THE FREE TRADE AREA OF THE AMERICAS
By Maude Barlow
Seedling June 2001
Last April, all the governments of the Americas, with the exception of Cuba, met in Quebec, Canada, for the third summit on the negotiations for a free-market regional trade agreement, the proposed Free Trade Area of the Americas (FTAA). With a population of 800 million and a combined GDP of $US 11 trillion, the FTAA would be the largest free trade zone in the world. It stands to have a dramatic impact on peoples’ lives, while strengthening corporate control over all aspects of government. Maude Barlow, of the Council of Canadians, has been following FTAA developments.
The Free Trade Area of the Americas is the name given to the territory covered by the expansion of the North American Free Trade Agreement (NAFTA) to all the other countries of the Western Hemisphere except Cuba. The FTAA is based on the NAFTA model, but extended to be "WTO-compatible" (World Trade Organ-isation) and include a whole new agreement on services. If reports coming from the Negotiating Groups working on the key elements of the deal are correct, the FTAA will become the most far-reaching free trade agreement in the world, encroaching into every area of life for the citizens of the Americas.Â
The FTAA was launched by the leaders of 34 countries of North, Central and South America and the Caribbean at the December 1994 Summit of the Americas in Miami, Florida. However, little real progress was made until the next Summit in Santiago, Chile, in April 1998, when a large number of committees and working groups were set up to develop specific areas of the agreement. Since then, these workhorses have regularly brought more than 900 trade negotiators and mountains of material to Miami, where most of the meetings take place.
 From the beginning, the big corporations and their associations and lobby groups have been an integral part of the process. In the US, a variety of corporate committees advise the American negotiators and, under the Trade Advisory Committee system, more than 500 corporate representatives have security clearance and access to FTAA negotiating documents. Non-government organisations (NGOs) and peoplesÂ’ organisations, on the other hand, have been actively shunned from the process (see box). One of the tasks of the FTAA negotiators is to compare and consolidate the key components of a variety of trade and investment agreements throughout the area, including:Â
--NAFTA - a free trade and investment agree-ment between Canada, the US and Mexico.
--MERCOSUR - a common market of the Southern Cone countries of Brazil, Argentina, Paraguay and Uruguay
--The Andean Pact
--Caricom - the Caribbean Community
 There are some differences among these pacts and agreements, but the similarities far outweigh the differences. Both NAFTA and MERCOSUR include measures to deregulate foreign investment and grant national treatment (non-discriminatory) rights to foreign investors. Both prohibit "performance requirements" whereby foreign investment must enhance the local economy and support local workers. Both are based on a model of trade and investment liberalisation that locks in the Structural Adjustment Programs (SAPs) introduced earlier into Latin America by the World Bank and the International Monetary Fund (IMF). Under these programs, most developing countries were forced to:
--Abandon domestic industry in favour of transnational corporate interests
--Turn their best agricultural lands over to export crops to pay off their national debt
--Curtail public spending on social programs and abandon universal health care, education and social security programs
--Deregulate their electricity, transportation, energy and natural resources sectors
--Remove regulatory impediments to foreign investment
Tensions of leadership exist in the negotiations. Since 1995, the US Administration has been unsuccessful in obtaining renewal for its "fast-track" legislation, which authorises the US Congress to adopt free trade agreements in full. This has given Brazil, the undisputed economic leader in Latin America, the opportunity to challenge US supremacy and bid to lead the process of economic integration of the Americas. The encroachment of the business community of the European Union into Latin America, especially in banking, telecommunications, automobiles and consumer products, has also served as a catalyst for the US to reassert its leadership in the hemisphere. The US is counting on the successful completion of the FTAA to maintain its corporated dominance in the region.Â
Further pressure for a successful FTAA comes from the defeat of the Multilateral Agreement on Investment (MAI) at the WTO in 1996 and at the Organisation for Economic Cooperation and Development (OECD) in 1998. After the shut-down of the "Millennium Round" of the WTO in Seattle in December 1999, WTO officials are finding it difficult to even secure a venue for a new Ministerial meeting. In addition, APEC (the Asia Pacific Economic Cooperation Forum) is faltering and few have expectations that it will make the hoped-for breakthrough to become a free trade/investment zone.Â
Many trade observers have identified the FTAA as the natural heir of these failed projects and are fearful that another such failure could put the whole concept of these massive free trade agreements on the back burner for years. In fact, in a January 2000 statement, Associate US Trade Representative Peter Allegeier said that the FTAA has taken on new importance after the fiasco in Seattle and may well aspire to go further than the WTO, freed of the need to play the deals off against one another.
