Why Latin Americans are apprehensive about the FTAA

Massive demonstrations and protests erupted at the Third Summit of the Americas in Quebec in April as heads of 34 nations in the Western Hemisphere met to launch the final push to realise the Free Trade Area of the Americas (FTAA) by the end of 2005. Critics fear that the FTAA would in effect be an enlargement of the North American Free Trade Agreement (NAFTA) which the US, Canada and Mexico signed seven years ago. As the following article explains, Latin American opposition to the FTAA is based on the fear that the negative effects experienced by the people of the NAFTA countries will now be visited on them.

by Roberto Bissio

THE Mexican, Canadian and American Social Watch coalitions as well as many other NGOs, journalists and scholars, have followed closely the North American Free Trade Agreement (NAFTA) over the past seven years since it went into effect.  Time and again, they have observed how promises of prosperity, partnership and environmental improvement made to Americans, Mexicans and Canadians have been broken. 

US domestic job growth largely disguised the estimated one million US manufacturing jobs lost under NAFTA. We watched closely for a commensurate rise in the Mexican standard of living as US manufacturing jobs migrated south.   Instead, we saw the median wage of Mexican workers plummet by 22.75% under NAFTA.  Eight million Mexican families fell from the middle class into poverty during this period, as Mexico's manufacturing and retail operations were gobbled up by US and Canadian giants.

Worse, we have watched tens of thousands of small Mexican farmers devastated by the flood of subsidised US corn imports facilitated by NAFTA. These families have been forced to move to the poor barrios of Mexico City or to cities along the US-Mexican border seeking new livelihoods.  This economic migration has placed an unbearable strain on the limited infrastructure of the sprawling nuevo-metropolises along the Rio Grande.

Unenviable fate under FTAA

If the proposed Free Trade Area of the Americas (FTAA) is realised, the enormous wheat, soy and beef exports of some South American countries could compete successfully in the markets of rich nations, provided that tariffs are dropped and other artificial barriers to trade - like the US anti-dumping provisions - are lifted, but Central America's small farmers can expect the same fate as Mexico's campesinos. Like the many Mexicans whose emigration to the United States was an economic necessity, these Americanos will soon confront the harsh realities of low wages, not to mention frequent discrimination, on the border's northern side. 

Meanwhile, Canada's once-stellar social services - education, health care, welfare and pension - to which many of our countries aspire, have been gutted. 

Despite the damage we have seen NAFTA inflict upon many in the three signatory nations, one of US President George W Bush's top priorities is to expand this NAFTA model to the entire Western Hemisphere (except Cuba) through the FTAA. There is growing popular opposition to the FTAA in many Latin American countries. We do not want the predominant effects of NAFTA - increased economic inequality, decreased real wages, increased exploitation of natural resources, and attacks on important public health and safety regulations - visited on us. 

Among many aspects of the FTAA that are worrisome to the citizens of the 31 FTAA target nations of Latin America and the Caribbean, perhaps the most troubling is the inclusion of extensive new rights and privileges for multinational corporations.

These same radical investor protections were at the core of the Multilateral Agreement on Investment (MAI). The MAI was a proposed investment treaty that was shelved in 1998 after international citizen opposition to the extreme power it granted multinational corporations over the public and governments. To grant foreign investors new rights without matching obligations is an attack on Latin American countries' right of self-determination.  The FTAA represents a breach of our sovereignty by undercutting our governments' ability to act on behalf of our own development interests versus adopting a one-size-fits-all programme imposed from up north. 

Foreign firms' 'right' to equal treatment

For instance, a Guatemalan government policy of extending credit at favourable rates to its economically marginalised indigenous people, in much the same way the US does to stimulate the growth of minority- and women-owned businesses, would violate a foreign corporation's 'right' to equal treatment under proposed FTAA rules. 

The irony is that the proposed FTAA rules would not prevent a foreign investor from receiving better treatment than a national investor, as in the case of exemption from taxes - a privilege frequently granted to foreign investors, but not to domestic investors.

Unfortunately, such backward policies are not a total surprise given the way the FTAA has been negotiated - in secrecy and systematically excluding input from small businesses, farmers and civil society throughout the hemisphere.  Only a select list of business representatives has enjoyed privileged access to the otherwise secret negotiating documents and even to the negotiators themselves. 

Given the extensive efforts made by the negotiators  to  shield  the FTAA documents and the entire negotiation process from public view, one cannot help but suspect that they fear that the referendums many citizens are demanding or a thorough consultation with the public in Latin America would lead to a resounding rejection of the FTAA.                          

Roberto Bissio, an Uruguayan researcher, is coordinator of Social Watch, a network of citizen groups monitoring social policies in 50 countries around the world.