Another Integration is Possible: Sovereignity Yes, FTAA No!

01 November 2002
Article
Sarah Anderson and Marcos Arruda analyse the FTAA point by point and propose alternatives which would create an integration with sovereignty.

This documents analyzes the FTAA point by point and proposes alternatives which would create an integration with sovereignty. It was written by Sarah Anderson, Institute for Policy Studies, Washington, D.C. and the Alliance for Responsible Trade (ART) and Marcos Arruda, Brazilian Network for a Peoples Integration, Institute Policy Alternatives for the Southern Cone of Latin America (PACS) and economist of the Workers Party (PT), Rio de Janeiro, June 2002.


The unusual challenges posed by the need to reduce social disparities, eliminate external vulnerabilities and realize the potential of Brazilian society all necessitate an active role for the state in these areas. ...Brazilian society must henceforth mobilize itself to defend and preserve its sovereign right to have a development policy. Such a policy would consist of policy instruments in the trade, industrial and technology sectors, all of which a future FTAA could definitively and legally prohibit.
Ambassador Samuel Pinheiro Guimarães (2002)

The FTAA treaty has no public policy, equity or technical ends nor does it set out to create sustainability in the member nations in terms of food security, trade, production or the environment. The trade deal is driven by US strategies to overcome its own problems of overproduction, to subordinate the geographic and economic spaces of the continent to US mega-corporations and to create a regional block, dominated by the US, capable of putting down any competition from the European Union and the Asian bloc in the struggle for economic, geo-political and cultural hegemony of the Planet.
(Jubilee South America, 2000)

NAFTA is the basis adopted for the negotiation of the FTAA and NAFTA is a treaty in which the prevailing interests are clearly those of the US. Once it is understood in this manner, it is clear that the FTAA stands against any hope the countries of Latin America and the Caribbean might have of carrying out their own development projects. It rules out policies for establishing socio-economic, political and environmental rights which address social inequalities, eliminate external vulnerability and equip these countries to enter into a just and equitable integration with the other nations of the Continent. The project of neo-liberal globalization in the Americas, epitomized in the FTAA, would perpetuate a status on the periphery of the hemispheric system for the countries of Latin America and the Caribbean. It would mean total subordination of these countries and peoples to powerful US interests. The instruments to carry this out include commercial and productive annexation (via liberalization of trade and investments), dependency on external capital (via the endless vicious circle of debt) and military submission (via the installation of US military bases and intelligence services throughout the continent). Any programme which takes up the struggle to defend sovereignty and build solidarity between the peoples of the Continent must, therefore, break from the strangle hold of these three knots.

What we propose below is not a reformed FTAA but another trade agreement entirely, one centred on the idea of an integration between neighbours, based on a promotion of mutual respect. Such an agreement would also seek a path towards prosperity, sufficiency, and shared responsibility for the common destiny and sustainable happiness of the peoples of the Americas by eliminating inequalities and injustices, by proportional sharing of resources and talents, and a proportionality in the distribution of the benefits of the collective fruits of labour.

This brief text, directed principally to the opposition candidates in the Brazilian Presidential elections in 2002, sketches out the basic elements of an alternative project for continental integration. It takes as its starting point a critical examination of the central themes of the FTAA already being negotiated. It is imperative that the candidates understand that the FTAA "is being shaped in the negotiations being carried out in nine negotiating groups... Given the fragility and dependency of the countries of the Caribbean and Central American, and the lack of articulation and economic weakness of many states in South America, you can guess that the US proposals presented to these groups have a major chance of success". (Guimaraes, 2002:3)

This is why the 9th Social Plenary of the Campaign for a Plebiscite on Sovereignty and the FTAA in Brazil decided in favour of two separate questions: one, on the continuation of negotiations, and a second on whether Brazil should sign on to the trade deal. Trade Ambassador Guimarães states categorically that whoever is involved in the negotiations is already committing to the terms of the Agreement and will have great difficulty to avoid signing it. His advice was that Brazil should refuse the FTAA mold entirely and withdraw immediately from the negotiations. This is the issues we want to put to the population who will vote in the Plebiscite in September.

It is useful to remind ourselves of the relevance of the role which Brazil can potentially assume in the various geo-political spheres - of South America and the Global South. An opposition victory in Brazil would result in a new configuration of forces, capable of initiating an emancipation across nations. It could establish a model for the organization of the society and the economy directed towards the eradication of the factors which create hunger and poverty, inequality and oppression. It could promote the construction of a world characterized by respect for rights, justice, brotherhood and peace. Other impoverished peoples of Latin American and the Caribbean are viewing the possibility of an opposition victory in Brazil with hearts beating high with hope. These are the dimensions of the responsibility which weigh today on the Workers Party and the other opposition parties.

