Toward a North American economic community.
In Canada, Maude Barlow gave a stirring speech criticizing the free-trade agenda of the Summit of the Americas.
A campaign to help sick people in need of unaffordable medicines is clashing with forces in the global pharmaceutical industry.
With NAFTA as an ugly precedent, the proposed trade pact is generating serious opposition from a number of social and economic sources.
When NAFTA was adopted in 1993, Chapter 11 in the trade and investment agreement was too obscure to stir controversy. Eight years later, it's the smoking gun in the intensifying argument over whether globalization trumps national sovereignty. Chapter 11 established a new system of private arbitration for foreign investors to bring injury claims against governments. As the business claims and money awards accumulate, the warnings from astute critics are confirmed--NAFTA has enabled multinational corporations to usurp the sovereign powers of government, not to mention the rights of citizens and communities.
The issue has exquisite resonance with the present moment. On April 20 thirty-four heads of state gather in Quebec City to lead cheers for a Free Trade Area for the Americas. The FTAA negotiations are designed to expand NAFTA's rules to cover the entire Western Hemisphere. The Quebec meeting should provide good theater but not much substance. Tony Clarke of the Polaris Institute, in Ottawa, says the meeting is intended to be "a face lift for the whole global agenda, by portraying free trade as democracy." Protesting citizens will be in the streets, challenging 6,000 police and Mounties, with an opposite message: Democracy is threatened by the corporate vision of globalization.
Chapter 11 of NAFTA should become a defining issue for FTAA negotiations. Many, including Clarke, vice chairman of the Council of Canadians, believe corporate governance was and is the FTAA's intent. "There is a conquering spirit at the heart of all this," he says, adding that the corporations' attitude is: "We have to get into every nook and cranny of the world and make it ours."
Chapter 11 provides a model of how this might be accomplished. The operative principle is that foreign capital investing in Canada, Mexico and the United States may demand compensation if the profit-making potential of their ventures has been injured by government decisions--"tantamount to expropriation." Thus, foreign-based companies are given more rights than domestic businesses operating in their home country. For example:
§ California banned a methanol-based gasoline additive, MTBE, after the EPA reported potential cancer risks and at least 10,000 groundwater sites were found polluted by the substance. Methanex of Vancouver, British Columbia, the world's largest methanol producer, filed a $970 million claim against the United States. If the NAFTA panel rules for the company, many similar complaints are expected, since at least ten other states followed California's lead. The federal government would have to pay the awards. California State Senator Sheila Kuehl and others have asked the US Trade Representative to explain how this squares with a state's sovereign right to protect health and the environment.
§ In Mexico, a US waste-disposal company, Metalclad, was awarded $16.7 million in damages after the state of San Luis Potosí blocked its waste site in the village of Guadalcazar. Local residents complained that the Mexican government was not enforcing environmental standards and that the project threatened their water supply. Metalclad's victory established that NAFTA's dispute mechanism reaches to subnational governments, including municipalities.
§ In Canada, the government banned another gasoline additive, MMT, as a suspected health hazard and one that damages catalytic converters, according to auto makers. The Ethyl Corporation of Virginia, producer of MMT, filed a $250 million claim but settled for $13 million after Canada agreed to withdraw its ban and apologize.
§ The Loewen Group Inc., a Canadian operator of far-flung funeral homes, lodged a $750 million complaint against the United States, claiming that a Biloxi, Mississippi, jury made an excessive award of $500 million when it found Loewen liable for contract fraud against a small local competitor.
§ Sunbelt Water Inc. of California has filed the largest and most audacious claim--seeking $10.5 billion from Canada for revoking its license to export water by supertanker from British Columbia to water-scarce areas of the United States.
§ Canada's Mondev International is claiming $50 million from the United States because the City of Boston canceled a sales contract for an office building with a shopping mall. Boston invoked sovereign immunity against such lawsuits and was upheld by a local judge and the Massachusetts Supreme Court. The US Supreme Court declined to hear the appeal. So the company turned to NAFTA for relief.
