Life as Commerce:

Free Trade And The Environment¹

A dangerous liaison: the environment

and free trade
Photo: Sobrevivencia

The rise of free trade agreements: what they are and what they cover
The current model of development based on free trade affects the environment in many ways:
1. It leads to increased depletion of natural resources: these are exploited to near exhaustion by industries and
other activities dependent on them and are turned into commodities. Natural resources are often transported to
other countries for processing and returned as industrialized products.
2. It creates insecurity by eliminating or weakening environmental laws or national environmental protection
policies which are seen as barriers to trade. Sometimes these laws or policies are adapted to include the
principles of free trade as contained in international trade treaties. Similarly, standards of environmental
protection may be lowered on the basis that too much regulation will drive away private foreign investment.
Partly because of clauses establishing mechanisms for the settlement of disputes between states and investors,
all forms of legislation – including health and safety and the rights of workers – come under attack.
3. It privatizes life via intellectual property rights (IPRs), including patents, which regularly feature in free trade
agreement (FTA) negotiations. IPRs and the rights of private monopolies cause genetic erosion (a loss of
genetic diversity).
4. It promotes the introduction of genetically modified foodstuffs, seeds, trees and plants which have an impact
on health, the environment, agriculture and other aspects of life.
5. It encourages the privatization of public services associated with natural resources, including the generation
and distribution of electricity, telecommunications, the supply of drinking water and wastewater treatment.
6. It advocates the expansion of monoculture plantations and the increased use of pesticides, thereby
provoking health problems, the loss of biodiversity, the loss of forests and the loss of the collective rights of local
communities and indigenous peoples.
7. It intensifies the development of infrastructure including roads, ports and airports, which also affect soil,
causing its loss and erosion, and preventing its use for other purposes.
8. It increases consumption, by inundating people with multiple products and advertisements, thereby
increasing the amount of waste generated and all associated problems.
9. It increases inequality in relation to the use of resources, with the wealthiest twenty percent of the world
already consuming eighty per cent of all the planet’s resources.

1. Created by COECOCEIBAFriends of the Earth, Costa Rica, Javier Baltodano licania@racasa.co.cr and Isaac Rojas Gavitza@racsa.co.cr, For the Global Forest Coalition,
January 2008
Despite these and other impacts, the use of natural resources continues to play an important part in the
negotiations of many free trade agreements (FTAs), both bilateral and multilateral. Governments, especially
those of European countries and the United States, have realized that interests they defend in multilateral
trade negotiations (not always successfully) which they have promoted since the mid-nineties, and
especially since the year 2000, through the creation of bilateral treaties and free trade agreements with
individual developing countries, can provide them with international legal measures which create laws
designed to protect their interests and those of the multinationals they defend.
They can thus create an investor-friendly legal system which provides large multinational corporations with
rights and privileges to conduct business that generates more profit whilst eliminating state regulatory
powers. These FTAs are negotiated on a basis of reciprocity, that is to say, both sides have the same amount
of responsibility over the issues being negotiated.
In UNCTAD’s report of 2007, on the subject of trade and development, it states that multilateral negotiations
in the WTO are progressing slowly, whilst there is a proliferation of commercial bilateral negotiations. There
were only twenty such agreements in 1990, but the number swelled to 86 in 2000 and 159 in 2007, with the
United States having negotiated the most, especially with developing countries. The European Union has
acted in a similar fashion.2
FTAs are a tool to strengthen and promote the neoliberal model of development and have been used with
increasing force in recent years. They are legal instruments that are binding, at both the international and
national level, on those countries that ratify them. The negotiating and signing of these treaties are carried
out in a fantasy world full of promises that are frequently not fulfilled; and they cover a large number of
aspects that relate to peoples’ everyday life. Usually, these FTAs include the following points:3
- Access to markets
- Services in general, along with a few specific provisos relating to certain sectors such as
telecommunications and finance
- Intellectual Property Rights
- Rules about what are known as non-trade issues, or the ‘Singapore issues’, which include investment,
procurement, policies competition and trade facilitation
- Issues relating to labour and the environment
Only the first point is genuinely relevant to free trade agreements. The second and third are new World Trade
Organization (WTO) issues and the fourth, introduced by the WTO in 1996 during the Singapore Ministerial,
is still under discussion. In 2004, the WTO’s General Council decided that the Singapore Issues should be
excluded from what is known as the Doha agenda and negotiations were halted. Labor and environmental
issues are generally also rejected as priority issues within the WTO (although there is a Committee on Trade
and the Environment which has achieved very little). Yet all these issues still reappear in bilateral FTAs.
In this way, the environment is being turned into something that can be bought and sold and, on many
occasions, attempts to protect it are seen as a barrier to trade that need to be eradicated. For example, if a
law or regulation is regarded as a barrier to trade, it can be challenged in front of various bodies who
advocate free trade. For the regulation to remain it is necessary to demonstrate its worth to these bodies,
proving that it is indeed the only measure that can be taken to achieve the desired objective. There are very
few success stories.
Currently, the FTAs that have or are being negotiated, emphasize the role of investment. The FTA involving
Central America, the United States and the Dominican Republic (CAFTA)4, for example, does not include a
specific definition of the concept of services. Instead it refers to the definition already contained in the
Agreement on Trade and Services in the WTO (which has already been questioned, because of its overly
broad and ambiguous nature). For this reason, it is noted that: "The GATS covers virtually any action, rule or
2. Khor, Martín; Bilateral/regional free trade agreements: an outline of elements, nature and develpment implications, Third World Network, p 16.
3. Khor; op.cit
4. COECOCEIBAAT; From How they are trying to kill life 3: services and investment in the FTA, San Jose, Costa Rica, 2005, 12p. Check at www.coecoceiba.org

