GREEN PAPER 3: Freedoms
That Are Abolished
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Originally composed of 12 Working Groups, the FTAA negotiators are now divided into nine Negotiating Groups and three Committees. The three Committees are responsible for making recommendations to the Trade Ministers. The Hemisphere's Trade Ministers have held five Ministerial Meetings since the Miami Summit of the Americas in 1994. At these meetings the Ministers exclusively discuss the FTAA with the purpose of outlining working plans for the negotiating process and make many important decisions about the FTAA. The Trade Ministers are scheduled to meet in Buenos Aires two weeks before the next Summit of the Americas.
Groups Negotiating for the Corporate Rulers
The negotiating groups are responsible for drafting chapters of the final FTAA document and have been meeting at least every 18 months for the past four years.2, These meetings have generally taken place behind locked hotel room doors (draw your own conclusionsŠ). This allows the negotiators to hammer out the details of the draft chapters of the FTAA in secret. The draft will be on the agenda at the next Summit of the Americas, which will be held in Quebec City in April 2001.
The following descriptions of what the negotiating groups are likely to include in their draft documents are based on the stated objectives of each of the negotiating groups, and what we know about the attempted MAI and WTO policies.
1. Market Access A Free Trade Free-for-All
The purpose of the policies in this section is to gradually eliminate tariffs and non-tariff barriers that restrict trade. This is the free trade part of the FTAA. Tariffs are fees or taxes imposed by governments on the import and export of goods. They are usually imposed to make imported goods more expensive than domestically produced goods. Most tariffs have been eliminated through WTO and NAFTA however some still exist. Non-tariff barriers include anything that could have the same effect as a tariff, such as environmental or labor regulations. During FTAA negotiations all tariffs will be subject to negotiation, which means, potentially, no sector of the economy will be immune from free trade rules (thereby eliminating protections for agriculture, medicine, public services, etc.).
2. Services Did Someone Say PRIVATIZE?
This was part of the failed WTO talks at the Seattle Ministerial in 1999 and would open national markets to international investors in such areas as health, education, telecommunications, water and other services. While most countries have liberalized, or opened to foreign investors, parts of their service sector as part of the General Agreement on Tariffs and Trade (GATT), the FTAA will seek further liberalization, which will lead to many poorer countries having their services bought out or monopolized by foreign investors (or multinationals). One of the first steps in liberalizing services is the privatization of publicly owned services. The World Bank and the International Monetary Fund have laid the foundations for liberalization by requiring countries to privatize many services as part of their structural adjustment programs.
A recent World Bank privatization project forced Bolivia to allow foreign ownership of water services in the city of Cochabamba. The subsequent rise in water prices met with intense resistance by city residents. People continually demonstrated in the streets, disrupting the city for several days. When police violence and repression failed to end the demonstrations, the Bolivian government was forced to change its policies regarding foreign ownership of water. The FTAA would limit governments' ability to restrict foreign ownership of services, leaving communities vulnerable to the predations of multinational corporations (MNCs)- such as what happened in Cochabamba.
3. Government Procurement By, of, and for the Corporations
Most governments have purchasing policies that favor locally produced goods and services. The FTAA would require governments to establish an "open and transparent" policy for government procurement forcing governments to reveal their procedures and the sources from which they purchase their goods and services. This would be the first step in ensuring that governments are not giving preferential treatment to local producers and suppliers. The FTAA would also impose a policy of "non-discrimination" in government procurement which would force governments to eliminate purchasing policies that favor local businesses. Negotiators are also considering the establishment of a dispute settlement body for complaints of suppliers against purchasing governments, clear evidence of the priority being given to corporations' profits rather than people or local economies.
4. Agriculture Genetically Modify My Ag!
The FTAA seeks to expand upon the WTO Agreement on Agriculture to restrict government subsidies for small farmers and eliminate price controls for important commodities, such as rice or corn. This spells disaster for small farmers who cannot possibly compete with giant agribusiness and for the poor who cannot afford to buy food at world market prices. When Mexico removed controls on corn imports, US corn flooded the Mexican market and millions of Mexican farmers went bankrupt. The US government is also seeking to expand the market for genetically modified organisms (GMOs). The FTAA is likely to include provisions that require other countries to remove any regulations or restrictions on the sale or production of GMOs.