We thank the authors of the Hemispheric Social Alliance document entitled Alternatives for the Americas (ASC 2002b) which has served as a point of inspiration and reference for this text.

Human Rights

According to international law, the first obligation of a government is to respect and guarantee the human rights of individuals and the society as a whole, as defined by international conventions. In fact, governments continue to ignore these commitments or treat them as something separate from economic matters. This has resulted in the current tendency to liberalize trade and investment while at the same time weakening the economies and exacerbating the exclusion of broad sectors of the population of the Continent. The FTAA process gives continuity to this tendency by not having any official negotiating group on human rights. Another integration would takes as its principal reference point both human and social rights as well as people's right to development, enshrined in international conventions. It would reject the dogma of the free market or the self-regulated market.

FTAA

  • The draft Agreement says nothing about human rights. The declaration from the Third Summit of the Americas in Quebec in April 2001 says that only democratic countries will be able to participate in the FTAA process. Democracy is not clearly defined, however, nor is it clear whether an "anti-democratic" country would be excluded from the benefits of the FTAA or only from the Summit Meetings.

Another Integration

  • would include a democracy clause that guarantees that each country in the FTAA must have democratic institutions and judicial systems able to guarantee human rights, broadly defined. These would include both economic, social, environmental, cultural, civic and political rights as well as those related to adequate conditions for the development of individual and collective potential, and equity in terms of gender, race and cultural communities;
  • would obligate the countries signing on to the FTAA to sign and ratify the principal international and regional conventions and instruments on human rights and to guarantee that these agreements take precedence over rules on trade and investment;
  • would guarantee that the victims of human rights violations have rapid and effective legal counsel leading towards restitution, compensation, rehabilitation and the guarantee that the offense will not be repeated;
  • would strengthen and reform the Interamerican Human Rights system ensuring that the victims or their representatives can participate in all the steps of the procedure in the Interamerican Court, thus making the participation of groups from civil society more effective; that the judges and Commission members be independent, honest and competent.

LABOUR

The negotiators refused to create a negotiating group on Labour. Liberalization of trade and investment allows the companies to move their production centers, their capital and their products freely and without borders. With the FTAA, workers will not have the same rights as those attributed to capital. For them, the borders remain. Management will have more and more power to lower the costs of production, pitting working people against one another. Also governments competing for foreign investment will find themselves under pressure to turn a blind eye when companies violate labour rights. A labour clause is not sufficient to guarantee labour rights. If there is not a profound modification in the direction of these agreements, the rights recognized in such a clause will remain only on paper.

FTAA

  • the only relevant language in the draft document appears in the chapter on Investments. It urges countries to "make efforts to guarantee that internal labour standards are not relaxed as a means to attract investment". This is not obligatory and therefore carries no real weight.

Another Integration

  • would demand that countries make a commitment to respect basic labour rights recognized at international level;
  • would promote collaboration with the ILO for verification of compliance;
  • would assist unions and other organization of civil society to present grievances about violations; the ILO would have the task of investigating and working with the country to ensure compliance;
  • if these measures did not give results, trade sanctions would be applied;
  • if the perpetrator were a company, the sanctions would be directed to the company;
  • only where it is discovered that a government is an active and recurrent accomplice in violation of rights would more general sanctions be applied to all exports of a particular country;
  • mechanisms would be created that address the needs for adjustment, including compensation grants, training, development of infrastructure and incentives for job creation.

Environment

Policies for trade and investment liberalization do not take into account the environmental costs of economic activities, thereby resulting in major consumption of energy, over-exploitation of natural resources and damages to bio-diversity. Efforts to promote sustainable development are viewed as obstacles to trade. There is no official negotiation group on environment, even thought there are many areas of the draft Treaty which would have serious environmental implications.

FTAA

  • does not clarify whether international environmental agreements would have priority over trade rules;
  • as with NAFTA and the WTO, the FTAA demands that a country bring together a certain number of scientific proofs to establish patterns and to demonstrate that laws and regulations are necessary. This frees the producers of genetically altered products from the onus of proof and inverts the precautionary principle! (According to this principle, in cases of doubt, the more cautious action is to be adopted.);
  • in the chapter on investment, there is a clause which exhorts countries to "make efforts to guarantee" that internal environmental standards are not lowered as a means to attract investment. But this clause is not obligatory and therefore makes little sense;
  • ignores the environmental costs which very likely occur, given the increase in forestry, mining, transport, extraction of fossil fuels, fisheries and other activities which damage the environment;
  • among the risks in the Treaty with respect to forests: accelerating logging to open industrial spaces; weakening protection against species being introduced and against GMOs; not allowing countries to use policy instrument to conserve their natural resources;
  • supports government refusal to grant patents for environmental reasons only when the commercial use of the inventions causes "serious damage" to nature or the environment;
  • prohibits export taxes and establishment of basic price platforms for exportation which can be used to conserve non-renewable resources.

