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| AGW Welcome | Events | The Witness Magazine |
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Fast
Track to Disaster for the World’s Poor On December 6, 2001, by a one vote margin of 215-214, the U.S. House of Representatives gave President Bush "fast track" authority to negotiate new trade agreements without any meaningful congressional oversight. An untrained eye would have found it hard to discern the shell game being played under the rhetorical cant emanating from the well of the House. House Speaker Dennis Hastert (R-Illinois) passionately urged lawmakers to "support our president who is fighting a courageous war on terrorism and redefining American world leadership or... undercut the president at the worst possible time," underlining with furrowed brow that the vote was "being watched closely by our allies and by our adversaries." But the shameful claim that a Member’s patriotic vote will aid the president in fighting terrorism only masks the true intent of this legislation right now. A bill called Free Trade Area of the Americas, of crucial importance to the growing power of transnational corporations, will be introduced in the Congress in the very near future, and the only way it can pass will be if the House and Senate abdicate their constitutional right to genuine debate and amendment and rush it through by "fast track" presidential authority.
Free Trade Area of the Americas (FTAA) will be a disaster for the poor of the world, but especially for the 34 countries of this hemisphere. It is crucial to understand the roots and the context of this bill as it arrives under the urgent pressure of Fast Track. FTAA has deep connections with the most brutal mechanics of globalization, with the Jubilee debt crisis in developing countries, and with the call for "free trade" in the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). NAFTA on Steroids In 1994, at the Summit of the Americas in Miami, the 34 nations of Canada, United States, Mexico, Central America, South America and the Caribbean (except Cuba) agreed to sign a trade and investment pact called Free Trade Area of the Americas. With a population of 800 million from Anchorage to Tierra del Fuego, and a combined GDP of $11 trillion, it would be the largest free trade zone in world. It is intended for completion by 2005, but there is some pressure (especially from the United States and Chile) for ratification by 2003, and hence the urgency to seek Fast Track authority. FTAA is based on models from NAFTA (1994) and WTO (1995), but it goes far beyond each of these in both scope and power. One observer has remarked that "FTAA is NAFTA on steroids." It incorporates from WTO the General Agreement on Trade in Services (GATS), and sneaks in all the powers of the Multilateral Agreement on Investment (MAI), which was roundly rejected by public outrage in 1998. It also expands on the Structural Adjustment Programs which have been imposed in recent years on most countries of the region by the International Monetary Fund (IMF) and World Bank, and which are so much a part of the unpayable debt which set the agenda for the Jubilee 2000 USA movement and now for its successor, the Jubilee USA Network. The constant recurrence of Structural Adjustment principles in all these trade agreements clearly demonstrates that the issue is not really new "free trade" agreements. It is the effective takeover of global political and economic governance by transnational corporations. All of this was envisioned in the "Washington Consensus" which was forged by the U.S. Treasury Department in the Bretton Woods Agreements just after World War II, and the FTAA is a culminating piece of that whole process. A World Ruled By Corporations In the principles of the FTAA we have the apex of the economic and political globalization process. The world today is no longer effectively ruled by nation-states. There has been a massive restructuring of the global economy in favor of Transnational Corporations (TNCs). Between 1970 and 1998, the number of TNCs increased by 800 percent. Of the top 100 economies in the world, 51 are now corporations and 49 are countries. 70 percent of global trade is controlled by just 500 corporations.
