Synopsis
USAID has worked in coordination with other U.S. Government
Free Trade Agreement (CAFTA) negotiations and to improve
trade capacity in Central American countries. Central to
the process was the CAFTA Trade Capacity Building (TCB)
Working Group. The Working Group helped Central American
countries mobilize donor, private sector, and nonprofit
support to address priority TCB needs, to identify countries'
national TCB strategies on preparing for trade negotiations,
implementing trade agreements, and transitioning to free
trade.
In this session, a panel will review this experience with
an emphasis on the kinds of assistance mobilized during
this process, especially with reference to improving the
trade policy consultative process, addressing key capacity
building needs in regulatory areas such as customs and sanitary
measures, and fostering trade-led rural diversification
and small business development.
Notes
William Brands, Political Economy Policy Analyst,
LAC
William Brands, Team Leader for the Economic
Growth Office in the Latin American Caribbean Bureau painted
a picture of the structure and communication within the
Trade Capacity Building Working Group. Carlos Torres, of
the Carana Corporation and Chief of Party for USAID’s
Rapid Response Mechanism supporting the trade process in
Central America, highlighted some important efforts surrounding
civil society outreach during the Central American Free
Trade Agreement (CAFTA) process. During the CAFTA negotiations,
Aler Grubbs was essentially the Secretariat for USAID for
the Central American countries in the negotiations and is
currently the Desk Officer for Bolivia and Argentina. She
covered examples of USAID trade capacity building assistance
during the CAFTA negotiations.
The purpose of the seminar was to demonstrate the importance
of trade and aid working together, as trade has oftentimes
been looked upon more favorably for development than has
aid.
Developing countries raised their voices at the Doha Round
in 2001 desiring a more active role in the global economy.
According to Brands, they identified the need for donors
to help them improve their negotiating approaches and successfully
implement trade agreements. They also recognized the need
for transition within their economies to be better receptive
to these agreements.
Tying assistance to trade negotiations presents new challenges
for USAID. However, increasing trade and investment in the
Western Hemisphere is the greatest priority for the Latin
America and Caribbean Bureau, a priority that is echoed
by the Administrator and Assistant Administrator. Brands
also mentioned the Free Trade Area for the Americas (FTAA),
a goal espoused by all of the leaders of the Western Hemisphere
for the last 10 years. USAID’s direct involvement
in trade negotiations has
1. fostered relationships between USAID and other government
agencies,
2. brought program agencies together with policy agencies,
and
3. necessitated development agencies to craft mechanisms
that are responsive to the trade process.
Integrating USAID and development goals into international
trade negotiations has not happened without some struggle.
For instance, USAID’s long-term outlook had to be
married with USTR’s more short-term planning framework.
In addition, though USAID sought to even out the trade playing
field between developed and developing countries, they had
to beware of potential conflicts that could be engendered
by a U.S. agency—USAID—essentially rooting for
the ‘opposite team’ by facilitating trade negotiations
for developing countries against the U.S.
Bringing development goals into the international trade
arena also increased the need for cooperation with intergovernmental
organizations, like the Inter-American Development Bank,
and augmented the need for information dissemination to
and feedback from civil society.
In response to Doha, USAID worked with other agencies and
multilateral organizations to develop a format for developing
countries to plan their own national strategies for trade
capacity building. There were three ‘legs’ to
their strategies:
1. identify how donors could help them prepare for negotiations
2. identify how donors could help them implement trade agreements
3. help economies transition to a more liberalized, competitive
economy.
These trade capacity building strategies formed the basis
of countries’ requests for assistance.
The Trade Capacity Building Working Group, including representatives
of U.S. government, NGO’s, and other organizations
seeking to develop trade capacity, was established to work
hand-in-hand with the other negotiating groups during the
2003 Central America Free Trade Agreement (CAFTA) negotiations.
Throughout 2003 the U.S. held nine negotiating rounds with
five Central American countries and three additional rounds
in 2004 with the Dominican Republic. At each of the rounds,
the Trade Capacity Building Working Group met and discussed
the TCB needs of these countries.
