Rule Masquerading as
Trade Policy: the Misnamed FTAA

The debate over 'fast track' authority for George W. Bush (to negotiate treaties that Congress can approve or reject, but not alter), and about the "Free Trade Agreement of the Americas" (FTAA) invariably starts from a false premise--that "free trade" is the goal. Media coverage presented the support for steel tariffs as if it were an exception to the rule of reducing trade barriers, but the only consistent rule seemingly is to strip away local and state power over any corporate behavior.

This is not merely the opinion of democracy activists, but of large groups of elected officials. The National Conference of State Legislatures has adopted an official policy on "Free Trade and Federalism" saying " states are not prepared to accept...a challenge to their sovereignty and to state authority based on an arbitrary and unreasonable standard of discrimination against foreign commerce." National associations of mayors and other regional officeholders have taken similar stances in the face of ongoing assaults against local self-governance.

While attempting to outlaw many positive forms of protectionism such as safeguards for healthy air, drinkable water, and a safe workplace, the FTAA would strengthen some of the most expensive, economically wasteful, and (in the case of life-saving drugs) deadly forms of protectionism. These are the patents, copyrights, and other monopolies commonly grouped under "intellectual property rights."

Many such intellectual property rights are important protections to ensure that writers, researchers, musicians, and others receive just compensation for their work. Often, though, these monopolies are giveaways of research and assets paid for by our tax dollars, as with countless drugs where the hard work of research and development was done by public employees but then given away with exclusive patents to drug corporations.

A study by the Massachusetts Institute of Technology showed that 11 of the 14 most medically significant drugs developed in the U.S. from 1970-1995 originated with government research. For example, the well-known cancer drug, Taxol, developed with $32 million in tax dollars over 15 years, essentially was given as a gift from us, the taxpayers, to Bristol-Myers Squibb Corporation. The drug generated about $1.7 billion in sales in 1999 alone, thanks to the company charging approximately 2,000 percent over production cost. Pharmaceuticals is just one of several realms where public research is turned into a corporate welfare bonanza.

One of the main purposes of the corporate-managed trade agreements masquerading as "free trade" is to expand this lucrative form of protectionism across international borders. And while tariffs rarely increase the price of a product by more than 20 or 25 percent, patent-protected monopolies can gouge us with prices20 times the cost we'd see in a competitive market.

Many of the proposed "property rights" protections are unconscionable to any decent society because they mandate massive suffering and death to prop up corporate profits. Brazil already has run into trouble with the World Trade Organization (WTO) for its laws dealing with the manufacture and import of generic AIDS drugs. These laws have formed an important part of Brazil's remarkably successful program for treating AIDS. Brazil has provided "triple-therapy" drugs -- the same ones that cost $12,000 a year to treat people In the U.S. but cost as little as $500 to produce.

Generic AIDS drugs have enabled Brazil to cut the death rate from AIDS nearly in half. But (following the Clinton example) the Bush administration currently is challenging Brazil at the WTO, contesting Brazilian law that allows for these generic drugs.

Agreements like the FTAA also expand protections for foreign investors, giving them rights that they would not be able to win in their home countries. There was a little-noticed provision in NAFTA called Chapter 11 that allowed foreign investors and corporations to sue communities, states and countries for damages if laws reducemaximum potential profits. This has turned out to be nightmare for public health and environmental protections.

Laws to protect health, worker safety and clean air or water are among laws already stopped or repealed out of the fear of lawsuits. In perhaps the most notorious case, the Canadian-based Methanex Corporation attempted to overrule California's decision to phase out the gasoline additive MTBE (methyl tertiary butyl ether--a known threat to safe drinking water). Methanex claimed $970 million was owed to compensate for potential profit lost by not using the toxin. This is just one example among many of corporate success in thwarting democracy, and the FTAA would only accelerate the process.

In another demonstrative example, the U.S.-based Ethyl Corporation (the one that brought us leaded gasoline) brought a complaint against the Canadian national government. Canada had prohibited the import of another toxic gasoline additive known as MMT, that effectively was banned in the United States. But the fear of losing the NAFTA lawsuit was enough for Canada to repeal its law and take $13 million from its citizens' pockets to pay "damages" to Ethyl Corporation.

Now imagine extending such NAFTA provisions to 31 more countries. You can see why people who recognize the devastating impact these rules would have on our health, environment and working conditions adamantly oppose the FTAA. Workers in the United States, Canada, and Mexico now have had eight years of experience with NAFTA--the FTAA's pilot program--and most have had enough time to realize it was a bum deal for anyone who works for wages or values the health of their children.

For the U.S., the main problem has been the loss of well-paying manufacturing jobs and the downward pressure on wages as companies move or threaten to move south. Canada also has lost a good part of its manufacturing sector, and income inequality has worsened significantly in every NAFTA country. Mexico has seen declining real wages for its workers as well as falling income for the self-employed (a much larger part of the labor force than in the U.S.)

For Latin America as a whole, the last two decades of "free trade" have been an economic disaster. Income per person has grown about seven percent over the last two decades, as compared with 75 percent in the previous two.

Dependence on growth, export trade, and foreign capital, while undercutting job security and wages, creates a vulnerable, unsustainable economy. A healthy economy benefits from trade but builds capacity to provide for much of its domestic demand and supports it by protecting the jobs and incomes of workers. We, as individuals, as well as our governments, also must recognize that a stable economy with low growth ultimately is desirable and necessary if our children are to inherit a planet capable of sustaining healthy life.

A multitude of smaller businesses, rather than dependence on a few mega-corporations with no loyalty to any place, also is vital to our prosperity. This holds true for communities as well; hence the importance of a strong base of locally owned, independent businesses in our own communities for substantial economic self-reliance.

But the core reason of all for citizens (of the U.S. or other nations) to reject the FTAA is simply the precedent of ceding sovereignty to promote global corporatization. The fact that the heads of transnational corporations such as Merck and IBM can read the draft agreement while the press and the public are kept in the dark speaks volumes about their agenda and why any citizen valuing our Constitution's promise of government of, by, and for the people should take issue with the FTAA.

The WTO and NAFTA are products of a decades-long effort to rewrite the rules of international commerce in ways that ignore the needs of most of humanity as well as our natural environment. But humanity is catching up. U.S. citizens especially may have been slow to awaken, but we won't sleep through another round of sacrificing our quality of life to corporate greed.

They can build fences around meeting places to shut out the voices of the people who bear the brunt of corporate exploitation, but the illegitimacy of the process has been laid bare. The misnamed "Free Trade Area of the Americas" scheme will not withstand public scrutiny.Start organizing your friends, family and co-workers to stop this anti-democratic threat in its tracks.

Thanks to Mark Weisbrot, co-director of the Center for Economic and Policy Research and to Jeff Kaplan for contributing material for this article.

For more information see the links on our Global Corporatization index page:

For a strident defense of corporate-controlled commerce see: www.truthabouttrade.com

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