Another Integration

  • would give environmental agreements priority over trade and investment rules; would urge countries to base their environmental regulation on the precautionary principle;
  • would obligate foreign companies to carry out environmental best practices and to share technologies which preserve the environment;
  • would subordinate trade and investment agreements to laws and policies on conservation of bio-diversity and forests; would eliminate subsidies for fossil fuels and for dismantling; would create incentives for conservation of soils and natural resources and would declare a moratorium on mining exploration in areas that are ecologically or culturally significant;
  • would prohibit patents on life forms and knowledge; protect the collective rights of local communities in relation to conservation, seeds and cultivation of bio-diversity;
  • would grant countries the right to regulate companies and investors to guarantee compliance with objectives related to sustainable development.

Investments

The purpose of this negotiating group is to create a protective context for international investors that is both stable and predictable. The point of view taken is that of the investors, above all the large, transnational corporations, and not that of countries and even less of the most impoverished peoples. The purpose of the investments negotiating group also has nothing to do with reduction or eradication of hunger and poverty on the continent. Worse still. The basis adopted by the negotiators is the controversial chapter on investments in NAFTA. On the basis of this chapter, private investors have launched dozens of cases for damages resulting from government actions which supposedly affect negatively the value of their investment. A US company obtained permission from the Mexican government to construct a disposal for highly toxic waste even after the municipal government had refused to allow the construction to proceed. At this moment, using this same logic and anticipating what the FTAA will bring, Bechtel, the US company which lost control of water in Cochabamba, Bolivia because of popular protests, is demanding that the Bolivian government give them an indemnity of 25 million US dollars for profits that that had hoped to attain over the coming years from their investment of 1 million US dollars. These examples prove that the FTAA is intent on granting more sovereignty to private companies than that enjoyed by nations and peoples. The trade deal would give legal foundations to this aberration.

FTAA

The FTAA draft is modeled almost word for word from NAFTA

  • grants special rights for foreign investors to that they can sue governments through arbitration panels that meet in secret;
  • defines expropriation in a broad form, including both direct and indirect: this would allow foreign investors to demand compensation for any government action, including laws in the public interest, which affects their private profits;
  • would prohibit controls over capital flows;
  • would prohibit "performance requirement" on foreign investors, including the obligation to behave in a manner that is socially and environmentally responsible;
  • would demand equal treatment for foreign and national investors;
  • does not contemplate debt reduction.

Another Integration

  • would recognize the sovereign right of nations to regulate investments so that they contribute to the promotion of a national development programme that is both just and sustainable: if this does not happen, it will be impossible to carry out just and sustainable development in the Continent;
  • would recognize the sovereign right of nations to protect their internal economy and their national enterprises;
  • would resolve the disputes with foreign investors through tribunals of the host country, so that citizens affected by the decisions can participate. Only after the case has been exhausted at national level could the foreign investor take a grievance to an international tribunal;
  • would not allow foreign investors to litigate against laws in the public interest. If a government carries out a direct expropriation of the property of a foreign investor, the compensation will be determined by national laws, taking into consideration the quantity of wealth extracted from the country during the investment:
  • would grant citizens groups and all levels of government the right to sue investors for violation of the Agreement and would create a legal obligation for behaviour that is socially and environmentally responsible;
  • would establish an international tax on currency exchanges with a view to reducing speculation and generating a socio-economic development fund which will be administered by a UN agency supported by civil society in the host country. Its authorities would be able to regulate the flux of money in and out of the country and to channel investments for priority activities according to national development projects;
  • governments would have the right to impose performance requirement on investors so that they collaborat in the creation of an adequate macroeconomic context, transfer appropriate technology and support social goals such as employment, protection of labour rights and respect for environmental laws.
  • would recognize that there are inequalities between countries and would urge concessions from the most powerful members and would permit governments to promote strategic sectors;
  • would immediately cancel unpayable bilateral and multilateral debts from countries with high incidences of poverty - Argentina, Bolivia, Ecuador, Guyana, Honduras, Nicaragua, Haiti, Jamaica and Peru;
  • would promote public audits of the debts of the other countries of the Continent, whose recommendations would serve as the basis for processes of renegotiations that would be both just and equitable, recognizing the shared responsibility of the local elites and the international creditors. Debts whose payment implies further impoverishment for the people would be considered illegitimate, as would debts contracted by fraudulent means or for projects without proven socio-economic benefits, and those debts which increased when the countries of the North unilaterally raised interests rates;
  • would form a neutral panel for international arbitration with alternating arbitrators or a bankruptcy court within the United Nations. Both would exist to guarantee just and transparent arbitration processes which would lead to agreements on cancellation of debts. Any tribunal created under the auspices of the IMF would be unacceptable, since the Fund is also a creditor.

