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Civil Society Comments on FTAA
Comments of the Citizens Trade Campaign to the Committee of Government
Representatives on the Participation of Civil Society in the Free Trade
Area of the Americas
May 1, 2003
The undersigned members of the Citizens Trade Campaign (CTC) are appreciative
of this opportunity to submit our views to the Committee of Government
Representatives on the Participation of Civil Society regarding negotiations
of the proposed Free Trade Area of the Americas (FTAA). CTC is a coalition
of labor, environmental, religious, family farm, and consumer organizations
representing constituencies across the United States.
We believe that increased cooperation between nations of the Western
Hemisphere can be a powerful tool to increase prosperity, democracy,
sustainable development, and stability within the region. However, by
subjugating crucial social concerns such as public health, equity, environmental
protection, and human and worker rights to the goal of increased international
investment and trade, the FTAA as currently constructed, promises to
bring about the opposite results for the people of North, Central, and
South America.
Sound international trade policy must be based on respect for core
social values of human dignity, environmental protection, and democracy
and work toward their promotion. Many of the provisions proposed in
the FTAA text have already been tried and have failed in other contexts.
We must learn from these mistakes. If we fail to heed these examples,
the FTAA is sure to impede rather than advance progress within the Hemisphere.
To a large extent, FTAA provisions build on those of the North American
Free Trade Agreement (NAFTA), an agreement which has a clear nine-year
track record. Rather than delivering on promises of growth and prosperity,
NAFTA has granted investors broad new rights while pitting communities,
workers and farmers from all three countries against each other, resulting
in decreased wages and benefits, declining unionization, increased environmental
degradation, and commodity prices at 30-year lows.
Rather than producing equitable development, the export-driven policies
of NAFTA have only delivered benefits to a privileged few at the expense
of the vast majority of North Americans. Income inequality within and
among NAFTA member countries has grown. Poverty levels in Mexico are
higher than before NAFTA took effect, while the US has lost 750,000
actual and potential jobs due to NAFTA. Within the U.S., over 73% of
the nation’s farms share only 6.8% of the market value of agricultural
products while 7.2% of farms receive 72.1% of the market value of products
sold. In Mexico, an increase of corn imports by over 200% has resulted
in massive dislocation of rural farmers. Women in the Mexican export
processing zone suffer from discrimination and violence, and women in
the US are disproportionately impacted by trade-related lay-offs.
In other areas, FTAA provisions replicate liberalization policies that
have wreaked economic havoc on Latin American economies, demonstrated
by the recent upheavals in Argentina and Venezuela. The FTAA also threatens
to repeat the documented failure of services privatization and deregulation.
Through structural adjustment policies imposed on the developing world,
and corporate driven liberalization policies within the United States,
we have seen time and again that the loss of accountability through
the deregulation and privatization of essential services results in
a dangerous loss of access and quality control.
If the FTAA continues in this direction, it will only repeat and exacerbate
the failures of the liberal economic model, posing a serious threat
to global security and stability.
With regard to the FTAA text and process, we would like to
comment on some critical areas:
Labor and Environmental protections:
- Sound trade policy must respect the rights and obligations of countries
under multilateral environmental, labor, and human rights agreements.
Instead, investment provisions in NAFTA have allowed corporations to
challenge policy measures taken in an effort to be in compliance with
international environmental protocols such as the Basel Convention on
the export of hazardous waste. The proposed FTAA would similarly allow
corporations to challenge efforts taken in compliance with important
international agreements.
- All trade agreements must include enforceable workers rights and
environmental protections including adherence to core labor standards
as established by the International Labor Organization - freedom of
association, the right to organize and bargain collectively, a minimum
age for employment of children, and prohibitions on forced labor and
employment discrimination. Trade policy must also include binding
non-derogation from existing domestic labor and environmental laws.
Despite hundreds of pages of protections for corporations, the proposed
FTAA fails to grant even a line to effective labor or environmental
protections. The full extent of language on either of these topics is
one completely unenforceable “strive to ensure” clause relating
to the maintenance of existing domestic labor and environmental laws.
As proposed, in contrast to the rights afforded to multinational investors
to file legal challenges to governmental regulations, the FTAA includes
no mechanism for private citizens and NGOs to bring forward formal complaints
for labor and environmental abuses.
In addition, the FTAA proposes new commitments on the temporary entry
of workers. Not only does this issue not belong in the purview of international
trade agreements, but the current proposal for temporary entry fails
to include adequate protection for migrant and resident workers and
mechanisms to ensure that temporary entry programs aren’t used
to promote mobile sweatshops.
NAFTA has been a disaster for the environment in the border regions
as factories flocked to areas with weak environmental protections. NAFTA’s
own commission on Environmental Cooperation has identified links between
the agreement and: increased levels of air and water pollution; new
and growing pathways for invasive species that damage agriculture and
the environment; and elevated cross-border trade in hazardous waste
and materials. The FTAA with its lack of environmental protections would
continue this environmental degradation.
