While tens of thousands of Central American children stream across our Southern Border, the U.S. government scrutinizes a rural development program proven to create real jobs and opportunity in communities of origin and for hundreds of poor Salvadoran families. 

Salvadoran farming communities celebrated a victory for food security and sovereignty this month. After posturing by the United States on how El Salvador purchases corn and bean seed to feed over 560,000 low-income subsistence farmers and their communities, U.S. officials backed off of the issue. The Salvadoran government proposal on seed had satisfied their demands, the U.S. Embassy said, and it would no longer hold up a much-anticipated $277 million aid package over whether or not El Salvador offered its procurement to transnational agricultural suppliers.

This was no small feat, considering current behavior of the United States in its dealings with El Salvador. For the past nine months, the United States has been conditioning a new round of development aid through the Millennium Challenge Corporation (MCC) on specific reforms to a variety of Salvadoran economic and security policies. Since 2011, the Salvadoran government has delivered on a number of policy reforms, including new frameworks to promote public private partnerships. Throughout this process, the United States has not acknowledged progress in any of these reforms unless specific laws were passed, signed and ratified in El Salvador.

But on corn and bean seed, the United States conceded that it would table the issue until the fourth quarter of 2014, substantially softening its position with El Salvador for the first time in months.

The U.S. softening on seed reflected a stark political reality evolving in Washington: the United States was beginning to look tone deaf in Central America.  As you read this, tens of thousands of children are streaming across our southern border, many of whom are fleeing violent situations that persist in impoverished local communities in places like El Salvador. How could the United States make overtures toward improved cooperation in the region on one hand, while on the other obstruct rural development programs proven to create real jobs and stability for thousands in the family farming sector?

Far worse, the United States appeared to be holding up a development aid package designed to generate much-needed economic growth over a relatively modest rural food security program.  As actors like EcoViva have demonstrated, the U.S. was doing so based on scant evidence to back up their position. Seed was also beginning to overshadow more important priorities like a new money laundering law. Heightened pressure from the press, as well as Democrats in the House of Representatives, also elevated the issue to a place that neither Washington nor the U.S. Embassy wanted it to be.

What transpired on seed reveals a deeper issue concerning inconsistencies with U.S. policy in the region, and Washington´s acknowledgement of the reality of the public programs that improve the lives of the majority of Salvadorans—either with those children that flee violence in their home communities, or those that stay behind to eek out a living.

As EcoViva has reported in a number of news outlets (here, here, here, and here), on this blog, and directly to U.S. officials, the Salvadoran government has made measurable progress in improving the way it purchases corn and bean seed over the last five years. In 2012, the Ministry of Agriculture opened up its procurement to purchase better, more desired corn seed at a significantly cheaper price than what had been offered historically to El Salvador by transnational companies like Monsanto and Pioneer. Through an executive decree, the government was able to procure a product that it wanted, a variety of certified hybrid corn seed known as “H59”, from 16 domestic entities—many of whom are local cooperatives consisting of the very same limited-resource family farmers that qualify for support through El Salvador’s Family Agriculture Program.

This decree also allowed the government to respond in a timely manner to seasonal requirements of their family farmers that produce corn–requirements that don’t conform to the existing bureaucracies and timelines for contracting. How can El Salvador fulfill its contractual obligations to pay seed producers to plant product in December or January, if it is obligated by law to wait until January to begin a three-month bidding process before any seed can go in the ground? Over 400,000 family farmers plant corn in May each year to correspond to the wet season, and can’t wait around for a bureaucracy to put corn in the ground, or food on their table.

All this didn’t matter, said the United States Trade Representative (USTR) in Washington. Above all, El Salvador needed to produce an “open, competitive, transparent, and rules-based” procurement process to purchase seed. Essentially, the U.S. government was under the impression that El Salvador’s seed buying process was systematically excluding certain kinds of businesses—in this case, transnational seed providers. When word got out that the U.S. was conditioning aid on El Salvador’s purchase of corn and bean seed from transnationals like Monsanto, the “anti-Monsanto”and “anti-GMO” drums inevitably began to beat on the internet and social media.