"When just the threat of a Chapter 11 action may suffice to wrest a financial settlement from a government, investors have unprecedented leverage against states," Lydia Lazar, a Chicago attorney who has worked in global commerce, wrote in Global Financial Markets magazine. Mexico, Canada and the United States effectively waived the doctrine of sovereign immunity, she explained, when they signed NAFTA.
As many as fifteen cases have been launched to date, but no one can be sure of the number, since there's no requirement to inform the public. The contesting parties choose the judges who will arbitrate, choose which issues and legal principles are to apply and also decide whether the public has any access to the proceedings. The design follows the format for private arbitration cases between contesting business interests. With the same arrogance that designed the WTO and other international trade forums, it is assumed that these disputes are none of the public's business--even though public laws are under attack and taxpayers' money will pay the fines. The core legal issue is described as damage to an investor's property--property in the form of anticipated profits. The NAFTA logic thus establishes the "regulatory takings" doctrine the right has promoted unsuccessfully for two decades--a retrograde version of property rights designed to cripple or even dismantle the administrative state's regulatory powers. "NAFTA is really an end run around the Constitution," says Lazar.
The fundamental difference in Chapter 11, unlike other trade agreements, is that the global corporations are free to litigate on their own without having to ask national governments to act on their behalf in global forums. Clearly, some of the business complaints so far are more exotic than anyone probably anticipated. These initial cases will set precedents, however, that major global firms can apply later. If nobody stops this process, the national identity of multinationals will become even weaker and less relevant, Lazar points out, since they have status to challenge government as "an open class of 'legal equals.'"
In Canada a private lawsuit was filed recently challenging the constitutionality of Chapter 11, since Canada's Constitution states that the government cannot delegate justice to other bodies. The Canadian government, itself embarrassed by the cases against it, expressed doubt that Chapter 11 should be included in the hemispheric agreement, though it appears to be backing away from outright opposition. In US localities, the cases are beginning to stir questions, but lawmakers and jurists are only beginning to learn the implications.
Does George W. Bush understand what he is proposing for the Americas? Did Bill Clinton and Bush the elder understand the fundamental shift in legal foundations buried in NAFTA's fine print? They knew this is what business and finance wanted. As the public learns more, the smoking gun should become a focal point in this year's trade debate, confronting politicians with embarrassing questions about global governance. Who voted to shoot down national sovereignty? Who crowned the corporate investors the new monarchs of public values?
Many compared it to marching through a dream.
After seven years under siege by 70,000 Mexican Army troops in the
jungles and highlands of Chiapas, the Zapatista National Liberation
Army (EZLN) sent twenty-four delegates, including its pipe-smoking
writer-spokesman Subcomandante Marcos, on a triumphant two-week
motorcade that landed in Mexico City on March 11.
believe that in any place, in any space in this world--and I have the
memory of my own revolution twenty-six years ago--I don't remember a
more moving moment than I lived yesterday," declared the
septuagenarian Portuguese Nobel Prize-winning author José
Saramago the next morning.
The US press coverage of the
march, limited though it was, hinted at such an apotheosis: the
cheering multitudes that greeted the Zapatistas from the roadsides
and at mass rallies in twelve states along the route, the flowery
words of peace and civil rights coming to Mexico's mythical newfound
democracy. But for the Zapatistas and Mexico's indigenous movement,
the struggle now turns into a battle to codify the movement's
progress into law.