Investment:
- Investment provisions must not empower investors to file legal
challenges to domestic public interest standards or policies. Sound
investment policy must allow governments to regulate corporations
in the pursuit of economic, environmental, social, and public health
goals.
Instead, the proposed FTAA expands NAFTA’s Pandora’s Box
of investor-to-state lawsuits in closed, unaccountable tribunals. These
special rights for foreign investors go far beyond those provided in
the US constitution for foreign or domestic corporations by allowing
compensation for loss of potential and perceived profits rather than
only tangible property loss due to government regulation deemed to be
discriminatory. Cases filed under NAFTA’s Chapter 11 include a
successful suit filed by a US company, Metalclad, for a Mexican state’s
refusal to grant that company a permit to establish a toxic waste facility
in an ecologically sensitive area. Another suit has been filed by a
Canadian company, Methanex, over a US state law banning an environmental
pollutant produced by Methanex. Moreover, the impact of these investor-to-state
lawsuit provisions goes far beyond specific cases filed, in their chilling
effect on future regulation in the public interest.
Services:
- Sound trade policy must include a carve-out for essential public
services such as public benefits programs, healthcare, education,
water, sanitation, and utilities.
The so-called exclusion for public services within the proposed FTAA
is actually only for “services supplied in the exercise of government
authority,” defined as services which are supplied neither on
a commercial basis, nor in competition with one or more service suppliers.
This very limited definition does not include services that are provided
by the government in tandem with private providers, or services provided
by the government with partial contracting out. Under this limited definition,
most of the public services in the United States would not be excluded
from FTAA services rules. Including essential services under FTAA rules
would lead to forced deregulation and could enable privatization, threatening
the quality, affordability, and accessibility of vital services including
our social safety net.
- An exclusion must also be made for services which require extensive
regulation or have an inherently social component including maritime,
air, surface, and other transportation, postal services, energy utilities,
corrections, and childcare.
The FTAA’s proposed “negative list” approach of implicating
all service sectors and regulations unless explicitly excluded creates
a dangerous situation in which rules are being imposed on services in
perpetuity, including services which may not yet exist or services whose
full impact has not yet been anticipated. Deregulation of energy, mining
and extractive services poses great environmental threats, yet it is
unclear that the FTAA would contain a carveout for measures taken in
conservation of exhaustible natural resources or habitat protection.
Public Interest Regulations:
- All parties to the FTAA must be guaranteed the right to regulate
foreign investors in services and other service providers in order
to protect public health and safety, consumers, the environment, and
workers’ rights without requiring that governments establish
their regulations to be the least burdensome option for foreign service
providers.
Instead the proposed FTAA prohibits domestic regulations which are
deemed “more burdensome than necessary” to investors. The
decision of what is considered “necessary” is left to unelected
trade bureaucrats. While the proposed FTAA includes an exemption for
protections to human, plant, and animal life, the same exemption within
the GATT has failed to provide sufficient leeway for countries to determine
and effectively protect their own public interest priorities.
- Sound trade policy must not restrict the ability of governments
to ensure that food products entering their borders are rigorously
inspected and meet domestic food safety standards. Governments must
be allowed to develop and maintain necessary sanitary and phytosanitary
standards to prevent the introduction of pathogens or other potentially
invasive species, which may adversely affect agriculture, human health
or the environment. Governments must be allowed to enact policies
to guarantee the right of consumers to know where and how food and
other goods are produced, including labeling for country of origin,
forest certification, and genetically modified foods.
The FTAA could limit the rights of governments and even non-governmental
organizations to adopt laws and other programs designed to promote social
goals including food safety, forest and habitat protection, biodiversity,
local development, and public health by subjecting these regulations
to a “no more burdensome than necessary” test.
- Sound trade policy must allow nations to follow public interest
standards adopted in reliance on the precautionary principle.
The precautionary principle is the internationally recognized legal
principle which holds that, when there is scientific uncertainty regarding
the potential adverse effects of an action, product or technology, governments
should act in a way that minimizes the risk of harm to human health
and the environment. The proposed FTAA, however, continues the policies
of NAFTA and the WTO, which undermine the use of regulatory approaches
that prioritize avoiding risk to the environment and public health.
Government procurement, loans, and subsidies:
- Trade policy must preserve the right of national, state, and local
governments to maintain or establish procurement policies to promote
social goals such as equity and sustainable local development.
Instead, the proposed FTAA would repeat NAFTA’s prohibition on
including so-called non-trade related criteria in government purchasing
decisions. In addition, it has been proposed within the FTAA that these
prohibitions extend to state, regional, and local government purchasing
decisions, threatening purchasing preferences for women and minority-owned
businesses, project labor agreements, anti-sweatshop procurement laws,
living wage laws, buy local laws and more.
Trade Remedy Protections:
- Sound trade policy must allow governments recourse to transparent
and effective trade remedy laws which provide workers, businesses,
and farmers safeguards from import surges, dumping, and unfair foreign
trade practices.
