Is the FTAA dead, or just resting?

Mexico's NAFTA experience has had a chilling effect on other southern countries.

There is a Monty Python sketch in which a customer in a pet store argues with the ownerover the state of a parrot — motionless and apparently deceased. Thecustomer insists that the bird is dead; the owner declares it is just“resting.” Replace the bird in question with the Free Trade Area of the Americas and you have the current situation facing what was to have been themost ambitious free trade agreement in the world. The deadline for the dealpassed almost unnoticed last Saturday and had long since been dismissed asunattainable. In fact negotiations have been “resting” for over a year withno new meetings scheduled.

There are many reasons for the fading vision of free trade. One is simplythe geopolitical fact that every time the U.S. gets bogged down in far-offwars, it begins to lose its grip on its own “back yard.”

But the reasons theFTAA is struggling to survive go much deeper. Most important, LatinAmerican populations are no longer listening to the old “prosperity is justaround the corner” tune of the neo-liberal crowd, whose policies have ruinedtheir countries. In nation after nation, democratic elections have resultedin centre-left governments gaining power on promises of activist government,and moderating neo-liberal policies. Brazil, Argentina and Venezuela areamong them, and Bolivia and Uruguay have followed suit. The unintendedconsequence of U.S. neo-liberal policies has been to revive a powerful LatinAmerican nationalism.

The FTAA as conceived by the U.S. and Canada was always weakened byover-reaching. Southern countries were only keen on market access, whileCanada and the U.S. “demanded” intellectual property, NAFTA-likeinvestor-state provisions, and public services. This demand sank in November2003 under the weight of American arrogance. The U.S. not only refused toreduce agricultural subsidies but had actually increased them, all the whiledemanding that southern countries drop trade barriers.

This was especially poisonous for Caribbean nations which depend on tariffsfor most, if not all, of their revenue. Under the FTAA these governmentswould have to abolish tariffs and introduce new tax systems. Despiterepeated promises from Canada, the issue of an adjustment period for tariffelimination has never been addressed.

Mexico's NAFTA experience has had a chilling effect on other southerncountries. Mexico has a huge head start as an export platform to the U.S. andother countries will have a tough time competing. They also view withtrepidation the U.S. penchant for exporting to Mexico, as “U.S.-made,” goodsmanufactured in cheap-labour Asian countries. As for any benefits forworkers, Mexico's example is not encouraging. Real wages in Mexico havedeclined by 20 per cent since 1994.

In the U.S. itself enthusiasm for the FTAA is not exactly burning. The issueof “off-shoring” jobs is not going away any time soon and it exposes thereal purpose of NAFTA and now the FTAA: helping U.S. companies regain globalcompetitiveness by facilitating their move to locations with extremely lowwages.

George W. Bush claims an FTAA would stimulate U.S. growth but thisargument is very weak. Neo-liberal policies forced on the south by the U.S.,have resulted in slower economic growth in that region. Between 1995 and1999, the U.S. increased its share of hemispheric economic output from 73per cent to 76 per cent.

In the meantime, Latin American countries have not been idle in determiningtheir own direction. Brazil is focussing its energies on building theMercosur trade block (Argentina, Brazil, Paraguay and Uruguay are fullmembers; Bolivia, Chile, Peru, Mexico and Venezuela are associate members).Mercusor is negotiating trade deals with countries like India and SouthAfrica. