Why Do They Come? • Charles D. Thompson, Jr.

A: Introduction

For most Jacaltecos, family is their highest priority. Extended families, often including three or more generations, frequently live together, and it is the dream of most parents to build a house large enough to accommodate their children’s’ families when they are grown.With the strong focus on the family, it might at first seem contradictory that so many fathers leave their families and migrate to the United States. But almost without exception, every single Guatemalan we spoke to who had migrated, or even thought about migrating, said they wanted to leave in hopes of helping struggling parents or giving their children more opportunities in education.

Although rich in culture and heritage, Guatemala is a very poor country economically. Latin America is home to the greatest class disparity in the world, with 50% of the nation’s wealth held by only 10% of the population. In Guatemala 75% of the population lives below the poverty line – what the World Bank defines as an insufficient income to purchase the basic basket of goods and services for the minimum level of healthy survival for a typical family.
Read more about the World Bank’s measures of poverty here.

B: Guatemalan Civil War and CAFTA-DR

In the 1980s Guatemala faced a brutal civil war. Many people fled North as political refugees to escape the violence. Since the 1990s, however, most Guatemalans immigrating to the United States are economic refugees. As the Guatemalan economy continues to be subject to corruption and stagnation, jobs are scarce and possibilities to improve one’s economic situation are lacking. For these reasons, men and women continue to make the dangerous trek north with hopes of finding opportunities to help their families.

The irony, according to many economists, is that poverty in Guatemala and other Central American countries has been largely exacerbated by United States’ policies towards the region. In the last few decades, the upsurge in undocumented immigration to the U.S. from the region correlates strongly with the Central American Free Trade Agreement (CAFTA). CAFTA is now often termed CAFTA-DR as the Dominican Republic joined the agreement in 2004.

CAFTA-DR is a bilateral trade agreement between the United States and Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic, that was signed in 2004 by President George W. Bush. “Free trade” refers to trade in which the price of goods reflects only the price based on supply and demand. Protections such as tariffs, taxes, and subsidies are not permitted on goods traded between nations participating in the CAFTA-DR agreement. According to conventional economic theory, free trade should be beneficial to all parties involved because each one specializes in making the product that requires the lowest opportunity cost, compared to all other trading partners. This should allow the most goods to be produced at the lowest cost, thus maximizing the amount of each good available to all trading partners.

However, many believe that CAFTA-DR has been harmful to both the citizens and the environment of Central American partners, as well as the United States. Free trade assumes some parity or equivalence between trading partners. In the case of CAFTA-DR, U.S. corporations are given considerable economic and political advantage. Therefore, the treaty serves largely to benefit U.S. corporations while displacing small farmers in Central America, who in turn must migrate to look for work.

The U.S. economy is enormous when compared with those of its CAFTA-DR trading partners. In 2003, it was nearly $11.8 trillion, accounting for nearly 3 quarters of the gross domestic product (GDP) of the entire Western Hemisphere. Meanwhile the combined GDP of all Central American countries before the agreement was estimated to be less than $100 billion, accounting for less than 1% of the United States’ economy.Sources:
“CAFTA-DR: A Focus on the Regional Impact”
www.carnegieendowment.org/files/CAFTA_summary.pdf
“Why CAFTA-DR Faces Opposition”
globaledge.msu.edu/NewsAndViews/businessReviews/gBR2-3.pdf

Read more about CAFTA-DR and it’s predicted affect on Central America here:

Central America.
Ed. by Markus Rodlauer, and Alfren Schipke.
Published by the International Monetary Fund, 2005.

Most staple foods produced in the United States, including corn and rice, are subsidized by the U.S. government. This means that the government pays American farmers higher prices for producing subsidized foods than they would normally get on the “free” market.

As a result of these subsidies within the United States, American farmers are able to sell their rice and corn, two staples of the Central American diet, below the cost of production. This puts Central American farmers, like Pancho, who is featured in “Brother Towns,” out of work because the price of his corn can no longer compete with the price of imported corn from the United States.

This inequality in trade creates a downward spiral for most people in the Central American economies. Though they supposedly have access to cheaper goods, there is much less money going into the economy to allow them to buy these goods.

CAFTA-DR is not the first example of an unequal international trade agreement. A similar treaty entitled NAFTA, the North American Free Trade Agreement, was signed in 1994, 10 years before CAFTA-DR, and involves Mexico, Canada, and the United States. The Carnegie Endowment reports that NAFTA has displaced an estimated 1.3 million small Mexican farmers since 1994.

As a result of NAFTA a significant amount of good quality farmland in Mexico is now confronted by large agribusinesses like Tyson Foods and Cargill. Mega companies such as these have the money and scale to compete, and government policies that favor them in the highly subsidized agricultural world. With increasing competition driving down prices, environmental and labor standards are compromised more and more to cut costs and remain competitive.

In the 3 years following the signing of NAFTA, naturalization applications in the US nearly tripled.

Joseph Stiglitz, a professor of economics at Colombia University, is a prominent critic of CAFTA-DR. He argues that, rather than stimulating Central American economies, CAFTA-DR will lead to increased poverty in these countries, similar to how NAFTA has functioned in Mexico. Stiglitz argues that Central American countries do not have the capital or ability to switch their main production resources to other crops or to compete on a level playing field when the U.S. subsidizes its growers. It is these foods, especially corn and rice, that were the foundations of Central American economies, and now those foundations are crumbling. Small farmers in Central America have little hope of becoming competitive in these commodities without similar subsidies.