Originally published in New Ground 98, January — February, 2005.
by Bob Roman
Winning the Battle!
Fair trade issues were in the background during most of 2004, despite some significant developments. Apart from being crowded out by election news, another reason might be that it’s also an issue on which far too many Democrats have failed the labor movement. As usual, there is good news and bad. Generally, fair trade advocates are winning a few battles but, I think, losing the war.
The good news is that negotiations toward a Free Trade Agreement of the Americas (FTAA) are comatose. Not dead because a framework for further negotiations exists and the Bush Administration’s “fast track” negotiating authority extends until June, but the deadline for reaching an agreement was January 1. Brazil and Argentina are generally given credit for the impasse. It would be nice to report that labor rights and environmental concerns were the deal breaking issues. Given the secrecy of the negotiating process and the bias of the press, one can’t exclude them as factors, but published accounts indicate a more traditional concern with sectors of the bourgeois economy.
Of course, it didn’t help that U.S. Trade Representative Robert Zoellick suggested that if Brazil did not want to trade with the United States, maybe it should look southward instead. Antarctica, perhaps. This comment went over about as well as you might expect. Zoellick began being talked up as a candidate to head the World Trade Organization or perhaps Fannie Mae. Well, would being Condi Rice’s new deputy do?
Losing the War?
In the meantime, negotiations on the Central American Free Trade Agreement (CAFTA) were essentially finished in December of 2003. The pact was not submitted to Congress, mostly because the Bush Administration did not want this to be an election issue. (Kerry did call for CAFTA to be renegotiated.) Plus, after the fact, the Dominican Republic decided it wanted to be included as well. While the Dominican Republic could probably have been accommodated in a separate bilateral agreement, its inclusion is perceived as making CAFTA more agreeable to some members of the Black Caucus. The agreement now includes Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and the U.S.
Beltway fair trade advocates are upbeat about the prospects of defeating CAFTA when it comes to a vote this year. And they have some reason to for this. Some significant business interests are opposed to the agreement. The American Sugar Alliance, representing sugar growers, is opposed because CAFTA phases out import quotas on sugar. Likewise, the textile industry views the agreement as another nail in their coffin, and cotton growers are not enthusiastic either. Given the growing budget deficit, the drop in revenue from import duties, while not huge, will still be of concern.
It also doesn’t help that the agreement does not adequately fulfill the instructions given by Congress to the U.S. Trade Representative that the agreement address labor concerns and make it a priority equal to other economic concerns. Regarding labor, the agreement really only says the countries must enforce their own labor laws, but provides no effective remedies, even suggesting that such concerns are essentially outside the scope of the agreement by referring disputes to “other international agreements”. It doesn’t improve matters that only the United States and Costa Rica have a pretense toward having adequate labor laws. The AFL-CIO maintains the labor provisions in CAFTA are worse than in previous free trade agreements.
CAFTA also continues the infamous Chapter 11 of NAFTA that allows corporations to sue governments for loss of potential profits. This has not come up frequently, yet, under NAFTA, but it has and is being used in a number of cases. In fact, it doesn’t need to happen frequently; the prospect of being sued is enough to keep local governments in line.
Despite this optimism, it is likely that CAFTA will be approved. The Republican leadership in Congress has been effective at maintaining caucus discipline. While some conservatives have ideological issues with such agreements related to sovereignty, it’s not likely to count for much in the face of Hastert, DeLay and the Chamber of Commerce. Any defections among Republicans will be more than balanced by defections among Democrats. This is particularly true of Democratic members of the Congressional Sugar Caucus.
Prior to the November election, the Senate Sugar Caucus included 11 Senators, mostly from sugar beet and sugar cane states. The Caucus in the House, however, is largely concerned with the confectionery industry, which would benefit from lower sugar prices. Representatives Mark Kirk (R-IL) and Danny Davis (D-IL) co-chair the House caucus, which includes 14 other Representatives, including Judy Biggert (R), Raham Emmanuel (D), and Bobby Rush (D) from Illinois. Representative Davis’ district has been hit hard by plant closings in the candy industry, particularly Brach Candy (see New Ground 36, “Brach Candy: the Battle Continues”) and there is the illusion that a drop in sugar prices might have prevented this.
