May 2005

Soren Ambrose
50 Years is Enough Network
Washington D.C.
USA

World Bank promotes CAFTA

It looks like the World Bank, never one to sit on the sidelines when a noxious trade treaty is being debated, has jumped into the controversial debate over the Dominican Republic & Central American Free Trade Agreement (DR-CAFTA). The treaty is actually between the U.S. and six countries in the region -- Dominican Republic, Nicaragua, Costa Rica, El Salvador, Guatemala, and Honduras. The U.S. Congress was expected to vote on it this month, but as it becomes more apparent that it would not be approved, it looks more likely that the vote will be postponed. The presidents of the various countries are in the U.S. this week to press for its passage, but a number of Republicans joined by nearly all Democrats in Congress are opposing the exploitative market-fundamentalist pact.

The World Bank has devoted a fair amount of energy in the last few years to a remarkably disingenuous campaign to blame Northern countries for trade imbalances -- as if the Bank had no idea what it was sentencing Southern countries to when it demanded they scuttle all their trade regulation and put their trust in global markets. Despite this belated apparent recognition of the traps inherent in relying on trade agreements with the North, the Bank has in actual fact accelerated its pressure on Southern countries to enter into such agreements. As Stephanie Weinberg of Oxfam America, who sent the message below, notes, the Bank itself has already published an analysis of DR-CAFTA which, will recommending its adoption, disagrees with some of
its proponents' central claims.

The Bank has been trying to establish itself as a source of advice for countries that want to improve their negotiating skills in trade talks. But they're hardly a neutral observer. The head of the World Bank's trade department, Uri Dadush, has already earned notoriety for his reckless calls for trade liberalization as the main path to prosperity. In the most outrageous example of his interventions, he responded to a European Union announcement last June that it would accept retention of some tariffs by
Southern countries by scolding the EU for not pushing the Southern countries harder, i.e. to use its power to coerce Southern countries to accept policies they don't want because free-market ideologues like Dadush say it's the bitter medicine that will cure them (not the first time they've heard that). A Reuters article on this incident last June reports (excerpts):

"A European Union proposal to exempt poor countries from substantial tariff cuts as part of a new world trade pact would actually hurt those countries in the long run, a World Bank official said on Tuesday. "We feel [this] waters down the value of the whole deal," Uri Dadush, director of the World Bank's International Trade Department, said.

"The EU proposal, although well intentioned, is not appropriate for development" because it would shield poor countries from one of the most important actions they can take to become more prosperous, Dadush told reporters at a Reuters conference on trade, globalization and outsourcing.

This flacking for DR-CAFTA, then, is completely consistent with the World Bank's established modus operandi. We don't need to wait for Wolfowitz to take over to see the World Bank acting as an agent for Bush Administration policies.