Toward a More Corporate Union
of the Americas?
by Katherine Sciacchitano, Dollars
www.alternet.org, February 11,
Which is closer to your vision
of North America?
Vision A: Three interdependent countries
with vibrant social movements, respect for labor rights, and environmentally
sustainable economies anchored in provision of social needs and
respect for cultural autonomy?
Or Vision B: An unequal alliance dominated
by the United States, complete with pumped up oil and gas production,
increasing militarization, corporate transnational planning groups,
and guest worker programs to ensure cheap, vulnerable labor?
If your answer is Vision A, there's good
news and bad news. The good news is that this past August at a
summit of the leaders of the United States, Canada, and Mexico
in Montebello, Quebec, labor, environmental and globalization
activists braved riot police and tear gas to demand democratic
input into North American decision-making. The bad news is that
the summit was about the Security and Prosperity Partnership of
North America (SPP) -- the real-world name of Vision B.
While left activists and researchers in
Canada and Mexico have been spreading the word about the SPP for
several years, so far in the United States the SPP, which was
officially launched in March 2005, has mainly caught the attention
of the right wing, which sees it as a stealth plan to impose a
European Union-style government on the continent.
The SPP is not a North American version
of the European Union. But it is a stealth plan -- one aimed at
bypassing the kind of international solidarity that halted the
Free Trade Agreement of the Americas and the Multilateral Agreement
on Investment. The European Union emerged after years of public
debate and a treaty ratified by member states. By contrast, the
SPP is not a treaty and will never be submitted to the U.S., Mexican,
or Canadian legislatures. Instead it attempts to reshape the North
American political economy by direct use of executive authority.
And while the European Union maintains an explicit role for government
in addressing inequality within and between countries, the SPP's
foundation is an unequal alliance where the United States retains
the political and economic trump cards.
Designed to shore up the United States'
weakening position as a global hegemon, the SPP's primary goals
are to link economic integration of the three countries to U.S.
security needs; deepen U.S. access to oil, gas, electricity, and
water resources throughout the continent; and to provide a privileged
-- and institutionalized -- role for transnational corporations
in continental deregulation. The stakes for labor, the environment,
and civil liberties in all three countries couldn't be higher.
Yet because of the SPP's reliance on executive authority to push
the agenda, many of the SPP's initiatives remain virtually invisible,
even to many activists.
The North American Free Trade Agreement
(NAFTA), which went into effect in 1994, was designed to enhance
the access of transnational capital from the United States to
cheap Mexican labor and Canadian natural resources. The SPP deepens
these relations and harnesses the so-called war on terror to an
expanded U.S.-Mexican-Canadian trade agenda and a lopsided energy
grab to secure U.S. access to dwindling continental oil and gas
As its name implies, the SPP has two basic
parts: the Security Agenda and the Prosperity Agenda. Both are
rooted in the United States' deteriorating global position, particularly
its increased competition for access to global oil and gas reserves
and worsening trade balance with China.
With the explicit aim of securing North
America from "internal" as well as external threats,
the Security Agenda coordinates intelligence activities among
the three countries and streamlines the movement of "low
risk" goods and people (especially so-called "NAFTA
professionals") across borders. It also involves extensive
military coordination, much of it focused on protecting energy
and transportation infrastructure. (Consolidating a North American
military structure no doubt also serves as an offensive hedge
against Venezuela's attempt to shape an independent South American
The Prosperity Agenda continues the Security
Agenda's focus on energy. World demand is growing as traditional
sources from the Middle East, Russia, and South America are becoming
less secure; and the resulting price increases and realignment
of power threaten a redistribution of wealth and power in favor
of the oil and gas producers, many of them in the Global South.
The Prosperity Agenda aims first and foremost at consolidating
U.S. control over North American energy supplies, first by expanding
production in Canada and Mexico, and second by increasing U.S.
access to that production by deregulating energy markets. In addition
to expanding energy production, Prosperity Agenda activities include
a tri-national framework for "minimizing" regulatory
"barriers"; special committees on the auto and steel
industries; removal of constraints on movement of capital and
financial services; and expanded and streamlined cross-border
transportation networks -- networks that will facilitate not only
trade within the continent, but more outsourcing to Asia.