Agriculture

The official goals of this negotiating group are the progressive elimination of agricultural tariffs, non-tariff barriers and export subsidies, as well as mechanisms to guarantee that the levels of food security established are not trade restrictions in disguise. The prevailing framework sees agriculture in purely trade terms and does not take into consideration the need for an agricultural sector with essential social functions including overcoming hunger, guaranteeing food security and protecting rural workers and communities from the volatility of international markets. The recent measures adopted by the US government which give ample protective subsidies to agricultural production and exports and the US government's unwillingness to include agricultural goods in the negotiations reveal a dual policy; freedom for the markets in which the US can easily prevail and restrictions and protections for those in which less industrialized countries have the advantage. Limiting a free trade area to industrial goods in the context of huge asymmetry in the composition of exports of the various participants, as is the case in the Americas, would be highly unfavorable to the countries which depend mainly or even largely on their exports of agricultural products (Guimaraes,2002:2)

FTAA

The terms of the Agreement are modeled on those of the World Trade Organization, though some proposals seek to extend trade liberalization even further.

  • the terms which are being negotiated run the risk of having legitimate programmes to promote national food security considered trade barriers, and thereby condemned;
  • do not take into consideration the necessity of land reform;
  • adopt strict criteria of competitiveness for the inclusion of products to be liberalized, without including social costs or the food insecurity implied by these measures. The draft Agreement does not include rules on programmes of food aid, leaving a dangerous gap. This was clearly demonstrated by the recent case of donations of genetically altered milk to Bolivia, in violation of local laws which prohibit the cultivation or sale of genetically altered products;
  • makes references to the agreements on trade in agricultural products of the WTO. The new round of WTO negotiations seeks a substantial reduction of agricultural subsidies, although the US is moving in the opposite direction on this;
  • would demand that countries use international or sub-regional sanitary and fitosanitary standards with a view to harmonization with the other countries in the FTAA. Stricter standards are allowed only where there is scientific justification.

Another Integration

  • would recognize the right of a government to food sovereignty, understood as the right to protect the majority of its producers, above all the small and medium scale producers and family agriculture, especially when the implications of not protecting these sectors are major social disruptions;
  • would propose agrarian reform which legitimates property rights - individual, associative and cooperative - for small producers and rural workers without land, and also respects the traditional rights of indigenous people to live collectively on their lands;
  • would recognize the sovereign rights of a country to exclude from any trade agreement the liberalization of socially sensitive products;
  • would recognize the sovereign rights of agricultural producing countries to coordinate in order to avoid saturating the market with identical goods;
  • would recognize the sovereign right of a country to establish subsidies that they deem necessary, especially those directed towards supporting small and medium farmers and fishers and those promoting agricultural production and fishing done individually or in associations or cooperatives, as long as these activities are environmentally sustainable. Subsidies should not be based solely on the quantity of land possessed, a criteria which promotes concentrations of property.
  • Would develop sanitary and fito-sanitary standards through public consultations, with a view to guaranteeing a high quality of security without leaving small farmers and farmers producing organic crops outside the negotiations by imposing standards that unjustly favour agro-industry and chemically intensive agriculture. Would support organic production, and studies on labelling genetically altered products and on the impact of these products on health and bio-diversity.

Government Purchases

The official purpose of this negotiating group is to expand opportunities for foreign investors to access and profit from the markets of government purchases throughout the Continent. These proposals would reduce the capacity of government to use contracts for acquisition and public works as instrument to promote social and environmental goals. In their place, contracts supported by money from the contributors would be subject to strict market criteria - and victory would go to the strongest. The US is pushing for FTAA rules to be applied not only at federal level but also at the level of state and municipal governments. This signifies one more imposition of top-down governance. Rules which are good for the protagonists of the globalization of capital would be imposed right down to local government level, robbing once more the sovereignty of the population to define its own paths to development. In a context of democracy, decisions about who to buy from, where to create jobs, what prices to charge are all decision that should be made at the level of each municipality and state, in accordance with their respective governments. The logic of the FTAA is the reverse - the decisions come from the top, to the benefit of the stronger economic agents and those able to offer the lowest prices.

