-Caveat Lector-
The Free Trade Area of the Americas and the Threat to
Social Programs, Environmental Sustainability and Social
Justice in Canada and the Americas
by Maude Barlow
Summary
The Free Trade Area of the Americas (FTAA), currently being
negotiated by 34 countries of the Americas, is intended by its
architects to be the most far-reaching trade agreement in
history. Although it is based on the model of the North
American Free Trade Agreement (NAFTA), it goes far beyond
NAFTA in its scope and power. The FTAA, as it now stands,
would introduce into the Western Hemisphere all the disciplines
of the proposed services agreement of the World Trade
Organization (WTO) - the General Agreement on Trade in
Services (GATS) - with the powers of the failed Multilateral
Agreement on Investment (MAI), to create a new trade
powerhouse with sweeping new authority over every aspect of
life in Canada and the Americas.
The GATS, now being negotiated in Geneva, is mandated to
liberalize the global trade in services, including all public
programs, and gradually phase out all government "barriers" to
international competition in the services sector. The Trade
Negotiations Committee of the FTAA, led by Canada in the
crucial formative months when the first draft was written, is
proposing a similar, even expanded, services agreement in the
hemispheric pact. It is also proposing to retain, and perhaps
expand, the "investor-state" provisions of NAFTA, which give
corporations unprecedented rights to pursue their trade
interests through legally binding trade tribunals.
Combining these two powers into one agreement will give
unequalled new rights to the transnational corporations of the
hemisphere to compete for and even challenge every publicly
funded service of its governments, including health care,
education, social security, culture and environmental
protection.
As well, the proposed FTAA contains new provisions on
competition policy, government procurement, market access
and dispute settlement that, together with the inclusion of
services and investment, could remove the ability of all the
governments of the Americas to create or maintain laws,
standards and regulations to protect the health, safety and
well-being of their citizens and the environment they share.
Moreover, the FTAA negotiators appear to have chosen to
emulate the WTO rather than NAFTA in key areas of
standard-setting and dispute settlement, where the WTO rules
are tougher.
Essentially, what the FTAA negotiators have done, urged on by
the big business community in every country, is to take the
most ambitious elements of every global trade and investment
agreement - existing or proposed - and put them all together
in this openly ambitious hemispheric pact.
Once again, as in former trade agreements like NAFTA and the
WTO, this free trade agreement will contain no safeguards in
the body of the text to protect workers, human rights, social
security or health and environmental standards. Once again
civil society and the majority of citizens who want a different
kind of trade agreement have been excluded from the
negotiations and will be shut out of the deliberations in Quebec
City in April 2001.
However, the stakes for the peoples of the Americas have
never been higher, and it appears a confrontation is inevitable.
What Is the FTAA?
The Free Trade Area of the Americas is the name given to the
process of expanding the North American Free Trade
Agreement (NAFTA) to all the other countries of the Western
Hemisphere except Cuba. With a population of 800 million and
a combined GDP of $11 trillion (US), the FTAA would be the
largest free trade zone in the world. If reports coming from the
Negotiating Groups working on the key elements of the deal
are correct, the FTAA will become the most far-reaching free
trade agreement in the world, with a scope that will reach into
every area of life for the citizens of the Americas.
The FTAA was launched by the leaders of 34 countries of
North, Central and South America and the Caribbean at the
December 1994 Summit of the Americas in Miami, Florida. At
that meeting, then President Bill Clinton pledged to fulfil former
President George Bush's dream of a free-trade agreement
stretching from Anchorage to Tierra del Fuego, linking the
economies of the hemisphere as well as deepening social and
political integration among the countries based on the same
free-market model as NAFTA.
However, little real progress was made until the next Summit
of the Americas, this one held in Santiago, Chile, in April 1998,
at which time the countries set up a Trade Negotiations
Committee (TNC), consisting of the vice ministers of trade
from each country.
With support from a Tripartite Committee made up of the
Inter-American Development Bank, the Organization of
American States and the UN Economic Commission for Latin
America and the Caribbean (ECLAC), nine Working Groups
were established to deal with the major areas of negotiations:
services; investment; government procurement; market access
(covering tariffs, non-tariff measures, customs procedures,
rules of origin, standards and technical barriers to trade);
agriculture; intellectual property rights; subsidies,
anti-dumping and countervailing duties; competition policy;
and dispute settlement.