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regulation that will have a direct or indirect effect on
trade in services. (...) The comprehensive nature of
GATS threatens to severely limit the ability of
national governments to initiate actions or policies in
areas of social, environmental or development
priority.”
Indeed, if one examines the text of the agreement, it
may be construed that ‘services’ includes such
sensitive issues, from the point of view of
environmental protection, as bio-prospecting of
national biodiversity and oil exploration. They Photo:Orin Langelle
receive the same treatment and have the same
range of obligations imposed upon them as
traditional activities subject to free trade rules.
Something similar has happened with the concept of ‘investment’. The criteria used to define it are also
equally ambiguous, to the extent that what is included goes far beyond the traditional boundaries of
‘investment’. This trend could be seen during the implementation of the Chapter on Investment in the North
American Free Trade Agreement (NAFTA), in which the courts that were created to study the claims of
investors have come to regard even the expectation a company may have of obtaining a share of a market as
a legitimate ’investment’.
These provisions also apply to all sectors that qualify as investment or services, i.e. whether or not the sector
is specifically mentioned. The sole exception to this is for sectors included in an annexed list of exempted
sectors. In other words, if a measure relating to a service is not contained therein, it is assumed that the
obligations of openness and deregulation imposed by the treaty must be complied with. If, on other hand it is
indeed contained in the list of exemptions, it is only exempt in the respects mentioned. This means that all
national laws pertaining to a given service or investment that are not specifically listed should be ‘in
conformity’ with the obligations imposed by the treaty because otherwise, they could be denounced by the
other parties as a violation of the agreement. This is known as the ‘negative list approach’ and is taken to the
extreme in the free trade treaty between the US, Central America and the Dominican Republic (CAFTA) and
are widespread in their application to virtually all areas of productivity and the vast majority of services -
including several essential public services - without any differentiation in response to the particular nature of
the entities or institutions involved in their provision or to national interests at large.
Some of the implications of the above are:
- CAFTA becomes the basis for any possible future FTA negotiations, including with the US or Europe.
The experience of Central America proves this: governments in the region and the European Union
announced the start of negotiations for an FTA between them (called the agreement of association by
the European Union). The European side has indicated that the basis for trade negotiations will be
CAFTA.
- These provisions prevent preferential treatment or priority being given to national and local
organizations for the provision of certain services or for the implementation of certain strategic
activities.
- They also equate private entities with public entities or institutions so that obligations apply to them
both equally in terms of relationships with foreign firms. This means that countries are obliged to give
companies the same conditions or benefits that they give public institutions or companies that provide
services to which treaty obligations apply or that undertake activities which qualify as ‘covered
investments’. In such cases, nature or the finer points of public institutions are not relevant.
The jurisdiction of national courts is called into question in relation to their ability to settle disputes that arise
from decisions made by local authorities when implementing national laws. In its chapter on investments
CAFTA reinvents and broadens the system of investor-state dispute resolution contained in NAFTA. If

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 disputes arise between the signatory states and foreign investors or any of the other parties, in the case of
the decisions being related to their investments, judgments may be submitted to international arbitration
tribunals when requested by the investor. These closed tribunals can operate on the basis of rules made by
the International Centre for Settlement of Investment Disputes (ICSID), the World Bank or the United
Nations Commission for International Trade Law (UNCITRAL). In all cases, they are given wide powers to
judge the policies and actions of states and may condemn them to pay large sums of money. Civil law is not
involved and they operate under mechanisms of absolute secrecy.
This issue, relating to the loss of full democracy and citizens’ rights, was highly criticized in the proposals for a
Free Trade Area of the Americas (FTAA).5
Environmental chapters
Chapters in free trade agreements that relate to the environment play a very specific role in making the
public believe that all free trade agreements contain provisions that guarantee mechanisms for protecting
the environment. However, such chapters don’t summarize all the environmental implications that an FTA
creates. Instead, it diverts attention away from the other chapters that create huge environmental impacts
such as those on services, investment and intellectual property.
In CAFTA we can find new versions of the environmental provisions of NAFTA.6
- For example, national standards of environmental protection and policies and priorities for
environmental development, as well as the sovereign right to adopt or amend and improve
environmental laws and policies are maintained by each party. Thus, no provision exists that requires a
party that has low standards of environmental protection to improve them.
- Also, incentives and voluntary measures are the preferred route to environmental protection. Thus
each party, according to their capability, will stimulate the development and use of these mechanisms.
Examples of such mechanisms include partnerships or other forms of organization that facilitate
voluntary action in protecting the environment; sharing information and experience between
authorities, stakeholders and the public; audits and the presentation of voluntary reports; methods of
improving the efficient use of natural resources or reducing impacts; and incentives that encourage
environmental protection including, amongst others, market-based mechanisms.
All these mechanisms are compatible with the theories of free trade which promote voluntary
protection rather than the application of sanctions or similar mechanisms (in some cases allowing trade
in pollution permits). From previous experience, these mechanisms do not work because companies
are dedicated to doing business and environmental protection is – in these cases - a secondary concern.
- Citizens’ rights are severely weakened: councils without any significant power are created to deal with
environmental issues. They have no mandate to examine the impact the intensification of trade has on
the environment. There is even less a chance of changing the guidelines of trade, even in cases where
these guidelines provoke or encourage an exacerbated exploitation of nature. So an Environmental
Council with little power coupled with a weak and fragmented management of the local environment
will see the logic of profit and the commodification of nature and society prevail7. Decisions of this
Council shall be taken by consensus which, in the world of commerce, means the strongest will prevail.
- National environmental legislation is watered down in three ways. First, through its definition. In
CAFTA, all legislation relating to regulating the extraction or commercial exploitation of natural
resources is excluded. In other words, laws about Biodiversity, regulating access to genetic resources or
Mining Codes, the Hydrocarbon Law and the Forestry Law are all affected. They will lose any content on
Human Rights, for example, and will have serious problems in determining who can and cannot
complain.
The second way in which environmental legislation is weakened is by the exclusion of any important

5. Tockman, Jasón; The free trade area of the americas and its impacts on forests, International Trade Program of American Lands Alliance, december 2002, p3.
6. COECOCEIBAAT; How they are trying to kill life 2: environmental chapter of NAFTA, San Jose, Costa Rica, 2005, p. 14
7. Lopez, Manuel, Solidarity Thought; Strategy for a Razed Earth, first edition, 2005

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environmental agreements such as the Convention on Biological Diversity, the Kyoto Protocol on climate
change or the Cartagena Protocol on biosafety, because such agreements only become law if ratified by all
parties. Obviously if we bear in mind that the United States is one of the governments that sabotages most
multilateral environmental negotiations, often refusing to participate in them as well, the reasons for this
exclusion are clear.
The third way in which environmental policies and legislation are weakened relates to the dispute settlement
mechanisms used. As per the investor vs. state clause, this can prevent a country implementing its
environmental legislation if it affects trade in a negative way. The country can do it, it is their right. But if the
other party believes that it has been damaged commercially because of it, they may sue the state for
compensation.
Thus, the environmental chapters of FTAs are simply mechanisms to acquire legitimacy among the
population at large. They create the impression that they help to protect the environment. But they actually
succeed in eroding environmental protection at the national level. This is their real role.
BIODIVERSITY AND WAYS OF COMMODIFYING IT
Over the last few decades, biodiversity has been commodified in a number of different ways.
Areas rich in biodiversity, such as in the Mesoamerican region, have been subject to a process of ‘piracy’ (the
removal of genetic resources, including seeds for farming). Through the implementation of relatively simple
techniques, these can then be transformed into ‘commercial’ varieties. Subsequently, these seeds are then
forced onto the market by the multinationals under the banner of scientific improvement and the green
revolution, with support from local governments and even at an artificially low price to encourage farmers to
buy them. The case of sweet chilli illustrates this. This plant:
"… has its place of origin in tropical and subtropical regions of the American continent, probably Bolivia
and Peru, where ancient seeds more than seven thousand years old have been found and from where
they would have spread throughout the Americas.”8
It is very likely that this distribution was caused in part by trade and barter: it certainly created a rich diversity
of varieties. In the latter half of the twentieth century, many corporations were devoted to producing
commercial varieties, often hybrids, from these ancient varieties. Thus today, marketing houses, usually
linked to multinational seed companies such as Cristiani Burkard SA and Duwest SA, amongst others,
distribute sweet chilli varieties whose names sometimes correspond to the Central American regions that
they originated from (quetzal, tropical irazú and tikal, for example)9.
Another process of commodification, ‘bio-prospecting’, emerges from efforts to combine marketing with
conservation. Thus, at the end of the eighties10, Eisner, supported by Janzen, proposed a system through
which countries rich in genetic material but
poorly equipped for scientific research, took
samples and biological inventories in order
to help acquire knowledge of their
biodiversity and gave access to their genetic
resources. This became one of the
objectives of the Convention on Biological
Diversity a few years later (CBD).
In addition, countries took the first steps in
monitoring the chemical properties of these
8.Orellana Francisco. Technical Guide to Cultivation in Chile. San Sal-
vador: Ministry of Agriculture. See
Www.centa.gob.sv / documents / guides / chile.pdf
9. El Salvador Ministry of Agriculture, 2006. Manual de Insumos agro-
pecuarios. www.mag.go.cr/bibioteca_virtual_ciencia/tecchile.pdf
10. Rodriguez, Silvia "Conservation and contradiction and erosion of s
overeignty: the Costa Rican State and protected Natural areas" Docto
ral Thesis, April 1993, Development Studies at the University of
Wisconsin, Madison, p152157