FTAA

  • would prohibit government from giving preference to local firms in awarding contracts;
  • would prohibit governments from evaluating suppliers with criteria other than price and quality, because it considers any other criteria as representing "unnecessary barriers to trade". Even if the evaluation are not discriminatory, they can be challenged as barriers disloyal to trade;
  • would prohibit policies which discriminate against the trade in goods and services of any country in the FTAA (example, the anti-apartheid sanctions against South Africa in the 1980s would be prohibited);
  • as in other trade agreement, the FTAA draft contains proposals to exempt public services, particularly sensitive ones like law, national security, social security, unemployment insurance and pensions. But in the real context of negotiations, the probability that these proposal will be accepted is small.

Another Integration

  • would recognize the sovereign right of national, state and municipal governments to decide where to buy and with what criteria.
  • would adopt the concept of socio-economic solidarity and thereby recognize the right to opt for preferential purchases, from women, from networks of producers association, from worker owned companies, and from producers committed to environmental sustainability and fair trade;
  • would recognize the sovereign right of countries to give priority to national companies over foreign suppliers, if this is seen as useful for national socio-economic goals. Would propose measures to avoid high prices for public services by fixing a maximum percentage over the price offered by the lowest international quote of equal quality for national suppliers in priority sectors;
  • would allow governments to include question of human rights and environmental protection in their purchasing policies;
  • would adopt bidding criteria that go beyond price and quality; would also include type of technology to be utilized, number of jobs generated, salaries to be paid and support to be conceded to small and medium suppliers, particularly those that are worker owners.
  • would give every country the right to elaborate a list of public services which must be reserved for the state.

Market Access

The official purpose of this group is to establish rules for the progressive elimination of tariffs, non-tariff barriers and other measures which restrict trade. The fundamental goal, however, is to restrict the sovereign rights of governments to put national development policies into practice. The gravest aberration is the unrestricted rights given to foreign investors to enter any market they desire, following only their strict corporate logic, without obeying the priorities of any program of national development. The guiding principle is that of "national treatment", which implies that governments must treat foreign investors, their investments and their products at least as favorably as they treat national investors. Promoters of this policy argue that national treatment gives a guarantee of non-discrimination and justice. Equal treatment of unequal parties, however, can only exacerbate the inequalities, both within each country and between the nations of the Continent. This proposal can be compared to giving a visitor to your home the same rights and the same treatment that the inhabitants of the house enjoy, including access the head of the family's wife! What kind of justice is this?

FTAA

  • would eliminate all tariffs in a maximum of ten years, independent of the concrete situation and the needs of the different countries signing on;
  • would restrict the sovereign right of a government to limit exports in accordance with their internal needs, including in times of austerity or catastrophe, demanding that they continue exporting in the same proportion as they have been exporting in the three preceding years;
  • would restrict the sovereign right of a government to administer strategic resources, or to establish minimum prices for exports which could provide incentives for the conservation of non-renewable resources;
  • would prohibit export taxes which could serve to avoid the sale of natural resources at prices lower than their cost of substitution;
  • would not offer assistance through the adjustment period;
  • would demand national treatment and most favoured nation treatment in granting access to the market, ignoring the fact that the Continent is not a playing field among equals;
  • national treatment also demands that imported goods receive the same treatment as goods produced within the country. This would forces countries signing on to reform their tributary policies and other regulations that mark the difference between national and foreign products;
  • would prohibit technical rules that are "more restrictive for trade than necessary"; this would open the door to challenge environmental regulations and other measures for the public good;
  • Would favour the elimination of non tariff barriers like quotas, import licenses and voluntary restrictions on exports. Up until now, however, the negotiations have focussed mainly on the reduction of tariffs.

Another Integration

  • would promote a participatory and transparent process between producers and society in general for the establishment of an agenda and a choice of products that would be subjected to the lowest tariffs;
  • would ensure that trade and investment rules were accompanied by policies of industrial development which guarantee that national industries would become competitive during the transition;
  • would include conditions for market entry such as product quality, protection of health and the environment (putting the precautionary principle into effect), respect for personal and social rights, as well as labour and gender rights, and also respect for the sovereign right of nations to have their own development project;
  • would confront the inequalities, opting for special, differential and proportional treatment in benefit of the poorest countries and also of small and medium scale farmers and enterprises, above all those that are worker-owned;
  • would seek to eliminate non-tariff barriers and would only permit such measures when they were designed to support legitimate environmental and social goals.