As well, three non-negotiating special committees were
established to deal with the issues of smaller economies, civil
society and electronic commerce. These committees and
working groups have been meeting with increasing frequency
throughout 1999 and 2000 and the early part of 2001,
regularly bringing over 900 trade negotiators and mountains of
material to Miami where most of the meetings take place.
From the beginning, the big corporations and their
associations and lobby groups have been an integral part of
the process. In the U.S., a variety of corporate committees
advise the American negotiators and, under the Trade Advisory
Committee system, over 500 corporate representatives have
security clearance and access to FTAA negotiating documents.
At the November 1999 ministerial meeting in Toronto, the
Ministers of Trade of the Americas agreed to implement 20
"business facilitation measures" within the year in order to
speed up customs integration.
One of the tasks of the negotiators is to compare and
consolidate the key components of a variety of trade and
investment agreements throughout the area, including:
NAFTA - a free trade and investment agreement between
Canada, the U.S. and Mexico
MERCOSUR - a common market of the Southern Cone
countries of Brazil, Argentina, Paraguay and Uruguay
the Andean Pact
Caricom - the Caribbean Community
As well, a number of Bilateral Investment Treaties (BITS) have
been signed between individual countries, based on the
"investor-state" model of NAFTA, whereby corporations can
directly sue governments for alleged property rights violations
without first involving their own governments.
There are some differences among these pacts and
agreements; MERCOSUR's goal, for example, is to become a
common market, whereas NAFTA has not attempted to
establish common labour standards among its three members
and the U.S. clearly would not tolerate the free movement of
labour from Mexico. And MERCOSUR does contain some social
provisions and programs for displaced workers that are absent
from NAFTA.
But the similarities between these treaties far outweigh the
differences. Both NAFTA and MERCOSUR include measures to
deregulate foreign investment and grant national treatment
(non-discriminatory) rights to foreign investors. Both prohibit
"performance requirements" whereby foreign investment must
enhance the local economy and support local workers.
And both are based on a model of trade and investment
liberalization that locks in the Structural Adjustment Programs
(SAPs) introduced earlier into Latin America by the World Bank
and the International Monetary Fund (IMF). Under these
programs, most developing countries were forced to
abandon domestic industry in favour of transnational
corporate interests
turn their best agricultural lands over to export crops to
pay off their national debt
curtail public spending on social programs and abandon
universal health care, education and social security
programs
deregulate their electricity, transportation, energy and
natural resources sectors
remove regulatory impediments to foreign investment
Tensions of leadership exist in the negotiations. Since 1995,
the U.S. Adminstration has been unsuccessful in obtaining
renewal for its "fast-track" legislation, which basically
authorizes Congress to adopt free trade agreements in full.
This has given Brazil, the undisputed economic leader in Latin
America, the opportunity to challenge U.S. supremacy in the
negotiations and bid to lead the process of economic
integration of the Americas.
As well, the encroachment of the business community of the
European Union into Latin America, especially in banking,
telecommunications, automobiles and consumer products, has
served as a catalyst for the United States to reassert its
leadership in the hemisphere. The EU has been intensifying its
presence in the region, negotiating individual free trade and
investment agreements with countries such as Chile, Mexico
and Brazil. The U.S. is counting on the successful completion
of the FTAA to maintain the dominance of its corporate sector
in the region.
Further pressure has been placed on obtaining a successful
FTAA in the light of the defeat of the Multilateral Agreement on
Investment (MAI) at the first ministerial meeting of the WTO in
1996 and at the Organization for Economic Cooperation and
Development (OECD) in 1998, and the shut-down of the
"Millennium Round" meeting of the WTO in Seattle in December
1999. In fact, WTO officials are finding it difficult to even
secure a venue for a new Ministerial meeting. As well, APEC -
the Asia Pacific Economic Cooperation Forum - is faltering and
few have expectations that it will make the hoped-for
breakthrough to become a free trade and investment zone.