Foto: Miguel Lovera

5 5
life forms. Countries that were better equipped scientifically would be responsible for the final stages of
identifying the properties of the samples, thanks to their superior technology used mainly in the
pharmaceutical and agricultural production industries. The properties being sampled, as a rule, are subject
to patents or other intellectual property rights, under the industrial argument of having to recoup the
investment made. This is where intellectual property comes into play. In this way such diversity is
appropriated and, as a consequence, countries that are highly scientifically developed acquire control of
these strategic resources which in our judgment, is tantamount to expropriation or theft. Thus we call this
activity bio-piracy as it facilitates and promotes the ownership of biodiversity11.
There were other arguments to justify bio-prospecting at the beginning: its environmental impact is very low
and therefore it was considered to be very compatible with conservation. Later, however, bioprospecting led
to the establishment of monoculture plantations of certain plants to ensure a continued supply, which has
had environmental impacts. In addition, as argued by the legitimizing rhetoric of bio-piracy, there were
supposed to be other benefits, beyond just economic considerations, such as the export of the technology.
This, however has not so far been fulfilled.
In Costa Rica, a pioneer in carrying out the processes of systematic bio-prospecting, the National Biodiversity
Institute (Inbio) is consolidated, a private organization that originally thrived from the collection of plants
that the country had maintained for more than a century at the National Herbarium, a public institution. This
country had carried out one of the most systematic efforts to gain knowledge of the flora in Tropical America:
Costa Rica managed to have an inventory of five hundred species of plants12 even in the late nineteenth
century. This inventory doubled every decade during the first eight decades of the twentieth century,
numbering almost ten thousand species of plants collected in the National Herbarium by the end of the
eighties, when Inbio, on the basis of this information, began collecting and bio-prospecting.
Thus bio-prospecting could be defined as the systematic search for, classification of and research about
products derived from biodiversity that might have commercial application. Bio-piracy is the marketing,
ownership and privatization of these products. This kind of activity, commercializing nature, seeks to profit
from the use and appropriation of biodiversity, encouraging its objectification and, hence, the buying and
selling of it.
While talking of biodiversity, we should mention that the traditional knowledge that relates to it is also
subject to commercial use and appropriation. It is also important to clarify that the theoretical distinction
between and bio-prospecting and bio-piracy is not normally so clear cut in practice.
Thus pharmaceutical and agricultural industries, using the genetic and biochemical resources of biodiversity
to develop much of their merchandise, have committed bio-piracy, typically through applications for patents,
hijacking various genes and using traditional knowledge to obtain those genes. Between 1950 and 1980, a
quarter of the medicines in the United States were based on drugs derived from plants and today 40% of
those in clinical trials are based on plants. Three quarters of these are used by various Indigenous Peoples.
The business generates US$ 68 a year13.
For this reason and given its place as a strategic commodity, representatives of various governments (whom
the industry has convinced to support its viewpoint in order to defend it in international negotiations,
including in relation to the World Trade Organization’s Trade-Related Intellectual Property Rights Agreement
(TRIPS)) are driving negotiations for legal frameworks at national and international levels that will help
access these resources and, ultimately, facilitate bio-piracy.
Intellectual property comes into play mainly through patents and rights of possession and confers
monopolies on the owners of the private property rights on new products. However, the ownership and
privatization of biodiversity can be furthered through other mechanisms besides intellectual property. For
example, basmati rice from India has earned a global reputation thanks to the work done by local
communities in India for thousands of years. This rice was obtained without any permission by the Rice Tec
company from the United States and marketed globally. That is to say, this company succeeded in reaping
11.COECOCEIBAAT; Biodiversidad entre el negocio y la sustetabili-dad; San José, Costa Rica, 2005, 34p.
12. Pittier, Henri; Plantas Usuales de Costa Rica, San José, 1978, Editorial Costa Rica, 3ra edición, pag25
13. Ribeiro, Silvia; Medicina tradicional, patentes y biopiratería, August 3 2002 from La Jornada de México.

