Free Trade Area of the Americas
|January 9, 2007||Posted by Staff under Progress Report, The Progress Report|
True Free Trade Does Not Need Secrecy, Special Privilege
Update: Free Trade Area of the Americas
The Bush administration is seeking a so-called “free” trade agreement that is actually about special privileged trade and private monopoly.
by Karen Hansen-Kuhn
As leaders of 34 Western Hemisphere countries gather in Quebec City, Canada in April 2001, President George W. Bush hopes that the third Summit of the Americas will mark a step toward fulfilling his father’s dream of a creating a free trade area stretching from Alaska to Tierra del Fuego. For a variety of reasons, this goal seems increasingly out of reach.
When, at the first Summit of the Americas in Miami in December 1994, President Bill Clinton proposed establishing a Free Trade Area of the Americas (FTAA) linking all of the hemisphere’s economies (except Cuba’s) by the year 2005, he held out Mexico as the model of economic reform and NAFTA as the model trade agreement. Just ten days later, however, the Mexican peso experienced a massive devaluation. Stunned observers watched as billions of foreign investment dollars flowed out of the country. That, coupled with the austerity and adjustment conditions attached to the bailout package financed by the U.S. Treasury and the International Monetary Fund (IMF)–particularly the requirement that interest rates be maintained at very high levels–led to further devaluation and sent the Mexican economy into a deep depression.
The economic crises and public discontent have dampened congressional enthusiasm for free trade agreements, as demonstrated by the defeat of the Clinton administration’s request for fast-track authority in 1998. Since then, further efforts to introduce fast track–or, as Bush’s Trade Representative Robert Zoellick calls it, “trade promotion authority”–have stalemated, with a bloc of congressional Democrats insisting that any agreement must include labor and environmental standards and Republicans vowing to block any accord that includes a linkage.
Recently, the Business Round Table has indicated its willingness to support the inclusion of labor and environmental issues in trade agreements. This is happening in large part because of corporate concerns that other trading partners, particularly the European Union, are gaining ground in trade talks in this hemisphere. In a February 2001 report, the National Association of Manufacturers (NAM) said: “FTAA negotiations should be accelerated and completed by the end of 2003. Speed is important because of the EU’s ongoing negotiations with major South American countries.” Although the NAM does not favor enforceable labor and environmental standards, it seems likely that the business community will push for some language on those issues in order to gain sufficient Democratic votes to grant the president fast-track authority and accelerate trade talks.
Many of the region’s governments believe that an FTAA would serve to ensure sustained access to U.S. markets by reducing tariffs and preventing trade disputes. The FTAA, like NAFTA, would also provide member countries a seal of approval and thereby, they hope, help to stimulate foreign investment. Brazil, in particular, continues to express ambivalence about the FTAA, suggesting that it would be better to promote Latin American integration first and then consider negotiations with the behemoth of the North.
As with NAFTA, the USTR proposals for the FTAA would result in greater rights for investors, without establishing any corresponding responsibilities. The USTR’s position is that investors should have the right to move funds into and out of countries without delay–meaning that provisions such as capital controls or performance requirements to ensure that investments serves to promote development goals would be illegal under an FTAA.
NAFTA includes weak side-agreements on labor and the environment, in which the three countries commit not to break their own laws on those issues, but not even these meager measures are being considered under the FTAA. Washington suggested even weaker language, calling for countries to strive to ensure that labor or environmental standards are not lowered in order to attract investment. Most Latin American governments, however, have rejected even those ideas as inappropriate in trade talks, fearing that any efforts to raise such standards would lead to disguised protectionism. Instead, they have relegated discussion of those issues to unenforceable summit declarations and action plans.
In an outline of its objectives leaked last year, the FTAA services negotiating group stated its goal to liberalize all services in all sectors–i.e., commercial services such as tourism, data processing, and financial transactions, as well as public services at all levels of government. The USTR supports further liberalization of trade in services, promoting a top-down approach in which all services not specifically excluded would be included in the trade deal. This approach could lead to the privatization of such public services as health and education–particularly if a government has opened the door to commercialization of the services by allowing some aspects to be subcontracted to private service providers. The USTR proposal calls for the inclusion of energy services, something excluded from NAFTA, and it fails to address the possible environmental consequences of such a move.
According to Alternatives for the Americas: Building a Peoples’ Hemispheric Agreement, which was prepared by activists and scholars from the hemisphere, labor, environmental, and other relevant social issues must be included in the negotiation process. The resulting agreements should affirm such internationally recognized accords as the International Labor Organization Conventions, the United Nations Convention to Eliminate All Forms of Discrimination Against Women, and the Inter-American Convention on Human Rights. Additionally, any consensus reached on these issues must be included within the text of the FTAA agreement, not in unenforceable side agreements.
Language regulating investments should also be changed to balance investors’ needs for clear rules with the development objectives of national economies. Governments should retain the right to impose performance requirements on foreign investors and should be allowed to protect small- and medium-scale producers and other key economic sectors in order to promote national development priorities. Each country’s right to maintain food and nutritional security (for example, by excluding basic grains from trade-liberalization measures) should also be guaranteed. Likewise, governments must be free to regulate without having to compensate foreign investors for “economic harms.” Until such time as the substantive rules reflect greater balance between granting broad new rights to corporations and imposing concomitant responsibilities, the investor-state mechanism has no place in the FTAA.
Tell your views to The Progress Report!