The official SPP website posts official
documents, but ongoing discussions are shrouded within tightly
controlled annual summits, ministerial level meetings, and working
groups that exclude civil society participation. Corporations,
however, have a privileged view of the road ahead and provide
guidance and direction through a specially-created North American
Competitiveness Council. U.S. members of the NACC include Wal-Mart,
Merck, GE, UPS, FedEx, and Kansas City Southern. The U.S. Chamber
of Commerce and the Council of the Americas -- whose website brags
that its blue-chip members represent the majority of private U.S.
investment in Latin America -- serve as the U.S. secretariat.
NACC advice is taken seriously. In February
2007, the NACC issued detailed recommendations for energy integration,
streamlining regulatory processes, and the speedy resumption of
trade after emergencies. Six months later at their August 2007
summit, the countries announced an energy cooperation agreement,
an avian flu preparedness plan with emergency border-management
procedures, and a regulatory cooperation framework. The regulatory
framework -- complete with goals and action plan -- specifically
incorporates NACC recommendations to increase reliance on voluntary
standards and to analyze regulations for their cost to trade.
Although the framework doesn't say exactly how principles would
be applied to different industries, the NACC's 2007 report gives
several telling examples, including regulations harmonizing "hours
of service" for truck drivers that would expand permissible
weekly driving hours, which safety advocates are already challenging
in court. Canadian plans to "harmonize" pesticide use
to U.S. levels -- an action that will raise exposure levels for
most regulated pesticides -- also provide a glimpse at the kinds
of regulatory changes we can expect from the SPP.
"Community" from the Top
In the United States, the best-known proponent
of the SPP is Robert Pastor, director of the Center for North
American Studies at American University. NAFTA broke new ground
by linking Mexico (a developing economy) with the United States
and Canada (two major industrialized nations) in a pact to increase
trade and investment. Predictably, NAFTA increased rather than
decreased inequality. But for Pastor, NAFTA's real problem was
its failure to build continent-wide institutions to push integration
even further. He sees the SPP as a means of building those institutions,
and envisions it as a new model for global governance -- by and
for elites -- that could be used to link other developed and developing
Building a North American Community, a
2005 independent task force report of the Council on Foreign Relations
on which Pastor served, reveals the breadth of SPP's ambitions.
The report called for a security perimeter around the three countries
by 2010, so that goods and people would be checked once on entry
and then move freely -- while being tracked -- within the continent,
greatly diminishing the costs of trade. There would be a common
tariff for goods from outside North America. Currently, NAFTA
rules of origin require checking goods to ensure they contain
sufficient North American content to qualify for duty-free treatment
under NAFTA. A common external tariff would save money by eliminating
the need to check for North American content. It would also facilitate
expanded supply chains and outsourcing.
"Full labor mobility" would
be preceded by greatly expanded guest worker programs tying immigration
status to employment. "Development" funds for Mexico
would translate into transportation and energy infrastructure
to help foreign investment push past the maquila zone on the border
into central and southern Mexico where poverty is greatest and
Intelligence sharing and joint military
exercises would increase "interoperability" and protect
strategic energy and transportation infrastructure. Mexican reticence
to accept U.S. troops on its soil -- the result of eight U.S.
invasions since its independence -- would be overcome in small
steps such as joint disaster coordination and plans for fighting
Academic and political exchange programs
and North American Studies centers would help build a North American
identity. Policy areas not touched by NAFTA or never implemented
would be revisited. As one SPP participant put it, during NAFTA
negotiations, the Canadians wouldn't talk about exporting water,
the Mexican's wouldn't talk about privatizing oil, and the United
States wouldn't talk about immigration. Barriers to maximizing
energy production and cross border trade in oil, gas, and electricity
would be eliminated and pressure put on Mexico's state-owned energy
company, Pemex, to dramatically open itself to private investment.
Air, rail, and trucking companies would be given unlimited access
to all three countries.
