Citizens are always sensitive when it appears that foreign governments and corporations and international tribunals are intervening ...

Citizens are always sensitive when it appears that foreign governments and corporations and international tribunals are intervening in their sovereign affairs. During the last few weeks, we've seen the people of Guatemala and El Salvador push back against efforts by the United States, Monsanto, and Australian-Canadian gold mining companies to require national governments to abide by national and international agreements over the objections of domestic constituents.

In Guatemala,

On September 4th, after ten days of widespread street protests against the biotech giant Monsanto’s expansion into Guatemalan territory, groups of indigenous people joined by social movements, trade unions and farmer and women’s organizations won a victory when congress finally repealed the legislation that had been approved in June.

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The Monsanto Law would have given exclusivity on patented seeds to a handful of transnational companies. Mayan people and social organizations claimed that the new law violated the Constitution and the Mayan people’s right to traditional cultivation of their land in their ancestral territories.

The Guatemalan people's success followed similar efforts in El Salvador to defeat Monsanto. There, it took place within the context of the government's negotiations with the United States over a $277 million second Millennium Challenge Compact.

El Salvador is a recent example of corporate domination in U.S. foreign aid. The United States will withhold the Millennium Challenge Compact aid deal, approximately $277 million in aid, unless El Salvador purchases genetically-modified seeds from biotech giant, Monsanto.[1] The Millennium Challenge Corporation is “a U.S. foreign aid agency that was created by the U.S. Congress in January 2004,”[2] according to Sustainable Pulse, and serves as a conduit for foreign aid funds.

MCC’s unethical aid conditions would force El Salvador to purchase controversial seeds from the American biotech corporation instead of purchasing non-GMO seeds from the country’s local farmers[3] – an action that would have negative effects on El Salvador’s agricultural industry in addition to presenting serious health and environmental risks.

Sure the laws were meant to give Monsanto a foot in the door, but they were also simply designed to have foreign companies treated in the same manner as domestic companies (give or take) as everybody agreed to in CAFTA-DR (that free trade agreement pursued by the Central American governments with the US). The US eventually relented on Monsanto and it was recently agreed that the two parties would go forward with the second compact.

Unlike agricultural reform, the evil CAFTA-DR is also being used to reforms that the left is cheering.

The United States accused Guatemala this week of failing to live up to the labor standards spelled out in the countries' trade agreement, pursuing a case that could lead to fines if Guatemala doesn't move to better protect its workers.

U.S. Trade Representative Michael Froman said he was moving ahead with the case in hopes that Guatemala, a partner of the U.S. in the Dominican Republic-Central America Free Trade Agreement (CAFTA), would make "concrete improvements" in enforcing labor laws already on its books.

"Our goal is to raise standards," Froman said at a press conference Thursday.

The case is being filed at a time when the U.S.-Mexican border is being overwhelmed by young immigrants, many of them Guatemalan children and teens fleeing violence in their home country. Froman said the complaint was aimed at helping to make Guatemala a safer place to live and work, so that its citizens don't feel compelled to "embark on a dangerous journey of migration."

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The Guatemalan government agreed last year to follow a plan to address the country's labor law violations. Froman, who traveled to Guatemala this summer, said the country had taken "significant steps" since then.

But Guatemalan union leaders insist the government hasn't made sufficient progress in addressing the violence. Those unions first raised their concerns back in 2008, when they filed a joint petition with the AFL-CIO calling on Guatemala to make good on its commitments.

The case announced by the trade representative's office Thursday will create an arbitration panel to determine whether or not Guatemala is failing on its obligations.

See also here and here. It's nice to see the US using its free trade agreements to enforce worker protection rights but where's the outrage with against the US for using its free trade agreement with Guatemala to interfere with the country's internal affairs? Is the process with regard to labor versus Monsanto so different or is it simply the presumed outcome of that pressure?

Finally, there's gold mining in El Salvador.

A multilateral arbitration panel here began final hearings Monday in a contentious and long-running dispute between an international mining company and the government of El Salvador.

An Australian mining company, OceanaGold, is suing the Salvadoran government for refusing to grant it a gold-mining permit that has been pending for much of the past decade. El Salvador, meanwhile, cites national laws and policies aimed at safeguarding human and environmental health, and says the project would threaten the country’s water supply.

“This mining process would use some really poisonous substances – cyanide, arsenic – that would destroy the environment. Ultimately, the people suffer the consequences." -- Father Eric Lopez

The country also claims that OceanaGold has failed to comply with basic requirements for any gold-mining permitting. Further, in 2012, El Salvador announced that it would continue a moratorium on all mining projects in the country.

Yet using a controversial provision in a free trade agreement, OceanaGold has been able to sue El Salvador for profits – more than 300 million dollars – that the company says it would have made at the goldmine. The case is being heard before the International Centre for the Settlement of Investment Disputes (ICSID), an obscure tribunal housed in the Washington offices of the World Bank Group.

“The case threatens the sovereignty and self-determination” of El Salvador’s people, Hector Berrios, coordinator of MUFRAS-32, a member of the Salvadoran National Roundtable against Metallic Mining, said Monday in a statement. “The majority of the population has spoken out against this project and [has given its] priority to water.”

