What Parliamentarians Should Know About the US Agenda in the FTAA

What Parliamentarians Should Know About the US Agenda in the FTAA
Presentation for the Parliamentary Forum
2nd Peoples Summit of the Americas, Quebec City, 17 April 2001
Sarah Anderson, Institute for Policy Studies

I want to say how honored I am to address such a distinguished group and to say how excited I am to be here in Quebec City. I was at the first Summit of the Americas in Miami in December 1994, where the plan for the Free Trade Areas of the Americas was launched, and that was a very different situation. The Miami Summit was a smoothly run event marked by an unusual lack of tension between leaders and virtually no protestors. And although I think it is a shame that Quebec City has become so militarized, I think that it is very healthy to have a lively debate about free trade, both between civil society and government officials and among government representatives.

I have been doing research and education on free trade for nine years, beginning with the debate over the North American Free Trade Agreement. Unfortunately, most media coverage gives the impression that all Americans who are critical of free trade are simply nationalist protectionists. To the contrary, the coalition that I'm part of, the Alliance for Responsible Trade, has worked very closely with scholars and activists from around the hemisphere to develop an internationalist position. We believe there should be rules and agreements to guide relations between the countries of the Western Hemisphere. We just think that the rules in NAFTA and those being proposed for the FTAA are the wrong rules because they disproportionately benefit large corporations and the rich. We believe that trade and investment should not be seen as ends in themselves, but rather as tools to achieve the goals of just and sustainable development and reduced inequality between and within our nations.

Beginning in 1997, labor organizations and citizens coalitions representing more than 45 million people in countries across the Americas have joined in a Hemispheric Social Alliance to fight the FTAA and to develop a positive alternative. Here at the Peoples Summit in Quebec City, we will be releasing the latest version of our proposal in a document entitled "Alternatives for the Americas." One of the core principles of this vision is that any hemispheric agreement should allow governments the power to design and implement their own national development strategies. This doesn't mean that they have to be closed to the global economy. It just means that they should have the power to pursue policies to ensure that trade and investment support their national economic goals and environmental sustainability.

I'm going to use the rest of my time to identify ways that I believe the US government's agenda in the FTAA would undermine that governmental power. The US government has released summaries of their negotiating positions and I've been reading them carefully. I also have a paper that provides an extensive critique, which I'd be happy to share with you. For now, I will discuss just four of the most important and threatening positions promoted by the US government.

1. Investor-state Provision

The first is in the investment negotiating group. It appears as though the US government is simply pushing in the FTAA for expansion of the investment rules that currently exist in NAFTA. As you may know, the investment chapter of NAFTA goes further than any other agreement in the world to provide rights and protections to international investors. The most controversial is a provision that allows private foreign investors to sue governments directly. They can sue over any breach of the extensive rights that are granted to them in this chapter. I'll just focus on the most controversial, which is the right to sue governments over public interest regulations that may reduce their future profits. This means that you could enact a law through a democratic process, that is designed to protect people or the environment, but if it should happen to potentially cut into a foreign investor's profits, it could be the target of an expensive lawsuit. There are many examples of these suits, and I'm sure that the Canadian parliamentarians are familiar with those involving Canada. Let me just mention another one, which should be of interest to Latin Americans. This is a case in which a US company successfully sued Mexico after being refused a permit to operate a hazardous waste treatment facility for public health reasons. The Mexican government was ordered to pay $17 million.

I think that perhaps the biggest danger of this provision is the potential chilling effect that it could put on governments that are considering enacting stronger public interest regulations. If they have to fear expensive lawsuits, it's likely they may not do it.

2. Performance Requirements

Another US position in the investment area that may be troubling to legislators is their proposal to ban performance requirements. Specifically, they want to prevent governments from being able to demand that foreign investors to do such things as transfer technology to the host country, use a certain amount of domestic materials in their production process, and so forth. I would argue that national and local governments should have the option of using such conditions as part of their development strategies.

3. Capital Controls

Likewise, the US government is pushing for an FTAA that would limit the ability of governments to regulate the flows of capital in and out of their countries. In the wake the global financial crisis that erupted in 1997 in Asia and spread around the world, there is a growing consensus in support of such controls. Even the IMF has recently approved of them in some circumstances as a means of preventing economic meltdowns and insulating countries from the contagion effects of crises. But the US government has ignored this lesson and is pushing for a broad prohibition on capital controls in the FTAA.

4. Access to Affordable Medicines

The United States is attempting to promote measures in the intellectual property rights rules that could undermine the efforts of governments to promote access to affordable medicines. You're probably aware of Brazil's program to fight AIDS, which includes the production of generic drugs that are far less expensive than what the multinational pharmaceutical firms charge. This has allowed Brazil to guarantee drug treatment to every person with HIV/AIDS in the country. By contrast, the United States appears to put the interests of the drug companies first. Although the summaries of their FTAA negotiating position on this point are vague, the recently negotiated trade agreement with Jordan would put limits on the power of governments to issue compulsory licenses for generic drugs. Thus, if the Jordan deal is any indication, the US government is likely to push for an FTAA that would make it difficult for the lessons of Brazil's generic drugs program to be emulated by other countries.

These are just a few of the issues that we've been raising about the US agenda for the FTAA that I think should be of special concern for legislators across the Americas. Of course, we're also concerned about things that are missing from this agenda. For example, there is nothing that would address the pressing debt problems faced by so many countries in this hemisphere. In 1999, the total debt burden of Latin America and the Caribbean was three times higher than in 1982, despite the fact that they made $1.1 billion in debt payments during this period. To me, it seems practical to promote substantial reduction of this debt in the context of the FTAA. There is a strong precedent for such a resource transfer in the European Union, which recognized the need to level the playing field between countries prior to economic integration. There, the rich countries funneled a tremendous amount of development aid into the poorer countries. In the Western Hemisphere, debt relief is the most sensible way to try to level our own playing field. Otherwise, countries that remain in the stranglehold of debt will always feel the pressure to try to attract foreign investment and promote exports by virtually any means necessary.

This last point really gets at the heart of the criticisms that so many people have of free trade, which is that deals like NAFTA and the proposed FTAA disproportionately benefit those that are already wealthy. And I think we already have too much inequality in this hemisphere. We need a new approach to globalization that focuses on reducing these gaps and elevates the interests of the general public above those of corporations.

References

America's Plan for the Americas: A Critique of the US FTAA Negotiating Positions co-edited by Sarah Anderson on behalf of the Alliance for Responsible Trade [PDF document]
Top 200. Global Economy (IPS) Fellows Sarah Anderson and John Cavanagh analyse the economic and political power of the world's largest corporations.