Other must-read articles in the Spring issue.
CAFTA-DR has already produced groundbreaking results.
Anyone who remembers the 2004 debate in the U.S. Congress over the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) likely recalls a contentious and emotional tug of war over the commercial merits and the adequacy of labor provisions in the bill. Nearly five years, $84 million to support labor capacity building and more than $1 billion in overall trade-related assistance (including three Millennium Challenge Corporation compacts) later, CAFTA-DR’s implementation is still a good story to tell.
For the first time in a free-trade agreement, CAFTA-DR includes Trade Capacity Building as one of the law’s core chapters, thus recognizing the asymmetrical development between participating nations and the certainty that the transition to lowered tariffs will involve hardship. It also mandates that a separate committee be responsible for evaluating trade capacity-building progress. This includes analyzing the human, infrastructural and institutional development assistance necessary for countries to more fully participate in and benefit from global trade.
Many who opposed CAFTA-DR questioned whether the bill would ensure that workers in these developing countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic) would be subjected to derogation of labor laws and loose compliance, or worse. Convictions on both sides of the debate were strong, and the close final votes in Congress reflected the polarized discourse: the Senate passed the implementing legislation in June 2005 by a vote of 54 to 45, and one month later the House of Representatives followed with a vote of 217 to 215.
The United States pursued this multilateral trade agreement in an effort to go beyond previously enacted unilateral preferential trade benefits provided to Central America. U.S. businesses argued the agreement was necessary to balance the gains made by firms from nations with established bilateral access to the region. Beyond the commercial and economic policy interests, strategic geopolitical concerns played a role in the bill’s ratification. The U.S. expected CAFTA-DR to buttress regional stability by deepening democratic gains, strengthening the rule of law, promoting employment opportunities, and helping to combat organized crime and drug trafficking.
Like most other trade agreements, CAFTA-DR liberalized trade in goods, services, government procurement, investment, and intellectual property. It immediately eliminated duties on 80 percent of U.S. exports in manufactured goods and 50 percent of those for agricultural goods. The remaining manufactured goods are phased out over 10 years; agricultural goods have a 20-year phase out.
The challenges ahead for Chile's two dominant political coalitions.
Latin America’s political pendulum has shifted markedly to the Left in the last decade, with presidents of populist or social democratic bents sweeping into power across the region. But some analysts have pointed to the election of Chilean President Sebastián Piñera as the beginning of what could be a swing back to the Right.
They’re wrong. A more accurate reading of Chile’s January election is that the center-left Concertación coalition lost—not that the center-right Coalición por el Cambio won. It is now clear, in the wake of the calamitous February 27 earthquake and tsunami, that both of the country’s political coalitions have an uphill struggle to win public support and trust. The Piñera government must capitalize on its can-do image while demonstrating that it is concerned about the poor. The Concertación must demonstrate that it can effectively respond to the demands of the population, including opening up its closed political clique.
The heaviest burden may be on the Concertación, one of the longest-lasting and most successful coalitions in Latin American history. The success of the Concertación, which governed Chile since its return to democracy in 1990, was due to its ability to devise a formula for governing based on consensus among the disparate collection of center-left political parties that opposed the military government of Augusto Pinochet. The strategy also involved negotiation with powerful players such as the military. This formula ushered in high levels of economic growth, impressive strides in eliminating poverty and remarkable political stability—a model example for democratic transition around the hemisphere.
The alliance’s fourth president, Michelle Bachelet, who turned power over to Piñera on March 11, left office with an approval rating approaching 80 percent. With such a notable record of governing and high levels of public support, how is it possible that the Concertación lost?
In many ways the coalition was a victim of its own success. The political model it created for governing Chile worked well during a period of democratic transition, but the model was seriously deficient in terms of representation, citizen participation and accountability. These “enclaves of the transition” became deeply entrenched in the Concertación’s style of government. Ultimately, this, rather than more compelling arguments presented by opponents, was what led to its defeat.
The Concertación’s formula of power helped build consensus, but the arrangements that allowed it contributed to an image of elitism, arrogance and excessive party dominance that led to its defeat. One example is the agreement that various parties of the Concertación would share presidential cabinet portfolios based on their relative strength and a general rule that ministers had to be of a different party than the sub-secretaries.
This ingenious arrangement was central to the success of the transition and provided widespread party input into government, underwriting the legislative success of presidents. But it also quickly came to reek of cronyism and elitism, with Chileans referring to it derisively as the “cuoteo,” amid accusations that political positions were distributed based on party connections rather than qualifications.
Like cabinet appointments, the distribution of legislative candidacies was also decided at the elite level, bypassing the concept of an open primary with citizen input. Presidential candidacies were similar deals, struck behind closed doors with a faint notion of openness. Over time, Chileans gradually came to perceive that back-room deals rather than democratic processes determined who ruled.
Panama's Ambassador to the U.S. on why the region needs to address security challenges collectively.
The future of inter-American affairs is anything but certain. Our divisions and struggles are not new, but our troubles and interests have become increasingly intertwined. The challenges facing our hemisphere—poverty and inequality, political stability and citizen insecurity—have not dissipated. But for too long, we have been unable to settle our differences to find common ground and create a path for a better future.
The state of inter-American affairs today is an unmistakable outcome of our turbulent struggles of years past. Despite a renewed sense of hope for the region this past year, we have been unable to coalesce around the goodwill that was created. Instead of constructively working together to resolve many of today’s difficult challenges, we are left with a sense of loss.
Every member of our community of nations plays a key part in the inter-American system. But, more importantly, it is the role each country assumes that defines its scope for success and that of the hemisphere as a whole. That is not to say that the success of countries hinges completely on the international system, but our international efforts reinforce our domestic policies by bringing greater prosperity and stability at home.
At the end of the Cold War, a future of deteriorating cooperation was not the expected path of the Americas. Exhaustion from political turbulence for some, troubled finances for others, and the collective yearning for a new era in Latin America triggered a shift away from the polarizing politics of earlier decades. A bold vision of democracy, social justice and respect for human rights, together with the economic prescriptions of the Washington Consensus, promised to usher in a new era of prosperity and peace in the hemisphere.
Panama, which I represent as Ambassador to the United States, adjusted its fiscal and monetary policies, redirected public spending to education and investments, deregulated its industries, and strengthened property rights. Other countries did the same. A driving desire for openness and macroeconomic stability, which to this day remains one of the most powerful and dynamic factors bridging North, Central and South America, spurred a period of intense bilateral and multilateral commercial negotiations to open new markets and secure access to financing. Social concerns and a common commitment to prosperity and security paved the way for a regional transformation and greater interdependence within the inter-American system. This dynamic brought us closer together—until new periods of strife and a further fracturing in the hemisphere emerged.
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.