BY EVA CHENG
At the April Summit of the Americas meeting of government leaders, to be held in Quebec City, Canada, the United States will seek endorsement for the extension of the North American Free Trade Agreement (NAFTA) to the rest of the capitalist countries of the Western hemisphere. The scheme is called the Free Trade Area of the Americas — the FTAA.
The idea for the FTAA was initially raised in December 1994 during the first Summit of the Americas in Miami, coming hard on the heels of NAFTA's implementation in January that year. Formal negotiations were launched only during the SoA's second summit in Santiago, Chile, in April 1998. The Quebec City summit is to be a high point of that negotiation process, due to conclude in 2005.
The FTAA is an attempt to expand to virtually the whole of the Americas what NAFTA is offering its three members — the US, Canada and Mexico.
NAFTA's price
Mexico has paid the dearest price for NAFTA, impoverishing many of its people, coating much of its landscape with pollution from dirty industries and undermining what remained of its national sovereignty.
As a condition for membership, for example, the country had to change its constitution to allow foreign acquisitions of its land. To comply with NAFTA's market access and anti-subsidy rules, a huge number of Mexican peasants have been forced off their land. According to a study of the first five years of the agreement conducted by the US activist group Public Citizen, "This has greatly contributed to Mexico's 65% under/unemployment rate".
Moreover, instead of delivering plenty of clean and quality jobs as promised, NAFTA has resulted in a massive proliferation of pollution-choked poorly paid jobs in maquiladoras, export processing zones mainly situated along the US-Mexican border. Such employment exploded from 546,433 when NAFTA started to 983,272 in April 1998, and has become Mexico's main job generator.
Three hundred maquila firms, mostly foreign transnationals, account for 70% of Mexican exports, the study found. Yet these maquiloras use less than 6% of Mexican inputs and "pay the typically low wages associated with maquiladora employment".
Not only do they pay 16% less than an average manufacturing job in Mexico but maquila jobs are almost impossible to live on. Mexico's average weekly wage of US$55.77 in 1998, according to the Public Citizen study, only left $1.77 for expenses on education, clothing, medical and other needs after basic food, housing and basic utility costs are addressed.
Maquilas further dragged Mexican wages down: in 1977, 7.77 million Mexicans (20% more than in 1993) were documented as earning less than the minimum wage of $3.40 a day. During the same period, the average wage fell by 29%, despite the productivity of Mexican workers climbing by 36.4%.
The pay and conditions of US workers have also worsened under NAFTA: US manufacturing workers, for example, with an average hourly pay of US$18.74 in 1998, now have to compete with the maquila wage of $1.51 per hour.
Even the pro-free trade Institute of International Economics admitted in 1997 that economic integration like NAFTA has been responsible for 39% of the rise in wages inequality in the US. "NAFTA makes it easier to suppress workers' wage and to discourage unionization with threats of job relocation", concludes Public Citizen.
The decison-making powers of local and national governments have been seriously undermined by NAFTA's infamous Chapter 11, which empowers special tribunals to override the decisions of such elected bodies.
The resolution of seven cases reviewed by these tribunals before the end of 1998 reveal that their deliberations have placed the profits of investors ahead of social interests and environmental sustainability.
In one example, the US Ethyl Corp took Canada to a NAFTA tribunal over the country's decision to ban the gasoline additive MMT on public health grounds. The tribunal ruled the ban constituted an unfair "taking" of the company's property — namely, its profits from selling MMT in Canada — and ordered Canada to declare MMT safe and pay Ethyl $13 million.
Washington's promises
The US is promising Latin American countries a rose garden if they sign on to the FTAA, including easier access to US markets and greater prospects for economic growth and development. But given the horrific reality of NAFTA, are there grounds to expect FTAA will be better?
The FTAA's tentacles go far beyond trade matters. "Free trade" and related market liberalisation and economic integration measures are only one of four official goals of the Summit of the Americas. The others are "preserving and strengthening the community of democracies", "eradicating poverty and discrimination" and "guaranteeing sustainable development and conserving our natural environment".
All are noble goals — but they will be twisted by the US to provide pretexts for action against its opponents, just as calls for "free trade" have been.
