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NEW BOOKS The Selling of Free Trade: NAFTA, Washington, and the Subversion of Democracy: A case study of a U.S. staple factory that transfers its production to Mexico. The personal experiences of workers in both countries sharply contrast with the political promises that dominated the mass media during and after the North American Free Trade Agreement debates. By John R. MacArthur. 2000. Hill and Wang. 388 pages. $25 cloth. Globalization from Below: The Power of Solidarity: Evolving from the battle in Seattle against the World Trade Organization, a guide for labor, environmental and social activists fighting corporate globalization. How to organize with such a variety of people and agendas. By Jeremy Brecher, Tim Costello and Brendan Smith. 2000. South End. 164 pages. $13. Globalize This! The Battle Against the World Trade Organization and Corporate Rule: Twenty-six activists address the 1999 protests in Seattle against the World Trade Organization and how to bridge divisions of race, class, gender and nationality to develop alternative institutions that democratically make global-economic rules. By Kevin Danaher and Roger Burbach. 2000. Common Courage. 218 pages. $15.95. Free Trade: Neither Free Nor About Trade: Documents the changes brought about by the Canada-U.S. Free Trade Agreement, implemented in 1989. The pact, alas, has affected social and political life more than it has affected trade. By Christopher D. Merrett. 1996. Black Rose. 320 pages. $23.99. More Books ACTION ALERTS Stop Fast Track: The Bush administration is lobbying for ‘trade promotion authority’ (formerly known as ‘fast track’) that would eliminate the ability of Congress to amend the FTAA. Find sample letters to Congress and newspaper editors at Public Citizen’s Global Trade Watch. Release the Text: Urge Congress to tell the Bush administration to ‘release the text of the FTAA’ so the public can debate its terms properly. Find contact information for your House representative and Senators, and check the sample letter at the Sierra Club. Free Jailed Protesters: Dozens of Quebec protesters remain behind bars. Urge officials to release them; find contact information at Stop the FTAA. Build Local Economy: Instead of patronizing transnational corporations, support the community. Find suggestions from the Council of Canadians. RESOURCES Alternatives for the Americas Alliance for Responsible Trade Center for International Environmental Law Hemispheric Social Alliance Stop the FTAA Council of Canadians Public Citizen MORE LINKS Global Economy

  HOME: AMERICAS.ORG   LENS: GLOBAL ECONOMY
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MAY 2001

Hemisphere, Inc.

If trade pact stays on course, 800 million
people can say goodbye to democracy

By DANNAH BAYNTON
Quebec City

While preparing to host the third Summit of the Americas here, Canadian leaders realized a lot of people would have a lot to say about the main agenda item: a proposal to create the world’s largest trade bloc. So the government built a 10-foot-high cement and chain-link barricade to keep those voices out. The barricade sealed off four square miles of the city, including the historic cliff-top citadel where 34 heads of state were to meet April 20–22.

The wall was part of a $22 million security operation, the largest in Canadian history, that mobilized more than 5,000 agents of the Royal Canadian Mounted Police, the Quebec provincial police and municipal forces. The federal government reserved all hotel rooms within 55 miles—a total of 11,000—to avoid any vacancies for protesters. And Canadian immigration officials repeatedly turned away people suspected of planning to attend protests or alternative conferences in Quebec.

Yet tens of thousands of protesters managed to come here. On the summit’s opening day, when they tried to get past the barricade separating them from the leaders, rows and rows of riot-clad police fired endless amounts of tear gas. Next came plastic bullets, attack dogs, pepper spray and water-cannon fire (a few protesters fought back with rocks, bottles and hockey sticks). Over the next three days and nights, toxic fumes wafted into neighborhoods, forcing residents to run for cover.

Inside the perimeter, ironically, a highly publicized summit resolution claimed that free trade depends on “the values and practices of democracy” and warned nations to avoid any “unconstitutional alteration or interruption of the democratic order.” The United Stated helped water down the clause by removing trade sanctions against non-democratic nations, rendering it little more than a PR decoration.

The toothless clause befits the anti-democratic process behind the proposed Free Trade Area of the Americas. The FTAA has taken shape through secret negotiations between trade officials guided by representatives of more than 500 corporations. The negotiators have kept civil-society organizations and even national parliaments from seeing the text, let alone participating in the talks.

The agreement itself, planned to encompass every nation in the hemisphere but Cuba, threatens to turn back the clock on democracy and sovereignty for 800 million people. Like its forerunner, the North American Free Trade Agreement, the FTAA would empower transnational corporations to win suits against a national government merely because a labor or environmental protection impinged on profits. And, according to leaked documents, FTAA negotiators aim to go beyond NAFTA by compelling nations to privatize virtually all government services.