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the benefits from centuries of work done by
several local communities simply by marketing it
on a global scale and without sharing the profits.
This is also a form of ownership.
In FTAs, these issues form parts of the texts that
are negotiated and signed. Biodiversity is
commodified through three main instruments.
Firstly, intellectual property: The United States
assiduously fights for these rights to be
standardized in accordance with its own national
law. It wants stricter protection for new
technologies and fewer exceptions to
patentability. All this brings with it the Photo: Simone Lovera
introduction of monopolistic rights to the food
system, limits on the free movement of
germplasm (seeds), increased genetic and cultural erosion, and the imposition of royalties on farmers, which
increases the price of seed. At the same time, any food sovereignty is lost and monoculture and agribusiness,
amongst others, are promoted.14 In European cases, establishing measures on these issues in FTAs is seen
as a strategy to access markets that were once publicly owned. There it was determined that inadequate
protection for such rights constituted a barrier to trade. As we can see, the objectives of both the United
States and Europe differ little in this area.
- In matters of intellectual property, countries are losing their ability to allow patents and other associated
mechanisms, such as the use of compulsory licenses to use patented material without paying royalties,
specifically in cases of national emergency.
Equally, many FTAs have even more far-reaching IPR requirements than the WTO. This is referred to as
‘TRIPs plus’. For example, if a country negotiating an FTA with the United States or Europe is not part of the
EU Convention for the Protection of New Varieties of Plants (UPOV), it is first compelled to ratify that treaty,
which often leaves the door open for the possible future patenting of plant varieties. This was the case in
Costa Rica, in the CAFTA, which forced the government to ratify UPOV’s 1991 Act (although they accepted
this rather calmly in the end). UPOV has significant impacts:15
1. UPOV denies farmers' rights both in particular and in the broadest sense: it curtails the right to save seed
for sowing, and does not recognize the inherent rights of local communities and their relationship to their
own biodiversity, as does, for example, Costa Rica’s Biodiversity Act.
2. Large companies are taking ownership of national systems of plant breeding in our countries: UPOV states
nothing about the transfer of technology. Studies carried out in several Latin American countries indicate that
a large percentage of requests for UPOV protection come from foreign firms operating in Latin America
(Ecuador 97%, Colombia 84%, Chile 79%, Mexico 67% and Argentina 57%).
3. Large companies acquire our biodiversity as property without any obligation to share the benefits: unlike
the Convention on Biological Diversity, UPOV says nothing about the fair and equitable sharing of benefits
reaped from the exploitation of biodiversity and our farmers have to pay royalties to use our own germplasm.
4. Criteria for the protection of new varieties in UPOV exacerbate the erosion of biodiversity: it promotes the
uniformity of species leading to lost harvests, food insecurity and genetic erosion.
5. Privatization of genetic resources adversely affects research: several studies in the United States show
that when there is protection through mechanisms such as UPOV, the transfer of research diminishes,
discouraging it altogether.

14. Bravo, Elizabeth; AFTA and food sovereignty; mimeographed, November, 2003, 9 pages
15.These impacts were analyzed and studied by the Network of Coordination in Biodiversity of Costa Rica. For better information one can consult Rodríguez, Silvia: The
subject of intellectual property, with emphasis on the intellectual property of living things in Thoughts on Solidarity, op.cit, p.26 to 34; Network of Coordination in
Biodiversity in various documents in support of the Legislative Assembly in Commission of International and Agricultural Matters

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6. Progress made to protect biodiversity in systems of negotiated access - as in the Convention of Biological
Diversity and the FAO - are undermined by UPOV: UPOV guarantees private ownership of resources within
sovereign nations.
7. Membership of UPOV assumes incorporation as part of a system that increasingly supports industrial
rights of possession to the detriment of farmers and non-industrial communities: broadening the time that
rightsholders have possession and again weakening the rights of farmers and public interests.

8. UPOV does not even observe the provisions of TRIPS and comes into conflict with the Convention on
Biological Diversity: provisions associated with granting privileges among members are more open in TRIPS
than in UPOV.
9. The TRIPS agreement is being reviewed: the next negotiations will be held in Geneva on the 17 to 20
September 2008. That means negotiations on the need for intellectual property regulations for plant
varieties are still being discussed internally within the World Trade Organization.
10. The bulk of the benefits will go to developed countries: UPOV is designed to facilitate monopolization by
large companies engaged in improving crops, and almost all of this ‘improvement’ is aimed at international
markets. After 35 years of UPOV, food insecurity has still not been eliminated in our countries.
In addition to forcing a country to ratify UPOV 91, Article 15.9.2 of the FTA says that countries must "make
every possible effort to grant patents on plants”. By opening up the opportunity to patent varieties of plants,
it is accepted that the privatization of the same in order to create monopoly rights over the plants was the
objective of the patent. That is to say, that which belongs to everyone today may belong to one tomorrow.
- Through the possible introduction of genetically modified organisms: FTAs negotiated with the United
States do not impose any restriction on the freedom to trade and import or export transgenic organisms or
products that contain them. This may even include transgenic trees.
- Through declaring bio-prospecting as a service and an investment for acquiring the privileges analyzed
above. In CAFTA, bio-prospecting is defined as a ‘scientific research service’; the permission to run this
‘service’ is equated to an investment contract and the bio-prospector is to be treated as an ‘investor’, with all
the privileges that the FTA accords investors. For example, working methods and findings would be
protected as intellectual property and there can be no ‘performance requirements’. The investor would also
be in a position to demand the elimination of the "Standards for Access to Genetic Resources and
Biochemicals" established in Costa Rica under the Act of Biodiversity and according to the principles of the
Convention on Biological Diversity (CBD). Articles pertaining to the defense of resources and the knowledge
of indigenous peoples, mandatory transfer of technology, the equitable sharing of benefits received from the
extraction of resources and the prevention of the country from exercising sovereignty over them16 would all
come into question.
The following example shows us how bio-piracy works and alerts us about its conversion into a service and
an investment under the rules of FTAs17: bio-prospecting activities developed by Inbio have been cited in
documents emanating from the CBD. At COPVI, held in The Hague, the so-called Bonn Guidelines on Access
to Genetic Resources and the Fair and Equitable Sharing of the Benefits Arising out of their Utilization were
adopted, among others. The communiqué emanating from the CBD on 19 April 2002 stated that these
guidelines "advise governments on how to make things fair and practical for users of genetic resources (such
as plants that can be used to produce new pharmaceuticals or fragrances). In return, these users can offer
benefits such as profits, scientific collaboration or training." Further on, the communiqué said literally:
"A well-known example of a contract for access and benefit-sharing was negotiated between the
Diversa Corporation and the Costa Rican National Biodiversity Institute (InBio) in 1995 and renewed in
1998. Both partners collect samples of micro-organisms associated with higher organisms such as
insects from mangroves, coral reefs, forest soils and other places. Diversa are looking for enzymes and
protein structures that can be used for biotechnology, crop protection and pharmaceuticals. (...) Under
16. Rodríguez, Silvia; Impactos sobre la biodiversidad del TLC, mimeographed, 2006, page 1
17. COECOCEIBAAT; Biodiversity, ... op.cit.

