US embassy cable - 05GUATEMALA2693

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