The group’s participants included the Office of the
U.S. Trade Representative (USTR), USAID Washington and overseas
offices, U.S. Department of Agriculture, U.S. Trade and
Development Agency, and Department of Commerce, as well
as multilateral organizations such as the Inter-American
Development Bank, the Organization of American States, the
U.N. Economic Commission for Latin America and the Caribbean,
and the Central American Bank for Economic Integration.
Representatives worked with the Central American representatives
and with other negotiating groups to discuss trade capacity
needs and increase donor responsiveness to those needs.
The Trade Capacity Building Working Group worked to increase
the involvement of higher-level officials of each respective
country in trade capacity building discussions, and improved
dialogue among U.S. and Central American agencies. Washington
USAID offices and the regional Central America USAID mission
focused resources more in the near and medium term needs
around preparing for negotiations and implementing the CAFTA
agreement; bilateral USAID missions focused resources more
on the longer-term areas related to trade capacity, such
as rural diversification.
CAFTA--Civil Society Outreach and Key Lessons Learned,
Carlos Torres
Carlos Torres introduced the unprecedented
Civil Society Outreach (CSO) program implemented during
the CAFTA negotiations in 2003. It was the largest ever
civil society outreach effort in Central America. The USAID
program, through Carana’s program, supported a great
deal of this effort; additionally, the Central American
governments themselves carried out a great deal of this
effort with their own resources. The Program worked to ensure
the legitimacy of the negotiation through the inclusion
of NGOs, labor, environmental groups, and others in the
negotiating process. It also sought to reinforce democratic
values, by increasing transparency through dialogue with
civil society, and to provide feedback for government negotiators.
The CSO Program’s (supported by USAID) key strategies
included placing and keeping the FTA on the public agenda,
taking seriously the feedback from civil society, working
to establish the positive country outcomes of FTA, and building
alliances with FTA supporters to combat an active, organized
opposition.
Torres pointed out several conditions on which the program’s
success depended including government and negotiating team
credibility, a capable media, and early inclusion of the
legislative body in the negotiating process. The program
used two methodologies of implementation—first, information
dissemination through an Internet site, publications, and
a public liaison (with a 1-800 number that civil society
could call and receive a response), and second, feedback
mechanisms, such as a Civil Society Consultative Group and
submission of position papers.
Each of the five Central American countries took part in
the CAFTA–CSO efforts. A region-wide glance at program
efforts shows that more than 1,350 seminars and forums were
held, with more than 10,000 participants and strong media
presence. Torres mentioned that during breaks in the negotiations,
civil society was able to approach negotiators for discussion.
In addition, the CSO programs followed a comprehensive
framework that entailed direct consultation meetings and
discussions with productive sectors, NGOs, academics, and
members of the Legislative Assembly. A ‘CAFTA Civil
Society Inventory’ was established which consisted
of hundreds of document meetings with key NGOs, business,
and academics. The inventory gave proponents of FTA an opportunity
to analyze criticisms and attempt to address them.
Torres presented evidence from a case study of Costa Rica’s
CSO program (CSOP) in 2003. The main attributes from this
study are that (1) Costa Rica published its CSOP strategy
early on, (2) Costa Rica held more than 450 meetings with
civil society organizations, and (3) it involved COMEX (the
Costa Rican Ministry of Commerce) and high level officials
in meetings. The Costa Rican experience demonstrated that
CSO programs must enjoy the direct support of high-level
officials, that the dialogue must be objective, and that
the trade negotiating team must be accessible to all parties.
Torres concluded by reminding potential CSO leaders that
a CSO program requires many human and financial resources
and that documentation is critical for maintaining transparency.
USAID Trade Capacity Building in the Central America
Free Trade Agreement, Aler Grubbs
Aler Grubbs briefly
described the three “legs” of the trade capacity
building (TCB) stool: preparation for negotiations, implementation
of trade commitments, and maximizing trade opportunities.
Examples of USAID assistance for preparation for negotiations
include training in trade topics, assistance with the organization,
staffing and equipment of the government’s trade unit,
and statistics on trade flows and products.