5. Intellectual Property Rights Whose Idea Is It Anyway?
Before the WTO, governments were free to establish their own policies regarding patenting of technology and information (intellectual property) based on an innovation or invention's importance to society. For example, many countries would restrict the patenting of certain medicines because they are important to public health. The intellectual property agreement of the WTO has already restricted governments' ability to define what constitutes intellectual property and how to regulate it. These rules give big companies a monopoly on patented materials. Companies with monopolies then control the pricing which often makes it difficult for impoverished people to obtain patented materials and restricts other companies from manufacturing cheaper generic materials. (See Protecting Intellectual Property)
6. Subsidies, Anti-dumping, and Countervailing Duties Who's Dumping on Who?
Subsidies are assistance governments give to corporations to offset the costs of production; they can be in the form of monetary awards or in the form of regulations or policies designed to give advantages. Dumping is when products are introduced into a country at a lower than normal value. Countervailing duties are the measures a government can take to counteract the effects of subsidized or dumped foreign imports into a country's market. The WTO has established rules for what subsidies a government is allowed to provide, what recourse governments have in the event that products are dumped into their markets (anti-dumping), and what kinds of countervailing duties governments can impose. These guidelines essentially put the burden of proof of damage on the government whose domestic markets are "injured" or "damaged" by dumping or subsidies. Since dumping and subsidies are more likely to be enacted by richer, more powerful countries, and the burden of proof is on the country suffering damages, which tend to be poorer countries with few resources to invest in the extensive investigative process, these rules generally benefit wealthier countries. The FTAA intends to "enhance compliance" with existing WTO rules.
7. Competition Policy Corporate Monopolies Only
A similar policy was attempted in the Seattle Ministerial of the WTO. This would be a catch-all attempt to eliminate any policies, regulations or anything that might favor local producers of goods and services. This is another blow to small, locally owned businesses (including small farms). By ensuring a market environment does not give any advantage or protection to local or small business, the FTAA guarantees that big corporations will always have the advantage. It will be the WalMartization of the Western Hemisphere as small businesses are overrun by multinational corporations.
8. Dispute Settlement Guess Who Wins?
Working within the scope of the WTO's Understanding on Rules and Procedures Governing the Settlement of Disputes, the FTAA seeks to establish a "transparent and effective" means for resolving disputes among countries and solve private trade controversies. It is likely that the FTAA will include provisions to allow corporations to seek redress for grievances with governments. This gives corporations power to prevent governments from enforcing any law or regulation designed to protect people or the environment. For example, if clean air standards require expensive technology to control emissions at a factory, the corporation can sue the government to change the law. This gives unaccountable corporations the power to overturn laws enacted by elected governments. (See Protecting Corporate Profit for examples of how corporations have already taken advantage of these kinds of "rights.")
9. Investment It's Risk-Free!
To "create a stable and predictable environment that protects the investor"3 is the objective of this working group. This is the resurrection of the defeated MAI, which provided a variety of protections for investors at the expense of labor, environmental, and consumer advocacy laws. While we do not know exactly what the final draft of the FTAA will look like, based on the language they have used in their Ministerial Declarations, we can extrapolate that the final text will have several provisions from the defeated Multilateral Agreement on Investment (MAI), including the following:
Broader definition of investment I didn't like that forest anywayŠ
The MAI sought to expand the definition of investment to include all types of assets, including: real estate (even publicly owned land) and natural resources (such as forests, minerals and oil); intellectual property (patents and trademarks); as well as more conventional types of investment such as stock options and direct foreign investment in services and manufacturing.4 With this broader definition, the FTAA would ensure that everything in the hemisphere with a market value would be available on the hemispheric free market. From national forests to oil reserves to the administration of hospitals and prisons, everything could be purchased and/or administered by the highest bidder for the sole benefit of corporate bank accounts.
National Treatment We're all the same here at WalMart
Under the MAI, foreign investors were to be guaranteed treatment better or equal to domestic investors. This would require the elimination of any laws, regulations, or practices that give preferential treatment to locally produced goods or national businesses. This would give wealthy multinational corporations an unprecedented advantage in establishing monopolies in poorer countries by removing the only advantage that smaller businesses have: that they are local. In many instances, giving such treatment to foreign investors amounts to discriminating against local or national investors since there are no laws written to say that domestic investors must be given better or equal treatment to foreign investors. By "leveling of the playing field" the FTAA offers no protection for smaller domestic firms against the giant corporate players. A level playing field does not create a fair game if one team consists of elephants while the other of ants.
