It´s a ubiquitous scenario. You know it well – when common sense/wisdom whispers in one ear, while emotions/senses scream in the other, and no matter how hard you try, your head and heart just can´t get in sync (mostly in love and dieting). Life here in Guate seems ripe these moments (see Domestic Violence or The Paradox of American Power), and getting a take on the latest event, Guatemala´s July 1st entrance into CAFTA (Central American Free Trade Agreement), has been no easier. The question – will this trade agreement provide the necessary steps for the development of Guatemala´s economy?

Common Wisdom

I was a good student in International Trade (although some classmates might disagree). I paid dutiful attention to the lectures where we learned the wisdom behind free trade – how Great Britain had utilized it to usher in Pax Britannica, and how the US and the world abandoned it during the 1920´s and 30´s (see Smoot Hawley Tariff) only to see it precipitate into worldwide economic depressions. I learned to graph its optimum economic equilibriums, showing why the US government returned to economic openness in the post-1945 world. I listened to the arguments on how multilateral trade deals like NAFTA (North American Free Trade Agreement) were good for all parties. I even benefited from free trade by having easy access to the plethura of “reasonably-priced” goods available at the local shopping emporiums (i.e. Target, Walmart, etc).

It all made perfect sense, and not just to me. If the majority of academic evidence, the Washington Consensus, and organizations like the WTO (World Trade Organization) supported the move towards free trade, then arguing against it and its benefits – job creation, consumer-friendly prices, and producer efficiency –would seem like a futile exercise unless you were well-steeped economics (ie. PhD) or your last name was Perot, Buchanan, or Nader. Common wisdom had spoken, free trade would improve the economy and so much more, and was crystal clear, that is until the emotions kicked in.

The Heart of the Matter?

My trip to Guatemala was not the first time I had heard a heartland cry out for economic improvement, but it was by far the loudest. As I listened to the townsfolk explaining the cold calculus of life, how products from sugar to education were expendable for survival, I wondered if CAFTA would be the answer for them. In a place where basic subsistence rules, could free trade unlock the door of possibilities? The general thought from those that are aware of CAFTA here in Rabinal is no. Sure, it will help the rich get richer (i.e. big businesses in Guatemala City), but it won´t affect the rural areas.

They are both right and wrong. It will create job opportunities especially in the cities, but it will not leave the rural areas unaffected. Jobs in the city encourage urbanization, which in turn, pulls people and resources away from rural areas. For example take Juanita.

Juanita, a Mayan housekeeper, in a mix of Spanish and Achí (the local language) explains to me that she has lived in Rabinal her whole life. She cannot read or write but has high hopes for her fifteen year old daughter who is in school. However, the $200-a -year school fee and the rising price of food is just too much for her current salary. Thus, in order to continue supporting her daughter´s education, she will move to the capital on the promise of finding a better paying job, leaving behind home, daughter, and much of her culture. As I listen to her story, I know that she is neither the first nor the last to make this journey that Stevie Wonder so succinctly described as, “living just enough for the city.”

Hung Jury

The jury is still out on CAFTA, and only time can be its judge. My leanings, though, lead me to believe that CAFTA will be good for
Guatemala even if only in the sense that it will increase international scrutiny of its economy and raise the bar for economic accountability. However, we would be sorely remiss to think that free trade´s road to economic developmental is accessible to all. The truth is simple – much investment (time, money, and effort) is still needed to resolve the dissonance between common economic wisdom and stark economic realities here in Guatemala. They say the distance from the head to the heart is a mere 18 inches; let´s hope for activists and visionaries that will start that journey, one inch at a time.