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 the terms of the agreement, Inbio collects specimens using their own techniques and ones provided by
Diversa as well. InBio guarantees that this technology will not be used to collect and process specimens
for other companies. The entire DNA sequence that InBio isolates for Diversa will become the property
of Diversa. All material isolated from these sites remain under the ownership of Costa Rica. Diversa pay
the wages and other extras of at least one InBio staff member. It also pays profits to Inbio in the event
that Diversa license a product to a customer from samples obtained from InBio. InBio receives access to
technology, equipment and the creation of capacity ...”
CBD openly supports a business that privatizes biodiversity and, in return, will receive a salary (to work on a
project that favours a multinational), access to technology that can only be used in the company’s project
and, eventually, royalties (but only if the product is marketed). The CBD is silent on the matter of whether or
not any control mechanisms with respect to what future products might be derived from the appropriated
samples of biodiversity. Nor do they question what it means, in cultural terms, to impoverished countries that
their biodiversity is privatized or at least investigated so that the whole world can see. Not a single word is
uttered about the key legal mechanism that underpins bio-piracy: intellectual property.
Finally, the cultural role of the traditional knowledge of biodiversity is threatened via a variety of means18:
- Pursuing the consolidation of the private rights of intellectual property over biodiversity robs it of any
spiritual and cultural value. This makes it easier to buy and sell it because one can
argue that the remaining knowledge can be protected through intellectual property
rights.
- Weakening the national frameworks that provide protection for bioidiversity, as
it is not explicitly included as an exception to the rules of the FTA.
- Ignoring biodiversity and negotiating terms contradictory to related policies
including prior informed consent, place of origin or any rules.
- Never having any consultation with indigenous peoples, according to the
terms of Agreement 169 of the International Labor Organization concerning
Indigenous and Tribal Peoples.
THE OPENING UP OF TRADE AND THE FOREST: REFLECTIONS
FROM THE HISTORY OF COSTA RICA
The opening of trade routes and major international markets has historically
been one of the major underlying causes of the destruction and degradation of
forests, and historical examples of this exist from all over the world. Costa Rica is a
small Central American nation whose history clearly illustrates this situation: before
the European invasion at the beginning of the sixteenth century, it is estimated that
its 52,000 square kilometers of territory was populated by just under half a million
inhabitants19. It is also estimated that 95% of this territory was covered by forests.
The colonial economy, during its first two centuries, was limited to subsistence
farming, exporting small amounts of timber for dyes, cocoa, tobacco and cattle
hides. Forests remained more or less stable throughout this period: "The five
budding colonial regions that existed at the beginning of the nineteenth century,
collectively, barely covered 10% of the nation’s territory.”20
1830 - 1930: the consolidation of coffee and banana exports
It was not until 1830 that the international coffee markets began to
consolidate.21 This trade began to drive the spread of the mono-cultivation of
18. GRAIN, TLCs: el conocimiento tradicional en venta, marzo del 2006, 16p
19. Herrera, Anayensy; Al encuentro de los ancestros. San José: Editorial ICER, 2005, p322
20. Carolyn Hall; Coffee and the historical and geographical
development of Costa Rica. San Jose, Costa Rica Publishing, 1976, p 208
21. Molina Ivan; Del legado colonial al modelo agroexportador:Costa Rica (18211914). San José: Ed. UCR. Serie
Cuadernos de Historia de las Instituciones (19). P 67

Photo: Miguel Lovera

9
this fruit and, consequently, the first significant wave of deforestation, via the increased colonization of new
areas.22
"The land, most of which was owned and worked communally, was not a consolidated commodity by
the end of the colonial period (1821). Neither was the workforce (…). The turning point came only with
the spread of coffee cultivation.”23
Between 1850 and 1890, nearly 200,000 ha of the state’s uncultivated lands were sold and a little more than
160,000 ha donated24 (7% of the total territory) to support the growth of the coffee industry. Today, coffee
remains the largest monoculture in Costa Rica, covering about 100,000 ha.25
In the final decade of the nineteenth century, preparation was complete for the construction of a railway to
the Atlantic, connecting the coffee regions at the centre of the country with the Atlantic Ocean and providing
a more direct route for the export of the beans (coffee had previously been exported from the port of
Puntarenas on the Pacific Ocean). Upon completing the construction of this work, entrepreneurs began to
turn to planting bananas extensively on the warm plains near the Atlantic, also for export to markets in the
North. By 1910, exports of the fruit equalled those of coffee. This marked the start of operations which
became the banana company United Fruit Company: "United spread throughout the Caribbean, having
based its business on the plundering of natural resources: once a land was exhausted, the crop was moved to
virgin soils."26
1960-1990: the meat markets
Whilst a national meat trade was already beginning to establish itself in 1840, owing mainly to the wealth
created by coffee in the central part of the country, it was not until the mid-twentieth century that the
demand for Latin American meat grew substantially in northern countries. Ecologists, anthropologists and
social scientists have charged this new market with "a number of negative social and environmental
consequences, including the destruction of forests, the decline in rainfall, soil erosion, substituting grazing
land for farms(…) rural unemployment and the concentration of land, credit and other resources.”27 It is
estimated that, between 1940 and 1990, it destroyed about 50% of the country's forests with the amount of
deforested areas increasing to 73% of the national territory.28
In the sixties and seventies livestock grew to be the third largest sector of importance to the country's
exports. But it was characterized as an extensive activity of low productivity which occupied, in a profligate
manner, lands suitable for the production of basic grains, rested land and land which should be used
strategically for the conservation of vital resources29. In short, it involved extensive destruction of forests.
1990 - 2005: the demand for meat disappears but neo-liberal policies keep the pressure on
forest resources
The 1990's arrived, along with new perspectives regarding the forest cover of a country. On one hand, the
instability and low selling price of meat forced the activity to collapse. Large livestock farms were abandoned
and the land, now less suitable for agriculture, regained its forest cover through a regeneration of secondary
forests, usually poorer in biodiversity compared to the original forests. By 2000, Costa Rica had just stabilized
its forest cover at just less than 50% of the territory. The recovered forests had implicit benefits in areas of
soil protection and the conservation of water resources but had little impact in terms of preserving
biodiversity, social benefits and the fair distribution of forest resources. Indeed, between 1996 and 2006, the
number of species of trees threatened with extinction increased substantially from 18 to 53.30
Neo-liberal policies instigated by the so-called Structural Adjustment Plans shaped the economic and political
realities in this era and have kept constant pressure on forest resources. These policies are aimed at assisting

22. Fallas, Oscar; Modelos de Desarrollo y crisis ambiental en Costa Rica. San José: Asociación Ecologista Costarricense. Serie Cuadernos de Estudio (1), 1992, 99 p
23. Molina, Iván; op.cit.
24. Cardoso, Ciro; 1987. La formación de la hacienda cafetalera en Costa Rica, 1987, citado por Molina, Iván; op.cit.
25. Programa Estado Nación (Costa Rica), 2007. XIII Informe. San José: Geográfica SA. Cuadro 4.34, 1987, p. 261.
26. Molina, Iván; op.cit.
27. Edelman Marc, La lógica del latifundio, San José, Editorial Universidad de Costa Rica, 1987, 516p
28. Fallas, Oscar; op.cit.
29. Ibid.
30. Baltodano, Javier; Bosque, cobertura y uso forestal en XIII Informe Estado de la Nación en desarrollo humano sostenible, 2007, see www.estadonacion.or.cr

