the biggest fortune in all of Latin America.

CAFTA: Something new for Central American exports?

The Central American oligarchy wanted to present CAFTA as an important and original step forward for exports of the region to the U.S. market. Is that certain? In this regard, one must remember that since 1982 exports of the region have been regulated by the Initiative for the Caribbean Basin (ICC). This measure, which was established by President Reagan as a concession along with other actions, was an attempt to try to isolate the guerrilla movements and popular uprisings of that period. The agreement permits almost total access for Central American products to the U.S. market without payment of tariffs.

Thus, to a large extent, one can say that by itself the ICC already permits free transit for Central American products to the U.S. market. On this basis, it is correct to declare that for regional production, as far as its access to the planet's most important market is concerned, CAFTA does not represent anything new.

It is also clear that CAFTA does not represent anything new for the Central American proletariat and peasantry, since, in a little more than two decades, the ICC has not solved anything insofar as the misery which is disheartening the Central American proletariat and peasantry is concerned. And neither will CAFTA.

Who wins with CAFTA?

In this entire situation, we must certainly take into account that some Central Americans will benefit from the new trade agreement, but this is a tiny minority, particularly those sectors of the bourgeoisie closely linked to U.S. transnational corporations.

Nevertheless, U.S. imperialism is the main beneficiary, especially because the signing of CAFTA, side by side with NAFTA, represents an important geo-economic precedent leading to FTAA (Free Trade Treaty of the Americas). In this way, the U.S. transnationals see the crystallization of their ambitions concerning all the markets of North and South America as much closer.

Some people say this is the main, if not the only, reason that Bush pushed for the signing of this commercial agreement. Certainly, CAFTA puts imperialism in an advantageous position, insofar as its ambitions concerning all the markets of the entire continent are concerned, and this is by itself a special and very important reason to make these types of commercial agreements with the countries of Central America. But matters do not remain there.

Those who declare that the FTAA is imperialism's main or only reason to push for this commercial treaty with Central America rely on the fact that the market between this region and the U.S. is worth approximately US$20,000 million. They assure us that such a quantity does not represent an important stimulus for Bush. In our opinion one must look calmly at this, and to this end it is necessary that we refer to the present state of the world economy, and, especially, of the U.S. economy.

The economy of the principal imperialist powers is in a serious predicament, and the trade balance of the U.S. has a worrisome deficit. In these conditions, one of the most important remedies is to extend and shore up the U.S. sphere of influence at all costs. In this context even the smallest markets turn out to be enormously attractive for the different imperialist powers. In any case, such is the situation of U.S. imperialism with respect to Central America. If this were not the case, then it would be necessary to ask the different transnational corporations with interests in the region if Central America had not yielded ample profits. What would be the sense in having spent millions of dollars in coups, military interventions, and in low-intensity dirty wars?


The commercial treaty with the U.S. will put Central American agriculture in a much weaker position than at present. This is not an unimportant question - quite the contrary. It is necessary to mention that agriculture is an activity to which 60% of the regional population is directly or indirectly connected. At this stage, the agriculture of Central America is already suffering what may be considered grave problems. On the one hand, the striking fall in the price of coffee, which is an important source of currency in the region, has increased the misery of millions of peasants who are engaged in coffee growing. On the other hand, the constant decrease in the production of basic grains that has occurred in recent years is affecting broad strata of the population, which are suffering a famine similar to that which is being experienced in the poorest countries of Africa.

It is under these conditions that Central American agriculture will have to compete with the robust U.S. agro-industries, which, after CAFTA comes into force, will enjoy free access to the Central American market, in spite of the fact that Central American tariffs are the lowest in all of Latin America.

U.S. agriculture will acquire an enormous advantage from the tariffs and from the gigantic subsidies that it receives (US$28 billion annually). This will permit it to export corn and wheat, for instance, with prices between 20% and 46% below the
cost of production.

Taking all this into consideration, it is not difficult to predict the future which CAFTA has in store for Central American agriculture. It can only bring as a consequence greater misery in the countryside, the increase of hunger and a rising tide of migration from the countryside to the city, which will surpass present migration.

Consequences for urban workers

Imperialism has taken a look at profitable and cheap Central American labor. While in the U.S. a bad salary is not lower than five dollars an hour, in Nicaragua, for instance, it hardly reaches 25 cents. The difference is significant, and the profits are more than obvious.