The proposed FTAA represents a global corporate system in which the transnational corporation is undisputed king, and the planet’s new rule will be by extra-parliamentary and transnational fiat. Moreover, as with WTO and NAFTA, the FTAA agreement will contain no safeguards to protect workers, human rights, social services, or health and environmental services. In early 1999, an FTAA Trade Negotiations Committee was set up, with nine Working Groups on major areas of negotiations. Over 900 trade negotiators, with mountains of materials, have been meeting since then in closed sessions in Miami. Big corporations and lobby groups have been integral to the process. Over 500 corporate representatives have security clearance and access to the documents. The public has been granted only bits and pieces of official information about these proceedings. Some negotiating documents have been leaked, including a substantive report from the Negotiating Group on Services in October 1999. There is no public participation in the drafting of these agreements, and no discussion allowed by anyone except corporate or state representatives. This Orwellian arrangement overlooks the fact that publics across the world have a great deal to either win or lose by the outcomes of these closeted deliberations. Of the nine negotiating groups, we shall look only at the first two, on services and on investment, since there is more leaked information about them than about the other seven groups, and because these two capture the heart of the FTAA in a special way. I am relying heavily on the splendid analysis by Maude Barlow, the national chairperson of the Council of Canadians, in a Special Report of The International Forum on Globalization, The Free Trade Area of the Americas: The Threat to Social Programs, Environmental Sustainability and Social Justice (February 2001). Corporate Takeover of Services The Negotiating Group on Services seeks to "establish disciplines to progressively liberalize trade in services, so as to permit the achievement of a hemispheric free trade area under conditions of certainty and transparency." It is a new agreement, and is even more sweeping in scope than the WTO services negotiation now in effect, known as the General Agreement on Trade in Services (GATS). The vast new authority to overrule government in the FTAA agreement demands that all public services at all levels of government would have to be opened up for competition from foreign for-profit service corporations. It would disallow giving preferential funding to domestic service providers in services as diverse as health care, education, municipal services, libraries, culture, and sewer and water services. A key prescription in the agreement is that "investors/corporations from all FTAA countries must be treated the same as domestic and local service providers." As in the open borders which are mandated by Structural Adjustment Programs, smaller countries will find that they have soon lost control of their own economy and social structure. For the first time in any international trade agreement, transnational corporations will gain competitive rights to the full range of government service provisions and will have the right to sue for financial compensation from any government that resists, since publicly funded services are considered "monopolies" in the new world of international trade.
Services are the fastest growing sector in international trade, and of all services, health, education and water are potentially the most lucrative of all. Columbia, the largest for-profit private hospital corporation, says that health care is a business no different in kind than aviation or ball-bearings, and it has vowed to destroy every public hospital in North America, since they are not "good corporate citizens." Numerous investment houses predict that public education will be privatized in the hemisphere over the next decade, just as health care has been, and say there is a great deal of money to be made when this happens. Foreign for-profit health, education and other social service corporations from anywhere will have the right to establish a "corporate presence" anywhere in the hemisphere. They will have the right to compete for public dollars with public institutions like hospitals, schools and day care centers. Standards for health, education and social work professionals will be subject to FTAA rules and review, to ensure that they are not an "impediment to trade." The Infamous Chapter 11 The mandate of the Negotiating Group on Investment is to establish "a fair and transparent legal framework to promote investment through the creation of a stable and predictable environment that protects the investor, his investment and related flows, without creating obstacles to investments from outside the hemisphere." It builds on and significantly expands the investment chapter of NAFTA, the infamous Chapter 11, which many analysts have called "the very heart and soul of NAFTA." In the FTAA mandate on investment, the exclusive focus is on the protection of foreign investors. And the key question is whether FTAA will force governments to entirely give over their sovereign power to regulate in the public interest.
NAFTA was the first international trade agreement to allow a private interest — usually a corporation or an industry sector — to bypass its own government and, although it is not a signatory to the agreement, directly challenge another NAFTA government if its laws, policies and practices impinge on the established "rights" of the corporation. Chapter 11 incorporates the rather astounding principle that a government cannot implement legislation that "expropriates" a company’s future profits. The investment rights granted in the second negotiating group of FTAA are very broad. No country can discriminate on behalf of its own domestic sector. A foreign "investor" or corporation can claim compensation for lost business or profit from the creation of regulations, including environmental laws, by the government of another FTAA country. No country has the right to place any performance requirements on foreign investment. A panel of trade bureaucrats can override a government’s domestic legislation or force a government to pay substantial compensation if they continue to enforce that legislation. To adjudicate all disputes, NAFTA’s Chapter 11 sets up secretive "tribunals" at the World Bank or United Nations, made up of three persons named by the parties in dispute. These hearings are not open to the public, offering the confidentiality which corporate investors consider essential. NAFTA panels are not bound by the rulings of previous panels; they create no precedents. NAFTA’S Secret Cases In the first seven years of NAFTA, it appears that some fifteen cases have been filed under Chapter 11, although one never knows for sure how many, or their outcome, since the whole process is so highly confidential. But we do know that an astonishing $13 billion has been claimed in damages by corporations in their initial filings: $1.8 billion from U.S. taxpayers, $294 million from Mexican taxpayers, and a whopping $11 billion from Canadian taxpayers. The first Chapter 11 case, brought before a NAFTA tribunal at the UN, was one in which the US-based Ethyl Corporation sued the Canadian government for $251 million in damages over its ban of Ethyl’s gasoline additive MMT, which Canadian Prime Minister Jean Chrétien had called a "dangerous neurotoxin." Even though the suit was filed while the MMT bill was still being debated in parliament, the Canadian government settled the case in 1998 by revoking the ban on MMT and paying Ethyl $13 million in damages, before the NAFTA tribunal had even issued its final ruling. The business community was delighted with this outcome, and numerous other cases against environmental laws in NAFTA countries immediately began to appear. If similar rights are in FTAA, the potential for large MNCs to bully the governments of the weakest and poorest countries of the hemisphere would be extraordinary. The case with the greatest chutzpah for size is that of Sun Belt Water of Santa Barbara, which is suing the Canadian government for $10.5 billion in damages. Sun Belt’s claim revolves around British Columbia’s having banned the export of its bulk water in 1993, thus preventing Sun Belt from getting into the water business in that province. The case is pending. United Parcel Service, of the friendly brown trucks, is suing Canada for $160 million in damages, claiming that provision of parcel and courier services by the Canadian postal service represents an unfair trade advantage against UPS. That case is also pending, but public service providers everywhere are watching for its outcome In 1996, Metalclad, a US waste-disposal company, sued the Mexican government because the state of San Luis Potosí refused it permission to reopen a renovated waste disposal facility which the people in the area had determined to be highly toxic. In a NAFTA tribunal at the World Bank, Metalclad sued the Federal Government of Mexico for $90 million, and, after a complex appeal procedure before a British Columbia judge, was finally awarded $15.6 million in damages in October 2001. Another important case, the largest brought in the United States to date, has the potential for creating a significant backlash against these outlandish suits. It is that of Methanex, a Canadian corporation which is the world’s largest producer of methanol, a key ingredient in the gasoline additive MTBE. In 1999, California banned MTBE, after studies at U.C. Davis warned that it may cause cancer in humans. Methanex claims that California’s action is a "confiscation" of its property, what Chapter 11 calls "tantamount to expropriation." Though its quarrel is with a state law, Methanex sued the U.S. government for $970 million, and if a NAFTA tribunal at the U.N. finds this a "regulatory taking," U.S. taxpayers can be held liable for the corporation’s nearly $1 billion claim for lost future profits. The Methanex case is pending, and it has become a main focus for the California Senate’s new Select Committee on International Trade Policy and State Legislation, the first committee of its kind in the 50 states. It is chaired by State Senator Sheila Kuehl, and its core concern is sovereignty, in this case the ability of a state to set antipollution standards that are tougher than federal minimums. In the sheer size of its economy, California dwarfs all 34 parties to the FTAA except for the United States itself. Following the lead of the Kuehl committee, legislatures throughout the Americas could begin to open global trade negotiations to public examination and make them responsive to the concerns of civil society. Structural Adjustment Policies Access to multimillion-dollar loans from the World Bank and IMF by Third World countries has been contingent on a country’s agreement to carry out a drastic economic program of "liberalization." This array of monetary, budgetary, market and trade reforms have together come to be known as Structural Adjustment Policies. These economic reform principles are also the basis of the NAFTA and the FTAA agreements. The Structural Adjustment package varies in detail from country to country, but the main policies include: reducing the state’s role in the economy; lowering barriers to imports; removing restrictions on foreign investment; raising taxes; eliminating subsidies for food staples and for local industries; reducing spending for social welfare; cutting wages; devaluing the currency; and emphasizing production for export rather than for local consumption. Most of these stringent directives can also be found in the proposed FTAA agreements on service and investment which we have analyzed above. Latin American countries know this FTAA model well, because they have in fact been living under it for several decades. FTAA will involve the same imperatives of deregulation and privatization that forced most of them to relinquish control of their own economies and dismantle their public infrastructures in the first place, so that they will want to examine this pact very carefully before jumping into it. FTAA’s Brave New World Because so much of NAFTA’s workings operate in corporate seclusion, it is difficult to get a reliable evaluation of its track record since it began in 1994. But Public Citizen’s Global Trade Watch has released a richly documented report, Down on the Farm: NAFTA’s Seven Years War on Farmers and Ranchers in the U.S., Canada and Mexico (June 2001). Their findings on the fate of agriculture in the three countries since 1994 hint at what is in store for the rest of the hemisphere under the brave new world of FTAA. The report shows how independent farmers in the United States, Canada and Mexico have seen agricultural prices plummet, farm incomes collapse and critical agricultural subsidy programs dismantled. NAFTA’s rules empowering investors, guaranteeing access rights to large corporate traders and constraining government regulatory power have set up a race to the bottom in farm income, wages and sanitary and environmental standards. The report’s conclusion is that NAFTA’s twin policies of free trade and elimination of domestic farm protections in all three countries have handed the entire food production and distribution system over to giant agribusinesses who have reaped huge profits while the majority of farmers and consumers have been major losers.
In addition to losing control of food security, public social programs have been abandoned and for-profit foreign corporations have been allowed in to sell their health and education "products" to "consumers" who can afford them. Under FTAA, this process will only accelerate through all 34 countries of the hemisphere, and traditional medicine, education and cultural diversity will be wiped out. One top WTO official has said that the goal is really worldwide economic and cultural homogenization, and that "it won’t stop until foreigners finally start to think like Americans, act like Americans and — most of all — shop like Americans." Fast Track to Corporate Power The negative outcomes of seven years of NAFTA have helped to define the growing national debate over President Bush’s urgent demand that Congress give him "Fast Track" power to rush trade agreements through Congress, just as soon as the FTAA agreements are ready. The U.S. Constitution gives Congress exclusive authority "to regulate Commerce with foreign Nations" (Art. I-8). "Fast Track" is a mechanism established in 1974 under Richard Nixon, and used only five times since, that delegates away to the Executive Branch this congressional authority for setting trade terms. It suspends normal congressional rules, and leaves Congress with 60 days to act, only 20 hours maximum of debate in each chamber of Congress, and an up-or-down vote with no amendments. Fast Track power expired in 1994, after it had been used by President Clinton the previous year for passage of NAFTA. Clinton’s requests that Congress again delegate its trade authority in 1997 and 1998 were refused by the House of Representatives. The Bush Administration has now renamed it "trade promotion authority," and Rep. Phil Crane (R-Illinois) originally introduced the Trade Promotion Authority Act of 2001: HR 2149. On the day that bill was introduced, the president received a bipartisan letter from 61 senators insisting that labor and environmental rights are crucial and must be protected in any trade agreement. The December 6, 2001 bill, HR 3005, was an amended version of the Crane bill, and it is that will now go the Senate. The