THE FTAA: A VIEW FROM THE STREET
April 25, 2001. The Quebec Summit is over. The occasion, of course, was the gathering of 34 heads of states of North and South America to further the economic and social integration of the Americas based on the US-style free market model known as the "Washington Consensus" and to consolidate North American corporate dominance in the countries of the South. Before the summit, to protect themselves from escalating opposition to the FTAA, the Canadian government erected a cement and chain-link fence around the entire city - dubbed the "wall of shame" - and triggered the biggest security operation in peacetime Canadian history. Six thousand and seven hundred police, thousands of soldiers on standby, armoured tanks, plastic bullets, and 5,000 canisters of tear gas were assembled. A jail was emptied in anticipation of the protesters about to descend on the city.
The Council of Canadians held a huge rally as part of the parallel Peoples’ Summit. Speakers from France and from Latin America were broadcast to thousands inside and outside the big tent. The feeling was electric and the crowd rose roaring to its feet dozens of times during the morning. Then, in the bright spring sunshine, a huge crowd of more than 60,000 people joined the labour-sponsored march, complete with music, puppets, theatre and dance.
Meanwhile, parallel to the Peoples’ Summit process, the preparations were proceeding for those committed to direct action, particularly at the wall, which had become a much-hated symbol of government indifference and exclusion. Direct action and non-violent civil disobedience have become a part of these globalisation jamborees wherever they happen, from Seattle and Melbourne to Prague and Quebec City, and they are usually led by youth. Their tactics have been responsible for shutting down, or at least postponing, several major events and have grabbed the attention of the world’s media.
On Friday morning about 3,000 people marched from Laval University to Old Quebec. At one point in the march, they separated into two streams – "yellow" for those going directly to the wall and "green" for those going into the city where they could act as observers and supporters. Within half an hour, the wall had been breached and clouds of tear gas were rising through the air. For the next two days, into the small hours of the morning, the police directed a merciless tear gas assault against the several thousand protesters anywhere in the vicinity of the wall. Some 463 people were arrested, some having been picked up by police in unmarked vans. Â
Now, we begin the task of the next stage of our work on the FTAA, demanding the text, getting the message to a wider public, putting forward alternative visions, building our movement. We have turned a corner and our powerful presence in Quebec City has changed the course of the FTAA process, perhaps irrevocably. Once again, our leaders tried to meet behind closed doors to decide our collective futures without us. Once again we said no. I can assure you our cry was heard around the world.
WhatÂ’s in the FTAA?
In a statement that accompanied the original 1994 Miami Summit, the Ministers made a series of recommendations in the form of a Declaration. In it, they said that agreement had been reached on several key "Objectives and Principles," including:Â
·  economic integration of the hemisphere
·  promotion of integration of capital markets
·  consistency with the World Trade Organ-isation (WTO)
·  elimination of barriers and non-tariff barriers to trade
·  elimination of agricultural export subsidies
·  elimination of barriers to foreign investment
·  a legal framework to protect investors and their investments
·  enhanced government procurement measures
·  new negotiations on the inclusion of services
Since then, information about just what is contained in the FTAA working documents has been sparse. However, the US seems intent on liberalising services, including health care, education, environmental services and water services. The FTAA will include provisions on investment similar to those in the defeated MAI and Chapter 11 of NAFTA, whereby corporations will be able to sue governments directly for lost profit resulting from the passage of laws designed to protect health and safety, workers rights or environmental standards (see box, p6).
The "Miami Group" - the US, Canada, Argentina, Uruguay and Chile - is also intent on forcing all countries of the Americas to accept biotechnology and genetically modified foods, thereby promoting the interests of biotech companies over the survival needs of small farmers, peasants and communities throughout Latin America. Finally, the US is trying to expand NAFTA’s industry-friendly rules on patents to the hemisphere, rules that give a company with a patent in one country the monopoly marketing rights to the item throughout the region.
The FTAA is a plan to create the most far-reaching trade agreement ever negotiated. The combination of a whole new services agreement in the FTAA combined with the existing (and perhaps even extended) NAFTA investment provisions represent a whole new threat to every aspect of life for all Americans, North and South. This powerful combination will give transnational corporations of the hemisphere important new rights, even in the supposedly protected areas of health care, social security, education, environmental protection services, water supply, culture, natural resource protection and all levels of government services.
1.    Services
This new agreement is meant to be compatible with the WTO’s General Agreement on Trade in Services (GATS). The GATS is mandated to restrict government actions with regard to services through a set of legally binding constraints backed up by WTO-enforced trade sanctions. Its most fundamental purpose is to constrain all levels of government in their delivery of services and to facilitate access to government contracts by transnational corporations in a multitude of areas, including health care, child care, elder care, education, museums, libraries, law, social assistance, architecture, energy, water services, environmental protection services, real estate, insurance, tourism, postal services, transportation, publishing, broadcasting and many others. The FTAA negotiating services agreement is even more sweeping than the GATS.