Regulatory Takings I'll pollute what's mine
This provision would allow corporations to demand compensation for any government's policies or actions that actually or potentially results in a loss of profits. For example, if a government passes a law requiring strict pollution controls, a multinational corporation that owns a polluting factory can sue the government for compensation if the costs of cleaning up cuts into their profits. The Metalclad case against Mexico is a good case of regulatory takings (see Protecting Corporate Profits). By including a provision on regulatory takings, the FTAA would give rights to corporations that are not possessed by any individual and would harm governments' abilities to pass regulations to protect public health, labor rights, or the environment.
Phase out Performance Requirements Phase out accountability
Performance requirements are conditions imposed on investors to benefit local economic development. Some examples of performance requirements are: governments requiring multinational corporations (MNCs) to hire a certain percentage of managers from a local population; using domestic suppliers for goods and services within a factory; certain environmental regulations; and requiring the exportation of products manufactured in foreign owned factories (which would prevent competition with goods produced by locally owned factories). While NAFTA and the WTO have already placed some restrictions on performance requirements, the FTAA would seek to eliminate them altogether over a period of time. The elimination of performance requirements would mean that MNCs would have no obligations whatsoever to the local communities in which they operate.
Free Flow of Capital Wheel of Foreign Currency!
About 90% of international financial transactions are speculative, meaning that 90% of transactions involving purchases or trading in foreign currency have no physical manifestations: no factories are being built, no goods are being bought or sold, nor is any new investment being made in any enterprise public or private. Traditionally, countries have been able to impose some controls on this flow of money, for example by imposing limits on who can change currency by requiring licenses or imposing a minimum time commitment on investors who purchase currency. These controls prevent a country's economy from becoming too dependent on foreign investment and protect domestic economies from collapse if foreign investors suddenly withdraw their money. NAFTA, the WTO, the International Monetary Fund (IMF) and the World Bank have all contributed to the loosening of restrictions on foreign investment in the past few years. (See Free Flowing Capital)
Take it to a Committee
The three working committees are non-negotiating bodies established to address specific issues within the FTAA. They make recommendations to the negotiating groups who either follow or ignore them as they see fit: the negotiating groups are in no way accountable to the committees.
Joint Committee on Civil Society Participation Sorry, We Can't Hear You
This committee was set up to demonstrate that the FTAA negotiators are committed to democracy and the participation of civil society. Unfortunately (but not surprisingly), the Joint Committee is little more than window dressing. Civil society was invited to submit comments to the committee, however, not only was the submission process cumbersome, there are no guarantees that any civil society concerns would be accounted for in the deliberations. Unlike the American Business Forum which is present at every negotiating meeting, civil society has not been invited to any meetings. This Joint Committee has done nothing to ensure that civil society concerns are addressed or even heard. (see Threat to Democracy)
Consultative Group on Smaller Economies Soon You'll Be Just Like US
This group was established to help smaller countries fully participate in the negotiations and in the implementation of FTAA rules. To this end, the committee administered a survey of countries with smaller economies entitled, "Technical Cooperation Needs Assessment for Smaller Economies." The 15 countries that responded to the survey stressed the need for training and technical assistance for trade negotiators, institutional reform, and implementing WTO commitments. In other words, the focus of this committee is to facilitate the implementation of WTO rules now and FTAA rules in the future. There is no discussion of how the FTAA will have different impacts on countries with smaller economies nor are any special provisions being made that favor developing countries in the drafting of the FTAA. Instead, the FTAA rules present a "one size fits all" formula for international trade. The Group on Smaller Economies is dedicated to providing "technical assistance" to help countries fit into the FTAA shirt.
Joint Government-Private Sector Committee of Experts on Electronic Commerce Building the Virtual Mall
This is a non-negotiating body that makes recommendations on how to increase and broaden the benefits of e-commerce and how to deal with the issues of expanding electronic commerce in the context of the FTAA. Any committee that is made up of self-proclaimed experts should automatically generate suspicion. Indeed, their primary objective appears to be to turn the internet into a virtual hemispheric mall and promote hyper-consumerism.