10
 the expansion of large exporting industries at
the expense of small farmers and agro-
ecological farms. In fact, the production of basic
grains declined drastically during this period.
Major institutions in the framework created to
ensure food sovereignty have also been
weakened or have disappeared31 and there has
been a considerable increase in monocultures
belonging to large companies (oranges,
bananas, trees for pulp, palms and, more
recently, pineapples). Huge agro-exporter
companies have been changing the landscape in
vast areas of warm tropical plains. The rural
Photo: Sobrevivencia agro-ecological landscape that existed in the
seventies in which crop farms were interspersed
with small grazing areas, abundant trees in agro-
forest systems and small forests, have been transformed into vast tracts of monoculture.
The example of the pineapple is, perhaps, the most dramatic and recent. The area under cultivation
increased by 300% over the past six years and, in terms of pesticide use, this crop ranks second after the
banana with 24.55 kg/ha of active ingredient required per year.32 The expansion coincides with the most
significant deforestation frontiers in the country and, along with bananas and oranges, has been associated
with progressive changes in soil usage, and the destruction of remaining forests and biodiversity.
It has been pointed out that thanks to the high international demand for pineapples as well as the easy
access to credit for this activity, "large amounts of derelict land and land undergoing secondary regeneration
have been brutally cleansed during recent decades ..." even priority conservation areas in the interior,
including the Maquenque Wildlife Refuge and the San Juan-La Selva biological corridor33 - two key areas in
terms of the establishment of the Great Mesoamerican Biological Corridor. Its impact on biodiversity has also
been documented, "which is illustrated by a drop in the population of monkeys in the northern area of the
country, problems of erosion and soil erosion, pollution of rivers and excessive logging in forests."34 Other
studies, concentrating on zones of pineapple plantation expansion, have also recorded drops in populations
of birds and other wildlife and links the phenomena to a number of factors including the presence of
pesticides.35
The situation has been aggravated by the tightening up of phyto-sanitary measures that are required for the
export of pineapple to the United States and Europe. These measures include thoroughly cleansing
pineapples of all seeds from wild plants that get mixed in with them resulting in large quantities of trees
(potential producers of small seeds that ‘contaminate’ pineapple) being cut down even many kilometers
away from pineapple plantations. This impact on the environment is combined with a disproportionate social
impact, where health problems for pineapple plantation workers are added to the contamination of
groundwater and surface water by pesticides and this problem already affects many communities living near
the plantations.
In addition to the growth of agro-exportation companies, the start of the twenty-first century coincided with
a boom in tourism. This industry had become the main source of foreign exchange for the country by the end
of 1990. It started due to the reputation of the national parks, in terms of ‘ecological’ tourism, but soon grew
to anchor itself in luxury hotels in coastal areas, deep-sea fishing, golf courses and sex tourism.
31. Rojas, Isaac; Soberanía alimentaria en Costa Rica: situación actual y propuestas para su rescate, San José;
COECOCEIBAAT, 2006; see www.coecoceiba.org
32. Programa Estado Nación (Costa Rica), XIII Informe. San José: Geográfica SA, 2007, Cuadro 4.34, pag. 261
33. Chasso, Olivier; 2005. El cultivo de la Piña: ¿Una alternativa de desarrollo sustentable en el marco de la propuesta del ASP Maquenque?. San José.
Curso Desarrollo y Sustentabilidad, Doctorado en Ciencias Naturales para el Desarrollo, 2005, 15p. See also www.coecoceiba.org on the analysis carried out
by Javiera Aravena on the subject of pineapple expansion.
34. Acuña, Guillermo;Producción de piña en el Caribe y Pacífico Sur de Costa Rica in Ambientico 158 of November 2006
35. Sigel, Bryan; Study on populations of birds in The La Selva Biological research station, Sarapiquí, 2006, cited in La Nación newspaper 16 May 2007, p20A36.
Roman, Marcela; Desarrollo turístico e inmobiliario costero y preocupaciones ambientales en XIII Informe Estado de la Nación en desarrollo humano sostenible, 2007,

11
The growth in real estate development has been dramatic, reaching 69% in some of areas of the country
during 200636. The impacts of tourism and the construction of luxury recreation areas are evident mainly
along the Pacific coast where, apparently, there is a correlation between the increase in land values and using
fire to keep them clean, whereby forests are degraded so as not to adversely affect building permits. Costeña
row in the peaceful south of the country, one of the most important wildlife corridors and with the highest
incidences of endemism in its biodiversity, is suffering severe degradation due to the construction of roads,
terraces and luxury buildings.37
In addition to its direct impact on the environment, this level of development has resulted in an increase in
the use of forest resources and has become a further underlying cause of deforestation and degradation of
forests in other areas which have fewer tourists. The domestic consumption of wood rose dramatically, by
almost 100%, within the last two years, reaching figures above or at least close to a million cubic meters.
This increase is in direct proportion to increases in two major areas: principally to satisfy the demand for
softwood pallets for the export of fruit and other agricultural products, and because of the boom in the
construction of tourist infrastructure. Four million pallets were manufactured in 2006, consuming just above
400,000 cubic meters of wood, mainly from plantations financed by the State of Costa Rica and using monies
from environmental services (PSA). This means that the mere export of tropical fruit (pineapple and banana
primarily) has increased the demand for softwood by almost 100% in the last few years.
The growth in building tourist accommodation, likewise, made significant demands on fine tropical timber.
Much of this wood has been produced illegally and includes the importation (also illegal) of timber from
forests on the Atlantic coast of Nicaragua38.
Free Trade Treaties… more pressure on forests and forest resources in general
An important issue discussed during FTA negotiations is the elimination of non-tariff measures which can
also have particularly negative impacts on efforts to protect and sustainably use forests.39 40
Non-tariff barriers that ensure the sustainable and socially just production of wood, such as local zoning
measures enacted to reduce negative social and environmental impact, or any environmental laws
regulating timber harvesting are typical non-tariff barriers at risk.41 Given the lack of effective regulatory
structures, the continued growth of global timber exports has resulted in unbearable pressure on forest
ecosystems.42
Other studies emphasize that the increased level of trade puts pressure on forests and forest resources,
especially in the poor countries of the south where there are weak institutions and methods of control.43
FTAA negotiations were advised about some of the risks to forests, such as the acceleration of logging,
logging by razing, watering down policies aimed at preventing the spread of invasive species, the issue of
transgenic organisms versus conservation, and the dangers of replacing forests with plantations. Similarly,
they were advised that the negotiations were going to go further than NAFTA. The same would happen with
WTO provisos.44
In July 2006, there were allegations that, in WTO negotiations, they were going to make all forest products a
priority area in the agreement for open markets. Canada, Hong Kong, New Zealand, Singapore, Thailand and
the United States proposed that the forest products sector should be subject to a complete abolition of tariffs
on products such as timber, and pulp and paper, amongst others. Companies operating in the forest sector,
such as the Santa Catalina group, according to existing evidence, could be behind this proposal. This partial
or complete liberalization would have disastrous consequences in environmental terms for many developing
see www.estadonacion.or.cr
37. Baltodano, Javier; op.cit.
38. Baltodano, op.cit.
39. Rice, Tim; Ozinga, Saskia; Marijnissen, Chantal and Gregory, Mark; Trade Liberalisation and its Impacts on Forest, 2000, UtrechNetherlands,: FERN.
See www.fern.org
40. Sizer, Nigel; Downes, David; Kaimowitz, David; Free Trade: liberalization of international commerce in forest products: Risks and opportunities.
Washington DC, 1997, WRI. See www.wri.org/wri
41. Rice et al, op.cit.
42. Ibid.
43. Katila, Marko and Simula, Markku; Sustainability impact assessment of proposed WTO negotiations: final report for the forest sector study. Finland, Impact
Assessment Research Centre Institute for Development Policy and Management, University of Manchester, UK, 2005. See http://www.siatrade.org
44. Tockman, op.cit