2.    Investment
Â
This provision builds on the investment chapter of NAFTA, Chapter 11. NAFTA was the first international trade agreement in the world to allow a private interest, usually a corporation or an industry sector, to bypass its own government and directly challenge the laws, policies and practices of another NAFTA government if these laws, policies and practices impinge on the established "rights" of the corporation in question. Chapter 11 gives the corporation the right to sue for compensation for lost current and future profit from government actions, no matter how legal these actions may be or for what purpose they have been taken. The inclusion of such sweeping investment provisions is a way of introducing a form of the Multilateral Agreement on Investment, a proposed OECD investment treaty that was abandoned in the face of massive civil society resistance, into the FTAA. Combined with other proposed FTAA measures, these investment provisions will allow corporations to undermine the ability of all governments to provide social security and health protection to their citizens.
3.    Market Access
Â
The Negotiating Group on Market Access has been charged with identifying and eliminating any unnecessary "technical barriers to trade" in line with the WTO. Under The WTO Technical Barriers to Trade (TBT) Agreement, a nation must be prepared to prove, if challenged, that its environmental and safety standards are both "necessary" and the "least trade restrictive" way to achieve the desired conservation goals, food safety or health standard. This means that a country bears the burden of proving a negative - that no other measure consistent with the WTO is reasonably available to protect environmental concerns. The WTO TBT Agreement also sets out an onerous procedural code for establishing new laws and regulations so arduous that it is very difficult for any nation to meet.
4.    Agriculture
The FTAA’s agriculture provisions are based on the WTO’s Agreement on Agriculture. The FTAA plans to set rules on the trade in food and restrict domestic agriculture policy, down to the level of support for farmers, the ability to maintain emergency food stocks, set food safety rules and ensure food supply. The WTO Agreement on the Application of Sanitary and Phytosanitary Standards (SPS) sets constraints on government policies relating to food safety and animal and plant health, from pesticides and biological contaminants to food inspection, product labelling and genetically modified foods. The Agreement has been used to defeat the use of the "precautionary principle" to establish regulatory controls. The precautionary principle allows regulatory action when there is risk of harm, even if there remains scientific uncertainty about the extent and nature of the potential impacts of a product or practice. By choosing the WTO SPS Agreement over the NAFTA SPS provisions, the drafters of the FTAA are moving to totally remove the right of individual governments of the Americas to set standards in the crucial areas of health, food safety and the environment.
5.    Intellectual Property Rights
As of January 1, 2000, all FTAA countries are subject to the rules of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). This agreement sets enforceable global rules on patents, copyrights and trademark. It has gone far beyond its initial scope of protecting original inventions or cultural products and now permits the practice of patenting plants and animal forms as well as seeds. It promotes the private rights of corporations over local communities and their genetic heritage and traditional medicines. It allows transnational pharmaceutical corporations to keep drug prices high: recently TRIPS has been invoked to stop developing countries from providing generic, cheaper drugs to AIDS patients in the Third World. The FTAA Negotiating Group on Intellectual Property has speculated that it might go beyond the WTO TRIPS Agreement in certain unspecified areas. Certainly, the additional powers of Chapter 11, the investor-state clause, will add strength to any intellectual property rights legislation in the FTAA and increase corporate power.
6.    Competition Policy
The mandate of the Negotiating Group on Competition Policy is to "guarantee that the benefits of the FTAA liberalization process not be undermined by anti-competitive business practices." Ostensibly, the aim is to promote competition, but the result, particularly for developing countries, is that they are often forced to break up their existing monopolies, only to find that they have given foreign-based transnational corporations golden opportunities to come in and pick off the smaller domestic companies. In this way, they can establish a whole new monopoly protected by WTO agreements such as the TRIPS and the Financial Services Agreement, both of which protect global mega-mergers.
7.    Dispute Settlement
It remains to be seen whether the FTAA dispute settlement mechanism will mirror the NAFTA model or the more punitive system of the WTO. Dozens of nation-state health, food safety and environmental laws have been struck down through the WTO process. Needless to say, the rulings affect poor countries much more significantly than wealthy ones. Sanctions against a country that depends on one or two export crops for survival can be devastating. It is little surprise that the majority of WTO challenges have come from wealthy countries. In fact, the US initiated almost half of the 117 WTO challenges launched between 1995 and 2000. It seems the FTAA negotiators are more likely to choose to retain the powers of private dispute settlements contained in the investor-to-state provisions of NAFTA, while opting for the more stringent conditions of the WTO to settle state-to-state disputes. This would be in keeping with the other proposals for the FTAA: whichever existing (or even proposed) model has the strongest discipline is the model of choice.