Many trade observers and pundits have identified the FTAA as
the natural heir of these failed projects and are fearful that
another such failure could put the whole concept of these
massive free trade agreements on the back burner for years.
In fact, in a January 2000 statement, Associate United States
Trade Representative Peter Allegeier said that the FTAA has
taken on new importance after the fiasco in Seattle and may
well aspire to go further than the WTO, freed of the need to
play the deals off against one another.
The next ministerial-level Summit of the Americas is to be held
in Quebec City in April 2001. At this Summit, leaders will be
presented with a heavily bracketed first draft for a Free Trade
Agreement of the Americas, out of which they will start to
fashion a full text. The agreement was originally intended to be
completed for implementation by 2005, but some countries,
including Chile and the United States, are pushing to move the
ratification date up to 2003, depending on how far negotiators
get at the Quebec City Summit meeting.
What's in the FTAA?
Essentially, the planned FTAA is an expansion of the existing
NAFTA, both in terms of including many new countries in the
pact and in terms of extending free trade's reach into new
sectors, based on tough new WTO provisions. In a statement
that accompanied the original 1994 Miami Summit, the
Ministers made a series of recommendations in the form of a
Declaration. In it, they said that agreement had been reached
on several key "Objectives and Principles," including:
economic integration of the hemisphere
promotion of the integration of capital markets
consistency with the World Trade Organization (WTO)
elimination of barriers and non-tariff barriers to trade
elimination of agricultural export subsidies
elimination of barriers to foreign investment
a legal framework to protect investors and their
investments
enhanced government procurement measures
new negotiations on the inclusion of services
Since then, information about just what is contained in the
FTAA working documents has been sparse. However, from
meetings with the United States Trade Representative's office,
members of Public Citizen's Global Trade Watch report that the
U.S. is intent on liberalizing services, including health care,
education, environmental services and water services. As well,
the FTAA will include provisions on investment similar to those
in the defeated Multilateral Agreement on Investment and
Chapter 11 of NAFTA, whereby corporations will be able to sue
governments directly for lost profit resulting from the passage
of laws designed to protect health and safety, working
conditions or environmental standards.
The "Miami Group" - the U.S., Canada, Argentina and Chile -
are also intent on forcing all countries of the Americas to
accept biotechnology and genetically modified foods (GMOs),
thereby promoting the interests of biotech companies such as
Cargill, Monsanto and Archer Daniels Midland over the survival
needs of small farmers, peasants and communities throughout
Latin America. Finally, reports Public Citizen, the U.S. is trying
to expand NAFTA's corporate protectionism rules on patents
to the hemisphere, rules that give a company with a patent in
one country the monopoly marketing rights to the item
throughout the region, thereby robbing local people of access
to traditional medicines.
As well, reports from the negotiators themselves have
inadvertently found their way into the public domain. An
October 7, 1999 confidential report from the Negotiating
Group on Services was recently leaked; it contains detailed
plans for the services provisions of the FTAA. Sherri M.
Stephenson, Deputy Director for Trade with the Organization
of American States, prepared a paper for a March, 2000 trade
conference in Dallas, Texas, in which she reported on the
mandate and progress of the nine Working Groups by sector.
FTAA Web sites and Canadian government documents contain
important information as well.
Put together, these reports expose a plan to create the most
far-reaching trade agreement ever negotiated. The combination
of a whole new services agreement in the FTAA combined with
the existing (and perhaps even extended) NAFTA investment
provisions represent a whole new threat to every aspect of life
for Canadians. This powerful combination will give transnational
corporations of the hemisphere important new rights, even in
the supposedly protected areas of health care, social security,
education, environmental protection services, water delivery,
culture, natural resource protection and all government
services - federal, provincial and municipal.
Mandates of the Nine Negotiating Groups
1.Services
The mandate of the Negotiating Group on Services is
massive: "To establish disciplines to progressively
liberalize trade in services, so as to permit the
achievement of a hemispheric free trade area under
conditions of certainty and transparency" and to develop
a framework "incorporating comprehensive rights and
obligations in services." It is a new agreement and meant
to be compatible with the General Agreement on Trade in
Services (GATS) - the WTO services negotiations now in
progress.
