El Salvador Perspectives

This morning, the government of El Salvador saluted Donald Trump for his election as president of the United States.  But what will a Donald Trump presidency mean for El Salvador?   Here are a few areas where his impact will be felt. Immigration .  Without a doubt, an anti-immigrant Trump administration could have serious economic and social impacts on El Salvador.   Approximately one of every four people alive who were born in El Salvador  or an estimated 2 million Salvadorans, currently live in the US. Remittances which they send home make up one sixth of El Salvador's gross national product.   Estimates vary, but perhaps between 700,000 and 1 million Salvadorans in the US are undocumented and would be a focus of Trump's immigration enforcement efforts.  If a significant percentage of them are suddenly deported, the disruption in El Salvador will be great.  Most certainly,   executive actions of the Obama administration which were int...

The US will apparently relent on a condition which was holding up the signing of the next round of Millennium Challenge compact funding for El Salvador.   The US had reportedly been insisting that El Salvador open up a seed purchase program to a Monsanto subsidiary, rather than keeping the program limited to purchases from local Salvadoran farmers and seed producers.  This round of funding from the US would be a five-year, $277 million compact, focused on projects in southern El Salvador along the Pacific coast. The  New York Times  reports the change in US position: MEXICO CITY — The United States and El Salvador said this week that they had settled their differences over compliance with the fine print of a trade agreement that threatened to hold up aid to the small Central American country, but the timing of the dispute has become an embarrassment for Washington.  The surge of Central American migrants to the United States over the last few months has b...

Food sovereignty is an important issue in El Salvador.  It is the issue of whether the country, its farmers and its consumers can be largely self-sufficient in the area of basic foodstuffs and not dependent on imports and the whims of world markets.   One area where the discussion of food sovereignty is focused is corn -- the basic food staple of El Salvador. On the EcoViva blog, there is a detailed discussion of this topic and pressure being exerted by the US in a post titled  Seeds of Food Sovereignty Grow in the Shadow of CAFTA .   Here is an excerpt: The Family Agriculture Program is part of the left-leaning Salvadoran government’s strategy to promote food sovereignty in a country that has a long history of food insecurity, social conflict, and ecological degradation related to industrial agriculture. It has strengthened the technical ability and capacity of local agricultural cooperatives to cultivate seeds and food so crucial for the food security of the ...

For your weekend reading, I highly recommend the article  Free Markets and the Food Crisis in Central America  by Carlos G. Sanchez at CIP Americas.  The article describes the transformation of the economies of Central America and the loss of food sovereignty. The countries of the region, including El Salvador, have been transformed from ones where enough food was grown to feed their own populations to countries which rely on imported food and are subject to the swings of prices in the global food and commodity markets.  The impact of free trade policies, an emphasis on cash export crops, and economic forces which have driven people out of the countryside and into crowded urban areas has resulted in widespread food insecurity throughout the region. Sanchez includes a call to action in his article: The starting point should be that every Central American has adequate access to food, and for this to happen, the structure of production and commerce must change. Nat...

The arbitration claim filed by Milwaukee, Wisconsin based Commerce Group was dismissed yesterday by the international arbitration tribunal hearing the case. The Commerce Group had filed suit under the DR-CAFTA trade agreement's investor protection provisions, asserting that El Salvador's decision to revoke its permission to mine in the country was improper. The decision by the tribunal is a narrow and technical one. The arbitrators ruled that the Commerce Group had failed to comply with the "waiver" requirement under DR-CAFTA which requires that a party cease any other legal proceedings over the dispute and proceed only before the arbitration panel. Because the Commerce Group was still proceeding in the Salvadoran court system to challenge the permit process, the waiver requirement was not met. A copy of the decision can be downloaded here . Because this is a narrow procedural decision, it sheds no light on the prospects for the similar arbitration brought...

The grassroots environmental coalition in El Salvador, the Mesa Nacional Frente a la Minería Metálica (Mesa), has filed a friend of the court brief in the international arbitration filed by the Canadian gold mining company Pacific Rim against El Salvador.   The Mesa is represented by the Center for International Environmental Law (CIEL).  The brief makes three central points: [We] will endeavor to use this submission to make sure that the Tribunal understands that:  (A) the grassroots, peaceful opposition to Pac Rim‟s proposed mine—and the government‟s response to it—were and are entirely legitimate and should be celebrated as a new dawn for representative democracy in El Salvador, not saddled with a hundred-million-dollar price tag; (B) the environmental concerns underlying that opposition were, and are, well-founded, but were not adequately addressed in Pac Rim‟s Environmental Impact Assessment (the “El Dorado EIA”); and (C) Pac Rim‟s inv...

The fifth anniversary of the effective date of the DR-CAFTA trade agreement is approaching in March. We can expect to see various writers trying to assess the impact of five years under this treaty and whether it was a good deal for El Salvador. I'll try to provide ways to think about DR-CAFTA's impact in posts over the next month. An article at alterinfos.org by Leonard Morin titled El Salvador - Free Trade's Dubious Blessings provides an assessment from the left, while providing space to acknowledge the viewpoints of supporters of DR-CAFTA. It's a good read to get you started on thinking about the impact of the trade pact. Here is an excerpt from one of the figures interviewed for the article: According to Gilberto García of the Center for Labor Studies and Support (Centro de Estudios y Apoyo Laboral, CEAL), “the Salvadoran and US authorities told us in 2003, 2004, and 2005 that the FTA [Free Trade Agreement] was going to be the solution, that the FTA was g...

A coalition of solidarity, environmental, religious, educational and civil society group have commenced a campaign against the Commerce Group San Sebastian gold mine in El Salvador. The campaign coincides with the initial hearing in the international arbitration suit which Commerce Group commenced against the government of El Salvador. The press release issued by the coalition states: A coalition of Milwaukee and national organizations called on Commerce Group, a Milwaukee-based mining corporation to drop its controversial $100 million legal case against the government of El Salvador. 58 organizations from across the country signed a statement demanding that the case not only be dropped, but that there be cleanup of environmental damages caused by the mine and compensation to victims of mine pollution. In 2006 the Salvadoran government revoked the company’s mining permits, following evidence that its operations were dumping highly toxic poisons into local water. In retaliatio...

I did not have time to watch more than an hour or so of the hearings in the arbitration between Pacific Rim and the government of El Salvador which took place on May 31 and June 1 in Washington, D.C. Luckily, the folks behind the Voices from El Salvador blog were watching and wrote a thoughtful summary of day 1 and day 2 . The writer summed up what could be gleaned from these formal legal proceedings: I found these hearings interesting on a couple levels. Much of what we hear about the mining debate comes from grassroots organizations that support the anti-mining movement in El Salvador. While the information we receive is important and interesting, too often we don’t know what is happening within the government ministries, or what Pacific Rim is really thinking. We see how their decisions manifest in Cabanas, but we don’t necessarily see the process. These hearings have been a window into what the Salvadoran government and Pacific Rim have been doing and thinking over the years....

Canadian mining company Pacific Rim, which is in a battle with the government of El Salvador to force the country to grant it gold mining permits, spoke publicly this week about its pending international arbitration under CAFTA: On January 4, 2010, the [Government of El Salvador "GOES"] filed preliminary objections to PacRim's claims under CAFTA and El Salvador's Investment Law. Copies of the GOES's filing and PacRim's response to ICSID are available on Pacific Rim's website (www.pacrim-mining.com). Under CAFTA Article 10.20, the Tribunal is to rule on the objections on an expedited schedule, has set a hearing on the objections for May 31 and June 1, 2010, and is expected to issue a ruling by September 2010. PacRim believes that El Salvador's objections are not only completely without merit, but are also frivolous, and that GOES filed them purely as an attempt to stall the arbitration proceedings. PacRim fully expects that the Tribunal will reject the...

The Central American Free Trade Agreement (CAFTA) turns 5 this month. An article from the Latin Business Chronicle looks at the benefits of the treaty from a business standpoint: Over its first few years, U.S. companies reaped significant benefits. Between 2005 and 2008, U.S. exports to the region increased by around 48 percent to reach $24.3 billion, while U.S. imports from the region increased by 10 percent to $14.4 billion. Inward foreign direct investment as a percentage of region’s GDP rose from 3.4 percent in 2005 to almost 5 percent in 2008, and higher remittance inflows and tourism from the United States helped lift per capita income. “Before the recession, the countries of the region all increased their exports by double-digit rates,” says David Lewis, vice-president of Manchester Trade, a Washington, D.C., trade consultancy. “They were very aggressive about taking advantage of new opportunities in agri-industry, agricultural products, and textiles. [CAFTA] was a shot in t...

The Canadian gold-mining company Pacific Rim sent out a press release this week stating that the lawsuit it has brought against El Salvador is moving forward now that three arbitrators have been selected.: An arbitration case brought by Pacific Rim Mining against the government of El Salvador will move ahead, as the arbitration tribunal has now been constituted, the company reported on Thursday. Pacific Rim embarked on arbitration proceedings because of the government's failure to issue permits for the company's El Dorado project, three years after Pacific Rim submitted a mine design to authorities. The company claims the government has breached international and Salvadoran law in its “improper failure to finalize the permitting process as it is required to do and to respect the company's and the enterprises' legal rights to develop mining activities in El Salvador”. The company hopes it will face better success in an international business arbitration under DR-CAFTA ...

Although most of the attention has been on the Canadian gold mining company Pacific Rim and its international arbitration suit against the government of El Salvador, there is a second US gold mining venture which has also commenced an arbitration. The Commerce Group and San Sebastian Gold Mines filed a notice to demand arbitration under the DR-CAFTA trade agreement. The companies, which are both headquartered in Milwaukee, Wisconsin, assert that El Salvador has a de facto ban on the operation of gold mines in El Salvador by foreign companies and that this has deprived Commerce and San Sebastien of their investment interests from operation and exploration of gold mines in the country. They claim damages exceeding $100 million. On July 2, 2009, the companies commenced their arbitration against El Salvador. In announcing the commencement of arbitration, the Commerce Group's 8-K filing states: The Company contends that the government of El Salvador has frustrated its efforts to...