Meanwhile, a common regulatory scheme
would make "harmonized" (read: lower) North American
standards the default approach to new regulations, and countries
would have to justify more stringent requirements. A seamless
North American market would create economies of scale for the
largest corporations. Delays and costs of checking goods for compliance
at the borders would be minimized. A rule of "tested once"
would eliminate "duplicative" reviews of product safety
and -- according to the council -- substantially raise profits
for biotechnology and pharmaceutical firms.
The Perils of Being Close
U.S. corporations and elites that dominate
continental production chains clearly stand to gain the most from
the SPP. But in fact, the SPP's earliest roots lie in proposals
by Canadian businesses and think tanks for what Canadians call
"deep integration." Essentially a strategy for bypassing
U.S. protectionism, deep integration seeks to leverage Canada's
geographic proximity for greater access to U.S. markets. The idea
received a serious boost in the days after 9/11. The United States
buys 80% of Canada's exports, and so when the United States closed
its borders following the attacks, Canadian businesses lost millions
of dollars every hour. Canadian elites promptly concluded -- correctly
-- that the price of continued access to U.S. markets was deeper
cooperation on security matters.
Canada, like Mexico, quickly signed a
"smart-border" agreement and began conforming its security
practices to the needs of the Bush administration's war on terror.
In 2002 Canadian officials provided information that helped the
U.S. deport a Canadian citizen, Maher Arar, to Syria, where he
was tortured. The Canadian government has since apologized, and
Arar, a software engineer whose wife stood as a candidate for
the New Democratic Party in 2004, has signed on to a public demand
that SPP provisions be submitted to Canadians for a vote.
But the SPP's dangers for Canadians go
beyond threats to civil liberties. Like NAFTA and the Canadian
U.S. Free Trade Agreement (CUFTA) before it, the SPP is a Trojan
horse aimed at trapping Canadian workers into a downward spiral
of global competition and neoliberal policies.
Both NAFTA and CUFTA were sold to Canadians
on the grounds that increasing trade would boost employment and
productivity; that would in turn solidify the economic base for
Canadian social spending, including the deeply popular single-payer
health insurance program. Instead, elites used the logic of competition
to tighten first monetary and then fiscal policy -- much as Reagan
did in the United States in the 1980s. As in the United States,
recession followed. Canadian exports, particularly of raw materials,
increased, but overall competitiveness came largely from pushing
up unemployment and driving down wages. Meanwhile, budget politics
were used to squeeze rather than support social spending. The
resulting deterioration in services became the pretext for experiments
in private health care provision that could jeopardize the entire
single-payer system. In many cases, it is Canadian divisions of
U.S. transnationals that are profiting.
Not surprisingly, Canadian activists began
arguing for abrogating NAFTA and reversing cutbacks in health
care funding and other public services. With its security trump
card and stratagem of rule by executive order, the SPP helps sidestep
popular opposition to belt-tightening and the more expansive deep
Deep Integration and Natural Resources
Energy provides the strategic example
of how SPP and deep integration would merge the interests of Canadian
and U.S. elites at the expense of ordinary Canadians.
The United States is the world's largest
energy consumer, and by 2025 it will be importing one third of
its supply. Canada is the largest supplier of crude oil and natural
gas to the United States, and has been deregulating its energy
sector since the 1980s to increase access to U.S. markets. Now
that rising oil prices have increased the financial feasibility
of oil production from the vast Alberta oil sands, total Canadian
oil reserves are second only to Saudi Arabia's. Canadian oil concerns
are more eager than ever to increase sales to the United States.
In a fully integrated, privatized North
American energy market, U.S. users would buy the lion's share
of energy resources; at the same time, demand would increase for
Canadian production, and so would prices. Not surprisingly, fully
integrating North American energy markets figures prominently
in the hopes of both U.S. and Canadian elites.
But the same mechanism would make energy
more expensive for Canadian consumers, who will be in direct competition
with U.S. buyers. In addition, easily-tapped Canadian conventional
reserves are dwindling rapidly. Raising oil production accelerates
their depletion and risks Canadian energy and environmental security.
The huge quantities of gas and water needed for production from
the oil sands increase environmental risks even more, and also
make economic feasibility dependent on continued high oil prices.
