TEN-POINT JUSTICE AGENDA FOR THE AMERICAS: 10 things that are wrong with the FTAA--and how to fix them
By John Dillon

At the Third Summit of the Americas in Quebec City last April, two fundamentally different visions of our collective future collided. The official Summit discussed the creation of a Free Trade Area of the Americas (FTAA). The FTAA will bind 34 countries from South, Central and North America and the Caribbean (except Cuba) to a set of rules aimed at giving transnational corporations (TNCs) even greater freedom from state controls.

Taking place at the same time was the Second People's Summit of the Americas where citizens from throughout the Americas (including Cuba) came together to pursue a collective agenda for social justice and ecological sustainability in the context of globalization.

These two visions are not compatible. The FTAA will subvert the citizens' agenda for justice in the Americas, and for that reason we argue that the FTAA must be rejected. We also offer alternative proposals to promote a justice agenda, based on the book Alternatives for the Americas.

Alternatives for the Americas grew out of the 1998 First People's Summit in Santiago de Chile and was updated for the Quebec Summit. Its proposals are supported by the Hemispheric Social Alliance, a broad coalition representing labour and women's groups, farmers, indigenous peoples, international solidarity groups and ecumenical organizations throughout the Americas.

While the official discourse at the Quebec Summit was about "trade" and "trade agreements," NAFTA and the FTAA have more to do with investment than with trade as such. The primary purpose of these agreements is to free transnational corporations (TNCs) from government regulations affecting foreign investors.

What follows is a Ten-Point Justice Agenda for the Americas--an agenda that reflects the vision of the People's Summit. It examines the FTAA in the context of this agenda and highlights key issues in the current negotiations that will exacerbate the unjust outcomes of previous agreements.
1. Ensure human rights take precedence over commercial interests
The Universal Declaration on Human Rights, adopted in 1948 by the United Nations, defines human rights as comprising both civil and political rights and social, economic and cultural rights, including the right to adequate food, housing, education, and health care. Accordingly, the UN Committee on Economic, Social and Cultural Rights has declared that trade liberalization "must be understood as a means, not an end. The end that trade liberalization must serve is the objective of human well-being to which the international human rights instruments give legal expression."
A report prepared for the United Nations Sub-commission on Human Rights on the World Trade Organization (WTO) found that the WTO has been a "veritable nightmare" for human rights: "For certain sectors of humanity--particularly the developing countries of the South--the WTO is a veritable nightmare...The assumptions on which the rules of the WTO are based are grossly unfair and even prejudiced. Those rules reflect an agenda that serves only to promote dominant corporatist interests that already monopolize the arena of international trade."

The UN report emphasizes the marginal bargaining power of developing countries within the WTO. Whereas the political declaration that emerged from the Third Summit of the Americas talks about the government leaders' "commitment to human rights," the real test is the actual effect of the FTAA on human well-being. Human rights must not be relegated to Summit declarations or the non-binding preamble to the FTAA. Rather, they must be realized in practice by reversing the destructive consequences of trade and investment agreements.

2. Give priority to eradicating poverty, generating high quality jobs and economic stability

The widening gap between the rich and the poor globally is an undeniable fact. Although trade and investment treaties are not solely responsible for this growing disparity, they reinforce a neoliberal economic model that promotes economic growth without paying attention to its maldistribution.
Most disturbing is the tendency of free trade to exacerbate income inequalities within nations. Income inequality has increased in almost every developing country that has undergone rapid trade liberalization, due in large part to a substantial fall in real wages earned by unskilled workers.
Proponents of free trade point to the efficiency gains and higher returns on capital investment that their econometric models say will result from lowering trade barriers. But the actual gains from free trade are very unevenly distributed. Recent experience shows that, when trade barriers are lowered, the lion's share of the advantages accrues to the strongest economic actors: the transnational corporations.

Who will gain most of the benefits from the FTAA? The impact of NAFTA on Mexico provides a telling case study for the rest of the Americas. When the Zapatistas rose up in revolt against the Mexican government on January 1, 1994, they declared that NAFTA was a "death sentence" for poor, indigenous farmers known as campesinos. Sadly, subsequent history has proven these words to be literally true.