USAID provided assistance with CAFTA implementation focusing
on CAFTA chapters that dealt with customs, sanitary and
phyto-sanitary measures (SPS), intellectual property rights
(IPR), and technical barriers to trade (TBT). The final
text on CAFTA is available on the USTR web site at http://www.ustr.gov/Trade_Agreements/Bilateral/DR-CAFTA/Section_Index.html.
CAFTA brought forth the need for a new system of cooperation
and coordination amongst USAID with the U.S. regulatory
agencies and Central American governments.. In order to
achieve adequate implementation of CAFTA agreements, U.S.
and Central American governments had to coordinate efforts
of pertinent regulatory agencies, such as USAID’s
close coordination with USTR and USDA, and with the Central
American ministry of trade and technical experts.
With respect to the CAFTA customs provisions, USAID worked
with USTR to design an action plan to address the transition
steps the Central Americans will take. This action plan
also laid out areas where other donors, such as the Inter-American
Development Bank, could coordinate assistance. To aid in
the carrying out of SPS mandates in CAFTA, the CAFTA SPS
Working Group and TCB Working Group worked closely to coordinate
the assistance programs with the technical and regulatory
experts. Finally, USAID works to maximize opportunities
of trade through programs on small business development,
competitiveness, and rural diversification.
Brands ended the Seminar with the following observations.
The TCB working group was one part in the great efforts
to come to a successful completion of the CAFTA negotiations.
It increased dialogue in trade capacity building, supported
a more focused approach to trade development assistance,
and increased trade-related resources (both government and
private). The CAFTA TCB experience furthered the efficient
use of development assistance by providing frameworks for
the effective integration of trade agreements, rules of
the game, and more—all of which helps to improve important
aspects, such as anti-corruption and transparency, in the
democratic process anti-corruption.
Question and Answer Session
Now, with legislation still pending both in the
U.S. and in Central America, are the trade agreements and
negotiations beginning to bear fruit or are people waiting
for the legislation to be enacted? If we don’t have
legislation for awhile, what happens to this momentum?
Torres:
We’re currently doing some work helping the
government of El Salvador to strengthen their legislation.
For example, we’ve been working with the Ministry
of the Environment to help strengthen environmental legislation.
With or without CAFTA, it’s beneficial because you’re
helping the government implement laws. In other countries,
USAID is already working on ‘the third leg’—taking
advantage of free trade. If legislation is delayed, I don’t
think that’s key issue at this point. They can still
export to the U.S. under CDI. It does slow down the timetable
for reducing U.S. tariffs from U.S. businesses. They can
act now. Our job is to assist them in these programs so
that they can take advantage.
I represent a USAID contracting firm called Development
and Training Services. We have a great interest in the gender
perspective when it comes to both going into trade agreements
and their implementation. How were organizations of women
included in the Civil Society Outreach program? What are
some of the very specific things that are being done now
to help them participate in the free trade round?
Torres:
With respect to the CSO Program, Central American
countries reached out to women’s organizations, including
the Association of Housewives in Costa Rica. In Guatemala,
there were very specific indigenous women’s groups
that were educated on the trade process and their respective
roles. There was an effort made to include all groups of
civil society. In terms of how outreach programs are working
with women, this is an ongoing thing. I’m aware of
microfinance projects in which more than 80 percent of the
borrowers are women. Much of the small business training
in the region is specifically geared toward women. There
was an empowerment survey done on the woman’s role
in family, community, and how they perceived themselves.
It showed that through some of the work that was being done,
microfinance lending and business development services,
how this had changed over a two-year period. The results
were very positive.
Grubbs: With any context of USAID developing
a new strategy, we carry out gender analyses to determine
the ways in which our programs can best incorporate women’s
development issues. For example, I mentioned the USAID/Guatemala
program, AGEXPRONT. I was able to see the crafts that women’s
cooperatives had produced. In Honduras, the microfinance
program has a large percentage of women’s lenders.
Whether it’s the CAFTA context or other development
context, we’re always trying to mainstream how to
bring core opportunities to women.
Carlos mentioned the success of using education
and public dissemination of information to build support
for the free trade agenda and cited example of Costa Rica,
which has a general lack of political consensus around the
trade agenda. What are some of the factors that contribute
to what, despite what is an apparent rising public support,
looks like a very dubious situation for its approval?