Finally, Canada is home to a quarter of
the earth's fresh water. Although it is not mentioned in official
SPP documents, Canadian activists believe that SPP includes discussions
of bulk water exports to the United States, threatening Canadian
water security just as the world enters a period of anticipated
severe water shortages.
From NAFTA to the SPP
If Canada's path to the SPP can be described
as a voluntary regression from developed welfare state to exporter
of natural resources, Mexico's reveals the combination of coercion
and repression running through the SPP and NAFTA.
Mexico bought into NAFTA and neoliberalism
as a result of the 1980s debt crisis. U.S. banks made huge low-interest
loans to developing countries and then ratcheted up interest rates.
When Mexico defaulted, the United States and the International
Monetary Fund renegotiated Mexico's loans and saddled Mexico with
free-market reforms that opened the country to foreign investment.
Wages and living standards plummeted. Mexico abandoned what remained
of its development plans and turned to neoliberalism, free trade,
and the promise of increased foreign direct investment to pay
Foreign investment never materialized
on the level expected. Meanwhile, Mexico enthusiastically reduced
agricultural tariffs under NAFTA even as the United States flooded
it with subsidized corn. Two million small farmers were driven
from their land, increasing unemployment and driving down wages.
Today half of all Mexicans live in poverty, with 15 million in
extreme poverty. Half of new labor-market entrants can't find
employment in Mexico, and remittances from migrants to the United
States outstrip foreign direct investment. The situation will
become even more dire when all remaining agricultural tariffs
under NAFTA expire later in 2008.
Any economic plan actually centered on
the needs of the Mexican people would include renegotiating NAFTA's
agricultural provisions. Instead, agriculture is off the table,
and immigration has taken center stage. Rebuffed by the anti-immigrant
backlash in the U.S., Mexico is turning to Canada for an expanded
guest-worker program, and the two countries have set up an SPP
working group to discuss labor mobility.
Meanwhile, SPP negotiators are discussing
funds to address "uneven development." In practice this
means connecting Central and Southeastern Mexico -- regions which
have some of Mexico's highest poverty rates and lowest wages,
but also some of its richest gas reserves -- to U.S. markets.
The region is also the target of former president Vicente Fox's
2001 Plan Puebla Panama, an $8 billion infrastructure program
aimed at integrating southern Mexico with the CAFTA countries.
The overall vision: stepped-up development of energy and gas reserves,
an even lower-wage workforce for maquila production than on the
U.S. border, and transportation and energy networks needed to
produce and carry finished goods to U.S. consumers.
Of course, appropriating land for highways
and other projects requires massive dispossession of farmers and
indigenous peoples. Since many of the peasants NAFTA has displaced
have already crossed the border to the United States, stepped-up
immigration control and labor repression are both in the offing.
So far, the two countries appear poised to limit migration from
the CAFTA countries into southern Mexico, regulate the flow of
Mexican immigrants to the United States in the north, and seal
a captive, repressed workforce in between.
Mexico's participation in the SPP's security
perimeter will greatly stiffen security along its southern border,
where several hundred thousand migrants annually try to cross
into Mexico from Central America to get to the United States.
And the United States has already tightened security along Mexico's
northern border, where 500,000 cross annually.
Bush's $1.4 billion request to the U.S.
Congress for a "Plan Mexico," which he hopes eventually
to extend to Central America, is linked to this plan. Billed as
a "new paradigm" for security cooperation and fighting
drug crime, in reality it's another step toward a U.S.-led continental
military and security structure. It won't position U.S. soldiers
on Mexican ground, but it will deepen coordination and provide
intelligence, training, and equipment to Mexican military and
police. The resources are certain to be used to against Mexico's
growing social movements. Mexico's anti-terrorism law has already
made it easier to criminalize protest. In 2002, the People's Front
for Defense of the Land managed to halt construction of an airport
that was part of Plan Pueblo Panama, and the Front also participated
in the Zapatista campaign to boycott the last presidential election.