Dispute Resolution

The aim of this group is to establish a supranational mechanism to resolve disputes related to supposed violations of the rules of the FTAA. The proposal in the FTAA draft is identical with the dispute resolution mechanisms in NAFTA and the WTO, excluding civil society from the process and focussing only on commercial, financial and investment matters, without taking into consideration disputes about social and environmental matters, nor the penalization of crooked businessmen. Our proposal would privilege national mechanisms and guarantee the participation of society.

FTAA

  • proposes supranational mechanisms for the resolution of controversies;
  • would offer the right to open a process of dispute resolution only to governments, and in the case of investment, only to the foreign investors. Civil society organization would not have the right to participate;
  • would limit the scope of the grievance to trade disputes - this marks a step backwards even in relation to NAFTA since NAFTA includes a mechanism, albeit very limited, to deal with violations of labour and environmental laws:
  • proposes the resolution of disputes as something to be carried out in secret meetings with panels made up of "technical experts", just as in the WTO.

Another Integration

  • would establish mechanisms of conflict resolution at national level first and only when these are exhausted, would their be recourse to supranational mechanisms;
  • would permit civil society participation at all levels;
  • would establish an effective system to strengthen the enforcement of social standards. The process would emphasize incentives for compliance, including technical and financial assistance to host countries with a view to making actions to force compliance completely unnecessary.
  • Would establish a public, transparent process in which all the shareholders would have the right to participate. At least part of the tribunal would consist of experts in the area of disputed rights.

Services

The official purpose is a progressive liberalization of trade in services (from financial, telecommunications and tourism to health and education). This means opening local service markets to foreign companies and restricting or prohibiting public policies which interfere with the market. The emphasis on services in the WTO, NAFTA and now the FTAA awakens the suspicion that the trade rules will rapidly reach a place where they coincide with the policies of privatization being promoted by the World Bank and the International Monetary Fund. These tendencies give profits to the owners of capital but reduce access and quality of social services to citizens, especially those with little or no purchasing power. In the case of privatization combined with passage from the state to foreign private investors, there is also a reduction in the presence, the regulatory power and the sovereignty of the state over state property and the services that the state should provide for its citizens. All of this augments the external vulnerability of the country.

FTAA

  • would augment market access for foreign suppliers of services in all sectors, by demanding that governments grant them most favoured national treatment. The draft of the Agreement contains two contrasting proposals, aimed at permitting smaller economies the right to claim exemptions, but it is very probable that the negotiations about these recommendations will continue to be polemic;
  • in social services such as education and health, they support the exemptions of GATT, which is only applied when a service is not offered "either on a commercial basis or in competition with one or more service suppliers". These conditions are extremely difficult to meet, given that no public service is offered as an exclusive monopoly;
  • would prohibit the establishment of limits on the number of private companies in education, health, administration of water, prisons and other companies that can operate in a state or community;
  • includes proposals on self-regulation which concentrate on guaranteeing that the regulations do not constitute unnecessary barriers to trade and are directed towards using the market as the principal regulator.

Another Integration

  • would recognize the sovereign right of a country to liberalize services or not, according to its national development priorities, and to maintain services indispensable to the population as public services;
  • would demand that countries guarantee the right to basic socio-economic services to all their citizens and would prohibit liberalization which in any way restricts this access;
  • would recognize the sovereign right of countries to protect sectors and local companies that are vital and strategic for the economy and to guarantee and reproduce the life of society;
  • would demand that governments, before any move to privatize, develop a strong regulatory capacity to guarantee protection to the consumer and universal access to these services.

Intellectual Property Rights

The official purpose is to ensure protection of the rights to intellectual property (rights of possession and legal protection of ideas, artistic creations, technological innovations and market tools). The WTO agreement on Trade-Related Intellectual Property (TRIP) which sets the standard, was criticized as discriminatory, favouring protection and compensation for private companies and against the interests of the majority of the society. TRIP rules give cause for concern, particularly the rules which grant companies the right to patents on organic material and monopolies on vital drugs.

FTAA

  • contains proposals for adopting the WTO rules on intellectual property rights;
  • contains a polemical proposal on the right of governments to force pharmaceutical companies to grant obligatory licenses to local companies in order to produce generic version of patented medicines. There is a proposal that would force the generic companies to duplicate costly trials and legal processes to demonstrate the security of the product, making it very difficult for the companies to proceed. There is another which would permit obligatory licenses, but only when the owner of the patent does not produce the drug using local methods;
  • one proposal would permit countries to prohibit patents on plants and animal, but it does not have majority support; there are various proposals that would restrict the right of farmers to use seeds saved from past harvests;
  • there are proposals which support the protection of indigenous and local community knowledge, but they don't reach the point of guaranteeing the right of indigenous people to resist the alterations to their collective knowledge or to oppose the conversion of their culture into articles for consumption.