Pacific Rim, Oceana Gold's predecessor, tried to pursue its claims through CAFTA-DR but its claim was rejected when it was determined to be a Canadian company and therefore not eligible to sue under this free trade agreement. Oceana Gold is now using the ICSID because the Salvadoran government became a party to that trade agreement in 1999.

Obviously many people would have preferred that the US and the countries of Central America had not signed a free trade agreement, but we have. After a decade of requests from Central American leaders, the US agreed and the agreement was signed in 2004, becoming effective a few years later. I'm just not comfortable blaming CAFTA-DR for all of the region's recent economic problems as was frequently heard during this summer's unaccompanied minors crisis.

The free trade agreement can be used to enforce laws to benefit more positive outcomes enjoyed by large (workers' rights) or small (mining corporations) groups. The Central American country that tends to get some of the highest marks from CAFTA-DR and for addressing workers' rights is Nicaragua. While not perfect, Nicaragua seems to be benefiting from CAFTA-DR to a greater extent than its neighbors (at least in the media). Part of that is due to its poverty (they received special benefits) but there are other factors as well.

While, for now, I am happy that the Monsanto laws were repealed or not passed and that the US is using CAFTA-DR to help promote workers' rights in Guatemala, it's not based on any principled reasoning. If anything, it's based upon what I see are outcomes that serve the needs of some of the region's most vulnerable. Now, I'm just waiting for a vote in favor of the environment in El Salvador.

Business Implications of El Salvador and Costa Rica Votes

I spoke with Mark Keller last month about the potential political (and business) implications of the Costa Rican and Salvadoran elections. Some of my thoughts appear in this Latin Business Chronicle article entitled Business Implications of El Salvador and Costa Rica Votes

“The new administration should be somewhere between moderate left and radical left,” says Uccelli of JP Morgan. Current president Mauricio Funes, widely considered more moderate than the party’s old guard, focused on social investment, including providing meals in schools and aid to women which have proven popular.

Sánchez Cerén has promised to keep these programs, and may try to expand them, says Uccelli. He has also promised to create jobs, foment small business, and employ a “mano inteligente” approach to crime, favoring strengthening the police over the military in combating transnational drug crime. University of Scranton Professor Mike Allison, who spoke with LBC in February, also says the FMLN would be more sensitive to environmental concerns and opposed to opening mining in the country, a fact which could have economic implications for the country which has suffered sluggish economic growth in recent years.

I'm pretty sure that most would agree that there is not going to be a serious activation of the mining sector in the country under Sanchez Ceren and the FMLN. As I also said to Mark, the FMLN will probably be more concerned with the environmental implication of a variety of economic development strategies, not just in regards to mining.

The second Millennium Corporation Compact negotiated between the US and Salvadoran authorities calls for large investments in the coastal and maritime areas of the country in order to promote tourism and the agro-export industry. However, given the environmental vulnerability of those regions, many Salvadorans are against much of the planned development. It's not clear how committed Mauricio Funes was to striking the right balance between environmental and investor concerns, but I am pretty sure that Sanchez Ceren will be.

That might have implications for what happens to the second ~$300 million compact and is something to keep in mind.

Lawlessness Is Undoing Effort to Save Honduran Forests

Elisabeth Malkin has a new article on Lawlessness Is Undoing Effort to Save Honduran Forests for the New York Times.

COPÉN, Honduras — Nine men were harvesting mahogany deep in the woods here when Alonso Pineda and his son appeared, carrying shotguns. An arrest warrant hangs over the two for clearing the forest illegally, but on that day they posed as its protectors.

“This is private property, and that tree is contraband,” Mr. Pineda shouted, witnesses recalled.

Mr. Pineda’s claims were not true, presumably part of a ruse to seize the wood for himself. In fact, the men cutting the timber that day belong to a legal cooperative that has been managing the forest for almost 15 years under government agreements that include permits to collect valuable mahogany while leaving the rest of the woods virtually untouched.

“You’ll have to take me out of here dead,” replied one man. Someone else buzzed a chain saw, recalled another member of the group, Luis Ruiz, and the outlaw pair vanished among the trees.

It was just a fleeting glance of Mr. Pineda, who has led settlers into the woods to cut down trees and replace them with corn plots and pastureland, which can eventually be sold, forestry experts and residents say. The communities conserving the forest, which is owned by the state, say they are losing their livelihood because of such incursions.

Okay, this is embarrassing. In 1998, I went for a nice Chinese dinner in Tegucigalpa, Honduras and then on to the movies to see Titanic. There were not many choices. In fact, there might not have been any other choices. Anyway, by coincidence, I ran into Rob from Colorado who was serving as a Peace Corps Volunteer in Honduras. Rob and I actually studied abroad together in Argentina in 1995 and just so happened to see each other at the theater on the one weekend that he had to go into the city for a meeting.

Rob was working with local communities on conservation issues, mainly preventing deforestation. However, he complained that most of his job was involved helping various Honduran communities organize against US corporations involved in tearing down the forests. I just mention all this because big business was absent from the article. Are the clearing of forests by legal big businesses, domestic or foreign, not a concern?

And the second thing that I wonder is whether the Chinese are involved here too. Belize has been having difficulties managing the illegal harvesting of rosewood that is mostly sold to China.