But as EcoViva reported, the actual buying process in question during 2014 had already opened up to international businesses since 2012. Requests for bids had been published openly in domestic newspapers, and the same direct purchasing methods under scrutiny for seed had taken place numerous times in the past while USTR remained silent. EcoViva and collaborators at OxFam America provided documentation and existing regulations to USTR related to the bidding process and oversight on seed , which USTR admitted they had never seen before. Moreover, seed procurement prior to 2012 also appeared less competitive: just five businesses provided seed at nearly twice the price, versus 18 currently at more affordable prices for the government.

In other words, the current procurement produced more accepted bids for a better product at a cheaper price, and information was accessible to EcoViva and other growers who applied for the bid from the Ministry of Agriculture. It even included several businesses that had imported seed, and participated in past procurements that USTR had no problem with, and allowed the government to obtain a product through a bidding process that allowed its budget to reach a historic number of farmers, each of whom receive 22 pounds of H59 and corresponding farming inputs. How was this process not competitive, open, transparent, or rules-based? And, more importantly, how did it represent a “regression” in procurement policy, as had consistenly been the USTR´s claim?

Now, it’s no surprise that those who failed to compete for the current seed procurement contracts got upset and called foul. Last April, a representative from the American Chamber of Commerce complained in a Salvadoran newspaper that the seed provided by businesses like Monsanto affiliate “Cristiani Burkard” was a superior product that should be purchased over domestic, certified corn seed like H59. Not so fast, said officials at the Salvadoran Ministry of Agriculture. Monsanto varieties like 30F-Decal and H5, they say, provide a lower grade corn by-product suitable only for tamales, exhibit lower germination rates, and have demonstrated reduced yields on Salvadoran farms compared to H59. According to El Salvador’s National Seed Law, amended most recently in 2005, the Ministry of Agriculture is obliged to purchase adapted hybrids with 80% germination rates, accompanied by field tested adaptation studies from at least 10 discrete samples. H59 met these requirements, 30F and H5 from Monsanto did not. Not to mention that these businesses were offering the 30F and H5 varieties for higher prices than the domestic cooperatives producing H59–$156 a unit versus $125 by domestic producers of H59. Currently, H59 is only grown in El Salvador by Salvadoran farming cooperatives like the five in the Lower Lempa, making it uniquely adapted to the region and growing conditions.

Of course, all policies and processes can be improved. Nearly three weeks after the Salvadoran government offered a proposal, the U.S. Embassy finally acknowledged publicly that they were satisfied with how things would progress—and only after press coverage associated with the region and child migration flows began to look untenable. USTR commented that it was willing to work with El Salvador on specific improvements to the seed procurement method, including the timing, publication, time to present offers, and open access to information for the bids among all interested parties.

By all means, let’s improve paperwork transparency and expand access to information. The corn and bean seed procurements should also be made available on El Salvador’s government contracting website, “COMPRASAL.” But again, these same issues signaled by USTR on seed procurement also occur repeatedly in other procurements throughout the Salvadoran government—procurements that conform to Salvadoran law, but could present problems under the same CAFTA-DR Chapter 9 issues being brought to bear by USTR on seed—if USTR decided to enforce them, like they decided to on seed. And it seems difficult to justify how publicizing a call for bids for 40 days versus 15 significantly improves “openness”, when the procurement is repeatedly made every year, and product standards for seed are established in a 2005 law accessible to anyone with a Google search engine.

Making government purchasing more transparent is an important goal. But does it justify an unprecedented hold up in foreign aid to a country that has proved its commitment to work closely with U.S. actors like the Millennium Challenge Corporation? As press heated up over seed procurement, U.S. officials decided that their arguments on seed no longer warranted the potentially bad publicity at a time when Congress was scrutinizing the Obama administration’s actions and policies in Central America on immigration, security and development—and well they should. So far, Obama´s $3.7 billion dollar request contains $300 million for State Department actions geared toward improving the Salvadoran condition. Perhaps the United States should first clear up how its current programs contribute to addressing migration “push factors” in the region.

Salvadoran seed producers should also remain confident but vigilant. They currently provide a product that the Salvadoran government prefers at a competitive price. If the U.S. is serious about improving transparency and competitiveness of this bid, this should only be made more apparent in the months to come.