Indigenous farmers growing corn, Mexico's staple food, simply cannot compete with highly subsidized U.S. agribusiness that now dominates their market. Two million campesinos were forced off their land in the first two years of NAFTA alone.

The loss of land and livelihood for campesino families has exacerbated rural poverty. In rural Mexico, 58% of all children under 5 and 74% of indigenous children have physical and mental problems because of chronic malnutrition.
Could Mexico have avoided this pattern of national economic disintegration at the hands of foreign investors? One way to do so would have been to insist that NAFTA preserve its right to regulate foreign investment through "performance requirements." Historically, these requirements have been used by countries to enhance employment and economic development, and include such measures as requiring foreign firms to hire local workers, purchase inputs from within the host country, and use technology that is appropriate to that country's stage of development.

To their credit, some developing countries are beginning to resist the use of trade and investment agreements to force them to abandon performance requirements.

The Hemispheric Social Alliance's Alternatives for the Americas would protect the right of governments to use performance requirements to ensure that foreign investment serves their development needs, especially the creation of quality employment and economic stability leading to the eradication of poverty.

3. Protect the environment - end investor-state suits
NAFTA goes beyond the WTO in giving new powers to TNCs to challenge the laws, regulations and practices of governments in member countries where they do business. This is known as the "investor-state" mechanism. Ceding the power to sue governments to foreign corporations--but not to citizens, or even to domestic firms--violates the most basic principles of democracy.
The investor-state mechanism permits foreign investors to sue national governments for virtually any action that decreases their expected profits, on the grounds that the measure is "tantamount to expropriation" of their assets. TNCs have used this clause to challenge a variety of measures designed to protect human health and the environment.

Collectively, these suits show a wide range of challenges to government regulatory powers. They are particularly disturbing because of their implications for denying governments the ability to safeguard human health and the environment. They also pose an enormous challenge to the democratic process by enabling corporations to veto national regulatory policies.

In our Alternatives for the Americas, civic groups from throughout thehemisphere oppose any investor-state mechanism and demand that the existing provisions of NAFTA be revoked.

4. Protect human health - provide low-cost medicines
The FTAA negotiations are occurring in the midst of a struggle between the pharmaceutical industry and some national governments, such as Brazil, that are licensing the production of less expensive medicines for the treatment of people with HIV/AIDS. This struggle represents a particularly dramatic example of how trade and investment agreements affect the right to health care as guaranteed by the Universal Declaration of Human Rights.
While Canadians are rightly concerned with rising health care costs due to high drug prices, elsewhere in the world the struggle over the implementation of the Trade-Related Intellectual Property (TRIPs) code is literally a question of life and death. The governments of some countries, notably India, Thailand and Brazil, have taken advantage of some measures within the TRIPs code to produce life-saving drugs.

Developing countries faced with soaring infection rates from HIV/AIDS can take advantage of two clauses within the TRIPs to produce generic substitutes for patented drugs. One of these clauses allows the licensing of generic copies of patent medicines in emergency situations--and the AIDS epidemic certainly constitutes an emergency. Another clause within TRIPs permits governments to allow the "parallel importing" of patented drugs from other countries where they are sold more cheaply.

Recourse to these measures to make less expensive drugs available for people with HIV/AIDS has alarmed and infuriated the transnational drug companies. They fear that these precedents might erode their monopolies, not just over the sale of AIDS drugs, but for other medicines as well. If the human rights of the sick and infirm are to be protected, the intellectual property provisions of the FTAA must be qualitatively different from the TRIPs. Many health advocates, and some Southern governments, believe that not just AIDS drugs, but the whole list of essential drugs identified by the World Health Organization should be made available for generic copying and parallel imports.

