Page 2 of 3 Clock running out on
free trade By Laura Carlsen
enough time to evaluate. More
recent evaluations, however, show an even greater
negative impact on Mexico, and the huge rise in
immigrants to the United States attests to the
fact.
The most evident impact of
free-trade agreements is increasing inequality.
Although a direct causal relationship is difficult
to establish empirically due to the number of
intervening factors, even in nations where growth
has occurred, the gap between the
rich
and poor has grown. Income inequality in the
United States climbed again in 2005, to where the
top 10% received nearly 50% of income. In
liberalized developing countries the gap is often
much larger.
Positive evaluations of FTAs
invariably cite increases in trade as proof of the
success of the trade policy. While this is a good
measure of success for trading companies, it is
not a measure of how the policy has functioned
within overall economic policy to improve the
standard of living of the general population.
By declaring a moratorium on FTAs and not
renewing presidential fast-track authority,
Congress can heed the message of the majority of
the people and take a deep look at the way these
agreements are restructuring the US economy, its
communities and its foreign policy. Much of the
repudiation that US President George W Bush faced
on his last trip to Latin America stems directly
from US trade policy. A long-term view toward
sustainable trade policy must take into account
its effect on US society and on other parts of the
world.
Four reasons to block FTAs The four agreements presently before Congress
provide ample reason to freeze FTAs. Each one
raises major questions. In Peru, the greatest risk
of the free-trade agreement centers on its
development impact. A nation with high poverty and
inequality, Peru still faces major challenges in
consolidating its economy and democratic
institutions. The projected negative impact on
employment-generating small and medium-sized
industries and the loss of development policy
tools have sparked grave concerns about the
political and economic effects of the agreement.
Peru's indigenous peoples warn that the treaty
will lead to violations of indigenous rights and
the pillaging of natural resources.
In
Panama, labor and farm groups have also protested
the FTA. For months the agreement was held up by
sovereignty issues surrounding the US demand to
adopt American meat inspection standards, which
Panama later conceded after the minister of
agriculture resigned in anger at the US position.
Panamanians also object to the projected influx of
US construction firms as the $5.2 billion dollar
canal expansion begins, calling it "giving back
the canal to the Americans". Panama's successful
management of the Canal Zone is among the greatest
sources of national pride. Even in Colombia, a
staunch US ally in Latin America, opposition to
the FTA has run high. Over 2,000 labor activists
have been assassinated in the country since 1990,
and the agreement adds no effective protections
while at the same time encouraging further gouging
into workers' rights. A Colombian health
negotiator also resigned in protest, this time due
to US insistence on restrictive pharmaceutical
patents that would affect access to medicines.
Negotiations with South Korea took place
in a different context. The agreement is the
largest FTA since NAFTA and has significant
strategic importance for proponents of the
NAFTA-style FTAs. According to plans, the US-South
Korea agreement would provide a beachhead for
extending the model in Asia and containing the
spread of Chinese influence.
Although the
Korean FTA follows the basic model, some
interesting concessions were made. Most remarkable
is the complete exclusion of rice - the basic
staple, major crop, and cultural nerve center of
Korean society. This was absolutely necessary in
terms of the signing and possible ratification of
the agreement in South Korea. Previously US
negotiators have forced partners to include
sensitive crops, albeit with longer transition
periods. Mexican farmers’ demand the removal of
corn - an equally sensitive product in that
country - has been refused outright.
Despite concessions, Korean farmers and
workers who have been at the forefront of protests
against WTO free trade rules and the FTA will
fiercely oppose ratification, citing projected
displacement of small farmers and loss of labor
rights.
The battle over the latest round
of free trade agreements before Congress will be
couched differently than the last ones. The
administration knows it cannot credibly use the
argument it gave during CAFTA ratification - that
the United States owes it to developing countries
to provide the market access and investment
conditions embodied in FTAs. Few nations have
welcomed US FTAs with open arms. Countries that
have signed agreements with the United States face
strong opposition movements, and their governments
have to pay a political price for agreements that
are seen as prejudicial to the poor.
The
foreign policy implications of imposing divisive
FTAs around the world have scarcely been taken
into account. But US trade policy has fed
anti-American sentiment and polarized allied
nations. On the day of the signing of the South
Korean agreement, a protester lit himself on fire.
CAFTA is already widening fissures in
Central American societies. In El Salvador, the
Supreme Court has accepted a challenge to the free
trade agreement, based on unfair competition and
violation of the constitutional right of the
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