32 years of economic and political information and analysis on the region

EL SALVADOR

CAFTA ratified
Two weeks prior to the end of 2004 and following a marathon plenary session, the Free Trade Agreement (CAFTA) between El Salvador and the US was pushed through by the right wing ministerial faction. While the government claims the Salvadoran economy will benefit, a study by the Salvadoran Chamber of Commerce and Industry shows that 47% of businesses are not ready to compete with foreign companies. Meanwhile, civil society and the Left claim the treaty is an imposition by the US government and is unlikely to solve the country's social and economic problems.

GUATEMALA

New generics law provokes US ire
On December 23 2004, the Guatemalan Congress repealed decree 9-2003 and approved decree 34-2004, which stipulates that those companies manufacturing brand name pharmaceuticals will not be able to extend their 20 years of market exclusivity by a further five years, starting from the drug's date of registration in Guatemala. The move represented a significant victory for many civil society groups and local generic pharmaceutical companies, who argue that the positive repercussions will be felt worldwide. However, the US Trade Representative (USTR) criticized the decision for going against commitments made in the Central American Free Trade Agreement (CAFTA). The US tactic of pressurizing governments to repeal laws favoring the availability of generics, by threatening to exclude them from free trade agreements, is now being extended to Andean countries.

Mining, a debateless debate
Substantial recent investments by mining companies have fuelled an increasingly polarized debate surrounding this sector. While the government, private sector and the World Bank all promote the idea of sustainable mining, analysts and ecologicalists warn of social and environmental risks. A debate over mining reform is expected to take place during the new legislature.

HONDURAS

Web of nepotism, family ties and political favors controls oil contraband industry
The illegal trafficking of oil could have cost the Honduran state up to US$27 million (500 million lempiras) in 2004. Investigations by the local press, which nicknamed the scandal `el gasolinazo', were supported by declarations made by a National Party congressman which shed light on the powerful influence of nepotism and the peddling of favors in the public sector. Meanwhile, evidence has surfaced that points to the existence of an oil smuggling ring made up of influential families and politicians. Despite the fact that official steps have been taken to facilitate the capture of those involved in contraband activities, many doubts remain over the proper application of justice when it comes to the higher echelons of Honduran political power.

REGION

Textile Quotas Scrapped
On January 1 2005 the world textile trade experienced a major change with the elimination of worldwide quotas. Small producers, such as the isthmus countries - who in part depend on quotas imposed by large importing countries - will now have to compete with huge scale producers with considerable growth potential such as China and India. The detrimental effects on local `maquila' factories have already been published in Guatemalan newspapers. Meanwhile, investors arrive with optimism and grand projects in China. .

COSTA RICA

Poverty increases
On November 25, the government published results of a survey which revealed that poverty in Costa Rica increased from 18.5% in 2003 to 21.7% in 2004. The subdued manner in which these results were announced contrasted with the pomposity of the previous year when the government declared that poverty had decreased for the first time in five years. One year on, government representatives blame the current situation on increased petrol prices and the failure of Congress to approve a law which would raise taxes. However, other analysts emphasize the role of the government, attributing the rise in poverty to cuts in social expenditure, the failure of salary increases to match inflation and the administration's adherence to neo-liberalism.

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07 January 2005