The caravan came to demand
constitutional recognition for Mexico's 10 million indigenous
citizens, subjected to generations of repression, poverty, racism and
exploitation of their lands and labor. As Mexico's President Vicente
Fox passed his hundredth day in office, he reiterated calls to the
Zapatistas to negotiate a peace. Not until the government fulfills
the promises it has already made, answered the rebels: release of
Zapatista political prisoners, closure of seven of the 259 military
bases in Chiapas, and congressional passage of the law that would
ratify the 1996 San Andrés peace agreements signed by the
government [see Jerry W. Sanders, "Two Mexicos and Fox's Quandary,"
The geographical advance was accompanied by a
steady rise in the popularity of Marcos and the Zapatistas in opinion
polls, an average gain of two percentage points per day, with over 50
percent in support. The implementation of the San Andrés
Accords is now the sticking point. Marcos and the Zapatistas, with
more than 1,000 delegates from the Indigenous National Congress,
encamped at the base of Mexico City's Cuicuilco pyramid--a circular,
370-foot-diameter stone monument that has survived at least 2,600
years of lava flows, earthquakes and urban
Underscoring their credo, "We will not sign a false
peace," the Zapatistas caused a fierce uproar when, as the caravan
was launched from San Cristóbal, Chiapas, they named architect
Fernando Yáñez Muñoz as their representative to
the federal Congress. Mexican police agencies have long claimed that
Yáñez is Comandante Germán, the feared national
guerrilla leader of the 1970s and '80s who, they say, helped found
the Zapatista army in the jungle in 1983, a charge that
Yáñez has denied. The Zapatistas have also, for the
first time, called upon other guerrilla movements to protect their
journey and remain alert, implying that if the state doesn't keep its
word, an armed guerrilla response could explode
María Luisa Tomasini, 78, a Chiapas
native designated by Marcos as the "grandmother of all the
Zapatistas," analyzed his call to the other insurgent groupsas she
was returning from the March 7 Zapatista rally in Iguala, Guerrero, a
state with at least sixteen armed clandestine guerrilla
organizations. "Clearly," she said, "it was a threat to the
government that it had better comply."
The powerful sectors
that have always gotten their way in Mexico--bankers, chambers of
commerce chiefs, right-wing clergy, the TV networks and key
legislators--are working furiously to sabotage the road to a genuine
peace. Fox's party, the PAN, teamed up with the former ruling party,
the PRI, against the left-wing PRD party to propose that the
Zapatistas meet with twenty congressional leaders instead of the
entire Congress. Marcos, noting that the indigenous of Mexico have
always been hidden "in the kitchen, on the back porch," rejected the
offer, arguing that the Zapatistas and the Indigenous National
Congress deserve to address the whole Congress. Hard-liners continue
to seek any roadblock to passage of the full indigenous rights bill
with hysterical claims that autonomy would fracture the nation, and
they vow radical surgery to the initiative.
On March 19 the
Zapatistas announced they will return to the jungle, citing the
"close minded" attitude of "cavemen politicians," saying, "Nothing
will be able to stop the popular mobilization" that stems from the
Congress's failure to act. "We will return with everyone who we are."
Immediately, thirteen national peasant-farmer groups pledged
nationwide marches, students plotted direct action and five major
indigenous groups in Oaxaca vowed to close the Pan American Highway
until Congress passes the accords. Congressional leaders begged the
Zapatistas to stay, Fox urged the Congress to meet with the rebels
and the drama now moves in unpredictable directions.
