This week
trade ministers from 34 countries gather in Miami for what has been billed
as the final round of negotiations for the Free Trade Area of the Americas.
By any standards, this is a hugely ambitious exercise. At issue is whether
the Miami meeting will reinforce the growing inequalities that are the
hallmark of current patterns of globalization, or instead, support a more
equitable international trading system that benefits all countries.
The Free Trade Area of the Americas, or FTAA, will create a free trade
zone stretching from Alaska to Tierra del Fuego. Desperately poor communities
in the Peruvian highlands and the slums of Rio de Janeiro will be connected
to a common market with
the world's richest country, the United States. Under the FTAA, the same
trade and financial rules will be applied to all, regardless of wealth.
Will the FTAA help to combat poverty in a region where more than 200 million
people live on the margins? Will these rules secure a reasonable distribution
of benefits between the FTAA's richer and poorer members?
There is no denying the potential benefits of open markets and foreign
investment for Latin America. But the problem with the framework proposed
by the U.S. government for the FTAA is that it envisages a rules-based
regime that would enforce a blueprint for wholesale deregulation of developing
country markets while maintaining unfair advantages for U.S. domestic
industries - in the same sectors in which developing countries have the
best chance of competing and lifting millions out of poverty.
What would the consequences be if the FTAA were adopted in its current
form? First, governments would lose the right to discriminate in favor
of small-scale domestic industries, to require the transfer of skills
and technology, and to restrict profit repatriation. If the recent history
of Latin America teaches anything, it is that unregulated open markets,
rapid import liberalization and the absence of essential government regulation
and public services is bad for growth, bad for stability, and disastrous
for poverty reduction.
Second, under the FTAA unfair agricultural trade with the United States
will continue. The U.S. position on agriculture in the FTAA negotiations
can be summarized in two words: no negotiations. The United States maintains
that the appropriate place to discuss agriculture is the World Trade Organization.
Yet at the recent WTO ministerial meeting in Cancún, Mexico, no
agreement was reached that would address the $50 billion that the United
States provides annually in support to its domestic agriculture producers.
This support generates vast surpluses that are sold in other countries
at prices less than their costs of production.
An editorial in The New York Times on Nov. 10 (" Weaning U.S. farmers
off aid," IHT, Nov. 11) made this criticism of U.S. farm subsidies:
"It's astonishing that a program can continue to get congressional
support when it hurts virtually everybody our representatives are supposed
to be concerned about - small farmers, other taxpayers and poorer nations
struggling to join the global economy."
Efficient exporters such as Argentina and Brazil suffer the consequences
in terms of reduced prices and lost market share. Meanwhile, impoverished
corn farmers in Mexico and rice farmers in Honduras and Haiti have to
compete in local markets against subsidized imports. Of course, they cannot
compete - and countless livelihoods are being destroyed. This issue is
of key importance to all developing countries and must be addressed if
the international trade system is to be seen as contributing to the development
of the world's poorest regions.
Agriculture is the fundamental issue for developing countries, while market
access, deregulation of investment and strong patent rules are of crucial
importance to the United States. In these nonagricultural issues, the
U.S. negotiating agenda for Miami is too ambitious. At Cancún,
developing countries comprehensively rejected European Union demands for
rules on the liberalization of investment and services, but the United
States has placed these at the top of its list of priorities. And to show
that it means business, it recently demanded that Costa Rica opens up
industries like telecommunications, electricity and insurance.
Intellectual property is another area in which the United States has adopted
a negotiating stance at variance with the needs of Latin America. Under
its proposals, the FTAA would enshrine far stronger protection for patent
holders than provided for in WTO rules. The upshot would be an increase
in the cost of technology transfer and rising prices for medicines as
U.S. patent holders use the FTAA to enforce the highest prices. For Latin
America the flip side would be reduced innovation and deteriorating public
health.
In many respects, the Miami meeting represents a crossroads in international
trade negotiations. For the United States, the exercise appears to be
part of a wider post Cancún strategy which undermines multilateralism
and the WTO. Increasingly, the preferred option seems to be recourse to
bilateralism and regional agreements in which U.S. power can overcome
the resistance of developing countries.
The danger is that the FTAA will become the harbinger of a new form of
unequal trade treaty imposed through power politics. Ultimately, this
is in nobody's interest - including that of the United States. Millions
of American jobs depend on prosperity in other countries, and on the stability
that a multilateral system of rules can provide. Imposing unequal trade
treaties will be bad for millions of the world's poorest people, who stand
to be excluded from the potential benefits of globalization. Disillusion
with the current system is at the heart of recent unrest in a number of
countries of the region. This puts at risk the democratic reforms that
spread across Latin America during the 1990's. The last thing the United
States needs is a political powder keg to the south. Putting the development
needs of people at the center of the FTAA negotiations is the best way
to prevent a return to authoritarianism and conflict.
November 21, 2003.
* The writer is honorary president
of Oxfam International and executive director of the Ethical Globalization
Initiative.
Source : The International Herald Tribune. Tuesday, November 18, 2003.
|