In 2006, Guatemala finds itself in a critical situation that continues to worsen. Over half the population (56%) is poor, and 21% live in extreme poverty. Sixty-three percent of the GDP is concentrated in the hands of 20% of the population (GINI Index) and 80% of the population is not covered by health care.1 Unemployment is on the rise, increasing crime and insecurity. Conflicts over land, education, health, and the environment are tense.
Under these conditions, on July 1 Guatemala became the fourth Central American country to sign on to the Central American Free Trade Agreement (CAFTA). The nation seems to have no awareness of where this will lead. There was no negotiation, but rather, compliance to a text drafted in Washington along a one-size-fits-all model. The only thing that changes is the condition for free trade of a particular product. The agreement was accepted, praised, and declared without any prior research into its consequences.
Guatemala’s Congress did recognize that CAFTA would have negative social effects, but did not specify how. The promise to legislate compensatory measures was an empty gesture to get the measure passed. To date, no studies have been carried out or legislation passed, but Congress continues to comply with Washington’s demands.
Life Under CAFTA
The passing months provide some colorful examples of how things have been managed under the agreement. The solution to these problems should have been studied before implementation; now we are scrambling behind with makeshift measures.
The deregulation of chicken imports has caused a row in the business community over who should get the candy from the piñata. The dumping of North American chicken on the Guatemalan market is damaging to some and beneficial to others in the private sector.
The negative consequences of buying subsidized chicken are felt by all those who depend on any part of the productive chain of raising chickens.
The benefit, in theory, is that dumping lowers the price for the consumer. But to assume this ignores two facts: a) competition is not always something importers want, and b) between importation and retail are highly controlled and monopolized distribution channels.
Chicken requires a refrigerated distribution system, and that cannot be improvised. In Guatemala, the system belongs to the already-established importers, so all 21,800 metric tons (MT) of imports under the duty-free quota end up with them. The auction really only divvied up the first half among the same old clients.
At 0.25 Guatemalan Quetzals per pound (US$0.03), the pushing and shoving for the 10,900 MT is justified because it is sold to the public at seven Quetzals a pound. These healthy profits have already inspired the curious