Small Steps for Corporate Trade
by Patrick Woodall
Multinational Monitor, May/June
President Bush came into office intent
on pushing a straightforward trade agenda that would benefit his
corporate backers. His plan: Kickstart the stalled World Trade
Organization (WTO) negotiations that had broken down after the
demonstrations in Seattle in 1999 and expand the even more pro-business
North American Free Trade Agreement (NAFTA) throughout the Americas.
Three years later, these two broad trade agenda items are no closer
to completion than they were in the Clinton administration.
In the United States, the political will
for free trade deals withered during the Bush administration as
nearly 3 million manufacturing jobs evaporated and high tech jobs
were outsourced. Internationally, the will for NAFTA and WTO expansion
was equally lacking. The September 2003 Cancun WTO Ministerial
collapsed after industrialized nations refused to address the
concerns of the developing world that the WTO disproportionately
benefited rich countries and harmed poorer ones.
The next month, talks in Miami significantly
scaled back the scope of the negotiations for the Free Trade Area
of the Americas, a U.S.-led initiative effectively to expand NAFTA
to the entire hemisphere, minus Cuba. Instead of continuing the
negotiations of the entire agreement as a single undertaking,
the negotiators agreed to an a la carte approach (with countries
agreeing only to different parts of the trade treaty) that mired
the negotiations. This April, an emergency meeting to resuscitate
FTAA negotiations failed to produce a breakthrough.
While the U.S. continues to pursue a new
round of WTO negotiations and enactment of NAFTA expansion through
the FTAA, it is working on many parallel tracks to use bilateral
and mini-regional free trade agreements (FTAs) to advance the
WTO and FTAA agendas.
"Step by step, country by country,
region by region, the United States is opening markets with top-notch,
comprehensive FTAs that set the standard," explained U.S.
Trade Representative (USTR) Robert Zoellick in December of last
Under the Bush administration, the United
States has entered into trade agreements with Chile and Singapore,
and commenced or completed negotiations for FTAs with the Central
American countries and the Dominican Republic, Australia, Bahrain,
Colombia, Peru, Bolivia, Morocco, Panama and Thailand.
Regardless of the scope (global, hemispheric,
regional or bilateral), the goal of all of the trade agreements
is to establish trade pacts that guarantee multinational corporate
interests will be protected. Intellectual property rights of pharmaceutical
companies are advanced while the ability for developing countries
to ensure access to generic medicines is compromised. The agreements
deem many national and local environmental regulations to be illegitimate
expropriations of profit. Copyright and trademark protections
are enforced with trade sanctions, but violations of labor and
environmental law are at best subject to fines and more frequently
are totally ignored.
The Bush administration's focus on smaller
trade measures has a two-fold purpose: to isolate some countries
who were skeptical of the U.S. trade agenda at the WTO and the
FTAA; and to set markers for future trade deals based on what
countries acquiesced to in bilateral agreements.
The United States is using FTAs to isolate
FTAA critics and loosen the negotiating logjam.
Brazil, Venezuela and Argentina are resisting
the U.S. agenda for the completion of the FTAA. They object to
U.S. demands over services liberalization (that foreign companies
should be able to compete for service provision everything from
telecommunications to package delivery to electricity on equal
footing with national companies), procurement rules (prohibiting
governments from favoring national suppliers), investment measures
(defining some environmental and other regulations that harm company
profits as indirect expropriations requiring compensation) and
agricultural tariffs and quotas (maintaining protections and subsidies
for U.S. farmers, especially big agribusiness).
But the United States has already reached
or started negotiations for trade deals with a dozen Latin American
countries. Indeed, when announcing the proposed U.S.-Panama FTA
negotiations, USTR noted that "high-quality agreements that
promote regional economic integration (Chile, CAFTA) with like-minded,
ambitious trading partners complement and provide impetus for
the FTAA negotiations." Such deals disadvantage FTAA critics,
because their neighbors are already entering into agreements with
the United States that lower tariffs on their exports to the United
The smaller FTAs also set the standard
for future agreements. For example, the Singapore FTA rolled back
modest advances made by the Clinton administration on labor and
the environment in the Jordan FTA. The Jordan FTA contained the
strongest measures to date on enforcing domestic labor and environmental
laws. These provisions were absent from the Singapore FTA and
signaled that the Bush administration would remove any remotely
effective labor and environmental provisions from future trade
The inclusion of broader services agendas
in the FTAs makes it more difficult to resist the stalled U.S.
services market liberalization agenda in the FTAA or the WTO.
The president of the Coalition of Service Industries, Robert Vastine,
endorsed the Singapore FTA because "the agreement provides
commercially meaningful market access for services" and continues
the "negative list" approach to services negotiations.
The negative list requires countries to open all of their services
markets unless they specifically opt out of specific services
The Central America Free Trade Agreement
(CAFTA) also includes the investor-to-state provisions of NAFTA
that allow companies, instead of governments, to challenge domestic
safeguards as illegitimate barriers to profits and trade, imperiling
environmental and labor laws which restrict profiting from pollution
and labor exploitation. "Since multinational companies could
challenge environmental and public interest protections before
international tribunals, demanding tens of millions in compensation,
how many Central American countries will still take action to
safeguard their citizens and the environment?" asks Friends
of the Earth (U.S.) President Brent Blackwelder.
CAFTA also expands patent monopolies for
U.S. pharmaceutical companies in Central America, effectively
limiting affordable access to generic medicines to treat HIV/AIDS
and other diseases. This intellectual property provision runs
counter to promises made at the WTO negotiations in Doha in 2001
to respect countries' right to take measures to ensure "medicines
"The issues that have [the WTO] hung-up,
and that created a stalemate in FTAA, like investment, procurement,
rules on competition and trade facilitation, are the issues Zoellick
and his negotiators can get more easily on a one-on-one basis,"
concludes the Washington, D.C-based Global Trade Watch's Chris
Whether this is an effective strategy
for advancing corporate interests is controversial in the business
community. Many corporate representatives say USTR is distracted
by the numerous negotiations with small market countries and has
lost sight of the big picture.
What is clear is that, unless citizen
movements in the United States can defeat them in Congress, a
legacy of the Bush administration will be a series of trade agreements
that establish a wide array of special protections for corporations
in many small and vulnerable economies around the world.
NAFTA / FTAA page