FTAA: Sweatshopping the Hemisphere

Revolutionary Worker #1097, April 8, 2001, posted at http://rwor.org

From April 20-22 the heads of government of every country in the Western Hemisphere except Cuba will come together at the Summit of the Americas in Quebec City, Canada. Representatives of 34 countries in North, South, and Central America, and the Caribbean will be protected by metal fences and the largest police deployment in Canadian history. The goal of their meeting will be to put together the Free Trade Area of the Americas Agreement (FTAA). The goal of this agreement will be to increase privatization and deregulation and make it even easier for imperialist exploitation throughout the hemisphere.

The FTAA will cause profound changes for millions. But U.S. officials have avoided much public discussion of the FTAA. Negotiations have gone on in secret. Government officials and representatives of corporations and financial institutions have been deeply involved in developing the agreement. With rising anti-globalization protests around the world, the U.S. fears that the more people know about the FTAA, the more it too will become the target of broad opposition and protest.

Despite the attempts to keep it quiet, activists have dug up a lot of information on what the FTAA will mean, and determined resistance to it is rising. Thousands of students, environmentalists, trade unionists, anti-imperialists, anarchists, AIDS activists, revolutionary communists, and others from both Canada and the U.S.--including many veterans of anti-globalization battles in Seattle, Windsor, Washington, DC and Prague--are planning to go to Quebec to protest the summit. Other actions are planned on both the Canadian and Mexican borders, as well as many cities in the U.S. and in South America.

The Plunder of the Americas

In 1994, the NAFTA (North American Free Trade Agreement) was passed, making the U.S., Mexico and Canada a unified trade area. Soon after this, President Clinton announced that the U.S. wanted to extend the agreement to include the whole hemisphere, establishing a "free trade area of the Americas." This same year, the FTAA effort was launched by the Summit of the Americas in Miami. Formal negotiations started with the 1998 summit in Santiago. Now, a draft of the agreement is reportedly set to be submitted to the Quebec summit, where negotiations will begin for the final agreement. FTAA is set to be imposed by 2005, with the U.S. pushing for it to be ready by 2003.

The FTAA is one part of U.S. efforts to integrate the entire hemisphere into an integrated global market under the domination of the U.S. and serving U.S. interests.

Adoption of the FTAA would increase the impoverishment, exploitation and environmental destruction of the peoples and lands in the oppressed nations throughout the Western Hemisphere. It would further increase bloodsucking profit-making by big capitalist corporations. U.S. imperialist control and penetration of the economies of the poor countries of South and Central America would be strengthened.

The people of Latin America have already been devastated by austerity measures, privatization, and currency devaluation over the last decade. Already, 45% of the population live in deep poverty. Structural adjustment policies enforced by the International Monetary Fund (IMF) and the World Bank--two international financial institutions dominated by the U.S.--have led to more destruction of the rainforests and lands of indigenous peoples. U.S.-backed counter-insurgency wars in Colombia and against the people's war in Peru have brought death, displacement and torture. The FTAA will make this nightmare situation for the people even worse.

FTAA--The Myth vs. the Reality

President Clinton said the FTAA would "create a partnership for prosperity where freedom and trade and economic opportunity become the common property of the people of the Americas." But this is an agreement between the U.S. as the world's dominant imperialist power, its junior capitalist partner Canada, and 32 poor, oppressed nations. The U.S. controls 75% of the total goods and services produced in the Western Hemisphere. So the remaining 25% is divided up between the rest, with Canada gobbling up a good part. Given this reality, some "partners" are far more "equal" than others.

As a recent article from A World To Win magazine points out: " 'Free trade' is itself a hollow watchword today--this is the era of imperialism, where big monopolies bestride the globe and dominate every major sphere of economic life. The 500 top multinational corporations, most of them based in the U.S., control 70 percent of all cross-border trade, and 60 percent of trade in agricultural products is controlled by U.S. agribusiness firms. In practice, expanding trade strengthens the ability of those able to take advantage of worldwide production and marketing networks by stripping away the mechanisms different countries have set up to protect the smaller home-grown industries and agriculture. Bringing small enterprises in particular in the Third World into more direct unfettered rivalry with the Western-based giants is a guarantee that the larger firms will gobble up the smaller ones and extend their penetration and domination of the oppressed countries." (See AWTW #26, "Free Trade-Engine of Growth or Plunder?" reprinted in the RW #1095-96.)

Trade expansion under imperialism has actually increased the polarization between rich and poor countries and within countries. The standard of living in the richest countries in the world was three times that of the poorest countries in 1800, six times higher in 1900, and 20 times higher in 2000. And in the period of the largest expansion of trade, from 1980 to 1996, 59 countries experienced an actual decline in Gross Domestic Product per year.