But imperialism does not want problems and has taken the relevant measures: one of the clauses of CAFTA prohibits the creation of unions in assembly plants owned by non-Central American capital. It is clear that in search of bigger profits, imperialism, allied with the local bourgeoisie, will try in every way to exploit the workers, who are already suffering an abominable situation. At present, the workers in only 45 of the 1,212 assembly plants registered in Central America have trade union representation.

Two other elements that should be considered, which will finally have profound negative consequences for the working class, are the interregional market and the assembly plants already set up in the region.

Although the U.S. market has acted as an important pole of attraction for Central American goods, the interregional market has also played a role of a certain importance for the local economies, although to a lesser extent. This is a market that is preferentially oriented to small and medium-sized industry; and when CAFTA comes into force, these entrepreneurs will have to share the Central American
market with imperialism. Eventually we will see how interregional exports will gradually decrease and how this local industry will be displaced. All that will mean the ruin of this type of enterprises. And, insofar as the working class is concerned, this
perspective comprises a potentially bitter future, given that for nations with a backward economy, small and medium-sized industries are the main source of jobs.

For assembly plants already set up, things are not going better. The textile industry, which employs approximately 400,000 Central Americans, is a good example of this. Already in 2001, as a result of the economic slowdown of the U.S., which is the main destination for textile exports, this industry suffered the loss of 90,000 jobs. But in addition to that, owing to the entry of China into the World Trade Organization (WTO), Central American textiles are now becoming victims of enormous pressure in the competition for the U.S. market. China possesses a greater established capacity for the production of clothing and textiles. China is the main producer of cotton, synthetic fibers, and silk. In addition to this its production costs are among the most competitive on an international scale.

These attributes have put China in a very favourable position compared to the great majority of poor countries in the struggle for the U.S. market. This is the case with Mexico, which has now been displaced by China as the traditional exporter of at least 20 products. In fact, U.S. textile manufacturers calculate that in a couple of years, Chinese dry goods could control 75% of the U.S. market.

To top off the misfortunes, Central American textiles will have to confront the consequences of the end of the Multifiber Accord (which is a system of quotas that controls world textile production) anticipated for January, 2005. The end of this treaty, which among other things, contained for some years 60% of the established capacity of Chinese textiles, will mark a sudden and profound change in production and in the world textile market, with important consequences for all producers. There are studies that indicate that the introduction of Chinese textiles into the U.S. has already cost more than 300,000 jobs. The most disastrous consequences will take place in the most backward countries, as is the case with the Central American nations.

But things do not stop there. On the other hand, another demand of U.S. imperialism for textiles and other Central American products is that the raw material these goods are made of must completely originate in the territory of the signatory countries. This measure represents a real problem for the Central American textile industry, which, in search of greater competitiveness during an economic crisis, has chosen to import ever greater quantities of raw materials from Asia, because they are cheaper. For example, 40% of textile production in El Salvador uses raw materials from Asia.

This protectionist measure on the part of imperialism will force Central American textile manufacturers to find a way to offset this imbalance, and it is certain that the responsibility for trying to maintain a certain margin of competitiveness will fall mainly on the backs of the working class.

A bigger social polarization

Another element that illustrates the consequences of CAFTA and its sequels on the peoples of Central America will be the reduction of revenues that the different governments will experience after the elimination of tariffs. And in this case, as in the examples mentioned above, someone will have to pay the price. And the bourgeoisie will not think twice about sending the bill to the workers by means of more taxes and reducing, if not eliminating, what is for itself already a bad public investment in the most urgent needs of the peoples of Central America.

With CAFTA, the only thing that is certain is that suffering will become more intense and extended to an ever growing portion of Central Americans, reaching inclusively broad sectors of the shrinking middle strata. All that will impel a bigger social polarization with enormous and important political consequences for the region. In fact, at this stage, we can already see signs that are only an announcement
of future episodes in the Central American class struggle.

It is enough to refer to the strikes and mobilizations that have already restrained recent attempts at privatization, such as the public health service in El Salvador and the electrical industry in Costa Rica. The victory of Farabundo Marti in the 2001 municipal and parliamentary elections in El Salvador should be seen in the same sense; and the last general strike in Panama should not be forgotten. But it is also necessary to mention a phenomenon that is ever more frequent in the Central American class struggle: the burning of assembly plants. This has been the reaction of hundreds of workers when a business suddenly closes and lays off everyone to move its premises to another region or when, as payday arrives, the enterprise withholds the wages and does not pay anyone. This was the case with the Camtel, Bentex and Modas Azteca assembly plants in Guatemala.