question of presidential Fast Track authority is crucial to the fate of FTAA, just as it was to NAFTA. Did Bill Clinton ever understand what was in the fine print of NAFTA’s Chapter 11? Will George Bush or the members of Congress understand it now, as it reappears in FTAA? It is simply astounding that the record of the fast-track debate over NAFTA in Congress in 1993 does not contain a single reference to Chapter 11. The debate, such as it was, was simply a heated rhetorical and public relations battle, in which the two sides were largely cast as defenders or enemies of "free trade." Not surprisingly, NAFTA’s advocates emerged the clear winners on all counts. After all, who could oppose the abolition of barriers to free trade? But the agreement’s most contentious provision, Chapter 11, was never about trade at all. It was about the sovereign power of governments to regulate in the public interest when faced with unlimited corporate power. As one observer has remarked: "That this shift should occur virtually unnoticed is a serious condemnation of the original NAFTA deliberations. The NAFTA that passed was, in crucial respects, not the NAFTA that was discussed." This tragic, and even scandalous, legislative situation must not be allowed to happen again with FTAA. Protesting Outrageous Inequality The terms of the public debate on global economic issues urgently need honest re-definition. Anti-globalization does not fairly characterize the protestors who came into the streets in Seattle and Prague and Quebec and Göteborg and Genoa. The many protests derive from the extraordinary power which is exercised by the Group of 8 (G-8), the WTO, the IMF and the World Bank. This new world order has no democratic mechanisms for representation, as nation-states do: no elections for accountability, no public forums for debate.
Those who want to protest take to the streets because that is the only effective form of expression available to them. Regardless of the hysterical rhetoric of the media, these hundreds of thousands of people should not be called anti-globalization. The protestors are indeed united against the present form of capitalist globalization, against the globalization of wealth and the globalization of impoverishment. But the vast majority of them are not against globalization as such. The movement is pro-globalization, but it is an alternative globalization movement — one that seeks to eliminate the outrageous inequalities between rich and poor and between the powerful and the powerless, affirming that a better future of self-determination is possible for the world’s losers. President Bush continually repeats his mantra: "Trade creates jobs; jobs are new hope for the world’s poor; when we promote open trade, we promote political freedom." And he sneers at the demonstrators in the streets: "They seek to shut down meetings because they want to shut down free trade… Make no mistake — those who protest free trade are no friends of the poor. Those who protest free trade seek to deny them their best hope for escaping poverty." We can expect more of this befogging drumbeat as the Senate takes up Fast Track, behind the mask of whatever new name, in the coming months. But the issue is not "free" trade or "open" trade, which are indeed hardly possible today, given the power structures of the current international order. The issue is rather fair trade. And both NAFTA and the proposed FTAA are so fatally flawed in favor of corporate profits that there is no chance for anything like a fair shake for workers or consumers in anything called a free trade agreement.
U.S. voters will be shocked when the pending Chapter 11 cases begin to win in the secret tribunals, and their education will then quickly turn to anger. FTAA is already of urgent concern to millions of Latin Americans. Brazil is the richest economy in South America and the ninth largest in the world. The head of its Workers’ Party and a leading presidential candidate, Luis Inacio da Silva, recently told some 60,000 participants at the World Social Forum in Porto Alegre, "The FTAA isn’t really a free trade pact. Rather, it’s a policy of annexation of Latin America by the United States." As Maude Barlow concludes so forcefully, "When they understand what is at stake in this hemispheric negotiation, the peoples of the Americas and the Caribbean will mobilize to defeat it. It is the fate it deserves." For all who care about economic and social justice for the whole human family, the struggle over FTAA will be the defining political issue of the coming several years. The call to each of us is to become informed, to set up circles of shared information and analysis in our local communities and religious congregations, and to address our local and national legislators with effective political persuasion.
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Thomas
E. Ambrogi is an interfaith theologian and human rights advocate. He is
a member of All Saints Church, Pasadena. With an earlier history as a
Jesuit priest and a university professor of theology and the applied social
sciences, Tom lives at Pilgrim Place, an ecumenical center for retired
church professionals
in Claremont, CA. He can be reached at