FTAA & the Environment - SNSF Backgrounder
INTRODUCTION
Global trade has expanded and contracted at different periods in the past, but throughout most of modern history there were no international regimes deliberately directing these trends. After WWII, however, this began to change. The U.S. and many other Western capitalist nations began to make tentative moves towards a systematic expansion of trade liberalization policies.
This was first reflected in the General Agreement on Trade And Tariffs (or GATT) process initiated in 1947. Basically, this process took a piece-meal approach towards reducing tariffs - every few years there was a new 'round' and it usually focussed on specific sectors of the economy.
By the time of the late 1980's, and particularly after the Soviet empire collapsed, there was a surge of pressure from the global capitalist elite to pursue liberalization policies at an accelerated pace and within the context of more structured regimes and institutions. The IMF and the World Bank, which had been around since the end of WWII, were retooled in the early 80's into instruments designed to consolidate the control of global capital over their client countries. The 'structural adjustment programs' (SAPs) which they prescribed to indebted nations represented a neoliberal recipe which included an emphasis on privatisation, deregulation, investment protections, and a dismantling of currency controls. Essentially, what this came down to was a relentless push towards doctrinaire free-marketism, and the dogmatic belief in this economic ideology became otherwise known as the "Washington Consensus".
But while the IMF laid the groundwork for liberalization within individual nationals, it was not designed to secure the liberalization of capital relations between those nations. This was still the province of the GATT in the 80's, but the business elite felt that there was the potential for mechanisms which might propel the expansion of trade much faster, and which might also greatly expand the concept of trade itself.
It is within this context that the first major free trade deal was signed: the Canada-U.S. Free Trade Agreement (FTA), implemented in 1989. This was supposed to eliminate all tariffs between the U.S. and Canada by 1998. But this treaty was supplanted in 1994 by an even larger and more comprehensive treaty between Canada, the U.S., and Mexico. This was, of course, the North American Free Trade Agreement (NAFTA).
NAFTA
The NAFTA represented a critical stage in expanding the power of trade regimes. It differed from its precursors mainly by virtue of its broadly applicable investment chapter, better known as "Chapter 11". This chapter allows corporations to directly sue the government of a NAFTA member-country for lost profits that result from government actions - even prospective lost profits. The chapter also includes a dispute settlement mechanism which mandates a tribunal of international trade-lawyers to settle things when corporations choose to sue one of the governments which is signatory to the treaty. Since the creation of NAFTA, there has been a proliferation of free trade agreements, with many bilateral ones such as the Canada-Chile agreement, and some multilateral ones such as the proposed Central American Four (CAFTA) treaty, and almost all contain investment provisions which are similar to those of NAFTA.
Right at the outset, labour was very suspicious of NAFTA, and time has proved that these fears were well-founded. As we near its tenth anniversary, NAFTA continues to exert massive negative impacts on workers all across the continent. During the NAFTA years, 75% of Canadians have seen a decrease in real income according to Statistics Canada, while in Mexico, real wages have declined by 23%. In the U.S., economist Robert Scott has shown that NAFTA eliminated over 700,000 job opportunities between 1994 and 2000. Labour unions continue to be seriously undermined as factories close shop in favour of cheaper labour elsewhere. Just to name a few major cases in the past year here in Quebec, we have witnessed the closure of the Fruit of the Loom plant in Trois Rivières, the shutdown of the GM plant in Boisbriand, and the announced closing of Avon in Montreal.
On the environmental front, it should be noted that trade is, inherently, an environmentally unfriendly proposition. It involves shipping goods over huge distances, resulting in the burning of large quantities of fossil fuels; it involves the packaging and repackaging of goods for different segments of their voyage, causing considerable negative environmental impact through the waste of paper and other materials; and it encourages the irresponsible consumption of valuable resources from somewhere else on the planet by consumers who have little or no appreciation of the environmental damage that is being done. In general, trade serves to conceal unsustainable practices, to push them beyond the field of vision of the average consumer. It is also a question of scale. Increased market size means increased production thanks to economies of scale, and this in turn means increased resource exploitation and waste.
But the environmental impacts of NAFTA extend further still. Corporations have discovered that they can use NAFTA to contest environmental regulations which get in the way during their race for ever-increasing profits. The MMT case, the S.D. Myers case, and the Metalclad case have all demonstrated that when foreign corporations choose to challenge environmental regulations that are based on the precautionary principle, corporations will emerge victorious and the environment will lose. This has effectively shut down the possibility of enacting environmental legislation based on the precautionary principle. This phenomenon has come to be known as the 'chill effect'.
The environmental risks inherent in NAFTA were recognized to some extent during its negotiation, and in order to reduce environmental opposition, a side agreement -- the North American Agreement on Environmental Cooperation (NAAEC) -- was tacked onto it. The NAAEC established the Commission for Environmental Cooperation (CEC) to oversee implementation of the agreement. The CEC head office is located in Montreal.
