NAFTA on Steroids:
The Free Trade Area of the Americas (FTAA)
Global Exchange newsletter, Spring 2001
During the last year and a half, street demonstrations in
Seattle, Prague and Washington, DC unmasked the three main institutions
driving corporate globalization-the World Trade Organization,
the International Monetary Fund, and the World Bank. The protests
shifted the public debate over corporate globalization and forced
directors at these institutions and their corporate allies onto
the defensive. But now the "free trade" lobby has another
project up its sleeve-the FTAA, or Free Trade Area of the Americas.
From April 20 to 22, heads of state from 34 countries from
throughout the Western Hemisphere will gather in Quebec City,
Canada for the Summit of the Americas. The Free Trade Area of
the Americas will be at the center of the summit's agenda. During
the meeting the hemisphere's leaders are expected to approve the
first draft of the FTAA, which trade negotiators hope to finish
The heads of state shouldn't expect to conduct their closed-door
negotiations in peace and quiet. Thousands of people are planning
to be in Quebec City in April to express their opposition to the
FTAA and to articulate their own fair trade vision. The protesters
will demand that the failed "free trade" system be reversed,
The FTAA presents a serious challenge to progressives opposed
to the "free trade" status quo. The agreement combines
some of the worst provisions of the North American Free Trade
Agreement (NAFTA) and the WTO. The agreement, like its predecessors,
puts the interests of investors above the need to protect the
environment, human rights and working communities. And its implementation
threatens to accelerate the race to the bottom in labor and environmental
Pessimism is not in order, however. With at least two years
to go before FTAA ratification, fair trade forces enjoy the space
to tap into the public's skepticism about the free trade experiment
and strengthen popular resistance to increased corporate power.
Equally encouraging, environmentalists, human rights activists,
trade unionists, farmers, indigenous peoples, and women's groups
from around the Hemisphere have already developed an "Alternative
Agreement for the Americas" that offers a vision of what
environmentally sustainable and socially just commerce would look
like. By pointing to the past failures of agreements such as NAFTA
while at the same time insisting that a different future is possible,
fair traders have a real chance of defeating the FTAA.
Discussions over a hemispheric free trade agreement began
in December 1994 during the first Summit of the Americas, held
in Miami. Talks advanced in 1998, when trade ministers met in
Santiago, Chile. Since late 1999, negotiations have been taking
place every few months, and the first working draft will be ready
for Quebec City.
Despite repeated calls for open and democratic development
of trade policy, the FTAA negotiations have been conducted in
secret. Early in the negotiation process, non-governmental organizations
demanded access to the talks and requested working groups on democratic
governance, labor and human rights, consumer safety, and the environment.
National trade negotiators rejected these requests and instead
established a committee to represent civil society views. But
this committee is little more than a suggestion box; it contains
no mechanism to actually incorporate civil society concerns into
US trade officials have been unresponsive to demands to make
the talks more transparent. In November 2000, more than 300 citizen
groups sent a letter asking that a draft of the FTAA be made available
to the public. In January, Members of Congress made a similar
request. Finally, on January 17, the office of the US Trade Representative
(USTR) released abbreviated summaries of its positions; but it
has not released the complete draft. In comparison, the Canadian
government made its positions public last December.
While NGOs-and even members of the US Congress, which has
not set the goals for US participation-are locked out of the negotiations,
corporations have been helping write the rules of the FTAA. More
than 500 corporate representatives enjoy the security clearances
needed to review FTAA documents.
Given this imbalance, it's not surprising that the US's positions
protect corporate interests at the expense of human rights and
The FTAA is an expansion of NAFTA to all of the countries
of the Caribbean, and Central and South America (except Cuba).
In the debates over the passage of NAFTA, the free trade proponents
promised that increased trade would create good-paying jobs and
not harm the environment. The last seven years have proven otherwise:
* In the US, an estimated half million jobs have been lost
since NAFTA's enactment as companies relocate to Mexico to take
advantage of weaker labor standards and lower wages. US workers'
new jobs provide, on average, only 77 percent of the wage of their
* In Mexico, wages in the manufacturing sector dropped 9.5
percent from 1994 to 1999. Approximately 28,000 small businesses
in Mexico have shut down, and the number of Mexicans living in
"severe poverty" (less than $2 a day) has grown by 4
million. In rural areas, thousands of farmers have been driven
into bankruptcy by the flood of cheap, subsidized US corn.
* NAFTA has also contributed to union-busting. According to
a Cornell University study of more than 600 organizing campaigns,
US employers threatened plant closings in 62 percent of the cases.
* The explosion of maquiladoras along the US-Mexico border
has created an environmental and public health nightmare. Every
day 44 tons of hazardous waste are improperly dumped along the
border. Due to a lack of sewage treatment in shantytowns, hepatitis
in the border communities is two to three times Mexico's national
* Forests in southern Mexico have suffered. Since NAFTA, 15
US wood product companies have set up operations in Mexico, and
logging has increased sharply. In the state of Guerrero, 40 percent
of the forests have been lost in the past eight years.