The AIDS crisis has awakened many people to the power wielded by the drug companies, which are chiefly responsible for the TRIPs code and its parallel, Chapter 17, in NAFTA. The drug companies helped to draft key TRIPs articles and are said to have teams of lawyers working on how it might be strengthened through the FTAA. If the FTAA talks succeed in closing what the TNC lawyers would regard as loopholes allowing generic medicines, then the next step would be to apply that precedent-setting language within the WTO.

In contrast to the TNCs' desire to prevent any erosion of their monopoly power, our Alternatives for the Americas calls for a complete overhaul of intellectual property rules. This must include a rollback of the TRIPs to facilitate the granting of compulsory licenses for the production of all kinds of generic medicines.

5. Ensure food security
If the Universal Declaration on Human Rights guarantee to the right to food is to be meaningfully implemented (Article 25), international rules governing agricultural trade must be revised. A study by the UN Food and Agriculture Organization (1999) on the outcome of the Uruguay Round Agreement on Agriculture in 16 developing countries found that liberalized trade in basic foods has resulted in "a general trend towards the concentration of farms...[and] has marginalized small producers and added to unemployment and poverty."

Food security has declined steadily in Latin America over the last 15 years as a consequence of opening up markets. Trade liberalization has reduced the production of basic foods, while the land has been turned over to cattle-raising and to agro-export crops such as fruits, flowers and vegetables. After market liberalization in the early 1990s, in Brazil alone nearly three million farmers lost their livelihood due to declines in prices for basic grains. Latin America, historically a net food exporter, has become a net food importer. (Rosene 1999:11).

Agro-export companies are using huge amounts of fertilizers and chemicals, causing serious health problems for agricultural workers and consumers. The Pan American Health Organization notes that, "Chemicals in the environment result not only in poisonings, but also in birth defects, cancer, and infertility, as well as behavioural and immune disorders."
Under the FTAA, the situation would become worse, since Northern agribusiness firms will strive to impose on the rest of the Americas conditions similar to those required of Mexico under NAFTA. We can anticipate the impact on the rest of the Americas will be as devastating as it was on Mexico.

Our Alternatives for the Americas proposes: "To ensure food security, countries should have the right to protect or exclude staple food from trade agreements. Hemispheric measures should also support upward harmonization of financial assistance for agriculture (as a percentage of GDP), strengthened protections for agricultural labourers, and traditional rights of indigenous peoples to live off ancestral lands."

6. Uphold the right to essential social services for all citizens
Negotiations on services under the FTAA are taking place at the same time as talks in Geneva aimed at expanding the WTO's General Agreement on Trade in Services (GATS). The U.S. negotiators are taking into the FTAA talks selected provisions from NAFTA and from the WTO's GATS that are most favourable to their agenda of breaking down barriers to market penetration for U.S.-based TNCs. In turn, we can expect any precedents they win in the FTAA to be taken back to the global talks in Geneva.
The GATS covers practically all government measures--including environmental, labour or consumer protection standards, no matter what their intent. Any government action, whatever its policy objective, that arguably alters the conditions of competition in favour of domestic service providers or in favour of some foreign service providers over others, is exposed to challenge.

The U.S. government wants the "the scope and coverage of the services chapter of the FTAA...to be comprehensive [covering]...all service sectors and all service suppliers." This means that all services would be covered unless an FTAA member country negotiates a reservation. But winning a significant exemption for a service sector could be costly in terms of having to give up something else as a trade-off.

Essential public services in areas such as health care, education, water and sanitation could be protected from the reach of the GATS or the FTAA if a government were willing to propose language to that effect. Trade agreements already allow sweeping exemptions for the military under "national security clauses." The same could be done for public services like health care and education, but Canada has refused to propose such language.

Alternatives for the Americas insists that any services code must make it clear that governments may exempt public services from the obligation to treat foreign investors as favourably as domestic public services. The language of this exemption must be as clear as the language used in the "national security" exemption in NAFTA which totally exempts the military and the arms industry from the reach of the agreement.

7. Give special and different treatment to small and less developed countries
The entire post-World War II history of international trade agreements has been marked by systematic discrimination against developing countries.
Within the WTO, special and differential treatment has often meant simply giving developing countries more time to implement complex new agreements, like the TRIPs and the TRIMs.