The official Summit of the Americas FTAA "Plan of Action" is full of public relations lies--aimed at covering up what this agreement will really mean for the people. The major points of the plan call for "preserving and strengthening the community of democracies of the Americas," "promoting prosperity through economic integration and free trade," "eradicating poverty and discrimination in our hemisphere," and "guaranteeing sustainable development and conserving our natural environment for future generations." But the reality of the FTAA has nothing to do with these lofty sounding slogans.

The FTAA is based on NAFTA, as well as elements of WTO (World Trade Organization) treaties. The major areas the agreement will cover are agriculture, services, investment, dispute settlement, intellectual property rights, subsidies and anti-dumping, competition policy, government procurement, and market access.

Essentially the FTAA will increase the ability of capital and goods to move across borders without any kind of hindrance or tariffs. Capital will flow rapidly in and out of countries to wherever the quickest and highest profit can be found. Health, safety, labor and environmental protections will be undermined or eliminated. Corporations will be allowed to sue governments for money--on the basis that certain laws (for example zoning laws against toxic waste dumps) prevent foreign corporations from making a profit.

FTAA will mean capitalist businesses can freely relocate without penalty or cost. Relocation will be used as a threat against workers to try to smash organization and resistance. This will increase competition between workers in different countries, driving wages down in all countries. Services like health care, education and even access to drinking water will be opened to privatization, putting them under the control of the "free market"--in other words, to be bought up by corporations to make profit. And the FTAA will expand the patenting of seeds, native agriculture, and even genes of indigenous peoples, turning them into commodities owned and sold by capitalist business for profit.

These are only some of the examples of what FTAA imperialist "liberalization" will mean for the people:

Privatization of public services has already been imposed on many poor countries in Latin America by IMF policies. In Bolivia, IMF-enforced privatization of water led to a 200% increase in the cost, making it unaffordable to many poor people. The FTAA will increase this kind of privatization and dozens of U.S. and Canadian companies--insurance companies, companies that run prisons, postal companies, etc.--stand ready to seize on FTAA changes in laws governing services to pry open local markets in other countries.

Institutionalizing "intellectual property rights" into binding law throughout the Americas will mean countries like Brazil that currently produce generic AIDS drugs would be prevented from doing so because they would "violate the rights" of pharmaceutical companies (primarily U.S. companies) which hold patents on the drugs. Brazil has made drugs for AIDS available to its population cheaply, cutting the rate of AIDS in its country in half. The imposition of FTAA rules on "intellectual property rights" will mean many people with AIDS will not be able to afford the drugs they need and will die.

The FTAA is expected to include a global free logging agreement which will eliminate tariffs on forest products and undermine environmental laws on the basis that they are "barriers to free trade." According to The American Lands Alliance, an environmental organization based in Washington D.C., these moves would "further decimate the world's endangered native forests, which would cause global deforestation and loss of biodiversity." With NAFTA Mexico did away with the rights of the people to communal land ownership and lifted restrictions on foreign ownership of property. These changes allowed 15 U.S. wood product companies to open operations in Mexico, including in areas where some of North America's largest remaining intact forests are located.

The U.S.-based Metalclad Corp. sued a state in Mexico that prevented it from building a toxic waste dump because of fear that people's drinking water would be contaminated. Metalclad said that by stopping the dump the state government was "effectively seizing the property" of the company. These rules clearly favor the corporations of the big imperialist states who have the advantage in money and power over those in oppressed countries.

Secret Tribunals

"Their meetings are secret. Their members are generally unknown. The decisions they reach need not be fully disclosed. Yet the way a small group of international tribunals handles disputes between investors and foreign governments has led to national laws being revoked, justice systems questioned and environmental regulations challenged. And it is all in the name of protecting the rights of foreign investors under the North American Free Trade Agreement."

From "Nafta's Powerful Little Secret:
The Tribunals That Settle Disputes,"
New York Times
, March 11, 2001

NAFTA gives international tribunals sweeping powers and broad impact to solve disputes between corporations and governments. These secret tribunals have been used in NAFTA disputes for only a few years, but have already had severe repercussions. According to the NY Times:

The Canadian government lifted restrictions on manufacturing an ethanol-based gasoline additive that it considered hazardous after an American manufacturer said that the ban hurt its business.

A tribunal ordered Mexico to pay an American company $16.7 million after finding their local environmental laws prohibiting a toxic-waste-processing plant that the company was building were tantamount to expropriation.

United Parcel Service, the package-delivery company, has filed a complaint contending that the very existence of the publicly financed Canadian postal system represents unfair competition that conflicts with Canada's obligations under NAFTA.

The FTAA will provide for these same kinds of secret tribunals.

