[mgj-discuss] [globalization] Talking Points: Free Trade Agreements - Lessons in LA

[IRC]

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Globalization News from IRC
http://www.irc-online.org/

November 4, 2005
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For more information and media interviews:
Siri Khalsa
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media at irc-online.org
Laura Carlsen 
 
 
Talking Points #4 — Free Trade Agreements
Lessons in Latin America
   

As the world’s leaders and trade officials gather at three
international meetings in late 2005—the Summit of Americas in Mar del
Plata (November), Asia Pacific Economic Cooperation forum in Busan,
South Korea (November), and the World Trade Organization ministerial in
Hong Kong (December)—to discuss trade and development issues, they
would do well to consider the impact of free trade agreements in the
Western Hemisphere.

1. Negative Trade-Offs
The trade-offs between gaining greater access to the U.S. market and
the displacement caused by loss of national markets to imports often
lead to negative net results. When compounded by a decrease in
participation in other regional and global markets, the result is both
politically and economically negative. 

2. Long-Term Harm
Concessions to U.S. demands in FTA negotiations can have long-term
detrimental effects. Under the North American Free Trade Agreement,
Mexico has seen the erosion of the smallholder farmer economy, the loss
of traditional knowledge of land and biodiversity use in rural
communities, food dependency, obstacles to the construction and
consolidation of South-South links, and greater inequality in income
distribution. It is also losing national sovereignty, cultural
diversity, and important policy tools for national development. 

3. Insufficient Protection
Special product protection, safeguards, or longer liberalization
periods are insufficient to solve the problems caused by massive
imports. A strategic product cannot be left to distorted market forces.
Moreover, the examples of sorghum and white corn displaced by yellow
corn imports illustrate the insufficiency of offering special
protection to specific products. 

4. Preempt Other Integration Strategies
The Free Trade Agreements with Mexico, Chile, Central America, and
potentially the Andean region severely hamper the development of other
potentially more advantageous options of economic integration. The
value of regional integration is not merely to create a trading bloc to
compete and negotiate more effectively with developed countries but to
rethink regional integration and develop joint tools for sustainable
production and trade. When done ideally—in a more horizontal manner,
among nations that share common challenges, with national development
and wellbeing cast as primary goals—regional integration could be a far
more equitable and sustainable course than the FTA model currently
imposed by the United States. 

5. Divide and Conquer Strategy
Washington’s divide-and-conquer strategy forces nations to concede in
other areas in order to assure market access, and uses sticks over
carrots to impose a model that benefits U.S. economic and security
interests and large corporations. For this reason, FTAs with the United
States should be avoided. Nations must evaluate alternative forms of
economic integration and assess all options. The gains offered are
limited and short-lived; the price is likely to be the long-term
sustainability and stability of the country.

6. Trade Tied to U.S. Foreign Policy
Not all trade costs are quantifiable, and among the highest costs of
FTAs with the United States today are the political costs. In U.S. FTA
negotiations, everything—trade being often a minor issue—is on the
table, whether explicitly or implicitly. And in the center is the
renewed U.S. drive for global hegemony. Trade policy is an instrument
for this hegemonic control, and it is now closely tied to security
policy. Political costs of trade dependency on the United States can be
very high. In the “with us or against us” mentality of the war on
terrorism, trade relations become another lever of control. Another
cost is the erosion of possibilities for greater regional economic
integration.

7. Incorporate Silent Voices
Trade agreements should incorporate the silent voices in the
negotiations process and debate. Small producers, especially farmers,
are particularly vulnerable and have a weak voice in national politics.
Incorporating them into talks is necessary not only to enhance
democracy and transparency but also to arrive at a better agreement.
They hold important truths about the productive and social structures
of their countries.

8. Trade Must Consider Other Values
Cost-benefit analysis of extraterritorial trade and investment must
include benefits and values that are now ignored by the international
market but which are vital to developing countries and the world. These
include livelihood generation, cultural diversity, food sovereignty,
protection of ecosystems, and biodiversity.

9. Invert Current Trade/Development Equation
The current equation that has trade policy driving national development
policy must be inverted. Development policies should drive trade and
investment policies and agreements, not vice versa. As is, trade
agreements, together with imposed rules about investment and finances,
systematically supplant or preempt the formulation of national
development policy. Sustainable and equitable development policies must
be the result of bottom-up not top-down planning that give priority
consideration to local, national, subregional, and regional needs
rather than to the demands of the world’s largest economies and
corporations.


These Talking Points were prepared by Laura Carlsen, director of the
Americas Program of the International Relations Center (IRC), online at
www.irc-online.org . Carlsen is the author of numerous essays and book
chapters on globalization, and speaks widely on trade and development. 


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