12
 countries as is demonstrated by a study done by
the European Commission on the impacts of
trade on sustainable development.45
Large sectors of most developing countries have
been impoverished in the past two decades, due
to the impact of neo-liberal policies implemented
in response to Structural Adjustment Programs.
Over the last few decades, for example, Costa
Rica has failed to reduce poverty levels, but
levels of social inequality have increased,
widening the gap between rich and poor.46
Many of the institutions that underpinned the
state’s social rights, which made the country
Photo: Sobrevivencia
especially famous from the sixties to the
eighties, have also deteriorated.
The growth of trade, on the other hand, is closely interrelated to the processes of consumerism and the
inequitable distribution of its benefits: 20% of the world's population benefits from 80% of the trade and
almost 70% of foreign investment.47 An estimated 80% of forest products are consumed by 20% of the
world's population.48 Free trade, in this sense, assists the inequality of consumption.
The cost of creating a richer but more unfair world includes critical environmental issues including climate
change, loss of biodiversity, declining fish stocks, over-consumption of mineral products and a good deal of
the destruction of most of the world’s forests.
The case of Mexico is illustrative: according to the findings of a study jointly developed by the Commission for
Solidarity and the Defence of Human Rights and the Centre for Political Studies, Texas: NAFTA has had a
negative impact on forests in the State of Chihuahua. Pulp and paper imports from the United States rose
rapidly forcing domestic producers to keep prices low, breaching environmental regulations. Also, and in
spite of signing up to NAFTA, illegal logging has increased and both environmentalists and indigenous
organizations have drawn attention to this situation.49
In national contexts: forests… a mere commodity!
In CAFTA, forests and forest resources in general are considered as resources: thus their use can be
administered and regulated by the commercial sector. Laws governing forests, for example, according to
Article 17.13, are stripped of any environmental aspect, meaning that they lose any content relating to
human rights of solidarity or third generation,50 thus turning forests into a commodity and bringing their
protection under commercial and administrative law. The ordinary citizen, therefore, loses his authority to
complain and make claims for the damage done to the forest unless he can demonstrate that these affect him
directly.51 He also loses their strategic value in terms of food security, housing, environmental protection and
other associated ethical and aesthetic values that, at present, forests have.52
Promoting and protecting big investment
The FTA, on the other hand, promotes and protects big investments, usually focusing on the development of
large projects in the fields of mining, oil and monocultures, all activities that many studies have identified as
underlying causes of deforestation and the loss of forest resources53.

45. Friends of the Earth International, Forests in jeopardy as WTO talks move into final phase, May 2006, p 2
46. Programa Estado Nación; op.cit p 51
47. Katila et al; op.cit
48. Hunter, D.; Salzman, J.; and Zaelke, D.; International Environmental Law and Policy Foundation PressAmerican University. Washington College of Law, 2005. See
http://www.wcl.american.edu/environment/iel/index.cfm
49. Rice et al, op.cit.
50. Zeledón, Ricardo; Código Ambiental, San José, Costa Rica, Editorial Porvenir, 2000, p 322
51. Rojas, op. Cit.
52. Baltodano, Javier; Bosques y Soberanía Alimentaria, en: La gestión comunitaria de los bosques: entre la resistencia y las propuestas de uso sustentable; 2008 p
7172. See www.foei.org.
53. Rojas, op.cit.

13
There is also the possibility that an increase in the trade in forest products produced on a large scale could
mean greater pressure on forests and forest ecosystems in general (especially in a country already facing a
critical shortage of wood)54. On the other hand, it also poses a threat to small-scale or artisan forest
activities, including small cabinet makers and local wood industries. For these activities, the ecological sector
made a plan for producing a sustainable supply of timber to satisfy the domestic demand because
sustainable activities would also be affected.55 However, according to criteria set out in the framework for
the protection of investments, measures aimed at protecting forests could be classed as "acts amounting to
expropriation". These could include regulations designed to prevent the forest being transformed to
accommodate other land uses, the need to institute new bans on the exploitation of endangered species or
changes in forestry laws aimed at improving their preservation and so on; these could be considered acts
amounting to expropriation or acts affecting expected earnings by companies.
Tax relief encompasses everything… as well as illegal timber?
CAFTA grants appellation of origin status to forest products according to the site from which they have been
cut56. Thus, the United States can import ‘meranti’ timber from Indonesia or ‘caoba’ from the Amazon to sell
to Central America: the first is tax exempted immediately, the second within ten years.
Meranti is a fine timber and common to Indonesia and most of Southeast Asia. This name denotes that the
wood comes from trees from several species of the family of dipterocarpaceas found in this region, where it is
known that a large percentage of the harvest finds its way onto the international timber market illegally.57
The United States, on the other hand, is one of the largest importers of wood produced from this region.
Thus, Central American markets could be flooded with timber illegally harvested on the other side of the
world.
PAYMENT FOR ENVIRONMENTAL SERVICES (PES): CHANGES IN LANGUAGE WHICH ASSIST
THE COMMODIFICATION OF FORESTS.
Costa Rica is one of the first countries to make use of the concept of PES by institutional methods, in
conducting a program of PES through the National Fund for Forest Financing (FONAFIFO), an institution
answering to the Ministry of Environment, since 1997.
Forestry Law 7575 of 13 February 1996 renewed the basic concept underlying the model of sustainable
forest financing operating in the country, probably due to the neo-liberal economic trends in vogue and the
discrediting of words as incentives. Forest incentives, which at the time had existed slightly less than two
decades, became PESs so that “the forests and forest plantations benefit Costa Rican society "(Article 3 of
the Forestry Law). Thus the heirs to previous experiments (Certified Forest Bonds, Forest Development Fund
and others) were born as PES and FONAFIFO.
Economic theory states that PES schemes simply try to absorb into prices the implicit cost that private
owners have in relation to forest services that benefit society as a whole: it is not about incentives,
considering them a distortion of the market.
The brave and valuable innovator who introduced the concept of environmental services into environmental
legislation should be recognized, since forests are now acknowledged as an integral part of the landscape
and necessary for ecosystems to function properly. It must also be acknowledged that the legislation
referred to depends on receipt of a significant budget from the PES, which comes from a 5% fuel tax. These
funds mean, to a certain extent, that there is a transfer of resources from rich areas of the country,
specifically the central plateau, which consumes most of the fuel and creates most of the pollution, to
economically poorer rural areas that are rich in forests and other natural resources.
Also, it should be noted that PESs were originally conceived as part of a national strategy for the conservation
of forests and the production of timber necessary for domestic consumption. In this way, PESs were initially
54. Baltodano; Bosque, cobertura y uso forestal
55. COECOCEIBAAT; La madera el bosque y la gente: alternativas para la producción de madera ambientalmente sana y Socialmente justa, San José, Neovisión,
2006, p 70. See www.coecoceiba.cr
56. Quirós, Rodolfo; Consultoría: Negociación de productos y servicios forestales en el TLCEUCARD. San José, 2004, FONAFIFO
57. Curran, Lisa M.; S. N. Trigg, A. K. McDonald; D. Astiani, Y. M. Hardiono, P. Siregar, I. Caniago,E. Kasischk; Lowland Forest Loss in Protected Areas of Indonesian
Borneo. Science 13 February 2004:Vol. 303. no. 5660, p. 952