The Nightmare of NAFTA

NAFTA proponents claimed it would cause wages to increase in Mexico, help Mexico develop a diversified and more self-reliant economy, create jobs in the U.S., and lead to an environmental clean-up on the border. But in reality, NAFTA has meant more poverty and hardship for the people and dangerous working conditions and environmental destruction. And this is what the FTAA plans on doing on an even bigger scale. Reports on NAFTA's record-- "NAFTA at Five: School of Real Life Results" by Public Citizen and Global Trade Watch, and "Seven Years Under NAFTA" by Sarah Anderson of the Institute for Policy Studies--document many of the actual effects of NAFTA.

NAFTA required Mexico to drop barriers to entry and exit of investment and also to lift tariffs, allowing more investment by foreign corporations. These changes made sale of products produced by these investments more profitable. Net foreign direct investment in Mexico increased from $4.4 billion before NAFTA in 1993 to $10.2 billion by 1998. Much of this investment was in building more maquiladora factories--which produce and assemble goods for export to the U.S. under dangerous, sweatshop conditions for workers. Employment in maquiladoras has increased two and a half times since NAFTA. Meanwhile, the spread of maquilas has meant an actual drop in the wages of workers in the manufacturing section in Mexico by 9.5%--from an average of $2.10 per hour to $1.90 by 1999.

Poverty has increased as a result of NAFTA, growing from 47% to 51% of the total Mexican population. Today Mexico has the largest gap between rich and poor in Latin America. The World Bank estimates that 65 million Mexicans live on less that $2 a day and 15 million on less than $1. NAFTA is also ruining small and medium-sized businesses in Mexico. 100,000 have gone bankrupt since 1994.

Hundreds of thousands of workers in the U.S. and Canada have been laid off by companies moving to Mexico. The new jobs these workers get pay an average of 23% less. Relocation is also commonly used as a major threat against unionization efforts. So NAFTA has increased the exploitation of the Mexican people, and also hurt proletarians in the imperialist countries.

The NAFTA rules on imports have allowed highly subsidized U.S. corn, wheat, rice and beans to flood the market in Mexico. Meanwhile Mexican authorities have cut off credit and support for Mexican farmers. Tens of thousands of peasants have been driven off the land because they can't compete with the prices of cheap U.S. imports. Their land has been snatched up by agribusiness and other types of big business. Now huge U.S. corporations like Monsanto and Cargill control the distribution of wheat, corn and rice in Mexico.

Another little known story is the effect of NAFTA on the health and environment in the border region. The massive growth of maquila factories has occurred without any expansion of infrastructure by the imperialist corporations to deal with hazardous waste. Reports on NAFTA indicate that the illegal dumping of waste along the border is routine. In Ciudad Juarez, across the border from El Paso, Texas, maquila employment increased 54%, causing a large population growth in the area. Yet Juarez has no waste treatment facility to treat the sewage produced by the 1.3 million people who live there. Environmental inspections have actually decreased on the Mexican side of the border. This lack of health, labor, safety and environmental standards is one of the reasons capitalist businesses are setting up production here.

With the rampant growth of maquilas, border-area residents are exposed to health-threatening levels of air pollutants in El Paso, San Diego, Douglas, Nogales and Yuma, Arizona, according to the EPA. Much of this is due to the large increase in cross-border truck traffic bringing goods from the maquilas into the U.S. Hepatitis A, caused by contamination of the Rio Grande river, has increased dramatically in several border counties in Texas since NAFTA. And a number of Texas border counties are also experiencing an increase in neural tube birth defects of babies that has been correlated with industrial development on the border. (Neural tube birth defects include spina bifida, in which the spinal cord region of the neural tube fails to close properly during the first month of embryonic development; and anencephaly, in which the embryo has no brain.)

In short, NAFTA has meant that U.S. imperialism has gained more control over the businesses, the land, the natural resources and the entire economy of Mexico. The Mexican people are being more ruthlessly exploited and pushed into misery. Mexico is more dependent on and susceptible to the flight of foreign capital. Mexico's total debt burden increased $20 billion by 1998 from the first year of NAFTA. Now the imperialists in collusion with the Mexican capitalists want to expand this model, including by spreading zones of maquila factories throughout Mexico. And FTAA aims to extend this nightmare of death and destruction throughout the hemisphere.


The further globalization of capitalist misery is also globalizing worldwide resistance and the possibility of revolution. Everywhere the institutions of capital go--whether they be the WTO, World Bank, IMF, World Economic Forum (WEF), or various development banks--they are being met by determined struggle. The moves of the U.S. imperialists against the people of South and Central America are being fiercely resisted. In Cancun, Mexico, thousands of youth met the WEF in the face of brutal police. In Ecuador, peasants have set up roadblocks against privatization and cuts in health care. In Colombia, the U'wa people continue to resist attempts to steal their land and destroy their culture and resources. Resistance is spreading from the largest cities to the most remote jungle areas. And now, thousands are planning to be in the streets of Quebec--to expose and resist the imperialist FTAA plan for even more misery and exploitation.

This article is posted in English and Spanish on Revolutionary Worker Online
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