The General Agreement on Trade in Services was
established in 1994, at the conclusion of the "Uruguay
Round" of the GATT and was one of the trade
agreements adopted for inclusion when the WTO was
formed in 1995. Negotiations were to begin five years
later with the view of "progressively raising the level of
liberalization." These talks got under way as scheduled in
February 2000, chaired by Canada's Ambassador to the
WTO (and former International Trade Minister) Sergio
Marchi. The common goal of Europe, the U.S. and
Canada is to reach a general agreement by December
2002.
It is called a "multilateral framework agreement," which
means that its broad commission was defined at its
inception and then, through permanent negotiations,
new sectors and rules are to be added.
Essentially, the GATS is mandated to restrict government
actions in regards to services through a set of legally
binding constraints backed up by WTO-enforced trade
sanctions. Its most fundamental purpose is to constrain
all levels of government in their delivery of services and
to facilitate access to government contracts by
transnational corporations in a multitude of areas,
including health care, hospital care, home care, dental
care, child care, elder care, education (primary, secondary
and post-secondary), museums, libraries, law, social
assistance, architecture, energy, water services,
environmental protection services, real estate, insurance,
tourism, postal services, transportation, publishing,
broadcasting and many others.
The FTAA negotiating services agreement is even more
sweeping than the GATS. As well as incorporating
"comprehensive rights and obligations," it will apply to "all
measures [defined by Canada as 'laws, rules, and other
official regulatory acts'] affecting trade in services taken
by governmental authorities at all levels of government."
As well, it is intended to apply to "all measures affecting
trade in services taken by non-governmental institutions
at all levels of government when acting under powers
conferred to them by government authorities."
The services agreement, says the Negotiating Group,
should have "universal coverage of all service sectors."
Governments are granted the right to "regulate" these
services, but only in ways compatible with the "disciplines
established in the context of the FTAA agreement." The
framework of the services agreement has six elements of
consensus.
These include:
sectoral coverage ("universal coverage of all service
sectors")
most-favoured-nation treatment (access granted to
investors/corporations from any one FTAA country
must be granted to investors/corporations from all
FTAA countries)
national treatment (investors/corporations from all
FTAA countries must be treated the same as
domestic and local service providers)
market access ("additional disciplines to address
measures that restrict the ability of service
providers to access markets")
transparency (disciplines "making publicly available
all relevant measures which may include among
others, new laws, regulations, administrative
guidelines, and international agreements adopted at
all levels of government that affect trade in
services")
denial of benefits ("FTAA members should be able
to deny the benefits of the services agreement to a
service supplier that does not meet such criteria."
Criteria could include "ownership, control, residency,
and substantial business activities.")
This list represents sweeping new authorities of a trade
agreement to overrule government regulation and grants
huge new powers to service corporations under an
expanded FTAA. For instance, if national treatment rights
in services are included in the FTAA, all public services at
all levels of government would have to be opened up for
competition from foreign for-profit service corporations.
This agreement would disallow any government or
sub-national government from preferential funding to
domestic service providers in services as diverse as
health care, child care, education, municipal services,
libraries, culture, and sewer and water services.
The combination of this sweeping services agreement
with the proposed extension of the investment rules
grants unprecedented new powers to the FTAA and the
private interests it promotes. For the first time in any
international trade agreement, transnational service
corporations will gain competitive rights to the full range
of government service provisions and will have the right
to sue any government that resists for financial
compensation. That the real goal of this
services/investment juggernaut is to reduce or destroy
the ability of the governments of the hemisphere to
provide publicly funded services (considered "monopolies"
in the world of international trade) is seen clearly in the
words of OAS Deputy Trade Director Stephenson:
"Since services do not face trade barriers in the
form of border tariffs or taxes, market access is
restricted through national regulations. Thus the
liberalization of trade in services implies
modifications of national laws and regulations,
which make these negotiations more difficult and
more sensitive for governments."
The FTAA Negotiating Group on Services has requested
the organization of national inventories of measures
affecting (i.e., inhibiting) the free trade in services.