Within NAFTA, no special treatment was accorded to Mexico as a developing country. In the FTAA negotiations, many of the 34 potential partners are small, island states that depend on exporting only a few products. To expect these states to compete under the same rules as Brazil and Mexico, let alone the U.S. and Canada, is ludicrous. These countries want special provisions written into the FTAA. But Canadian Trade Minister Pettigrew maintains that the goal is to arrive at "a single class of membership" in trade agreements where the small and the weak are treated the same as the powerful.

One of the reasons why trade liberalization has had such detrimental effects on the populations of less developed regions is the asymmetry in bargaining power between small, less developed states and large industrial countries.

This basic principle of justice--that smaller and weaker states should not be expected to compete on the same basis as larger and stronger states--must be respected. Developing countries do not just need more time to adjust to the same rules as large, industrialized countries. What they require is a trade regime that recognizes that different rules are required to meet their particular needs.

8. Release countries from intolerable and unjust debts
Proponents of the FTAA wax eloquent about the earning potential of expanded exports from Latin America and the Caribbean. But will these export earnings then be available for investment in genuine social and economic development? Or will they simply be used to keep up payments on an unjust and illegitimate burden of external debt?

By the end of 1999, the countries of Latin America and the Caribbean had a total external debt burden of US$792 billion, three times as high as in 1982. This transfer of wealth from impoverished Southern peoples to their Northern creditors must be eliminated by the immediate cancellation of 100% of the bilateral and multilateral debts of low-income countries. A mechanism must also be set up to assess and cancel the illegitimate debts of all developing countries.

Our Alternatives for the Americas endorses the international Jubilee movement's call to assess and cancel illegitimate debts. This demand is particularly important in the Latin American context. Many of these debts originated during the period of military dictatorships in the 1970s. The military governments that originally contracted these debts were not democratically elected. Moreover, many of the loans were used to finance the purchase of arms that were later used to repress internal dissent. Substantial sums were stolen or used for projects that were destructive to the community or the environment.

The Latin American debt crisis resulted in large part from unilateral decisions in creditor countries to raise interest rates. Average interest rates on floating-rate loans soared from 6.25% in 1979 to 24% in 1981. This unilateral rise in rates cost Latin America US$106 billion in just two years. Debts that grew because of the compounding of interest payments when new loans had to be taken out just to keep up payments on old credits are illegitimate.

Our Alternatives for the Americas identifies with the Buenos Aires Declaration of the Latin American and Caribbean Jubilee movement, which states: "Resolving the foreign debt problem entails seeking historic reparations that countries of the North owe to the peoples of the South as a consequence of the looting and devastation that they have carried out over 500 years."

9. Give governments the right to control development - end SAPS
Closely linked to the debt burden are the Structural Adjustment Programs (SAPs) that debtor countries are required to adhere to in order to receive new credits from the IMF, the World Bank, or other lenders. SAPs are welcomed by TNCs because they reduce the power of national governments to impose conditions or controls on foreign investors.

There is an insidious relationship between SAPs and trade and investment agreements. On the one hand, many SAPs include unilateral trade liberalization as a condition for new loans. In these instances, developing countries give up protection for their industries without even gaining any new market access, as they would hope to do in actual trade negotiations.
More important still is the way in which SAPs re-orient whole economies away from meeting domestic needs to an export-led model, as well as opening them up to foreign investment.

Trade and investment agreements make these changes permanent. Whereas a SAP is a temporary program that can be reversed by a subsequent government, once a government signs on to a trade and investment agreement, all its successors are bound by the agreement. Thus measures like the sale of publicly-owned telecommunications companies or water services become a one-way street. Under NAFTA (and probably within the FTAA), any future government that wants to bring these services back into the public realm would be compelled not only to compensate the current owners, but also operate the enterprise "solely in accordance with commercial considerations" and in a manner that does not discriminate against investors from another member country. (NAFTA Articles 1502 and 1503)

SAPs promote a neoliberal model of development that requires trade, investment, social and environmental policies to adhere to strict market principles based on the dictum that "there is no alternative (TINA). In contrast, our Alternatives for the Americas is based on another principle, which we might call TAMA: "There are many alternatives." We maintain that there is not just one development model that is appropriate for all countries. On the contrary, we insist that there are a variety of options that ought to be open to sovereign countries to choose from, given their different histories, cultures, resource endowments, and political systems.