Another Integration

  • would demand the supremacy of international agreements on human rights, the right to health, food security and bio-diversity over TRIPs and other trade agreements;
  • would recognize the sovereign rights of governments to require obligatory licenses and other measures to guarantee access to essential drugs, as in the case of production and marketing of HIV/AIDS drugs by Brazil and India;
  • would prohibit patents on all forms of life, including animals and plants, micro-organisms and processing of biological and genetic materials, including what is derived from the human body;
  • would support the right of farmers to store, use and sell seeds that they have produced as well as free exchange of patents on germ plasma in the public domain;
  • would recognize the collective right to communal property and its priority over rules about intellectual property, and the right of communities of indigenous people and black communities to full autonomy in decisions about their traditional habits, in accordance with their cultural systems and traditional rights.

Policies to defend competition

The official purpose of this group is to prevent anti-competitive business practices which prejudice consumers and become obstacles to efficient allocation of resources (such as oligopoly or monopoly control on markets and prices, and economic concentration.) Even though these negotiations could have positive outcomes in breaking the excessive economic power of the giant transnational corporations, everything indicates that the real target of these negotiations is the state and parastatal companies which are seen as obstacles to the free market. These practices of concentration and anti-competitiveness have been the subject of debate in UN agencies for more than 20 years, with a view to imposing some kind of regulatory framework. But the lobbying power of the transnational groups and the governments of the rich countries have prevented any progress. On the other hand, nowhere is there a debate about recognition of the sovereign rights of each nation to define and implement its own vision and strategy for national development and the duty to respect the right of other nations to do so.

FTAA

  • would allow the existence of state enterprises, whether monopolies or not, as long as they do not enter into contradiction with national and sub-regional levels for the promotion of competition and operate according to market criteria;
  • would create an autonomous authority with supranational jurisdiction to investigate and impose sanctions on anti-competitive practices. This goes beyond NAFTA, which obliges members to adopt rules of competition but does not subject them to supranational mechanisms to ensure that these are carried out;
  • there it a proposal which would permit foreign investors to sue governments for administering monopolies or state enterprises;
  • includes proposals which prohibit stocking raw materials and intermediate and manufactured products. This measure would impede the maintenance of stock for purposes of regulation and facilitate the loss of local productive capacity in favour of international suppliers.

Another Integration

  • would recognize public enterprises as vehicles for healthy socio-economic development, a safeguard to sovereignty and as instruments for social and environmental justice. While the state must guarantee that these public enterprises are strong and efficient, these enterprises would not be subject to anti-monopoly laws nor would they be evaluated solely with criteria of price and quality;
  • would recognize the primacy of national mechanisms of jurisdiction over anti-competitive practices; would stimulate production through cooperatives and associations, fair trade and ethnical consumption characterized by solidarity, as well as local, national, regional and continental planning for socio-economic development, with a view, first and foremost, towards the well-being of each citizen and the population as a whole; would envisage benefiting from the complementarity and the cooperative advantages between social forces and countries, maximizing not only the efficiency of each economic actor but of the system as a whole;
  • any dispute between a foreign investor and a host government would be dealt with first at national level, and only after that, move to supranational bodies whose criteria must be compatible with the full exercise of rights - both personal and of the society;
  • would recognize the sovereign rights of a government to adopt public policies designed to strengthen food and energy security and a full realization of national rights.

Gender

The official FTAA process ignores the differential impact of trade and investment liberalization on women, even though these policies have already affected women throughout the continent in many and varied forms. Examples are the growing numbers of assembly plants that employ mainly women for work that is underpaid, often precarious and with frequent violation of workers rights. The expansion of agro-exports has destabilized families, forcing husbands to immigrate to urban regions while their wives stay behind, looking after families and exiguous properties.

FTAA

  • there is no reference in the official FTAA drafts to the impact on gender which will be generated by this Agreement. The declaration from the Third Summit of the Americas proclaims that governments are committed to the promotion of gender equity, but there are no specific details on how they think to realize this;
  • the language on services represents an expansion on what is defined as a service, and includes all levels of government, among which health care, education, and drinking water have particular implications for women, both as workers and consumers;
  • the language on rights of intellectual property would affect peasant women and craft producers;
  • the proposal to give private companies the right to patent seeds, even those used by indigenous people over centuries, would, if passed, terminate popular sovereignty on indigenous knowledge and culture;
  • the proposals on trade marks could grant to a person or company the right to patent design patterns or geographic indicators (e.g. Jequitinhonha Valley Pottery), thus affecting the ability of local crafts people to better market their products;
  • the proposals on government purchases could eliminate the sovereign right of municipal, state and federal government to give preference to companies run by women. In this same chapter there is a proposal that government should consider the "supplier's experience in global activities and business" when contracts are being awarded, thus discriminating against national and local suppliers, specifically women in business, because there are few women with access to credit, technology and the necessary information to operate at an international level.