In April 2006 the group came to the aid of flower growers and
vendors in a confrontation with police in nearby San Salvador
Atenco. Thirty five hundred police beat 200 of the town's 300
inhabitants; arrested 150; sexually assaulted 30 women; and killed
two youths. For his part in the resistance, the movement's leader
was sentenced to 67 years in prison -- the first prosecution under
Mexico's post-9/11 anti-terrorism law.
Mexico's Energy Matters Too
As with Canada, Mexican energy is where
the largest stakes are being played. Mexico is currently the third
largest supplier of oil to the United States, yet estimates are
that Mexican oil and natural gas reserves could be exhausted in
as little as ten years. The SPP's plan to step up Mexican oil
production by completely privatizing gas production and increasing
private investment in its oil sector will strip Mexico of crucial
resources for development at a time when world oil prices make
them most valuable.
The main barrier to the SPP's privatization
strategy is the Mexican constitution, which guarantees the benefits
of the energy sector to the Mexican people and places management
of oil and gas in the hands of state-owned Pemex. Pemex is a symbol
of national sovereignty, and Mexico refused to commit to privatizing
Pemex during NAFTA negotiations. But legislation in the '90s chipped
away at Pemex's jurisdiction while expanding the scope for private
sector contracts. More importantly, Pemex was severely undermined
during the 1980s debt crisis, when oil and gas revenues were chained
to foreign debt repayment.
As a result, Pemex has been chronically
starved for funds for exploration and development. The shortage
is routinely used as an argument for privatization. The SPP has
plans to release a report this year highlighting Pemex's purported
inefficiencies and need for private capital. Sixty percent of
Pemex's revenues go to supplying nearly 40% of Mexico's national
budget; no private firm could survive under similar constraints.
Ironically, the 1970s loans that led to the 1980s debt crisis
were made so Mexico could develop newly discovered oil during
a period of record prices. Those record prices were the result
of the 1973 OPEC oil boycott. OPEC deposited the profits from
those price hikes in U.S. banks, and those funds in turn became
the capital U.S. banks used to lend to Mexico. Chaining Pemex's
revenues to debt repayment in the 1980s meant Mexico was forced
to increase output and add to what by then was a glut of world
energy supplies -- thereby contributing to lower world prices
and weakening its own revenues. In effect, Mexico went into debt
slavery to help undermine OPEC and cheapen the cost of energy
for U.S. corporations. SPP's agenda brings the cycle full circle,
with the United States willing to accelerate exhaustion of Mexico's
remaining reserves to bolster its own increasingly precarious
international energy position.
Upping the Ante
The SPP ups the ante for activists. Until
now, labor and progressives -- at least in the United States --
have tended to focus on specific targets such as trade agreements
or demands for debt relief. And when we analyzed NAFTA, we analyzed
it in class terms, not in geopolitical terms. But the SPP's goals
are broader and deeper even than NAFTA's goals. They aim at nothing
short of remaking the political and economic governance structure
of North America.
The wishes of Canadian and Mexican elites
notwithstanding, the SPP's primary purpose is to buoy U.S. capitalism's
flagging international position, from its trade deficit to its
energy deficit. U.S. security, energy and transportation needs
are the touchstones, and the draft agreement aligns the policies
of Canada and Mexico -- and appropriates natural resources --
to meet those needs. Economic integration is conditioned on military
integration, which in turn aims at consolidating the U.S. position
in the hemisphere.
While the United States maintains most
of the economic leverage in the triad, most hot-button issues
are in Mexico and Canada. For U.S. activists in particular, bringing
these issues alive will first require a much deeper understanding
of our neighbors, and an ability to link their issues to domestic
Chief among the dangers for ordinary people
in all three countries are the environmental consequences. Increasing
rates of fossil fuel extraction in North America may feed the
U.S. energy habit, but the solution is short term. The contributions
to global warming for North America and the world, however, will
The SPP's bundling of security with economic
concerns also fuels Bush's war on terror, the accelerating militarization
of U.S. foreign policy, and continued U.S. leadership of neoliberal
globalization. Canada's commitments of troops in Afghanistan,
increased military spending, and willingness to find common ground
with the United States on Latin America and the Caribbean are
one product of the noxious mix. Another is Mexico's willingness
to serve as a counter-weight to Venezuelan attempts to harness
its oil wealth to alternative regional and global development
In terms of daily governance, the SPP
privatizes the regulatory functions of government on an international
scale not seen before in industrialized democracies. NAFTA and
other WTO agreements limit the legislative and regulatory powers
of member states by imposing global standards such as "market
access" and "national treatment" on how countries
treat foreign investors. These standards create "one way
roads" to privatization once countries begin liberalizing
a sector. Applied to Canadian experiments in private health care,
they could end up forcing Canada first to open its doors to for-profit
foreign providers and insurance companies, and then to pay them
the same subsidies given to Canadian public and nonprofit operators.
