Musings on the FTAA

[Ed Weick]

The tear gas has cleared. The politicians and their advisors have gone home. The kids have gone back to their classes or wherever else they came from, though a few are still being held in Quebec City. What’s it all mean? From the media reports, I gathered that much of the discussion among leaders focused on the politics of a more closely linked western hemisphere, not on the economics, though economics may well have dominated discussion in the back rooms. Politicians appeared to give particular attention to the so-called "Democracy Clause", which was intended to establish conditions that would exclude non-democratically elected countries from the FTAA. It would seem that, as long as a country could demonstrate that its leadership was elected, it was in, regardless of how elections were held or rigged, how power was distributed, and who had control behind the scenes. Dictatorships like Cuba, even if benevolent, were out. The economics will undoubtedly prove more troublesome. The protesters on the street were probably right in seeing the FTAA as a means of making it easier for corporate capital to move from the richer parts of the western hemisphere, mainly the United States, into the poorer parts where labour was cheaper and restrictive environmental and social regulations were fewer. However, the protesters were wrong in making this look all bad. Poor countries would benefit and so might the rich. For example, Jamaica is alleged to have become a major transshipment point for drugs moving from South America to the United States not only because the drug trade is extremely lucrative but also because young people in the vast shanty towns of Kingston can find little else to do. Giving them some alternatives and raising the standard of living even a little might do something positive in stemming the flow of drugs. Providing more jobs at home could also stem the brain-drain which Jamaica and other Caribbean countries are experiencing. As another example, people who must live in the huge and growing slums of Sao Paulo have a strong work ethic and will do anything legal or illegal, to keep themselves and their families alive. They try to learn English in little classes held at night to get jobs in downtown hotels. Even exploitative foreign investment would be welcome. Unions were out in some force in Quebec City. They do not want to see capital move from the United States and Canada to Jamaica and Brazil. It means a loss of jobs for their members and a further decline in their powers. However, the movement of capital to cheaper labour abroad has been only one of a number of factors accounting for the decline of unions, and not likely the most important factor. The industrial structure of advanced economies, the nature of work, and the character of employer-employee relations, have all changed greatly over the past few decades and would all seem to have eroded labour power. But the most important thing about the FTAA is that it is unlikely to result in anything very substantial by 2005, the target date set at Quebec City. Indeed, it will probably not result in very much that could not happen under bi- or tri-lateral arrangements. There are just too many problems and differences among the countries of the Americas to permit the establishment of something unified and workable. They vary enormously in wealth, income distribution, education, the composition of populations, and other such factors. Efforts have been made to establish freer trade. The most notable example is Mercosur, the trading block which includes Argentina, Brazil, Paraguay and Uruguay. At present, however, Mercosur appears to be in some trouble.* The FTAA will most certainly not result in anything resembling the European Union. Member nations of the EU were originally much closer to enjoying a similar standard of living than are countries of the Americas. They have put years of work into fiscal restructuring. They were willing to relinquish important powers of governance, including monetary policy, to central authorities. There is no way that one can see anything similar for the Americas in the next few decades. * (See: http://www.stratfor.com/home/giu/archive/042401.asp#Cavallo) Ed Weick