10. Give citizens access to the process

Citizens must have meaningful input into the design of economic integration agreements. The consultative process under the FTAA is deeply flawed. Citizens' organizations have been calling for greater transparency and participation in decision-making on trade accords for a number of years, but with little result.

In November 2000, more than 330 groups from throughout the hemisphere sent a letter to the head of the FTAA Trade Negotiations Committee. Such submissions from civil society are summarized and delivered to trade ministers at the periodic ministerial meetings. During the first round, the committee received 71 submissions, ranging from short letters to comprehensive proposals, all of which were condensed into a five-page document delivered to the ministers some eight months after they had been submitted.

In November 1999, members of the Hemispheric Social Alliance spent two days in workshops debating and refining two comprehensive policy papers on two important themes encompassed by the FTAA: "Investment, Finance and Debt" and "Social Exclusion, Jobs and Poverty." These papers were presented directly to Trade Minister Pettigrew and other ministers from throughout the Americas at a forum in Toronto. Some 16 months later, Mr. Pettigrew has yet to respond to the contents of these policy papers.

In contrast, transnational corporations have had exclusive access to the FTAA Trade Ministers and to the negotiators through the Business Forum of the Americas. Moreover, the TNCs were offered exclusive access to the heads of government if they contributed financially to the cost of the Quebec Summit. Two Canadian firms, Scotiabank and Alcan, paid $500,000 each to co-sponsor the Prime Minister's Cultural Performance and Evening Reception during the Summit. In return, executives from these corporations received invitations to "networking events" with the leaders and "priority seating during the reception." Other companies sponsored coffee breaks for $75,000 or VIP gifts to the delegates for $100,000.

Democracy Watch co-ordinator Duff Conacher goes to the heart of the matter when he says, "Giving corporations access to policy-makers in return for money is not only undemocratic--it's unethical. Such cash-for-access schemes reveal that, rather than being objective and impartial, Canada's public officials are open to being bought by corporate interests."

Conclusion
The FTAA is clearly proposing to extend precedents from NAFTA, the WTO and the failed MAI--precedents that have had devastating consequences for human development and the environment. The FTAA, therefore, must be rejected.

The Hemispheric Social Alliance states clearly: "We believe that the FTAA does not correspond with our goals for the economic, social and cultural integration of our peoples, and represents a threat to national sovereignty. We cannot abandon social and economic development plans in the name of free trade."

Our Alternatives for the Americas is based on an entirely different premise. We insist that the primacy of human rights must be recognized in every trade and investment agreement. Thus our Alternatives for the Americas requires that, in the event of a conflict, human rights must take precedence over commercial interests and investors' rights.

We believe that citizens must have meaningful input into the process of economic integration. That was the fundamental premise of the Second People's Summit of the Americas. At the Quebec Summit, we continued to press forward with this vision, rejecting the FTAA and insisting on just and sustainable alternatives for the Americas.

(John Dillon is a researcher with the Ecumenical Coalition for Economic Justice (ECEJ). The foregoing article is a condensed version of a recent ECEJ report, "Put People Before Profits: Say No to the FTAA." Copies of the complete report, with sources and a bibliography, are available from ECEJ, 947 Queen Street East, Suite 208, Toronto, Ont. M4M 1J9. Tel 416-462-1613. For more information, see the ECEJ website at www.ecej.org - the People's Summit of the Americas website at www.sommetdespeuples.org - and the Stop the FTAA website at www.stopftaa.org)
Taken from The CCPA Monitor, July/August 2001
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