Another Integration

  • would insist on an evaluation of the impact of trade policies on women and establish mechanisms to discuss how to incorporate gender equity into trade and investment agreements;
  • would demand that foreign investors be subject to the internal laws on sexual intimidation, sexual discrimination and discriminatory management practices impacting on salary;
  • would put into place policies and laws which guarantee full protection of women's civil, labour, reproductive, sexual and human rights;
  • would offer technical assistance and development aid to promote education, technical training and job creation for women, particularly displaced women or women who have lost their salary as a result of trade liberalization. Would create funds for education, health and labour programmes with a particular focus on gender;
  • would offer technical assistance and development aid to guarantee that women have equitable access to resources like credit, training, technology, lands, water, markets, etc.;
  • would urge countries to implement the 20/20 Initiative of the UN which invites developing countries to dedicate 20 percent of the national budget to social programmes and urges donor countries to dedicate 20 percent of their external aid to the same end.

Subsidies, Anti-dumping and Compensatory Obligations

This negotiation group is proposing three government actions. These actions are criticized by the free traders, who claim they introduce distortions into the market. They are 1) anti-dumping laws, which recognize the sovereign right of a country to defend its products against imports sold below the cost of production; 2)obligatory compensations, which are remedies against the damages of importation; and 3)subsidies, used to support strategic sectors or economic groups. In many countries, strategic groups give strong support to this class of actions (e.g. the steel lobby in the United Sates and the auto parts sector in Argentina). The recognition of vulnerability in relation to these areas is reflected in the ambiguous wording of the official proposals coming from the negotiating group; explore paths to deepen the existing laws on subsidies and compensatory measures, and to improve rules and procedures in order to have trade law which does not create unjustified barriers to trade. The Hemispheric Social Alliance is forming its opinions about these matters at this moment.

Conclusion

There are strong signals that the government of the United States is itself having difficulties negotiating and approving any trade deal that strays a little from the general lines of NAFTA. These include the difficulties encountered in approval for NAFTA in the Congress in 1994, the criticism from various sectors of US society on NAFTA's implementation and free trade agreements generally, the approval by only one vote in the TPA (which corresponds to the old fast track authorization), the firm US negation of negotiation laws for trade defence (anti-dumping, anti-subsidies, safeguards), the recent US law which concedes broad protective subsidies to production and exportation of agricultural products, and the US list of 300 "sensitive" products.

The question is complex, but the general tendency is clear and allows the sovereign countries and peoples of the hemisphere to take a firm position. With regard to the Brazilian elections, defence of national sovereignty in the face of the FTAA will be one of the issues to debate with the diverse Presidential candidates, and will certainly constitute essential criteria for a choice of the best candidate. Fundamentally, what is at stake is two opposing projects of society. The dominant project today is based on the dogma of free markets and the capacity of the market to self-regulate. This model gives primacy to external capital as the source of financing and renounces the sovereign right of a nation to define its own path to development. The other project breaks with this dogma and affirms a different paradigm based on the right of people to define a project of development - personal, social and national - and to be active in its realization. This model dramatically reduces dependence on external capital and centers energies and resources on meeting the basic needs of the population and building the national economy. This paradigm includes an affirmation of the values of altruism, cooperation, respect for diversity, complementarity and the search for systemic efficiency to maximize the well-being of the peoples of the Continent as the principles that will make possible another continental integration.


References

Guimaraes, Samuel Pinheiro (2002) How Will the FTAA BE (www.agenciacartamaior.com.br), March 6.

Hemispheric Social Alliance (2002a) Opposing Visions for the Hemisphere; The official FTAA draft vs Alternatives for the Americas, edited by Sarah Anderson with contributions from members of the Hemispheric Social Alliance in various countries of the hemisphere, January.

Hemispheric Social Alliance (2002b) Alternatives for the Americas (www.asc-hsa.org)

Hemispheric Social Alliance (2002c) FTAA: Trade Agreement?" a summary prepared by Karen Hansen-Kuhn in Latin America in Motion, no 346, January 24, ALAI, Quito (www.alainet.org)

Jubilee South America (2002) Declaration on FTAA, Debt and Militarization: The Challenges for Freedom in the Hemisphere, May 25, Quito.

Originally published in Brazilian by PACS, Rio de Jeneiro, November 2002
Translated into English by Judith Marshall