These plans depend on minimizing public input. “Years of talking to them and not getting through is reflected in the FTAA text leaked so far,” said Lori Wallach, director of Public Citizen, at an alternative “People’s Summit of the Americas” in Quebec. “They have us behind barbed wire. They’ve locked out our allies from across the hemisphere by denying them visas into Canada for the People’s Summit—people who normally enter Canada with ease. Then they mention a ‘democracy clause.’ It’s spin, and it’s unacceptable.”

Submission

Then-President George H.W. Bush first proposed a hemispheric trade bloc in 1991. The first Summit of the Americas, a 1994 gathering in Miami, set an 11-year timetable to negotiate and implement the FTAA. At the summit, President Bill Clinton held out Mexico’s economic policy as the model for reform, and he held out NAFTA—signed by Canada, the United States and Mexico—as the model trade pact.

To qualify for NAFTA, Mexico amended its constitution to wipe out its indigenous population’s traditional communal land rights. The change helped convince the Zapatista National Liberation Army to launch an armed indigenous revolt in the southern state of Chiapas on January 1, 1994, the day NAFTA took effect.

Since NAFTA’s inauspicious debut, average Mexicans have seen few benefits despite a flood of foreign investment. While the number of workers employed in factories that produce goods for export has doubled, wages in the manufacturing sector have declined almost 21 percent, according to an April report by the Washington D.C.–based Economic Policy Institute, which studied Mexican government figures. Earlier this year, the Washington, D.C.–based Institute for Policy Studies reported that the number of Mexicans facing “severe poverty” (earning less than $2 per day) has grown by 4 million under NAFTA. The number facing at least “moderate poverty” (less than $3 per day) now totals more than 50 percent of Mexico’s 100 million inhabitants, up from 47 percent in 1994, the report adds.

Back in the United States, NAFTA has devastated workers. A Cornell University study of more than 600 union-organizing campaigns found that 62 percent led to management threats to relocate to Mexico.

“This model has been road-tested and failed,” said Public Citizen’s Wallach, holding up a tattered copy of NAFTA. “It cannot be used as a model for the Americas.”

Yet that’s precisely the plan. The second Summit of the Americas, held in 1998 in Santiago, Chile, launched the FTAA negotiations officially. One provision, modeled on NAFTA’s Chapter 11, would elevate corporations to the legal status of national governments. Under Chapter 11, a nation with laws affecting a company’s ability to generate profits risks seeing an unaccountable tribunal assess damages and overturn the offending measures. The “judges” are private lawyers hired to rule in secret proceedings open only to company representatives and the three NAFTA governments.

A sample of cases shows Chapter 11’s effects. The Virginia-based Ethyl Corporation sued Canada over its ban on MMT, a gasoline additive suspected of causing brain damage; a settlement forced Canada to overturn the law in 1998 and pay $13 million to Ethyl for profits the company said it lost due to the ban. Similarly, California-based Metalclad Corporation sued the central Mexican town of La Pedrera for refusing to license a hazardous waste landfill on top of an aquifer; last August, a NAFTA tribunal ruled that Mexico owed the company $25 million for “expropriating” an investment. And the British Columbia–based Methanex Corporation is suing the state of California for nearly $1 billion and for an end to a ban on a toxic Methanex gas additive that’s seeping into groundwater there.

A Chapter 11–style provision in the FTAA would handcuff governments across the hemisphere. “U.S. mining companies with concessions in the Amazon could sue the Brazilian government for any efforts to improve protection of the rainforest,” Sierra Club President Robert Cox wrote before the Quebec summit. “And U.S. manufacturing companies could sue the governments of Mexico or Chile for enforcing common-sense pollution control laws.”

Steve Porter, senior attorney of the Washington, D.C.–based Center for International Environmental Law, said there are no citizen rights under consideration for the hemispheric accord. “The FTAA investment chapter expands corporate rights and represents one of the broadest deregulatory and anti-democratic agendas I’ve ever seen,” he said.

The United States, further, is pushing for the FTAA to require countries to adopt rules on intellectual property rights even more favorable to patent holders than what the World Trade Organization requires. Countries would lose their ability to control drug prices and license generic competitors to ensure that essential medicines were affordable and accessible (see BRAZIL PUTS AIDS CARE BEFORE DRUG PROFITS).

And, according to documents leaked last year, FTAA negotiators are following the path of the World Bank and International Monetary Fund with plans to force nations to privatize all types of government services. The goal is for corporations to control everything from education to transportation, from health care to electricity, from mail delivery to tap water.

“In our country, people have resisted the privatization of public services,” noted Alberto Villareal of the Uruguayan Social Ecology Network. “We have outlawed water privatization, for example. But the FTAA will not allow that, and our government will be sued. If the FTAA passes, we lose the right to change or maintain our laws. That is an assault on democracy.”

Authority

The 34 governments plan to start talks on removing regional trade barriers in May next year and to finish the pact by January 2005. The FTAA would take effect later that year. The United States and Chile want to push the implementation date forward to 2003, a move opposed by Venezuela and Brazil.