Instead the FTAA proposes to impose strict restrictions and prohibitions
on trade remedy processes including antidumping and countervailing duty
cases. Trade remedy laws are an important tool in protecting domestic
industries from economic attacks.
Agriculture:
- Sound trade policy must allow governments to ensure competitive
markets for family farmers. In such it must not prevent countries
from establishing domestic and global food reserves, managing supply,
enforcing antidumping disciplines, ensuring fair market prices, or
vigorously enforcing antitrust laws.
It is clear that the draft FTAA text reflects multinational agribusiness'
ambitions to remove all agricultural tariffs despite the clear and inevitable
adverse impacts such a move would have on the hemisphere's farmers and
peasants given the adverse impacts Mexican, U.S. and Canadian farmers
have already experienced under NAFTA. When corn tariffs were lowered
under NAFTA, hundreds of thousands of corn farmers were forced to seek
other means of sustaining themselves. The FTAA currently fails to address
issues of price and concentration with regard to agriculture. This combination
will lead to decreased market prices for producers, increased concentration
of marketing and distribution by existing oligopolies, thus continuing
to undermine national, regional and global food security.
Transparency:
- Prompt and regular disclosure of full negotiating texts including
indication of which countries are putting forth the various proposals.
While we applaud the release of negotiating texts during the 2000 Summit
of the Americas in Quebec and last year’s Ministerial in Ecuador,
the “scrubbed” condition of these texts- devoid of country
sponsorship for the various competing proposals- makes them unusable
for meaningful analysis and comment.
- The broad array of constituencies representing the majority of
the peoples of the Hemisphere including labor unions, environmental
organizations, farm and campesino organizations, public health advocates,
faith-based organizations, and civil and human rights advocates must
be accorded at least the same access to trade negotiators and the
negotiation process as those constituencies representing commercial
interests. Procedures for public comment on negotiations must include
public hearings as well as mechanisms to ensure full disclosure to
and input from state and local governments.
Instead, the FTAA process affords special privileged access to members
of the Business Forum, access which is not available to the Labor Forum
or other members of civil society. The FTAA process fails to involve
state and local governments in informed participation despite the fact
that these governments would bear a great deal of the FTAA’s impacts.
- Any dispute resolution mechanisms established by the FTAA must
be open and transparent, including public disclosure of documents
and access to hearings. In addition, submission of amicus briefs must
be permitted, and standing for state, regional, and local governments
as intervenors must be accorded.
The FTAA text proposes to follow the NAFTA model of closed and undemocratic
dispute resolution.
Intellectual Property
- Sound trade policy must allow governments to take actions to protect
public health by ensuring access to medicines. It must not constrain
the rights of farmers to save, use, exchange, or sell farm-saved seeds
and other publicly available seed varieties. Intellectual property
protections must allow for the respect and protection of traditional
knowledge of indigenous peoples and local communities, and must not
require the issuance of patents on living organisms or their genetic
parts and components.
Instead, the proposed FTAA would limit compulsory licensing to the
public sector, prohibiting companies from manufacturing cheaper drugs
under a government-obtained license. The proposed FTAA would also prohibit
the export of compulsorily licensed goods, impose obstacles to timely
compulsory licensing, and require harsh penalties, including criminal
enforcement, for intellectual property violations. In addition, the
proposed FTAA intellectual property rules fail to protect against bioprospecting,
a crucial issue for an area that is host to over half of the world’s
biodiversity.
Development
- Sound trade policy requires additional assistance and respect for
diversity of development paths. Special and differential treatment
must be granted for developing countries with regard to the timeframe
for implementation of the agreement as well as local development and
public health concerns. In addition, debt relief is essential for
successful economic integration.
While the FTAA text currently includes a provision for special and
differential treatment, the language is hortatory and unenforceable
against competing provisions such as investment, intellectual property
rights, and market access. The proposed FTAA also rules out the establishment
of performance requirements for domestic investment including capital
controls which have been essential to sustainable economic development
in many countries in both the developed and developing world. The proposed
FTAA is silent on the crucial issue of debt relief and would continue
to expand inequities between developing and developed countries and
between the rich and poor in all countries.
Conclusion
Despite the fact that much of the above commentary has already been
made available to trade negotiators by our member organizations and
many others, the current FTAA and negotiating process continues to proceed
on a path which threatens workers, the environment, public health, sustainable
development, and democracy. The corporate-managed free trade model has
suffered a dramatic loss of credibility in recent years. Unless the
US shows leadership in the FTAA negotiations to reverse direction and
pursue the above policy prescriptions that improve human and economic
development, the FTAA will meet with strong opposition from civil society
throughout the Americas, including from the CTC.
Alliance for Sustainable Jobs and the Environment; American Lands
Alliance; Communications Workers of America; Defenders of Wildlife;
Friends of the Earth; Institute for Agriculture and Trade Policy; International
Brotherhood of Teamsters; Minnesota Fair Trade Coalition; National Family
Farm Coalition; Public Citizen; United Steelworkers of America
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