In the United States (where health insurance is already private),
they could be used to prevent the United States from putting its
own single-payer system in place.
By contrast, the SPP bypasses national
authority to create formal, tri-national structures for corporate
regulatory input prior to involvement by legislatures or citizens.
Many SPP goals are thus hidden at their inception; even after
they emerge, most will be buried in the daily workings of executive
agencies who have been directed to give maximum attention to corporate
needs and trade. In the United States, a short list of agencies
already involved in the SPP includes the Department of Justice,
the Department of State, the Federal Trade Commission, the Federal
Communications Commission, the Departments of Agriculture and
Energy, and the Department of Homeland Security.
Finally, the SPP is a frontal assault
on labor and civil liberties. Plan Mexico should be seen as a
threat to human rights throughout the continent. The North American
labor movement desperately needs a democratic Mexico where independent
organizing and labor rights can be exercised without threat of
violence. Instead, the SPP will intensify exploitation of Mexican
labor and deepen the low wage neoliberal model in both the United
States and Canada, as well.
What It Will Take
Currently, Bush is politically weakened
by the Iraq war, Mexico's president Felipe Calderón by
his election scandal, and Canadian prime minister Stephen Harper
by his lack of a parliamentary majority, raising the question
of whether the SPP will survive the leaders' terms in office.
But even if it were stopped in its current
form, much of the SPP would continue. A Framework for Regulatory
Cooperation has been signed, complete with goals for action and
annual work plans. The North American Energy Working Group --
now integrated into the SPP -- was actually established in 2001.
Plan Mexico, once funded, will take on its own life, and the push
to privatize Pemex will continue.
Opposition to Plan Pueblo Panama gives
some indication of the depth and breadth of the activism that
will be needed to be effective with the SPP's agenda. Calderón
recently revived Plan Puebla Panama, with an added military component
-- no doubt inspired by the SPP. Yet it was stalled for many years
by protests against displacement of farmers and destruction of
the environment, and a vibrant cross-border network of activists
has grown up around it. The breadth of the Plan Puebla Panama
led activists to conclude that opposing environmentally destructive
infrastructure projects wasn't sufficient: what is necessary is
a deeper understanding of the economic and political vision behind
Plan Pueblo Panama, and development of an alternative analysis.
An effective response to the SPP agenda
will require the same kind of expanded cross-border contacts and
focused study of the North American and global political economies.
This is the very work the left needs to do to begin creating economic
and political alternatives that reflect its values.
The challenge is particularly difficult
for activists in the United States. Unlike the left in countries
where domestic agendas have been affected by U.S. actions for
many years, most in the United States think of domestic issues
as controlled by domestic politics. But as rising oil prices combine
with a falling dollar, and U.S. economic autonomy begins to be
more constrained, more people in the U.S. may understand the need
for different allies.
U.S. activists need a democratic Mexico
with strong labor rights and a Canadian welfare state that survives
the ravages of neoliberal globalization. We need to build an environmental
agenda based on conservation and renewable resources and an economic
agenda based on diversity and human rights. We need a progressive
voice that can drown out right wing cries that the problem of
globalization is the loss of U.S. dominance and power. Most of
all, we need an international, powerful, and organized response
from the left, and popular forces to challenge the more deeply
coordinated and increasingly militarized forces of international
capital. Reasoned opposition is no longer enough.
This article is from the January/February
2008 issue of Dollars & Sense: The Magazine of Economic Justice.