The Washington Office on Latin America (WOLA) has released a report on the impact of the DR-CAFTA trade agreement on the labor conditions in the Central American countries who are parties to the pact with the US. From the executive summary: Despite the promises by the governments and U.S. funding, labor conditions in the DR-CAFTA countries have not improved and violations continue unabated. WOLA also finds that the governments are unable or unwilling to reform the labor legislation identified in the White Paper, and that the judicial systems continue to be inefficient and incapable of enforcing judgments. The 28 page report reviews the DR-CAFTA countries in several areas, and finds little improvement. Although there are some promising initiatives in El Salvador and other countries, the larger dynamics affecting workers' rights have not yet moved significantly.

The Canadian gold mining company Pacific Rim today filed a notice of intent to bring an arbitration claim under the Central America Free Trade Agreement (CAFTA) against the government of El Salvador for the government's failure to grant Pacific Rim the permits necessary to proceed with its planned gold mine. The filing was announced in a company press release issued today. In addition to issuing the press release, Tom Shrake, Pac-Rim's CEO, held a conference call with stock analysts today to explain the decision to commence the arbitration prcoess. The directions for listening to a recording of the call are in the press release . During the call, Shrake stated that the arbitration claim would seek to recover Pac-Rim's investments in the country and "hundreds of millions of dollars in damages." According to Shrake, the local population and political leaders are in favor of the development of the mine, but the current national government was unexplainably u...

It has been almost two years since the Central American Free Trade Agreement between the United States and Central American countries and the Dominican Republic went into effect for El Salvador. A recent article by Raul Guttierez at IPS collects a wide variety of statistics about economic activity linked to the treaty. At this point, it's still difficult to see net positives or negatives: The Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) with the United States was supposed to enable El Salvador to increase its exports to the U.S. market and attract foreign investment. However, economists consulted by IPS said that is "unrealistic" and that ordinary Salvadorans are still waiting for the promised benefits. René Salazar, head of the Administration of Trade Treaties, said DR-CAFTA was El Salvador’s "most important trade agreement" because it has promoted increased trade with the United States. Non-traditional Salvadoran exports to the U.S. of...

In a vote on Sunday, Costa Rican voters ratified CAFTA , the frequently controversial Central America Free Trade Agreement. Costa Rica will join El Salvador in this treaty with the US which also includes Guatemala, Honduras, Nicaragua and the Dominican Republic.

A recent article in the Miami Herald takes a look at the impact of the Central American Free Trade Agreement (CAFTA) on El Salvador. While citing the figures the Salvadoran government uses to proclaim the treaty a success, the article also speaks with business owners who believe they see benefits and those who see none: El Salvador was the first Central American nation to implement the CAFTA-DR accord, in March 2006, followed by Honduras, Nicaragua and Guatemala. The Dominican Republic implemented the accord this year, and Costa Rica is awaiting ratification. The agreement eliminates most tariffs on two-way trade between the United States and the five nations that have ratified the accord. While experts say it is too soon to effectively measure the impact of CAFTA-DR, both exports and investments have clearly climbed in El Salvador. The United States is El Salvador's largest trading partner outside of Central America, and the region is now the second largest U.S. export market in...

This week marked the one year anniversary of the effective date for El Salvador of the Central American Free Trade Agreement (CAFTA). As was true when the treaty was adopted, the views of whether the agreement is benefiting El Salvador are sharply split. US and Salvadoran government officials praised perceived benefits of the treaty, saying that 29 new businesses have opened in El Salvador since CAFTA went into effect, and another nine have expanded their operations. According to figures from the El Salvador's Central Reserve Bank, exports to the US market totaled $2.005 billion in 2006, a little less than the $2.057 billion in 2005. However, Salvadoran authorities pointed to "excellent" growth in exports of El Salvador's traditional products -- coffee, sugar and shrimp -- and in non-traditional products -- artisan objects, ethnic foods, medicines, fruits and vegetables. Those traditional and non-traditional areas grew by 68% or $403.7 million over 2005. Howev...

A recent article from the Inter Press Service looks at the impact of the DR-CAFTA free trade agreement in the first year of its implementation. The article points to evidence that cheap agricultural imports from the US are threatening the existence of small corn and rice farmers in El Salvador: The massive influx of U.S. goods demonstrates the competitive disadvantage under which small Salvadoran farmers must labor, and they feel their future to be most uncertain. For example, Miguel Alemán, a leader of the Confederation of Agrarian Reform Federations, said, "a sack of fertilizer cost 18 dollars last year, and now it's gone up to 23 dollars. We were selling a hundredweight (quintal) of creole maize at 11 or 12 dollars, but this year it's only worth 8.50 dollars." "Under CAFTA, U.S. maize sells in El Salvador at 6.40 dollars, so who's going to buy from us?" the small farmer asked. "Last year I cultivated just under a hectare of maize for my family...