14
very similar to incentives used as mechanisms to assist the implementation of policies for the conservation
and the rational use of forests outside public land and National Parks.
The concept of PESs has, however, been gradually put under pressure by various national conservative
factions and international institutions like the World Bank. It has been losing its image as a tool for national
policy and becoming more a tool for neo-liberal economics that seek to commodify and create markets for
natural resources. One example is the Ecomercado project (2001-2005): a fundraising initiative for PESs
instigated by the Costa Rican government and financed by a World Bank loan and a grant from the Global
Environment Facility (GEF). The project clearly focused on its overall objective to "…Support the
development of markets and the private provision of environmental services offered by private forests." For
almost five years the project tried to sell environmental services associated with the maintenance of
biodiversity, reduction of greenhouse gases and water conservation in domestic and global markets.
The drive to create new markets for services associated with biodiversity, carbon credits and water, raises
many important questions. For example, who is going to buy these services and what rights do they acquire
to biodiversity, forest resources and national water resources. How do they interact with national sovereignty
over biodiversity in this new market? Do they have a significant amount of carbon sinks proven to reduce the
problem of climate change? In answering these questions, it must be acknowledged that it is entirely
legitimate for a country to take responsibility for the cost of protecting and maintaining its own natural
resources in order to maintain food security, health care and an ethical relation with its biodiversity, but it is
both dangerous and unbalanced to hand over the protection of these resources to multinational corporations
who pay for environmental services.
Another example of privatization trends in relation to PES schemes in Costa Rica have been attempts to
manage Clean Development Mechanism projects (CDM) under the Kyoto Protocol, to sell carbon credits and
the national sale of Certificates of Environmental Service (CSA).58 Reality has shown that despite efforts and
large investment in projects, the opening of such markets has been limited: schemes such as the Certificate
of Environmental Services did not end up funding more than some 1,500 hectares of protected forests in
total59, a small amount when compared with the more than 200,000 hectares of forests born using PESs
between 2001 and 2005, mostly financed by funds from the national budget or borrowing.60
Moreover, most cases show very little relationship between the productivity of the company and the use of
environmental services that is made in the area under the CSA being subscribed to. An example of a company
that produces hydroelectric power illustrates this. The company uses an estimated 1.5 litres per second of
flow to produce 1.9 kw/h which means the use of a dam about two thousand hectares in size, but that
company only pays for a seventy-five hectare CSA61.
There is also little investment in PESs by companies whose activities are closely connected to water use. They
have, over the past decade, only contributed 0.4% of what has been invested.62
It’s probably the "Water Canon", approved via
decree at the end of the last administration
(Decree no.32868, Canon for the Concept of
the Approval of Water) and based on a
national effort to find better funding for the
conservation of private forests, which might
turn out to be one of the most sustainable
sources of funding for the PES.

58. Rojas, op.cit.

59. Fondo Nacional de Financiamiento Forestal de Costa Rica
(FONAFIFO); Invierta en bosques: el certificado de servicios
ambientales, 2007. See www.fonafifo.com
60. Fondo Nacional de Financiamiento Forestal de Costa Rica
(FONAFIFO); Distribución de las hectáreas y árboles contratadas en
Pago de Servicios Ambiéntales, por año y por modalidad, en el
periodo 19972006; 2007. See www.fonafifo.com
61. FONAFIFO, op.cit.
62. Baltodano; op.cit.

Photo: Simone Lovera

15 5
At present, projects funded by carbon funds (CDM) are also limited to a list of projects under consideration or
ready for investment. In total, they include the possible funding of more than a million trees: around twenty
thousand hectares of recovering forests and nearly three thousand hectares of forest plantations.
Finally, the Costa Rican government, as part of its campaign for ‘Peace with Nature’, is promoting a feeble
initiative called ‘Costa Rica: a carbon neutral country’. Included in its activities is a project to plant more trees
to act as a sink. It is funded by donations raised by its citizens and businesses using the slogan ‘Plant a Tree’.
This initiative is in its first year and, as yet, there is still no appraisal of its results.
Payment for environmental services
CAFTA explicitly limits the PES system as a “market-based mechanism” (article 17-4, para 1c) reducing its
strategic nature as a possible tool for encouraging conservation based on zoning according to the social and
environmental interests of the country. Since the TLC is above national legislation, this starts to emphasize
the potentially mercantilist character of the PES.
BY WAY OF A CONCLUSION
The number of FTAs, either bilateral or on a regional level, have greatly increased in recent years and
increasingly cover new topics which include issues of a non-commercial nature.
FTAs are negotiated behind peoples’ backs, take sides with large corporations and do not bring about an
improvement in the people’s living conditions, as shown by the analyses in Mexico and Chile, to cite just two.
The commodification of natural resources has accelerated with the rush to sign free trade agreements … the
FTAs distil the spirit of greed and present a vivid example of how the strong impose their will on weaker
countries. There is no scope for justice in multilateral negotiations, such as those of the WTO, because they’d
rather defend corporate interests than those of people. Instead, FTAs offer a clear illustration, on the level of
trade relations, of the saying ‘divide and conquer’. The rich north, avid for resources, needs to break the blocs
and alliances in the South and aims to use trade treaties to do this. They have been proposing smaller
treaties in order to build strategic alliances with poorer neighbors like Mexico (NAFTA) and Central America
(CAFTA) or to take advantage of opportunities offered them by the shift to neo-liberal governments (in
Colombia or Chile, for example).
Forests and biodiversity, as part of this process, are turned into things that can be bought and sold for the
benefit of corporate interests. Thus, the forests are no longer the place where many towns and communities
conduct their everyday life and their biodiversity is stripped of its cultural and spiritual value. They are only
objects that can swell the coffers of the corporations who profit from these FTAs.
The FTA represents the last link in the neo-liberal chain where the state ends up being watered down in order
to allow corporate consolidation. Not only does this step up direct pressure on resources and the
environment but it also undermines the ability of the citizen to participate in the management and
conservation of resources. This, ultimately, has historically been the only guarantee that natural resources,
forests and biodiversity continue to be maintained.
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16
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