Impact on Latin America
The countries of Central and South America and the Caribbean are being given all sorts of promises about the FTAA. More liberalised trade and investment will create the biggest trade powerhouse in history, thereby spreading prosperity to the many millions of the region currently without work or hope, they are told. Latin Americans should examine these promises very carefully before jumping into this pact. The reality is that Latin America has been living under this FTAA model for over a decade. It is based on the Structural Adjustment programs of the World Bank and the IMF that Latin Americans know only too well. It was the deregulation and privatisation imperatives of structural adjustment that forced most to dismantle public infrastructure in the first place.Â
In order to be eligible for debt relief, many dozens of the countries of the Americas were forced to abandon public social programs, allowing for-profit foreign corporations to come in and sell their health and education "products" to "consumers" who can afford them. US health care corporations, such as Aetna International and American International, are reporting 20% growth in the region per year. Countries are allowed to maintain the most basic of public services only for the poor; but these services are so inadequate that the corporations are not interested in them, so many millions of people in the hemisphere go without the most basic education and health services.Â
Under the FTAA, this process will accelerate, wiping out traditional medicine, education and cultural diversity. Worldwide economic and cultural harmonisation is acknowledged to be the goal. Says one top US WTO official: ÅgBasically, it won’t stop until foreigners finally start to think like Americans, act like Americans and, most of all, shop like Americans."
The last decade of trade and investment liberalisation has already caused great suffering in Latin America. Interest rates on debt payments have soared from 3% in 1980 to over 20% today. Latin America has the highest rate of inequitable income distribution in the world. After swallowing its free market medicine, it now has a poverty rate higher than it was in 1980 and the buying power of Latin American workers is 27% lower.  Â
Mexico, eight years into NAFTA, now has record-high poverty rates of 70%, and the average minimum wage has lost more than three-quarters of its purchasing power during that time. Ninety million Latin Americans are now homeless and 105 million have no access to health care whatsoever. Child labour has grown dramatically; there are now at least 19 million children working in terrible conditions. Massive environmental degradation has resulted from the region’s desperate rush to exploit its natural resources and the use of pesticides and fertilisers has tripled since 1996.
The exploitation of Latin America’s natural resources by North American corporations now taking place would dramatically increase under a hemispheric pact. Transnational mining, energy, water, engineering, forestry and fisheries corporations would have new access to the precious resource base of every country and the investor-state right to challenge any government that tries to limit their access to them. The ability of governments to protect the ecology or set environmental standards regarding the extraction of natural resources would be greatly reduced, as would the right to ensure local jobs from any activity of foreign corporations.
Joining the FTAA under these circumstances would be "tantamount to suicide," says the coalition of trade unions of the Southern Cone countries. In December 2000, the major unions of Argentina, Brazil, Paraguay and Uruguay called upon their governments to submit the FTAA to national plebiscites, which they believe would result in its defeat. The FTAA process is deepening the already growing poverty of the region, the union leaders said, putting "limits on national institutions that should decide the future of each country, while pushing aside the mechanisms that allow society to ensure a democratic administration of the state."
*Maude Barlow is the Volunteer Chairperson of The Council of Canadians, Canada’s largest public advocacy group, and a Director with the International Forum on Globalisation. The current article is adapted from: "Summing up the Summit" and "The Free Trade Area of the Americas and the Threat to Social Programs, Environmental Sustainability and Social Justice in Canada and the Americas". Both are available at: www.Canadians.org. The Council of Canadians can be reached at 502-151 Slater Street, Ottawa, Ontario, K1P 5H3, Canada. Tel: (1-613) 233 2773, Fax: (1-613) 233 6776. Email: [email protected]
For more information on the FTAA:
· The declaration from the People’s Summit held in Quebec: www.peoplessummit.org
· Murray Dobbin (2001), NAFTA’s Big Brother: The Free Trade Area of the Americas and the Threat of NAFTA-style "Investor-State" Rules, www.Canadians.org/publications/publications-main.html
· The official FTAA site, maintained by the Inter-American Development Bank, the Organisation of American States, and the United Nations Economic Commission for Latin America and the Caribbean: www.ftaa-alca.org
· FTAA from a direct action perspective: www.stopftaa.com
· FTAA international protest summary, outlines the protests at the Quebec City; lots of pictures: blake.prohosting.com/infobank/
Reference for this article: Reference: Barlow M, The Free Trade Area of the Americas, Seedling, Vol 18, Issue 2, June 2001, GRAIN Publications
What is Seedling?
Seedling is the quarterly newsletter of GRAIN. It provides thought-provoking articles on all aspects of GRAIN’s work and more. To receive Seedling in paper or electronic format (on a CD Rom), or to inform us of a change of address, please contact GRAIN at the address below.
Seedling materials may be reproduced, translated and disseminated freely. We ask only that the original source be acknowledged and that a copy of your reprint be sent to GRAIN.
GRAIN, Girona 25 ppal, Barcelona E-08010, Spain. E-mail: [email protected]