February 2004

Views expressed are those of the authors, not necessarily of the AFSC.

"Free" Trade at the Crossroads
Miami and Beyond

Arnie Alpert is Coordinator of the American Friends Service Committee’s New Hampshire Program.

Nine days after the collapse of World Trade Organization negotiations in Cancún, Mexico, and two months before hemispheric trade talks in Miami, 72 major American corporations and big business coalitions issued their instructions to the Bush administration’s trade negotiators.

"We strongly urge you and your negotiating team to stay the course and continue to fight for a comprehensive and commercially meaningful FTAA (Free Trade Area of the Americas) that incorporates high standards, similar to those that the United States has achieved in its free trade agreements with Canada, Mexico, Chile and Singapore," advised the business leaders in a letter dated September 23 and posted on the web site of the US Council for International Business (www.uscib.org). Signatories included powerful lobbying groups such as the Business Roundtable, the Coalition of Service Industries, the National Association of Manufacturers, and the US Chamber of Commerce, plus corporations including General Electric, Wal-Mart, AOL Time Warner, and United Parcel Service.

The statement said virtually nothing about reducing tariffs (taxes on the import of goods), the central emphasis of classical free trade theory and the focus of most descriptions of what "free trade" agreements are about. Instead, the businesses outlined an aggressive agenda that would make it easier for service sector businesses to operate without regulations that stand in the way of profit maximization. Terms such as "comprehensive" obscure a sweeping agenda of transferring power from democratic governments to multinational firms and unelected trade bureaucrats.

As manufacturing continues to nosedive, most of the US economy now consists of services, mostly providing insecure, low-paying jobs without benefits. The big players in finance, telecommunications, software, entertainment, engineering, and transportation are drooling at the prospect of commercial operations in markets all over the world. What stands in their way are not tariffs, but the provision of services by government-run enterprises (e.g. schools, hospitals, etc.) and the prospect that governments might adopt regulations which restrict their business operations. Under this approach to "trade liberalization," environmental regulations, worker-safety provisions, wage standards, and health care provision can be ruled unfair trade practices.

In the September letter, the business groups also demanded "high levels of protection for investment," including NAFTA-type provisions that would allow foreign corporations to sue for monetary damages whenever government actions harm their profits. Other proposals included "high standards" for intellectual property, i.e. protection for the pharmaceutical industry, companies that peddle genetically modified seeds and food, and the large corporate music, movie, and software producers. Also prominent on the big business wish list is "wider market access" to government contracts. These provisions target local governments which prefer to purchase from small local firms, and governmental procurement regulations which support or boycott firms based on their affir-mative action practices, non--discrim-ination policies, environmental records, ethical invest-ment practices, and human rights impact. The Bush administration is squarely on the business groups’ side.

FTAA Hits a Roadblock

But in Miami as in Cancún, those pushing the aggressive agenda of the US multinational corporations hit a roadblock. Brazil, which has the largest economy in Latin America and which is now led by a leftist president, is reluctant to go along on US terms. Two weeks before the trade summit officially began, when the US and Brazil agreed on a compromise, it was pretty clear that the prospect of a "comprehensive and commercially meaningful FTAA" touted by the business groups was not likely.

While police harassed demonstrators on the Miami streets, the official FTAA negotiations stayed stalled. As Jessica Walker-Beaumont of AFSC wrote, "On the one hand, the US was pushing to include ambitious chapters that go beyond current WTO agreements in the areas of intellectual property, government procurement, competition policy, and investment policy; on the other hand, Brazil was insisting on excluding these topics from the negotiations. Simultaneously, the US was refusing to move on Brazil’s demand to reduce domestic agriculture subsidies, the US insisting it would only negotiate this issue at the WTO level."

In the end, instead of the ambitious FTAA of big business dreams, negotiators could only agree on what became known as "FTAA Lite." In the new framework, which remains vague, governments would agree to a common baseline of market openness, but would be able to stand aside from proposals on services, investment, intellectual property, and government procurement. What such an agreement would mean remains to be seen, but politically it was another defeat for the Bush administration.

Bush Administration
Attempting End Run

A roadblock, of course, is not a permanent halt to motion; it can also be an inducement to take another path. Over the course of four days in Miami, the Bush administration representatives announced they would launch new trade negotiations with the Andean countries (Ecuador, Colombia, Peru, and Bolivia), Panama, and the Dominican Republic, plus a bilateral investment agreement with Uruguay — a stategy that is clearly intended to isolate Brazil, Argentina, and Venezuela. The Administration also announced a tripling of funding, to $150 million, "to help support developing countries participate and benefit from the FTAA negotiations," providing a carrot to countries that toe the US line.

Outside of Latin America, the Bush Administration is also negotiating separate trade deals with Australia, Morocco, and the Southern Africa Customs Union (Lesotho, Botswana, Namibia, South Africa, and Swaziland), and plans to start new trade talks with Bahrain and Thailand.

Robert Zoellick, the US Trade Representative, told the Coalition of Service Industries on December 2, 2003: "We have been pressing for freer trade — especially in emerging services markets — globally, hemispherically, and through subregional or bilateral free trade agreements." Zoellick told the business representatives, "The strategy of advancing on multiple fronts is paying off, especially in our drive through FTAs (Free Trade Agreements) to achieve state-of-the-art provisions to assist sectors like those represented here tonight. We are making modern rules for 21st-century economies."

Zoellick announced the completion of the Central American Free Trade Agreement (CAFTA) on December 17, although without Costa Rica. The country with Central America’s largest economy walked out of CAFTA talks at the last minute after refusing Washington’s demands to "liberalize" its tourism, insurance, and telecommunications sectors (i.e. permit deregulated commercial activity by US-based multi-nationals). However, Costa Rica has since said that it will join CAFTA in exchange for minor bilateral concessions (www.ictsd.org/weekly/04-01-28/inbrief.htm). The text of CAFTA is still top-secret, though the countries involved have promised to release it soon.

As for the FTAA, its future is murky. Years of negotiations yielded a draft, finally made public after substantial pressure from civil society. But most of the text remains in brackets, indicating a lack of consensus among the 33 parties. Whether negotiations toward "FTAA Lite" will be based on that draft, or some new process, is unclear. What is fair to say is that there are three factors that can get in the way of the Bush administration’s reactionary agenda.

First, the governments of Brazil, Venezuela, and Argentina are not following Washington’s script. If they gain additional allies, the Bush agenda will face stormier prospects. Second, ten years after NAFTA, civil society groups are well organized across the hemisphere. Their analyses of NAFTA’s failures have influence with some government officials. Finally, negotiating new trade agreements will last until beyond the 2004 US Presidential election.

So far, the Democratic Presidential candidates have been quite critical of the Bush approach, and even distanced themselves from the Clinton trade agenda that preceded and resembled it. "Every Democratic Presidential candidate ought to be taking a strong position against the Bush trade agenda," said Jim Jontz of the "Regime Change 2004" project of Americans for Democratic Action. "In fact, several of the candidates are emphasizing how NAFTA has been a mistake. We’d like for them all to be explaining how the Bush trade deals will be even worse, threatening workers, the environment, democracy, and human rights at home and around the world."

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