Contesting Trade in Central America: Market Reform and Resistance

Introduction, Overview, and Methods

Introduction, Overview, and Methods After sixteen years of “governing from below,” Sandinista leader Daniel Ortega returned to power in Nicaragua in 2007, once again denouncing the forces of imperialism and promising to address economic grievances. Joining Ortega, Honduran president “Mel” Zelaya (2006–2009) linked forces with Hugo Chávez, entering the Venezuela-sponsored integration initiatives PETROCARIBE and the Bolivarian Alliance for the Peoples of Our America (ALBA) until a 2009 coup brought his unceremonious ouster. In the same year, El Salvador experienced a pivotal electoral transition. Mauricio Funes, presidential candidate of the Farabundo Martí National Liberation Front (FMLN), the political party descendant of a demobilized revolutionary army, emerged victorious following twenty years of government under the Nationalist Republican Alliance (ARENA), a right-wing business-aligned party. Even firmly institutionalized Costa Rica felt the regional political roil. One of the bastions of that country’s two-party system fell into frank collapse in 2006, replaced by the upstart Citizen Action Party (PAC), a rising critic of neoliberal change. In country after country, Central America’s new leaders, coalitions, and political parties called into question the market transitions that had been under way for two decades. Only a few years before, this region seemed a bastion of neoliberal reform. As in much of Latin America, deregulation, trade liberalization, and privatization of state resources served as the reigning policy norms. Governments in Nicaragua, El Salvador, and Costa Rica followed strict International Monetary Fund (IMF) guidelines to stabilize and then restructure their faltering economies in the 1980s and 1990s. The pro-market reformers who led these nations locked in various policies using new laws and binding international agreements. The most recent addition was the Central America Free Trade 2 ContestingTrade in Central America Agreement,1 a trade and investment agreement signed by the United States, five Central American countries, and the Dominican Republic in 2004. This agreement, designed to persist across administrations, came to symbolize an enduring commitment to the neoliberal model. How did a region committed to market reform become an area where these principles and policies were so contested? This book offers an answer to that question. I argue that contemporary dynamics in Central America echo Karl Polanyi’s (2001 [1944]) “double movement” in which the “great transformation” to market economics is followed by rising resistance and the search for alternatives. Writing about the nineteenth- and early twentiethcentury liberal transition in Europe, Polanyi found that hardships associated with marketization of production and the commodification of land and social relations triggered a countermovement of opposition. This double movement juxtaposed two competing principles: “[O]ne was the principle of economic liberalism, aiming at the establishment of a self-regulating market, relying on the support of the trading classes, and using largely laissez-faire and free trade as its methods; the other was the principle of social protection aiming at the conservation of man and nature as well as productive organization . . . using protective legislation, restrictive associations, and other instruments of intervention as its methods” (Polanyi 2001 [1944], 138–139). The second movement gathers force in reaction to the first as it attempts to reduce negative consequences for people and the environment through state intervention, market regulation, community solidarity, and cultural affirmation.2 At the dawn of another century, anti-neoliberal resistance movements again challenged the penetration of market logic and launched a search for alternatives. The accelerated expansion of corporate globalization contributed to multiple local and national movements for “self-protection,” often intersecting in multistrand transnational networks and alliances. Market transition carries costs as well as benefits, as the burgeoning literature on neoliberalism testifies. Deregulation increased vulnerability to shocks, while competition dislocated traditional producers, and heightened inequalities exacerbated social tensions. New actors emerged during the market transition , and old actors were reconfigured, reweaving but also fraying the social fabric. Resistance movements of varied stripes soon mobilized to contest the ethos of market-oriented reform. Piecemeal and ad hoc, resistance variations reflected local conditions and customs and emerged as a natural reaction to social and environmental distress. Examination of reform and resistance in Central America, using the debate about CAFTA as the pivot, allows us to construct a refined anatomy of this dual process. The Central America Free Trade Agreement with the Introduction, Overview, and Methods 3 United States was officially proposed in 2002, negotiated in 2003, signed in 2004, and entered into effect between 2006 and 2009 in its seven signatory states (in...