Porto Alegre, Brazil--In U.S. living rooms, talk about such policy measures as the White House's proposed Free Trade Area of the Americas (FTAA) is likely to elicit clueless shrugs. But south of the Rio Grande, millions of Latin Americans consider FTAA--and U.S. trade policy in general--to be an immediate issue of life and death urgency.
No surprise, then, that as some 40,000 social activists and scholars met here last week to strategize against what they call "corporate globalization," they chose resistance to the FTAA as one of their top priorities. "We will fight it every possible way and we will defeat it," vowed Luis Inacio da Silva, Brazil's most important opposition politician. As head of the left-of-center Workers' Party, which governs large parts of Brazil, Da Silva, or "Lula" as he is known to most Brazilians, is currently leading in opinion polls for this October's presidential election. The FTAA, he says, "isn't really a free trade pact. Rather, it's a policy of annexation of Latin America by the United States."
Lula's characterization of the agreement is at sharp odds with that of the Bush administration, which claims that the proposed agreement would help the hemisphere's poor by encouraging a freer flow of goods among all 34 countries stretching between Canada and Argentina. The administration hopes a pact can be approved and implemented by 2005.
So, why such a sour view from Lula and other Latin Americans--the very people President Bush says this agreement would benefit? Critics of the FTAA say it would allow powerful countries like the U.S. to force smaller countries to open their markets, which would then be quickly absorbed. Underdeveloped countries couldn't hope to compete with giants like the U.S., which would, in the end, gobble up an even greater piece of the economic pie.
Even some leading free-trade defenders concede the same point. Jose Manuel Salazar-Xirinachs, chief trade advisor to the Organization of American States (OAS), acknowledges that, while he remains hopeful, there has been no substantial reduction in Latin American poverty after a decade of trade liberalization encouraged by Washington. "Liberalization was not the miracle or the magic formula that many expected," he said.
Objections to the FTAA center on the same point: the pact would diminish the power of nation-states to regulate their own economies and protect their own citizens. Like the 1994 North Atlantic Free Trade Agreement signed by the U.S., Canada and Mexico, the new pact would allow corporations to sue individual governments over any law that might diminish private profit, including legislation that protects consumers, communities, labor and the environment. Already, under Chapter 11 of NAFTA, Mexico has been successfully sued by a U.S. company for trying to protect itself against toxic dumping by blocking the company's expansion plans. And a Canadian firm has sued the U.S., claiming a California anti-air pollution law interferes with profit-making.
The FTAA would also severely erode controls on foreign investment capital--the same sort of controls that the International Monetary Fund says have been key in providing financial stability in countries ranging from Chile and Colombia to Brazil.
With the richest economy in South America and the ninth-biggest in the world, Brazil worries that American corporations would use the FTAA to exploit the abundant resources of the Amazon. The trade debate has become so contentious in Brazil that the recent assassinations of two Workers' Party mayors have been widely interpreted here as an attempt to intimidate Lula and force him to withdraw from the presidential race, thereby silencing a central FTAA critic.
But hesitation over FTAA extends beyond Lula's leftist opposition. Recently, the lower house of the Brazilian Congress unanimously passed a nonbinding resolution calling for withdrawal from the current FTAA negotiations with the U.S.
Such opposition also extends into the United States, where there is fear that, as has been the case with NAFTA, the export of domestic jobs will be greatly accelerated if the FTAA is implemented. Resistance from labor, citizen and environmental groups has been so stiff that, two months ago, when the Bush administration asked for "trade promotion authority" to expedite negotiation of the FTAA, the measure passed the U.S. House of Representatives by a single vote, at a time when Bush was at the height of his post-Sept. 11 popularity.
In its desperation to ram this measure through Congress, the White House may have done itself more damage than good. Last-minute backroom deals with wavering members of Congress guaranteed more trade protection for U.S. agricultural interests--not only contradicting the spirit of free trade but infuriating major trading partners. A few days after the squeaker House vote, Brazil's moderate President Fernando Henrique Cardoso condemned the protectionist measures.
In the months to come, as negotiations on FTAA become more intense, so will resistance and protest. U.S. opponents say they will apply the "Dracula Strategy" to defeat the pact. "The more we expose it to the sunlight of public opinion, the more unpopular it will become," says Lori M. Wallach of the nonprofit Public Citizen's Global Trade Watch division.
From Brazil and the rest of Latin America, meanwhile, anti-FTAA campaigners will make it clear they are not flat-Earthers opposed to all trade agreements or to greater economic integration. Rather, they will argue that it is the height of cynicism to contend that treating radically unequal partners equally is somehow fair. These critics want a partnership with the U.S.--but a more equitable one.
One model frequently cited as more attractive is that of the European Union. When the EU was being formed, "compensatory" measures were enacted so that richer countries--like Germany and France--provided significant development aid as well as trade and currency advantages to poorer partners like Greece and Portugal.
If President Bush is serious about his promise to help lift Latin Americans out of poverty, he should follow the European example. An FTAA based on the notion that a country like landlocked and impoverished Bolivia can be an equal trading partner with the U.S. will only deepen the hemispheric divide. A more authentic partnership between North and South America would not only establish rules for fair and increased trade and alleviate the suffocating burden of Southern debt, but would also embody a continental Marshall Plan that would seriously address the currently unsustainable imbalances in education, health care, the environment and human rights.
But there is no evidence to suggest that Bush is serious about his hemispheric anti-poverty promise, which probably means a rocky road ahead. This might be a good moment, then, for average Americans to start brushing up on the alphabet-soup details of NAFTA, GATT (the General Agreement on Tariffs and Trade) and the FTAA. They're likely to be hearing a lot of angry protesting about these issues in the next few months, and they might want to know what all the shouting is about.