21 - 27 December 2000
Issue No.513
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Al-Ahram Weekly On-line 21 - 27 December 2000 Issue No.513 |
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NAFTA on steroids
By Faiza RadyFar from the hustle and bustle of the urban madding crowds, the Common Market of the South -- more commonly known by the Spanish acronym Mercosur -- held its 19th summit in the pristine Brazilian coast town of Florianopolis this week. Amidst the general euphoria and hullabaloo of the summit, Mercosur took a battering when Chile an-ounced that it will sign a free trade treaty with the US. Mercosur views the US as its biggest threat in the hemisphere and aims to block Amer-can economic hegemony on the continent. Chile's move was therefore regarded as a defection from the ranks.
Established in 1990, Mercosur started off as a loose trade association with a membership of only four South American nations: Argentina, Brazil, Uruguay and Paraguay. Mercosur membership was later expanded to include Bolivia and Chile as associate members and the idea of spreading out and forming a powerful trading bloc modelled on the European Union (EU) is now the association's top priority.
In this grand scheme, it is envisioned that members nations will have shared tariffs, coordinated taxes and a common currency. With its 225 million people and a combined GDP of an estimated $1.2 trillion, Mercosur has the potential to develop into a serious regional power broker. Brazil, in particular, is pushing to transform Mercosur into a powerful market capable of sparring with its formidable Northern neighbour -- the North American Free Trade Association (NAFTA).
While the need to challenge NAFTA, which includes the United States, Canada and Mexico, is sufficiently urgent to warrant forming a counter-bloc, Mercosur's more immediate aim is to block US plans to expand NAFTA to all countries of the Western hemisphere (with the notable exclusion of Socialist Cuba).
The Clinton administration has, for some time now, been busy negotiating a more formidable version of NAFTA. Dubbed "NAFTA with steroids" by the Washington-based NGO Global Trade Watch, the scheme is to forge a gargantuan US-controlled market encompassing the entire hemisphere: the Free Trade Area of the Americas (FTAA). Headed on the US side by trade representative Charlene Barshefsky the FTAA Trade Negotiations Committee consists of trade ministers from 38 nations who meet every few months to negotiate the projected free trade haven.
Hailed by the Clinton administration as the realisation of the Pan-American dream of prosperity, democracy and environmental benefits, the details of FTAA talks nevertheless remain shrouded in secrecy. "Every aspect of the FTAA negotiations is being kept secret and Congress is in the dark as much as we are," reported Global Trade Watch. Although the the role of the American Congress is to delineate the terms for foreign commerce, the executive office has illegally bypassed the judiciary to promote an agenda of its own.
The Clinton administration has bent over backwards to provide the corporate sector with privileged information about ongoing negotiations, while sidelining democratically elected officials. According to Global Trade Watch, more than 500 high-level corporate CEOs have security clearance and free access to FTAA documents. In addition, international banks, like the Inter-American Development Bank, and organisations like the UN Economic Commission for Latin America and the Caribbean and the Organisation of American States are privileged partners to FTAA negotiations.
Conducted behind closed doors, with limited information only occasionally leaking to the public through the efforts of concerned NGOs, little is known about the actual nuts and bolts of FTAA. The draft text includes provisions to liberalise "services" -- loosely grouped into a category that includes education, healthcare, environmental services, energy and anything else we pay for that isn't strictly a material commodity -- in a way comparable in scope to the General Agreement on Trades and Services within the World Trade Organisation (WTO).
In line with conventional neo-liberal dogma, economists promote the liberalisation of services as crucial to development. The theory goes that across-the-board privatisation will increase competition and translate into improved services and lower prices. But a quick look at the public health record under NAFTA depicts a different version of the success story. While NAFTA promotes cutting transnationals' production costs to maximise profit, it does not require members to maintain even minimum levels of food safety standards.
More specifically, NAFTA paragraph 717 forbids more rigorous inspections on Mexican produce imports to the US. Consequently, food safety inspection of imported foods declined in the US from eight per cent of total imports in 1993 to less than two per cent in 1998. In Mexico, severe slashing of the country's domestic food inspection budget reduced spending on food safety from $25 million in 1992 to $5 million in 1995. Over and beyond cutting production costs -- without reducing prices -- deregulation of the public heath inspection sector under NAFTA has effectively undermined food safety.
Essentially conceptualised to protect the profits of transnationals, NAFTA regulations favour corporate investment rights over national legislation. It follows that foreign investors are in the position to challenge, and ultimately scrap, standing laws for undermining their real, or even, perceived profits before NAFTA tribunals. A notorious precedent is the Ethyl vs Canada case. The US-based Ethyl corporation -- the company that put the lead in leaded gasoline -- used NAFTA to challenge a ban of its gasoline additive MMT, banned by Canada after health officials determined that the additive's neurotoxin content posed a serious health hazard.
Arguing that the ban of the toxic additive constituted an unfair "taking" of their "property" -- defined as perceived sales profits -- Ethyl demanded compensation for loss of business and damage to its reputation to the tune of $251 million. Facing an empowered and hostile NAFTA tribunal, the government ultimately backed down and settled out of court, agreeing to declare MMT safe, cancel the ban and pay Ethyl $13 million in reparation for lost profits.
NAFTA's record shows that creeping deregulation has emasculated the authority of national governments and compromised public health for the sake of corporate profits. And more good things loom ahead for the Western Hemisphere under a more radical and fine-tuned FTAA version.
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