OAS Economics: How to Rip Off Latin America

Revolutionary Worker #1059, June 18, 2000

The recent demonstrations in Windsor, Canada dragged a shadowy operation into the light.

Massive ruling class negotiations have been laying the basis for a new Free Trade Area of the Americas (FTAA)—to create the world's largest "free trade" area, covering the entire Western hemisphere (except Cuba)—34 countries with a combined Gross Domestic Product of $10 trillion. Its organizers brag it will stretch "from Point Barrow to Patagonia, Hawaii to Recife, Easter Island to Newfoundland."

Given the impact this FTAA will have on the lives of 800 million people, it is startling how little people have known about this plan. Governments and the media have allowed it to develop quietly—without publicity and controversy. Meanwhile, the capitalists of this hemisphere have been deeply and directly involved in these plans at every level. An "Americas Business Forum" has been held every year bringing hundreds of corporation heads together to shape the economic future of the Americas. Key decisions of life and death are being made out of view, in those lavish meeting where corporate and government leaders cut their deals.

An American Dream

In 1994, the North American Free Trade Agreement (NAFTA) was passed, uniting the U.S., Mexico and Canada into a single trade area. Immediately afterward, President Clinton announced the U.S. wanted to extend this arrangement to the whole hemisphere. Intense negotiations followed. The declared goal was to work out the new arrangement by this year, 2000—and have the FTAA in operation by 2005.

The idea behind FTAA is to eliminate all restraints on the rapid flow of investment capital throughout the Western hemisphere. Capitalists would be able to move their investments even more quickly from country to country in search of profits. Countries could no longer insist that foreign-owned factories stay open a specific number of years. Laws controlling currency speculation would be weakened. There will be courts where global corporations can sue local governments.

There is likely to be an increase in the number of special "Free Trade Zones" that are especially "deregulated"—and where even the usually weak laws governing wages, safety, environment and health are further weakened.

There is lots of talk about freedom going on—"free trade," "free market," "free elections." But in the end, the only freedom that is being expanded is the freedom to exploit.

Competition for Maximum Poverty

We are into the age of www.destroyyour company.com. The future is going to be the fast countries, countries that are open, that are flexible, that embrace free trade. We have got to embrace it to get stronger. It is an issue of developing a culture of competition, a will to win.

Kenneth Courtis, economist, Deutsche Bank Group Asia Pacific.

"Globalization has created a world where workers and oppressed people all over the world are more bound together. Bound together by ruin and misery, but more importantly bound together by a common enemy and a common future. Capitalism forces its competitive values on us by pitting us against each other in a desperate struggle to survive.... But what we have in common is stronger than what divides us."

Carl Dix, RCP National Spokesperson

At FTAA conferences, government trade ministers have insisted that all countries will benefit from the new arrangement. But, the FTAA is an arrangement between 32 poor third world countries—and the U.S., the world's most powerful imperialist country (plus Canada, the U.S.'s junior imperialist partner). Inequality is built in.

FTAA will increase the penetration of U.S. capital throughout Latin America and the Caribbean—more and more deeply transforming their economies in ways that serve foreign corporate profits. Food production will be even more oriented toward cash crops and U.S. agribusiness. While the people become more dependent on imported food—they will have fewer protections from rapid jumps in the prices of those foods.

When working people fight to raise wages or improve conditions or protest oppression, foreign capitals will be able to pull out more easily and move to some other country. The FTAA seeks to intensify competition between working people—in Latin America, Canada and the U.S. itself —over who can offer themselves for the lowest wages. Who wins in such a competition? Only those who extract the profits.

Even without FTAA—the last decade of capitalist restructuring has been devastating in Latin America. 45 percent of the population live in deep poverty—many are unemployed and underemployed. Austerity and currency devaluations have driven millions of people to desperation. Wealth is more concentrated than it has been in decades.

In the first four years of NAFTA, U.S. trade with Mexico doubled. But meanwhile, the people of Mexico suffered economic ruin. The buying power of the Mexican minimum wage dropped 24%.

The FTAA will intensify these nightmarish trends throughout Latin America and the Caribbean. Increased mobility of capital will intensify child labor, chemical poisoning in factories and fields, urban shantytowns and forced migration. It will expand belts of sweatshops. Peasants will be displaced from their lands and their desperation will threaten the remaining rain forests. And this whole process will further undermine national independence of oppressed countries—making their economies more dependent, more distorted, more open to collapse in the swings of world markets and speculation.

The U.S. has always dreamed of making the whole Western hemisphere into its backyard. FTAA will not drive European and Japanese investors out of Latin America, but it will undermine their influence, and strengthen the position of U.S. imperialism within the larger world economy.

The Barrel of the Gun

"The hidden hand of the market will never work without a hidden fist— McDonald's cannot flourish without McDonnell Douglas, the designer of the F-15."

Thomas Friedman, New York Times, March 28,1999

The U.S. imperialists are extending the military integration and support in Latin America parallel to their plans for economic integration via schemes like the FTAA. They are developing "hemispheric" military forces that can operate across borders in both South America and Central America. U.S. imperialists have built bases to threaten revolutionary base areas of the Communist Party of Peru and to prepare counterinsurgency offensives in Colombia. They are holding on to their notorious bases in Puerto Rico—the staging grounds for a century of previous interventions.

Who do the U.S. imperialists fear? It's the people themselves. The imperialists know the devastating impact their plans will have on the masses of oppressed.

Each new imperialist demand on Latin America brings new unrest and resistance. One week, it is Bolivia, where protests fought the privatization of the country's water system. Later it was the peasants in Ecuador who set up roadblocks against the privatization and cuts in health care. As we go to press, there has just been a general strike of millions of workers in Argentina protesting new austerity measures and wage cuts. The imperialists know too that their oppressive moves will bring new desire for revolutionary change. They understand the tremendous danger they face from the Maoist people's war waged in Peru and the powerful example it projects.

Honey Words, Savage System

"We can create a partnership for prosperity where freedom and trade and economic opportunity become the common property of the people of the Americas."

President Bill Clinton, announcing<R>FTAA plans, Miami 1994

"This system is a disaster and a total failure for the great majority of people on this planet. Trying to make capitalism more human is like trying to tame a pool of piranhas. It can't be done."

Carl Dix, RCP National Spokesperson

People are told they have no choice but to "compete in the world marketplace." Whole countries and regions are told to grovel before imperialism. There is a promise that this will be done "with a human face" and that (in the end) there will be benefits for all.

But, as the Revolutionary Internationalist Movement recently wrote, "The wealth and knowledge produced by the world's people can never be used to serve the people themselves so long as a minority owns and controls the world's resources, so long as this minority of exploiters wield political power."

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