NAFTA deserves to be repealed, not expanded. The NAFTA experience
demonstrates that the race to the bottom is real: Corporations
move their operations to countries where environmental regulations
are lax or unenforced, and use their ability to move as a lever
to lower standards here in the US. This dynamic will worsen under
the FTAA as corporations pit poor workers in Mexico against even
poorer workers in Haiti, Guatemala and Colombia.
While the FTAA is largely based on NAFTA, in some areas it
goes even farther than its predecessor. Indeed, the FTAA is NAFTA
The FTAA's most sweeping rollbacks of environmental, consumer
and human rights protection appear under the agreement's provisions
on investment. The FTAA investment rules are very similar to elements
of the Multilateral Agreement on Investment (MAI), a kind of corporate
bill of rights that activists defeated in 1998. If implemented,
the FTAA's investment rules would elevate property rights above
Like NAFTA, the FTAA will include "investor-to-state"
lawsuits. These give corporations the ability to sue governments
over regulations that diminish a corporation's potential future
profits. These lawsuits grant corporations-but not citizens or
NGOs- powers formerly reserved only for nation-states. Such lawsuits
represent the most direct assault by corporations on values such
as environmental protection and human rights defense.
Already, under NAFTA, several investor-to-state lawsuits have
resulted in reduced government powers to protect the public interest.
In one case, Canada dropped its ban on the chemical MMT, a fuel
additive linked to nervous system damage, after the US-based Ethyl
Corporation used the NAFTA dispute tribunal to challenge the Canadian
law. In another bad call, a NAFTA tribunal forced Mexico to pay
$16.7 million to a US corporation after a state government in
Mexico prevented the company from opening a hazardous waste disposal
center. A case is currently pending under which the US may have
to pay almost $1 billion to the Canadian corporation Methanex
because of a California phase-out of the fuel additive MTBE, which
is poisoning the state's ground water.
The FTAA's investment rules also prohibit countries from putting
controls on capital flows. This prohibition ignores the recent
experience of countries such as Malaysia and Taiwan that have
used capital controls to insulate themselves from the devastation
of financial crises. By banning capital controls, the FTAA weakens
countries' ability to guide their own development.
Also devastating to countries' efforts to encourage equitable
development are FTAA rules against "performance criteria."
That is, the FTAA would prohibit countries from: requiring a certain
level of domestic content in production; giving preferences to
domestically produced goods; and requiring firms to transfer technology.
The FTAA's ban against such time-tested development tools will
make it even harder for less developed countries to use foreign
investment to advance social goals.
The FTAA's intellectual property rights rules go even further
than those of the WTO. Countries' ability to produce life-saving
drugs will be constrained by new monopoly patent rules and limits
on patent exemptions needed to make generic versions of expensive
pharmaceuticals. The new intellectual property rights regulations
will also make it harder for nations to refuse patents on plant
varieties and animals, raising the specter of a wave of biopiracy
affecting indigenous groups and delicate biospheres. FTAA rules
may also encourage the privatization of important services. All
service sectors- including education and health care- will be
open to privatization unless countries deliberately seek a "reservation"
for a particular area.
While the FTAA goes to great lengths to protect corporations,
it does nothing whatsoever to defend the environment, labor rights
or human rights. The agreement merely states that countries should
"strive to ensure" that environmental and labor laws
are not relaxed to attract investment. There is no enforcement
mechanism for even this weak provision. Moreover, this loose request
is virtually meaningless in countries where environmental and
labor laws are already weak.
It's obvious who the winners and losers are under the FTAA.
Corporations get the ability to challenge any government regulation
that could affect their profits; investors dodge capital controls;
the pharmaceutical industry and big agribusiness see their reach
extended. Meanwhile, the needs of virtually every other sector
of society are ignored. The environment loses. Workers lose. Governments
Until recently, globalization has been driven by a business
elite interested in creating new global relations as a way to
increase profits. But another kind of globalization- grassroots
globalization-is winning supporters around the world. The question
confronting us is: What kind of globalization do we want-elite
globalization or grassroots globalization?
The Alternatives for the America, a reverse image of the FTAA,
shows what grassroots globalization would look like. Started during
a "people's summit" that coincided with the 1998 trade
meeting in Santiago, the Alternatives document represents an ongoing,
collaborative process to establish viable alternatives to the
FTAA. The alternative agreement places the interest of local communities
at the center of international commerce.
As the Alternatives authors have noted, at this stage of the
struggle it is not enough to oppose and to criticize- we must
build a proposal of our own and fight for it. The debate over
globalization, after all, isn't a competition between isolationism
and internationalism. It's a contest of values-life values vs.
money values, popular democracy vs. top-down policy making.
Trade Organization (WTO)