Free
Trade for Whom?
By
Harriet Mullaney
Different
Visions.
The Central America Free Trade Act (CAFTA), which
will define U.S. trading relationships with Guatemala, Nicaragua,
El Salvador, Costa Rica, and Honduras, is the legal counterpart
to Plan Puebla Panama (PPP) and is currently being negotiated.
Familiarity with the North American Free Trade Act (NAFTA), encompassing
the U.S., Mexico, and Canada, is critical in understanding what
to anticipate from CAFTA and the proposed Free Trade of the Americas
Agreement (FTAA). These plans share a well-coordinated goal: increase
the economic power of U.S. transnational corporations, with as few
restrictions as possible, by opening and integrating the markets
of Mexico, Central America, and ultimately all of Latin America.
From a social justice
perspective, economic integration should focus on human development
and participation as the means for advancing economic development.
This has not been prioritized and thus the structural roots of
poverty remain:
• lack of education
and health care.
• growing crisis
in hunger.
• limited access
to potable water and adequate housing.
• high unemployment.
• low wages.
• economically-motivated
migration.
• loss of confidence in democracy.
Consideration of an alternative global vision that, as articulated
at a women’s conference sponsored by Mesa Global in Guatemala,
would “reinvigorate the people of the world, based on communal principles
of human, political, social, economic, and cultural rights” seems
overlooked.
Unifying Theme.
Privatization, the sale of public services as barriers unfair to
trade and competition, has been one of the foundations of the neoliberal
trade model promoted by the World Bank (WB), the Inter-American
Development Bank (IDB), and the International Monetary Fund (IMF).
Privatization has taken on a new intensity under the Bush administration
as a foreign policy strategy. Tom Barry (Interhemispheric Resource
Center) describes this strategy as a Global Pax Americana
that “envisions a world in which U.S. politics, culture, and economy
are the coin of the realm, and where there are no existing threats
to U.S. supremacy.”
As Central American countries emerged from civil war and internal
strife, they began economic reforms under the direction of the WB,
IDB, et al. by lowering trade barriers, eliminating state subsidies,
and selling social services. Throughout Latin America, there were
396 sales/transfers of public assets from 1986-99. Most citizens
do not believe that privatization has benefited them. WB and IDB
report that privatization has done nothing to improve Latin American
fiscal positions and has deepened income inequality despite increased
growth. Regardless, the course of action remains the same, including
tacit approval of corrupt government partners.
The Mexican Test Case.
20 years of trade liberalization and 10 years under NAFTA foretell
much of what can be expected for countries to Mexico’s south. On
the positive side:
• Trade and investment
have been stimulated.
• Exports have
grown annually at 10.6%.
• Foreign direct
investment (FDI) has nearly tripled.
• Inflation has been curbed.
Unfortunately, the negative side of the ledger looms more ominous
for Mexico and the fate of free trade elsewhere.
• Annual per capita
economic growth was 1% from 1985-99, compared with 3.4% from
1960-80.
• Imports exceed
exports, resulting in a balance of payments deficit.
• Despite manufacturing
growth, jobs show a net loss since NAFTA.
• Real minimum
wage is down 60% since 1982, and 23% under NAFTA.
• Households
in poverty have increased by 80% since 1984, with 75% now below
the poverty line.
• Inequality has deepened.
• Rural Mexico
is in particular crisis—80% in poverty, and over half in extreme
poverty.
• From 1985-99,
rural soil erosion, municipal solid waste, and air pollution almost
doubled.
• Since NAFTA, real spending on the environment
is down 45%, and plant inspections have been halved.
• Increases in FDI have failed to bring cleaner
technologies and higher environmental standards.
Pre-trade liberalized Mexico had many problems,
but the free trade era has not been kind to the majority of Mexicans,
making their lives harder and increasing economically-motivated
migration. Mexico, mired in its own long history, has not been able
to resolve these issues to the benefit of its citizens.
The agricultural sector has suffered under NAFTA,
but not silently. Almost 100,000 campesinos marched on Mexico City
on January 31 seeking renegotiation of NAFTA’s agricultural provisions
and calling for recognition of the non-market contributions of the
campesino economy essential to national sovereignty, cultural diversity,
and rural employment. Concern also exists over the cultural and
health implications of Mexico’s importation of 40% of its food.
Campesinos are demanding national policies that respond to national
needs.
A key issue revolves around the subsidies paid to
U.S. agribusinesses that allow them to export grains at below cost.
This practice, known as “dumping,” is prohibited by NAFTA and
the World Trade Organization (WTO). In 2001 alone, an estimated
5 million tons of U.S. corn were sold at a dumping margin of 25%.
These practices have economic consequences for Mexican farmers,
and also culturally assault a way of life and the crop central to
it.
Chapter 11, NAFTA’s investor-to-state dispute resolution
clause, has been widely publicized over a $970 million lawsuit brought
by the Canadian corporation Methanex against the U.S. to overturn
a California law phasing out MBTE, a gasoline additive and suspected
carcinogen. Less known is the $16 million judgment against Mexico
for a suit brought by U.S.-based Metalclad resulting from San Luis
Potosi residents refusing a toxic waste site. Such dispute resolution
holds the potential to bankrupt nations.
The maquiladora industry, established along the
border in 1965, grew exponentially post-NAFTA. Hundreds of U.S.
assembly plants relocated there for the low waged workforce, the
majority internally displaced. Now these companies are turning
to even lower paid workers in Central America and Asia. In 2001,
Mexico began to lose its appeal, and within 18 months lost 600 maquilas
(250,000 unemployed). The development of maquilas in southern states
is proceeding more slowly than originally anticipated. The history
of Mexican maquilas exposes the fickle nature of a free trade environment.
The lessons to be learned from Mexico’s experience
cannot be overstated, and reveal the extent to which other economies
throughout the Americas will be impacted by the proposed U.S. free
trade agreements
What You Can Do:
Follow these
issues with these links:
Global Exchange - www.globalexchange.org
Committee in Solidarity with the People of El Salvador -
www.cispes.org
Religious Task Force for Central America and Mexico
- www.rtfcam.org
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