Can Central America business sectors speak as one voice during Obama visit?
Some 170 business leaders from Central American Integration System (SICA) member countries will meet Friday at the Antigua Aduana facilities in downtown San José for three panel discussions coordinated by the INCAE Business School and the Inter-American Development Bank.
The meetings, taking place in the context of the visit by U.S. President Barack Obama on Friday and Saturday, will address development, energy, commerce logistics and regional trade integration.
The event resumes Saturday with discussions about the role of young people in economic development. The panels’ conclusions will be delivered to Obama and his Central American colleagues.
But what can the region’s business sector expect from Obama’s visit? The outlook is not that positive, as the answer mostly depends on the region’s capacity to establish a unified and solid investment option for U.S. firms. Some analysts believe that instead, the issues of security and immigration will dominate discussion during the two-day presidential summit.
At an early stage in the Obama administration, Vice President Joe Biden indicated what the region could expect in terms of relations with the U.S.: During a visit to Costa Rica in 2009, Biden said the Obama administration would mark “an era of new relationships with Central America.” But in several speeches, Biden was clear in emphasizing that he “came to listen with a tightly closed wallet.”
For the U.S. vice president, economic recovery in the United States “was the best way to collaborate with the region.”
Obama is still fighting to bring the U.S. economy back from the crisis that struck in 2008. His administration has no specific regional initiatives, and Latin America was not the focus of either of his presidential campaigns, beyond TV spots in Spanish to secure the Latino vote.
But Costa Rican Foreign Trade Minister Anabel González said in an interview with the daily La Nación that cooperation from the U.S. could increase “as long as the region can offer a solid business platform.”
Obama’s brief appearance at Saturday’s meeting with regional business leaders can be considered mostly a goodwill gesture, and a way to denote that the U.S. is regaining interest in the region as a possible workforce provider for U.S. firms. Whether that happens under fair labor conditions, or in a sweatshop scheme – as some believe – remains to be seen.
The U.S. is still the main export destination for all the countries in the region. Central American exports to the United States in 2011 totaled $8.9 billion, increasing to $9.8 billion last year, which represents 33.3 percent of the region’s total exports in 2012, according to the Central American Economic Integration Secretariat.
Costa Rican Foreign Minister Enrique Castillo said earlier this week that “what the United States is looking for, and what we, too, are looking for, is how to find spaces in Costa Rica and the region for U.S. companies to invest.” But he added that, “The government’s role is to facilitate opportunities, but private businesses are responsible for taking the next step and investing.”
That means infrastructure, logistics and technology initiatives must be prioritized in order for regional firms to become an appealing option for U.S. companies.
On Thursday, Castillo said that although “it is customary to sign agreements during summits or international meetings, in this case there will not be any signing of documents or declarations. It is, above all, an exploratory meeting.”
The minister added that “it’s up to each country to comply with the recommendations and conclusions of the meetings.”
A unified agenda seems an unlikely scenario for Saturday’s meeting, as Central American countries seem more interested in pushing for mostly local-oriented goals – particularly security and immigration reform.
The three countries comprising the “Northern Triangle” (Guatemala, Honduras and El Salvador) will emphasize requests for direct aid from Washington to fight drug trafficking. They also are likely to push for approval of immigration reform in the U.S., a key political goal for the Obama administration.
As El Salvador’s president, Mauricio Funes, said earlier this week, “We are going to see what the U.S. can do to reduce levels of crime and drug trafficking in Central America, and after that, we’ll see what else the U.S. can do to support our economies.”
Meanwhile, the main goals for the southern part of the region, mostly Costa Rica and Panama, will be trade and investment, as well as development of clean energy.
Costa Rican trade officials will focus on asking for U.S. support for the country’s entry into the Organization for Economic Cooperation and Development (OECD) and the Trans-Pacific Partnership Agreement (TPP).
“We will ask President Obama and his officials to support the growing participation of Costa Rica in the global economic scenario,” Foreign Trade Minister Anabel González said at a press conference on Tuesday.
González added that access to the OECD would help Costa Rica become an agent in the region to promote principles such as democracy, law, fair competition and economic opportunities.
On the TPP agreement, González stressed that it is a commercial forum that Costa Rica is interested in joining to “connect to an axis of very strong economic growth in the world.”
The TPP involves negotiations between the United States, Japan, Brunei, Malaysia, Chile, Peru, New Zealand, Australia, Singapore, Vietnam, Canada and Mexico, which comprise nearly one-third of the global gross domestic product.
“This alliance seeks to establish a free trade area with modern rules for the promotion of competitiveness and global value chains, and this is very important for Costa Rica,” González said.
Honduras’ goals for the meeting are mostly focused on the drug fight and immigration reform, as President Porfirio Lobo told local media. The Honduran entourage consists of a group of ministers and only three representatives from the business sector.
Earlier this week, Lobo said he would “formally ask” Obama for true immigration reform that favors the more than 60,000 Hondurans living in the United States under Temporary Protected Status.
Guatemala’s Otto Pérez Molina also said that immigration reform is the topic that most interests him during the meeting with Obama.
Nicaraguan President of the Superior Council of Private Enterprises (COSEP) José Adán Aguerri told local media that the Nicaraguan delegation would propose the construction of a gas pipeline across the isthmus.
Currently, generation of each kilowatt of electricity costs an average of 17-18 cents in Central America, COSEP said. A gas pipeline would drop that cost to 7-8 cents. That would make the region more competitive as electricity rates would decrease, which foreign firms often have requested from local governments across the region.
Aguerri noted that Nicaragua’s initiative already has the support of the other countries in the region, which would likely mean approval of its inclusion in the proposal to be presented at the presidents’ meeting.
Despite all this, regional business leaders on Saturday cannot expect an approach like Kennedy’s Alliance for Progress if they are not willing to offer in return a secure investment environment and serious improvement in infrastructure. One figure remains telling: This year, the Obama administration requested a cut in aid to Central America that if approved would drop regional aid from $100 million to $86 million. Not a good start for a new partnership.
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