The chickens come home to roost

29Jul07

Whilst it might still be too early to assess the impact of the Central America Free Trade Agreement on Nicaragua, some of the predictions before its signature look like they are coming true. In two recent articles, a pair of regular commentators on Nicaragua highlight the affect of the Agreement.

In the first, Ben Beachy, a Witness for Peace worker, writes that CAFTA is beginning to take its toll on Nicaragua’s textile sector. In the first six months of this year 4,000 jobs were lost in the textile sector, whilst only 2,000 were created in other, non-textile, maquila jobs. The fall in textile jobs was widely predicted, as the Multi Fibre Agreement expired in 2005, and jobs started to migrate from Central America to China. It was thought Nicaragua was immune, having the lowest wages in the region, but this doesn’t seem to be the case.

The second article by Toni Solo, Americanism vs ALBA, is a wide ranging article on how US policy is sharpening its focus on the Bolivarian Alternative. It also includes the startling news that since CAFTA came into operation, Nicaragua’s exports to the US, meant to increase because of the lifting of trade barriers, have actually fallen. A report by Nicaragua’s Ministry of Development, Industry and Commerce reckons the Central American Free Trade Agreement has so far resulted in a 0.1% net decline in Nicaragua’s exports to the United States while tax exempt maquila exports increased 16%. This doesn’t necessarily contradict Beachy’s conclusions, as the nature of maquila exports seems to be changing, and an increase in production (and profits) on the back of falling job numbers is hardly unknown. it was also thought that whilst maquila production might benefit from CAFTA, other sectors would be badly hit.

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