CAFTA was negotiated on a short-time line, was there
time to build the necessary support? Despite good analysis
that was done in information dissemination, a lot of the
opposition is coming from sectors, especially the agricultural
sector, that still feel vulnerable. How are the governments
failing to communicate what protections are in place for
those sectors? Why do you think it is that there is still
a lot of vocal concerns for the impact?
Torres:
The lively debate, I think, is very positive. It
has stimulated the democratic process. There is a lot of
concern throughout the region. I think the 12 month process
was good and Costa Rica was satisfied. What you see in Costa
Rica is a lot of debate going beyond CAFTA and has to do
with the privatization of state monopolies. Costa Rica has
done relatively little privatization and this became a debate
about privatization and opening up the state monopolies.
Through the surveys that I mentioned before, we know that
the population has shifted. The majority of the population
has begun to think that maybe liberalization is good. Much
of the oppositions are lead by unions against the privatization
process. There is a need to modernize resources whereby
the government focuses on things it does best while allowing
the private sector to do what it does best.
Whenever you introduce free trade, you have both
companies and employees that are both winners and losers
and employees that are displaced. What are some of the mechanisms
to help cushion the adjustment period for these parties?
Torres:
Much aid is being targeted toward those caught in the transition.
I would like to point out that these kinds of transitions
are not a new thing. Tariff barriers have been coming down,
from 100 to 25 percent, in the last twenty years. This is
an ongoing process, and there have been lively debates.
The protective industries have lobbied heavily. Consumer
groups feel that they can have better products at a lower
cost. Companies are working on improving. USAID is providing
technical assistance. For example, USAID currently has a
pilot program in Nicaraugua that works in furniture exportation.
Many companies have come to terms with transition and are
making changes that will promote their survival.
Grubbs: Beyond the USAID programs in
these countries, some of the multilateral donors, like the
Inter-American Development Bank, opened up programs for
transitioning different productive sectors. In addition
to that, Honduras and Nicaragua are Millennium Challenge
Corporation (MCC)-eligible countries. It will be interesting
to see what kinds of proposals they put forth to the MCC.
USAID has been really active with the World Bank and IDB
to deal with issues of rural diversification. We’re
trying to discuss maximizing the benefits of trade agreements
to rural societies.
I work for a company that provides business development
services. We currently have programs with USAID in some
Central American countries. We believe that there is significant
potential for us to contribute to trade capacity building
efforts in the region—especially in terms of the ‘third
leg’ (maximizing trade benefits and opportunities).
Is there a mechanism for creating a partnership with USAID
related to that ‘third leg’?
Brands:
In short, yes. Most of USAID’s resources are in the
field. We’ve worked with the field during the trade
negotiations to provide them with definitions and strategies—the
three legs of the stool. The field controls their money
and develops their own strategies. However, the strategies
that the field is developing run mostly parallel to the
‘three legs’ strategy. Quite frankly, the last
leg of the stool, maximizing trade benefits and opportunities,
is the most important. The crux of the funding is and will
continue to be through the third leg of the stool.
How did you manage any staffing insufficiencies
that may have come up in governments and negotiating teams
of developing countries?
Grubbs: We
can’t fund a government worker for another government
that we are negotiating with. In Honduras, we helped the
government in setting up their trade unit. We don’t
provide salary assistance, but we do provide technical assistance.
You’re point is well-taken in that we tried to help
these governments as much as we could without actually funding
them.
Torres: In the mid-1990s, Costa Rica,
under the Ministry of Foreign Commerce, organized a semi-autonomous
institution which brought in the Free Zone Corporation (which
is the government entity that licenses free zones) and the
Export Processing Centers (which processes all import permits).
These entities were originally set up in the 1980’s
actually make money from the revenue of export and import
permits, as well as free zone permits (which adds up to
millions per year). Through the revenues generated by these
fees, the government has resources that they can apply to
negotiations. For example, that’s how Costa Rica paid
for the CAFTA negotiations. Governments should engage in
mechanisms like this one to increase their resources for
trade negotiations.
Back
to USAID 