All those expressions reflect the exhaustion of patience and an ever-deepening desire for change among Central American working people, sentiments that will be catalyzed even more by CAFTA, resulting in expressions of struggle unpublished not seen for the past decade in Central America.

In fact, the fear of this potential scenario and the bitter memory of the Costa Rican bourgeois after their defeat at the hands of workers in the attempt to privatize the electrical industry was what made the government of that country hesitate at arriving at an agreement with imperialism during the round of negotiations last December. On that occasion, the Costa Rican government demanded bigger guarantees for Costa Rica's agriculture and emphasized that it was not ready to discuss privatising telecommunications. Of course, imperialism did not accept these demands, and the negotiations concluded without Costa Rica's signing. Now, at last, the Costa Rican government has yielded to imperialist pressures, and it accepted the CAFTA protocol at the end of January. For their part, the workers of Costa Rica have made their position on CAFTA clear: “The TLC (CAFTA) will be defeated in the streets . . ."

For a socialist program for Central American workers

There is no doubt that the reaction of the proletariat and peasantry of Central America will be to leap onto the stage seeking a way out of its difficult situation. In this search the confrontation with the bourgeoisie and the transnational corporations will gradually acquire bigger expressions. But neither should we doubt that imperialism and its partners from the local bourgeoisie, out of fear of possible nightmares, will try to use the same means of repression they have used in the past to crush the workers of this region before the culmination of the workers' and peasants' struggles.

Before the brutality that the bourgeoisie and imperialism are preparing for the Central American workers both in the countryside and the city, it is necessary to wage an energetic struggle to provide a real revolutionary alternative to put a definitive end to the catastrophe which millions of families are now suffering in this region. A program which would have as its essential elements the seizure of power by the workers and the elimination of private property over the principal means of life in order to put them at the disposal of the needs of majorities by means of a planned economy.

But a program is also needed that makes the working class, in alliance with the poor peasantry, the principal crux of action in the struggle against capitalist and imperialist oppression. Any initiative that tries to replace the action of the masses (mass mobilizations, work stoppages, blocking highways, strikes, etc.) in the streets, the factories, the neighborhoods and the communities, is condemned to failure.

The failure of the different national liberation movements, which explicitly or implicitly recognized the existence of a supposed nationalist or progressive bourgeoisie, can be explained by their attempt to substitute the guerrilla struggle for the role of the masses in the class struggle and the absence of a program which clearly and convincingly sets forth the elimination of private property. This conception of reality, on the one hand, prevents the oppressed classes from clearly recognizing their enemies and, on the other hand, comprises an enormous danger since it gives the nationalist or “progressive” bourgeoisie an important opportunity to manoeuvre and attempt to derail and lead any struggle which endangers the interests of the bourgeoisie, that is, private property to defeat.

For a Socialist Federation of Central America

For many decades the economic resources of Central America have been at the brazen and unpunished disposal of U.S. imperialism. During all this time imperialism has acted to shelter and collaborate with the bourgeoisie and landowners of the region. All of this has been translated into a more than bitter experience for working people, who were subjected to brutal repression every time they dared to protest. The only thing CAFTA offers is to prolong the already long-lasting nightmare Central America is experiencing. CAFTA really means the organization of economic and natural resources of Central America under capitalism.

But it is also necessary to recognize that no Central American country has salvation by itself alone and aside from the rest of the nations of the region. A triumphant revolution in any of these countries will have to set forth a policy of extending the revolution to the rest of the nations. Otherwise, that country would be isolated by imperialism, and the rest of the regional bourgeoisie would push the revolution to defeat.

And so another element of vital importance for the future of the revolution in Central America is the fact that in each of the countries the proletariat is inspired with deep internationalist feeling in each one of their actions in their struggle against repression. From this arises the necessity of championing a program which has as a key aspect the appeal to all the Central American workers to struggle for a Central America unified along socialist lines. A Socialist Federation of Central America would mean the coordination of the economic resources and enormous natural reserves which the region has at its disposal - not for the profit of imperialism or the bourgeoisie, but for the advantage of the workers of the countryside and city. A federation with these characteristics, controlled democratically by the workers, would immediately become a solid material base for eliminating at the same time all the suffering that has shaken Central America for many decades forever.