Pôrto Alegre, Brazil–In US living rooms, talk about such policy measures as the White House’s proposed Free Trade Area of the Americas (FTAA) is likely to elicit clueless shrugs. But south of the Rio Grande, millions of Latin Americans consider FTAA–and US trade policy in general–to be an immediate issue of life and death urgency.
No surprise, then, that as some 40,000 social activists and scholars met here last week to strategize against what they call “corporate globalization,” they chose resistance to the FTAA as one of their top priorities. “We will fight it every possible way and we will defeat it,” vowed Luis Inacio da Silva, Brazil’s most important opposition politician. As head of the left-of-center Workers’ Party, which governs large parts of Brazil, Da Silva, or “Lula” as he is known to most Brazilians, is currently leading in opinion polls for this October’s presidential election. The FTAA, he says, “isn’t really a free trade pact. Rather, it’s a policy of annexation of Latin America by the United States.”
Lula’s characterization of the agreement is at sharp odds with that of the Bush Administration, which claims that the proposed agreement would help the hemisphere’s poor by encouraging a freer flow of goods among all 34 countries stretching between Canada and Argentina. The Administration hopes a pact can be approved and implemented by 2005. So, why such a sour view from Lula and other Latin Americans–the very people President Bush says this agreement would benefit? Critics of the FTAA say it would allow powerful countries like the United States to force smaller countries to open their markets, which would then be quickly absorbed. Underdeveloped countries couldn’t hope to compete with giants like the United States, which would, in the end, gobble up an even greater piece of the economic pie.
Even some leading free-trade defenders concede the same point. Jose Manuel Salazar-Xirinachs, chief trade advisor to the Organization of American States (OAS), acknowledges that, while he remains hopeful, there has been no substantial reduction in Latin American poverty after a decade of trade liberalization encouraged by Washington. “Liberalization was not the miracle or the magic formula that many expected,” he said.
Objections to the FTAA center on the same point: the pact would diminish the power of nation-states to regulate their own economies and protect their own citizens. Like the 1994 North American Free Trade Agreement signed by the United States, Canada and Mexico, the new pact would allow corporations to sue individual governments over any law that might diminish private profit, including legislation that protects consumers, communities, labor and the environment. Already, under Chapter 11 of NAFTA, Mexico has been successfully sued by a US company for trying to protect itself against toxic dumping by blocking the company’s expansion plans. And a Canadian firm has sued the United States, claiming a California anti-air pollution law interferes with profit-making.
The FTAA would also severely erode controls on foreign investment capital–the same sort of controls that the International Monetary Fund says have been key in providing financial stability in countries ranging from Chile and Colombia to Brazil.