FTAA: For the Already Affluent
April 26, 2001
While I was in Quebec City for the protests against the proposed Free Trade Area of the Americas (FTAA), I saw marchers from Brazil's landless-peasant organization, Haiti's democratic movement and Canada's industrial unions. Protesters waved the flags of Mexico and Chile, Cuba and Quebec.
What united these diverse groups from all over the hemisphere? A determination that social values -- like labor rights and environmental protection -- not take a back seat to international commerce. One picket sign proclaimed, "My kind of globalization: social values, trade unions, solidarity." That's not the kind of globalization the FTAA promises.
So-called "free trade" agreements like the North American Free Trade Agreement (NAFTA) and the FTAA -- which is just NAFTA expanded to a hemispheric scale -- deprive people and communities of the meager tools they have to counteract the power of capital.
For example, pollution from factories of northern Mexico has caused severe health problems in surrounding communities, including appalling patterns of babies being born without brains in some border towns.
What recourse do individuals have? Very little, short of fleeing their homes. Only communities with the power to decide democratically whether to allow a company in will be able to exclude polluting companies and to impose environmental standards on those that they do allow in. The proposed free-trade agreements, however, rule out such powers as unfair "restraints on trade."
A small town, of course, will rarely enjoy much bargaining power against a multinational company, especially if its residents are desperate for jobs. The free-trade agreements, however, have the same negative effects on a national scale.
These agreements apply not only to trade in goods, but also to capital. They pull down regulations, known as capital controls, that countries impose on foreign investment. The "liberalization" of Mexico's financial markets opened the country to a massive influx of foreign capital during the early 1990s, putting the country at the mercy of international investors and speculators. When the bubble burst in 1994 and investors abandoned the Mexican peso, the country faced a massive economic crisis. Mexican workers and farmers suffered a decline of nearly one-third in their living standards.
The same dynamics dragged the economies of Brazil, Russia and the whole of East Asia into depression. In each case, many investors made a killing and left, investors who were late to leave got bailed out, and ordinary people footed the bill.
No wonder the few who make their fortunes from investments feel that their right to invest wherever they choose, without any regulation or constraint, is the very height of freedom.
For the rest of the world, freedom consists of the power to collectively and democratically decide their fate -- how their economies will be organized, what kinds of jobs will be available and what environmental conditions they will live in. And these freedoms are far from safe in the dangerous new world of "free trade."
Alejandro Reuss is originally from Santiago, Chile. He is currently co-editor of Dollars & Sense magazine in Cambridge, Mass. He can be reached at email@example.com.