FTAA proponents say the accord depends on whether Congress gives President George W. Bush “fast-track” negotiating authority, limiting lawmakers’ role to a yes-or-no vote on the agreement, with no chance to amend it. After negotiating NAFTA with fast-track authority, the Clinton administration failed repeatedly to win fast-track’s renewal due to bipartisan qualms over NAFTA effects.

This summer, the Bush administration plans to introduce another bill for fast-track, which Trade Representative Robert Zoellick has renamed “trade promotion authority.” Sen. Charles Grassley, the finance committee chair who led a delegation to Quebec, warns that the bill’s chances will diminish as next year’s mid-term elections approach. The administration is expected to attach the provision to more popular legislation, such as a measure to help the U.S. steel industry, which faces overseas competition, or a renewal of “trade adjustment assistance” for U.S. workers who lose their jobs because of trade pacts.

Some Democrats are pushing a proposal to hinge fast-track authority on whether the FTAA includes labor and environmental protection clauses. In February, the conservative Business Roundtable changed course and endorsed such clauses, possibly including fines on manufacturers that abuse workers or damage the environment, and conditioning lower tariffs and export financing on labor protections. The change reflects the roundtable’s desire to reach a fast-track compromise quickly, fearing that prolonged FTAA negotiations would leave U.S. firms at a disadvantage as the European Union forges trade deals in this hemisphere.

Judging by NAFTA’s record, such a compromise would do little for workers or the environment. Of the 23 complaints filed under the NAFTA side accord on labor rights, not one has resulted in sanctions against the alleged violator, according to an April report by Human Rights Watch. Companies named in the complaints have included General Electric, Honeywell, Sony, General Motors, McDonald’s and Sprint. The alleged violations have included life-threatening health and safety conditions, firings for worker organizing, favoritism toward employer-controlled unions, forced pregnancy tests and mistreatment of migrant workers.

The impunity for labor-rights violators under NAFTA was obvious in the northeastern Mexican town of Río Bravo on March 2, when President Vicente Fox’s labor ministry allowed a rigged election against an independent union at a factory owned by the Kentucky-based Duro Bag Manufacturing Corporation (see NEW LABOR POLICY LOOKS LIKE OLD).

“The NAFTA experience is an important lesson for any future trade agreements,” José Miguel Vivanco, executive director of the Americas division of Human Rights Watch, said before the Quebec summit. “Our research shows that agreements on labor will never work without the active support of the countries involved. In the case of NAFTA, these three countries have actually worked to minimize the impact of the labor provisions.”

Resistance

With NAFTA in mind, grassroots groups across the hemisphere are mobilizing around the FTAA. In Quebec, the People’s Summit dissected what’s known about the accord, and offered democratic alternatives. “With these trade agreements, government leaders have more in common with corporate leaders than with the people they are supposed to represent,” said Maude Barlow, chair of the 100,000-member Council of Canadians, which helped lead the event. “People have no access to entrenched power except to put their bodies on the line,” she added, referring to the barricade clashes.

The week after the summit, labor leaders from 34 countries in the hemisphere met with AFL-CIO President John Sweeney in Washington, D.C., to map out plans against the FTAA. A statement from that group, the Inter-American Regional Organization of Workers, said the pact would promote “a race to the bottom” in which corporations seek out countries that pay the lowest wages and have the worst working conditions.

While FTAA critics have multiplied their ranks, they haven’t reached consensus on what to do about the accord. Some progressive scholars and policy analysts agree with business leaders that lowering tariffs and easing the international flow of capital are the only routes to lifting Third World living standards. The key, they say, is for trade agreements to include enforceable protections for workers, the environment, indigenous people and so on.

But most groups who came to Quebec doubt the professed benefits of free-trade pacts and say there’s no fixing the FTAA without democratizing the process. The Hemispheric Social Alliance, a network of social movements and nongovernmental organizations, proposes mass citizen education followed by national referendums on trade agreements. “We want all the millions in the Americas to participate directly and have their voices heard,” said the alliance’s Hector de la Cueva, a Mexico City activist. “We want to start with a popular referendum, and then advance to a more formal one, country by country. We will fight this in buildings or in streets, whichever is necessary.”

And a few protesters say the only hope for workers and the environment is revolutionary change. A document circulated in Quebec by the Boston-based Northeastern Federation of Anarcho-Communists denounced both “capitalist tyranny” and “reformism”: “We refuse to trap ourselves in the limits of the ‘possible’ and small reforms without consequences.”

A unifying theme outside the official summit was that profits do not equal democracy. “There is a new dictatorship emerging, that of corporations given the right to strike down the laws of democratically elected people,” said Tony Clarke, vice chair of the Council of Canadians, a day after protesters tore down part of the wall. “And then they wonder how people can engage in civil disobedience? We are building a mass resistance against a corporate regime that cannot have moral and political authority.”

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