ITUC OnLine – October 5, 2007

Brussels, 5 October 2007 (ITUC OnLine): On Sunday the people of Costa Rica are casting their vote in a referendum on the ratification of the DR-CAFTA, a free trade agreement between the US, the Dominican Republic and Central America (Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua). Costa Rica is the only one of these seven nations that has not yet ratified it.

The ITUC’s affiliates in Costa Rica, the CMTC (Central del Movimiento de Trabajadores Costarricenses) and the CTRN (confederación de Trabajadores Rerum Navarum) have been deeply involved in the campaign for a NO vote. On Sunday September 30th, the last official day of the campaign, a huge demonstration calling upon the people of Costa Rica to vote NO took place in San José, with massive trade union mobilisation.

The ITUC supports the position of the Costa-Rican unions, also backed by the AFL-CIO in the United States. “The proposed agreement fails to take account of the impact DR-CAFTA stands to have on workers’ rights and other decent work issues,” said ITUC General Secretary Guy Ryder. “It is extremely likely that an acceleration of trade flows between both regions will further erode respect for core labour standards. It is, in fact already extremely difficult for workers in Central America and the Dominican Republic to organise into trade unions, as would-be members face intimidation, threats, dismissal, and blacklisting.”

In the case of maquiladoras (also known as Export Processing Zones or EPZs), employers place great obstacles to trade union organising and collective bargaining. Abuses of workers’ rights abound both in Costa Rica and in the other countries covered by DR-CAFTA. Furthermore DR-CAFTA contains no protection for women against discrimination and other groups that have historically faced abuse in the workplace.

Despite the overwhelming evidence of workers’ rights being routinely abused, DR-CAFTA offers no solution. Its single enforceable workers’ rights provision requires only that countries enforce their own labour laws, laws that the International Labour Organisation has documented as failing to meet international standards. DR-CAFTA contains no enforceable provision preventing countries from weakening or even eliminating some of their labour laws. In this sense DR-CAFTA can be seen as a step backwards since under existing commercial laws the US can withdraw trade benefits from Central American and Caribbean countries not only if they do not enforce their labour laws but also if those laws do not protect workers’ rights.

CAFTA does not just fail to address workers’ issues. Its impact on the development prospects of the Latin American sub region is debatable. Indeed if the trade deal goes into effect, 80% of U.S. industrial goods will enter Central America and the Dominican Republic duty-free, with the remaining tariffs to be eliminated entirely after 10 years. This will largely prevent the Latin American countries from protecting their own industries from external competition and may therefore jeopardise further industrial development plans.

CAFTA also opens the door for introducing competition into Costa Rica’s telecommunications and insurance markets, both of which are publicly run today. A liberalisation of such markets would entail the privatisation of these services, with particularly damaging consequences for employment.

In the agricultural area, CAFTA does not dramatically increase access to the U.S. market for the Dominican Republic and Central America, but it does eliminate those countries’ tariffs on basic grains such as rice, beans and corn. This may have a detrimental effect on Central America’s agricultural sector because relatively small-scale farmers will not be able to compete with subsidised agricultural imports from the US. A negative impact on the livelihoods of the rural poor – the majority of the population in many of the countries – can be expected.