guiding principle of the San Andrés Accords is autonomy. The
word has galvanized many beyond Mexico's indigenous populations. The
battered Mexican left--peasant farmers, urban workers and especially
the nation's youth--view themselves, too, under the banner of
autonomy. Indeed, the popularity of the Zapatista struggle around the
world derives at least in part from the coherent language of
opposition to globalized and savage capitalism that they have
constructed. French sociologist Alain Torraine, who accompanied the
caravan, praised the Zapatistas during a March 12 discussion with
Marcos and the comandantes in Mexico City, marveling, "The entire
world, and we are speaking of the left, is looking for a new
language." Comandante David, a Tzotzil delegate who was a chief
negotiator and architect of the San Andrés Accords,
acknowledges that the demand for autonomy goes far beyond indigenous
rights. "We are going to explain directly to the indigenous and
nonindigenous brothers of the country that indigenous rights are for
the good of all the peoples," he said while preparing to leave on the
Autonomy--what might be called "home rule" in
other parts of the world--includes local control of land use, a sore
point for big business in Mexico, its eyes on natural
Beyond Mexico, US investors and corporate
interests, with expectations that Fox will be the most effective
deliveryman yet of Mexican resources under NAFTA, are stoking the
subterfuge. Former US Ambassador to Mexico James Jones, now a
railroad baron and rainmaker for the Manat, Phelps and Phillips law
and lobbying firm in Washington, is on the board of directors of TV
Azteca, the most notorious manipulator of public opinion among all
the Mexican media. TV Azteca joined the other broadcasting giant,
Televisa, to present a March 3 Concert for Peace live from Aztec
Stadium, featuring a laser light show, a Woodstock-style logo and the
usual condescension toward "our indigenous brothers." The prepackaged
video aired with the concert didn't mention autonomy, or indigenous
political prisoners, or 500 years of conquest--certainly not justice
in connection with the 1997 massacre of unarmed indigenous peasants
at Acteal. The only proposed solution was to send aid to the poor,
barefoot indigenous communities, an approach known in Mexican
politics as "clientism." Many analysts saw Fox's fingerprints on the
TV peace show, as both stations rely on state permission to broadcast
in Mexico. Indeed, one of the demands of the San Andrés
Accords is the right of indigenous peoples to break that control by
forming their own media, including the use of radio and television
The question of indigenous autonomy also has
consequences for the US-imposed "war on drugs." The San Andrés
Accords would restore indigenous rights to the use of currently
illicit sacred plants and codify the pre-eminence of ancient forms of
community justice. Luciano, a spokesman for the Zapatista community
of Polho, explained to me in 1998 how the autonomous system works
without constructing a single prison cell: "If a young man grows
marijuana, he goes before a municipal judge to be disciplined and
oriented so that he won't ever do it again. If the youth does it
again, there is no response whatsoever: He cannot be pardoned a
second time. He would then be expelled from the
That the Zapatista communities have had far
more success in driving out the narcotraffickers and preventing drug
and alcohol abuse than any other region of the Americas is of little
concern to the big talkers of law and order. Opponents charge that
autonomy in matters of criminal justice would "balkanize" the country
and subvert the "rule of law."
Indigenous and social
movements across Latin America--in Ecuador, Colombia, Bolivia, Peru,
Panama, Brazil and other nations--had representatives quietly
observing the caravan. In spite of the powers stacked against them,
the Zapatistas, newly strengthened, their national support deepened,
have many cards yet to play in forcing legislative victory. In the
latest of the ironies under NAFTA, autonomy may thus, and soon,
become Mexico's leading export product.
Multinationals, their intellectual coverings shredded, are love-bombing labor while hunting for new fig leaves.
At Brazil's "counter-Davos," democracy was in; elitism, corporations were out.
His dream is an open northern border. But first, he must end southern poverty.
For more than two years, the antisweatshop movement has been the hottest political thing on campus [see Featherstone, "The New Student Movement," May 15, 2000]. Students have used sit-ins, rallies, hunger strikes and political theater to demand that garments bearing their institution's logo be made under half-decent working conditions.
From the beginning, the major players were students and administrators. While some progressive faculty members--mostly from sociology departments--offered the students early support, economists, who like to think of their discipline as the queen of the social sciences, kept fairly quiet.
That changed this past July. After colleges and universities made a number of visible concessions to the students over the spring, a group of some 250 economists and lawyers released a letter to administrators, basically complaining that they hadn't been consulted. The letter, initially drafted by Jagdish Bhagwati of Columbia University and burnished to perfection by a collective of free-trade zealots calling themselves the Academic Consortium on International Trade (ACIT), reproached administrators for making concessions "without seeking the views of scholars" in relevant disciplines. Judging from their letter, the views of these scholars might not have been terribly enlightening. On page 24 of the magazine, the ACIT missive appears with some comments (see "Special" box, right).