2.Investment
The mandate of the Negotiating Group on Investment is
to establish "a fair and transparent legal framework to
promote investment through the creation of a stable and
predictable environment that protects the investor, his
investment and related flows, without creating obstacles
to investments from outside the hemisphere." It builds
on the investment chapter of NAFTA, Chapter 11, which
is, as legal trade expert Barry Appleton explains, "the
very heart and soul of NAFTA."
NAFTA was the first international trade agreement in the
world to allow a private interest, usually a corporation or
an industry sector, to bypass its own government and,
although it is not a signatory to the agreement, directly
challenge the laws, policies and practices of another
NAFTA government if these laws, policies and practices
impinge on the established "rights" of the corporation in
question. Chapter 11 gives the corporation the right to
sue for compensation for lost current and future profit
from government actions, no matter how legal these
actions may be or for what purpose they have been
taken.
Chapter 11 was successfully used by Virginia-based Ethyl
Corp. to force the Canadian government to reverse its
legislation banning the cross-border sale of its product,
MMT, an additive to gasoline that has been banned in
many countries and that Prime Minister Jean Chretien
once called a "dangerous neurotoxin." S.D. Myers, an
American PCB waste-disposal company, also successfully
used a Chapter 11 threat to force Canada to reverse its
ban on PCB exports - a ban Canada undertook in
compliance with the Basel Convention banning the
transborder movement of hazardous waste - and
successfully sued the Canadian government for $50
million (US) in damages for business it lost while the
short-lived ban was in place.
Sun Belt Water Inc. of Santa Barbara, California, is suing
the Canadian government for $14 billion because British
Columbia banned the export of bulk water in 1993,
thereby closing any opportunities for the company to get
into the water-export business in that province.
The Negotiating Group on Investment has made
substantial progress in including in the FTAA the same or
enhanced investor-state rights that exist currently in
NAFTA, including:
basic definitions of investment and investor
scope of application (very broad)
national treatment (whereby no country can
discriminate on behalf of its domestic sector)
most-favoured-nation treatment (whereby access
to investors from one FTAA country must be given
to investors of all FTAA countries)
expropriation and compensation for losses
(whereby an "investor" or corporation can claim
financial compensation for lost business and profit
from the creation or implementation of regulation,
including environmental laws, from the government
of another NAFTA signatory)
key personnel (the ability of corporations to move
their professionals and technicians across borders
outside of the normal immigration process)
performance requirements (limits on or the
elimination of a country's right to place performance
requirements on foreign investment)
dispute settlement (whereby a panel of appointed
trade bureaucrats can override government
legislation or force the government in question to
pay compensation in order to maintain the
legislation)
The inclusion of such sweeping investment provisions is a
way of introducing a form of the Multilateral Agreement
on Investment, a proposed OECD investment treaty that
was abandoned in the face of massive civil society
resistance, into the FTAA. Combined with proposed
strengthened provisions on market access, agriculture
and intellectual property rights and sweeping new
proposed provisions on services and government
procurement, these investment provisions will grant new
powers to the corporations of the hemisphere. Such
powers will allow them to challenge all government
regulations and activities, and undermine the ability of all
governments to provide social security and health
protection to their citizens.
3.Government Procurement
The mandate of the Negotiating Group on Government is
very clear: "To expand access to the government
procurement markets of the FTAA countries" within a
new agreement. This will be done by achieving a
"normative framework that ensures openness and
transparency of government procurement processes,"
ensuring "non-discrimination in government
procurement" and "impartial and fair review for the
resolution of procurement complaints."
This FTAA mandate on government procurement appears
to go further than that of the FTAA's WTO counterpart,
the WTO Agreement on Government Procurement,
whose aim is to prevent governments from fostering
domestic economic development when purchasing goods.
Measures targeted by the WTO include favouring local or
national suppliers, setting domestic content standards or
imposing community investment rules. For now, the WTO
does not enforce market access or national treatment
rules on the purchase of direct government goods and
services.
However, the FTAA Negotiating Group appears to go
much further and open up all government contracts,
services and goods to competitive bidding from other
FTAA countries' corporations. The Negotiating Group has
requested an inventory of the relevant international
classification systems and a compilation of each
government's procurement statistics.
end pt. 1
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