Under the cover of promoting "the community of democracies", for example, come schemes to combat "illegal drugs" and related crimes, eliminate the "threat of national and international terrorism", and promote and protect "human rights". In practical terms, these translate into enhanced military and political backing for Colombian army operations against popular leftist guerillas and a stepped-up economic and diplomatic war on revolutionary Cuba.
The US's promises of giving FTAA signatories greater access to its enormous domestic market will undoubtedly be undone by its manipulation of the fine details of the treaty — just as similar promises to WTO members have been.
But even if honestly adhered to, "free trade" mechanisms such as those in the FTAA are fundamentally unjust. Because they seek to apply equal rules to economies of vastly different strengths, their benefits flow overwhelmingly to the stronger party.
The Third World's economic problems are structural. As a result of historical underdevelopment and subjugation, poor countries' economies are largely dependent on exporting low-value commodities, particular agricultural and light manufacturing goods, and importing high-value goods and services from the rich countries, resulting in near-perpetual shortfalls in external trade revenue and current account deficits.
These can only be plugged, temporarily, by borrowing funds from rich countries' banks and governments. In turn, Third World countries' ability to service these existing debts or borrow much needed new funds is at the mercy of the imperialist powers, specifically the US, as the US dollar dominates international transactions and Wall Street dominates international financial markets.
The debt burden and the erratic movements back and forth of massive speculative funds increase Third World countries' vulnerability, leading to periodic crises and the need for International Monetary Fund "rescues". The cost of such bailouts is further economic measures which benefit finance capital at the expense of poor countries' social needs — drawing them again deeper into the treadmill of perpetual dependence.
Latin America's treadmill
Latin America is in exactly such a position. Its debt crisis in the 1980s, founded on massive external imbalances and vulnerable export incomes, was triggered by Washington's decision to sharply raise interest rates. In exchange for being bailed out, and having their debts restructured, economies through Central and South America had to swallow neo-liberal policies which have had devastating social impacts and have enforced even greater levels of economic dependence.
Claims of an economic turnaround in the 1990s turned out to be mirages, and even they were limited to Mexico and several small Central American countries which depend more than ever on the US. The entire region has been hit by successive waves of deep structural crises: in Mexico in 1994-95; in Brazil and Colombia in 1998-99; in Ecuador in 2000. Even in the first weeks of 2001, El Salvador has been forced to "dollarise" its economy and Argentina has been forced to ask for a US$39.7 billion "rescue" by the IMF.
Nearly all Latin American countries are sustaining massive deficits in their current accounts. While the region's current account deficit fell from US$87 billion in 1998 to US$55 billion in 1999 (equivalent to 3.1% of the region's GDP), economic growth prospects, government budget deficits, terms of trade, export receipts and capital inflows all worsened. The region's gross foreign debt hit US$750 billion.
In an attempt to resist complete US domination, and gain some breathing space, the region's countries have started trade or economic cooperation pacts between each other. The most important, Mercosur, groups Argentina, Brazil, Paraguay and Uruguay as members and Chile and Bolivia as associates. The Andean Community includes Bolivia, Colombia, Ecuador, Peru and Venezuela; the Central American Common Market comprises Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua; and Caricom covers 14 tiny Caribbean economies.
The US is seeking to have all of these agreements dismantled and superseded by the FTAA, which it will lord over.
Speaking to Green Left Weekly during his January visit to Australia, the Cuban Communist Party's Abelardo Cueto Sosa said that, if the US succeeded in installing the FTAA, the last traces of national sovereignty in Latin America and the Caribbean would be wiped out.
Cueto had no doubt that the FTAA will worsen the plight of the working people but said he is optimistic that such tightening of the screws will provoke massive resistance. He said, "America always underestimates the Latin American people ... confronted by a battle of survival, people will go to the streets and nobody can tell where this movement will go".
This potential for a people's movement in resistance, said Cueto, could be a major political factor in stalling Washington's FTAA push.
Opposition to the agreement is already a rallying cry for leftists from across the region. Anti-capitalist activists in North America are planning an all-out mobilisation in Quebec City on April 20-22 to prevent the Summit of the Americas from agreeing to the FTAA. Millions around Latin America, and around the world, will be wishing them victory.
[For more information about the Quebec City protests against the FTAA, Visit <http://www.peoplessummit.org> and <http://www.quebec2001.net>.]