UPDATE: El Salvador’s “Action Plan”

After this blog was published, the U.S. Ambassador to El Salvador, Mari Carmen Aponte, clarified on a national television program that policy reforms such as seed purchasing, public-private partnerships, and a new money laundering law were suggested by the previous Salvadoran administration under Mauricio Funes, and included a total of 13 distinct policies to be revised to improve El Salvador´s investment climate.  These policies were detailed in an “Action Plan” proposed by El Salvador, she said, and since the approval of $277 million through the Millennium Challenge Corporation, the United States was seeking timely completion of these efforts.

Like any country on Earth, El Salvador has a responsibility to meet its obligations under international and bilateral agreements, including dealings with the United States.  Foreign aid should also not be a blank check.  However, the exact nature of these obligations, including who from Washington is ultimately responsible for enforcing their completion, seems to exist on a constantly shifting and sliding scale.  Regarding El Salvador´s “Action Plan”–the details of which have not been made public–EcoViva sees a lack of consistency within Washington development agencies on who ultimately oversees the reform process, and who has final say on progress and completion of this “Action Plan” in Washington.

For its part, the Millennium Challenge Corporation (MCC) has been forthcoming in its particular requirements for an improved investment and business climate in El Salvador.   Until November of 2013, these policies had included bureaucratic improvements in business start-up and transaction costs, illegal property seizure, improvements in special business zones, reforms to police actions on financial crimes, and public private partnerships.   Then, in December 2013, the MCC sent a letter to the Salvadoran government which stated that El Salvador would also need to account for free trade compliance issues, alongside specific improvements to public private partnerships and money laundering policies, both of which had recently been passed and approved by large margins in the National Assembly.

Where had free trade compliance come from?  It had certainly not been mentioned previously by the MCC.  Nor was it on the agenda of the Council for Economic Growth in El Salvador, a private sector round table that embodies the U.S. “Partnership for Growth” with El Salvador–or at least, as far as EcoViva could discern from conversations with U.S. officials and individual members of this round table, staffed by the IMF and members of FUSADES, a Salvadoran think tank.

To date, the Council for Economic Growth’s reform agenda for spurring private sector participation in the Salvadoran economy has not been made available to the public–despite the fact that calls for greater civil society participation and transparency in the Partnership for Growth had been acknowledged by the U.S. State Department.

As it turned out, the United States Trade Representative (USTR), the federal agency charged with promoting and enforcing free trade agreements around the world, like CAFTA-DR, had pressed the issue.  USTR sits on the MCC’s Board of Directors, officials said, and had raised concerns about what they considered to be “regressions” in El Salvador’s compliance with CAFTA-DR standards.  These regressions, they said, were outlined in a recent report that included polices on international property rights, pharmaceutical purchases, Points of Origin, and seed procurement.  USTR’s seat on the MCC Board allowed them to not only comment on approving MCC aid to El Salvador–which was granted a green light by Board members, including USTR, in September 2013–but apparently USTR could also press for specific reforms, and re-prioritize them before the MCC and El Salvador could sign and ratify the $277 million aid package, as long as the reforms added to general improvements in El Salvador’s business and investment climate.

Ah ha, okay.  So perhaps USTR could help us understand whether or not progress on El Salvador’s “Action Plan” was being made or not.  But in conversations with USTR, it became clear that USTR didn’t consider themselves to be either empowered or capable of assessing progress on El Salvador’s action plan.  As reported by EcoViva, USTR itself acknowledges that they can neither veto an MCC aid package as a Board member, nor define what specific progress looks like in advancing policy reforms.  USTR as a federal agency has its own mechanisms for enforcing free trade compliance, just as the MCC utilizes its own evaluation process for assessing good governance and trade policies in partner countries like El Salvador.

So, the search for who has final say in Washington on progress toward El Salvador’s “Action Plan” continues.  Unfortunately, it may take a flood of tens of thousands of Central American children to get a reply, and perhaps from the highest levels of the Obama administration as El Salvador’s president and other leaders meet in Washington with President Obama and Vice President Biden.   It’s unfortunate that our border crisis may be the only thing to jolt Washington out of its tendency to play hot potato with its diplomatic mission on El Salvador and the region.

Ultimately, El Salvador and other Central American government have the greatest responsibility for tackling the immense security and economic challenges facing the region.  But this display of U.S. diplomacy, and the uncertainty it has helped engender, is not helping.