For the much same reasons, expect some unions to make defeating CAFTA not a priority. Not surprisingly, the Democratic Leadership Council has been supportive of CAFTA.
The Velvet Shillelagh
While the United States International Trade Commission calculates the immediate economic effects of CAFTA in the U.S. as minimal, the U.S. business community has an interest in opening these modest economies to their participation using rules written to their benefit. Not even in effect or ratified except for El Salvador, CAFTA has been used to get the Dominican Republic to repeal a tax on beverages sweetened with corn syrup and Guatemala to repeal laws concerning intellectual property disadvantageous to the U.S. pharmaceutical industry. In the United States, CAFTA is the justification given by the highly profitably Florida Crystal Corporation when it declared its intent to outsource work to “independent contractors” and impose a reduction in overtime pay and other benefits for the remaining employees, thus provoking the Machinists Union to strike. This is in a plant that had not had a strike in decades. One farmer cooperative has already closed a sugar mill in Louisiana citing CAFTA as its reason.
Threats to close or move and the bloody shirt of international competition are not unusual gambits in collective bargaining, especially when it is the first contract. And once again, the deterrence effect has an unmeasured consequence on bargaining and organizing, not to mention tax policies.
Defeating CAFTA is important and it’s pretty to think it might mark a turning point. But one has to wonder. Aside from NAFTA, the U.S. has bilateral free trade agreements with Israel, Jordan, Singapore, Chile, Australia, Morocco. A free trade agreement with Bahrain has been completed and is expected to pass with no difficulty. Indeed, bilateral agreements are being advocated as an alternate strategy toward accomplishing the FTAA.
The other CAFTA members also have their own bilateral and multilateral free trade agreements. There is the Central American Common Market that includes Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. This has individual agreements with Chile, Panama and the Dominican Republic. Costa Rica has agreements with the Caribbean Community and Canada. Mexico has a free trade agreement with El Salvador, Guatemala, and Honduras. Nicaragua has a free trade agreement with Mexico. The Dominican Republic has a free trade agreement with the Caribbean Community.
Even allowing that some of these agreements are functioning at the level of wishful thinking, it’s easy to see that neo-liberal property rights over human rights model of development is becoming dominant.
These agreements act as tar-babies. The longer they function, the more difficult it is for a country to withdraw. Virtually no one in the United States or Canada, for example, is talking of withdrawing from NAFTA; the prospective economic disruption, real or imagined, would be too threatening to politicians’ careers. In 2000 for example, a move to withdraw from the World Trade Organization was defeated in the U.S. House, 363 to 56.
Renegotiating the agreements might seem a reasonable approach (and Mexico’s President Fox is under pressure to reopen some aspects of NAFTA). But this has some severe practical problems for U.S. fair trade advocates. The obvious one is simply the balance of power within our own country. And our negotiating partners are not always to our left, not always even to the left of Bush. Even allowing for imbalances of power in favor of the U.S. this presents a problem.
The practice of negotiations also would need to change. While CAFTA was being negotiated, the draft was treated as a state secret, not subject the Freedom of Information Act. Some NGO access to the negotiators was allowed, but it was extremely limited.
What Is To Be Done
Finally, advocates of fair trade will need to have something of a consensus as to the changes that are needed or desirable. We need summits not only on how to defeat measures like CAFTA (such as the recent Citizens Trade Campaign summit in Washington) but multinational meetings to discuss what today might seem utopian proposals for fair trade. I don’t mean to suggest that nothing on this has been or is being done, but more is needed particularly here in the States.
The need for this is urgent. NAFTA, CAFTA, et. al. are setting in concrete a system that favors only the wealthy, that regards property as the sole human right and the sole legitimate concern of the state, with inadequate means for remedy atop dynamic economies and societies and diverse cultures. Insurrectionary leftists and establishment conservatives alike take note: this is an excellent prescription for violence.