The CEC, however, is essentially powerless as a regulatory body and has no direct ability to alter the environmental consequences of trade. The one exception is that the CEC has some enforcement powers through investigation of citizen complaints that a country is not enforcing its environmental laws and regulations (but Canada is exempted from this since it never agreed to the provision). Otherwise, the CEC is relegated to report writing, and even on that score, it has generally been reluctant to rock the boat.
The FTAA
Now we come to the Free Trade Area of the Americas (FTAA). The idea is basically that of an expanded NAFTA which will cover all the countries of the Americas with the exception of Cuba, supposedly because Cuba does not meet certain stringent democracy requirements (or to put it another way, a certain minimal level of democracy must be present before the FTAA can move in and erode it).
Officially, the FTAA was conceived in 1994 at a meeting in Miami of trade ministers and business leaders, but the idea may well have originated at an earlier date. Robert Zoellick, the United States Trade Representative (USTR) has recently suggested that it was in fact the brainchild of Ronald Reagan. The murkiness of its history has been compounded by the extreme lack of transparency in which negotiations have proceeded. Aside from brief glimpses during the yearly ministerials which have occurred since 1995, the public has been almost completely shut out of the FTAA process. A public consultation process exists, but it is mainly a cosmetic gesture. Until very recently, there was not even a mechanism to inform negotiators that public submissions had been made. Meanwhile, all meetings occur behind closed doors, and draft texts were kept secret until 2001 when a massive 'liberate the text' drive mounted just prior to the summit in Quebec City finally forced them to be divulged.
What was revealed to the public did not instil confidence. In spite of repeated assurances from trade officials that the FTAA would not repeat the mistake of NAFTA's Chapter 11, it was discovered that the FTAA included an investment chapter nearly identical to that of NAFTA. Furthermore, the most recent draft, unveiled after the Quito ministerial, reveals a much expanded services chapter which, unlike that of NAFTA, is likely to be subject to investor-state provisions as well. The FTAA, therefore, is now being characterized by many critics as NAFTA + GATS, with GATS being the notorious General Agreement on Trade and Services which is being negotiated within the WTO. In short, the FTAA appears to be, if anything, potentially much more threatening than NAFTA.
The environmental outlook for the FTAA is especially grim. NAFTA was drafted in the wake of the much publicized Dolphin/Tuna case of 1991 (under a GATT dispute resolution mechanism), so it was felt necessary to mollify environmentalist interests. But FTAA negotiators seem to have all but ignored the environment as a serious consideration. Many environmental groups have insisted on the inclusion of a powerful environment chapter in the agreement and a separate negotiating group to produce it, but nothing in this regard has ever materialized. Even the less desirable option -- another side-agreement along the lines of the CEC -- has been utterly ignored.
Of course in some ways, this is not such bad news, because any environmental provisions within the FTAA are bound to be a sham anyhow. The underlying economic concepts, after all, are inimical to long-term ecological sustainability. Perhaps without the greenwash, the public will at least be able to judge the thing for what it actually is.
Meanwhile, the really good news is that the tide is turning with regard to public opposition to the FTAA, and particularly in the South. Resistance in Latin America to corporate imperialism has snowballed over the past year in the wake of the financial debacle in Argentina. In Argentina, Uruguay, Bolivia, Ecuador, Venezuela, Brazil, and Mexico, people are fed up the corporate erosion of democracy and are lashing back. What has the neoliberal agenda brought them? Income has stagnated and decreased. The middle class has greatly diminished leaving the gap between rich and poor more dramatic than ever. In the year 2000, the middle class represented only 25% of the total Latin American population, as opposed to 53% in 1960. Education and health services have been gutted in many countries by successive waves of privatization. It is little surprise that Lula in Brazil, Eva Morales in Bolivia, Lucio Gutierrez in Ecuador, Hugo Chavez in Venezuela, and other anti-neoliberal voices now garner legions of supporters.
Resistance will continue to mount as we move towards 2005, the date which negotiators have set as their target date for full implementation. One recent aspect of this resistance is a hemispheric plebiscite. The first country to complete this task was Brazil, where 10 million voters - 98 % of those polled - voted to reject the FTAA last September. A similar plebiscite has already been initiated in Quebec by the Réseau québécois sur l'intégration continentale (RQIC) . This task will be completed over the next few months. Also, there are plans for a large-scale mobilization in Miami, where the ninth ministerial will be held from November 17th to 21st.
Get Involved - Stop the FTAA Now!
Solidarity Network to Stop the FTAA (SNSF)
http://www.snsf-rscz.com
For further information contact:
ftaa-alert@angelfire.com
(450) 437-5044