 Re: FTAA: Why it sucks so bad
From: "BRIDGES Weekly Trade News Digest"
HEMISPHERIC LEADERS AGREE TO AMERICAS FREE TRADE BY 2005
At the Third Summit of the Americas held from 20-22 April in Quebec City, Canada, heads of state representing 34 North American, South American and Caribbean countries reaffirmed their political commitment to strengthening hemispheric relations by approving the finalisation of
a Free Trade Area of the Americas (FTAA) by January 2005.
The meeting was accompanied by widespread street protests and parallel civil society events (see related story, this issue) that highlighted a host of concerns from many sectors over the impact of unfettered
regional trade on the environment, human rights, and social issues.
For their part, leaders drew tentative linkages between freer trade and social concerns. The declaration that emerged from the Summit -- the Declaration of Quebec City -- states that "free trade...will promote regional prosperity, thus enabling the raising of the standard of living, the improvement of working conditions of people in the Americas and better protection of the environment."
Mexican President Vicente Fox said that unless poverty and inequality were reduced, democracy could not be strengthened. Echoing Fox's statement, US President George W. Bush said that trade liberalisation was the "best weapon against tyranny and poverty". Owen Arthur, Prime Minister of Barbados, said poverty had undermined his people's
confidence in the future. "They tend to see on the dark side of globalisation and trade liberalisation," he said. "They dread the
coming of a 'new world' dominated by an impersonal technology and an even more impersonal market."
Building upon the results of a 7 April meeting of trade ministers from the Americas in Buenos Aires (see BRIDGES Weekly, http://www.ictsd.org/html/weekly/10-04-01/story2.htm), leaders agreed that the design of the FTAA should take into account differences in the size and levels of development of participating economies, though they did not specify how this should be accomplished. The Declaration further states that the FTAA should be "balanced, comprehensive and consistent with WTO rules and disciplines and should constitute a
single undertaking."
In response to transparency concerns, the leaders noted in the Declaration that they would make public the preliminary draft of the FTAA Agreement, though no date was specified.
On environment, the Summit Declaration built upon the results of the Montreal Environmental Ministers meeting of the Americas, where discussions between representatives of the environment authorities across the hemisphere focused on environmental management; environment
and health; and biodiversity protection across the hemisphere. Echoing this initiative, the leaders committed their governments to environmental protection and sustainable use of natural resources "with
a view to ensuring a balance among economic development, social development and the protection of the environment".
But while leaders stated that their goal was to achieve sustainable development throughout the hemisphere, no explicit link was made between the environment or sustainable development and the FTAA itself.
Existing sub-regional accords in the Americas promote sustainable development in different ways. For example, the North American Free Trade Agreement (NAFTA) between Canada, the US and Mexico contains side agreements on environment and labour that aim to promote these concerns in the context of the trade accord, and the Andean Community has a council of Environmental Authorities which is taking the lead on biosafety and intellectual property rights issues in the sub-region.
FTAA-Democracy connection
Government leaders also discussed the linkage between trade and democracy in the context of the forthcoming hemispheric trade accord. The Declaration contains a clause stressing that having a democratic government is a condition for participation in the Summit of the Americas process. Officials indicated that this would also apply to the FTAA, with the proviso that such efforts go hand-in-hand with increases
in financial support for democracy through the Organisation of American States. The Southern Cone Common Market (Mercosur) -- comprised of Argentina, Brazil, Paraguay and Uruguay -- contains a democracy clause
excluding any Mercosur member from the trade grouping should it fail to meet certain democratic norms.
Investment provisions figure in FTAA text
A draft FTAA text on investment leaked to the public on 19 April indicates that the forthcoming trade agreement may contain strong investor-rights language. Although the text appears entirely in brackets -- denoting specific language yet to be finalised -- it confirms many civil society groups' fears that the FTAA investment
provisions will closely resemble those found in NAFTA's Chapter 11. NAFTA's investor-state Chapter has been used in several instances by foreign investors to challenge domestic regulation in the three NAFTA
parties, including environmental regulation (see BRIDGES Weekly, 20 February 2001, http://www.ictsd.org/html/weekly/inbrief.20-02-01.htm).
Concerns that a finalised FTAA will generate a similar result have led many non-governmental organisations within the region to demand that governments rethink the logic behind the investment provision. According to Canada-based International Institute for Sustainable Development (IISD) Senior Advisor Aaron Cosbey, "Certainly we strive
for increased investment and economic growth, but we also want environmental integrity, human health and safety and scores of other non-economic goals. The problem with the Chapter 11 cases to date is
the [NAFTA] tribunals have been unable to find that kind of balance. They've promoted increased investment, but with terrible consequences for the environment."
Governments plan to start talks on removing regional trade barriers in May next year and to conclude an FTAA agreement by January 2005. The accord would come into force by the end of that year. The free trade
area would be the world's largest trade grouping, with 800m people and a third of world economic output. The next Americas Summit will take place in Argentina.
"FTAA Investment Text Includes Proposal For Investor-State Disputes," INSDE US TRADE, 20 April 2001; "Leaked FTAA Investment Chapter Cause For Concern," IISD PRESS RELEASE, 20 April 2001; "Western hemisphere leaders
agree to free trade deal," FINANCIAL TIMES, 22 April 2001; ICTSD Internal Files.
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2001-04-21, 06:45
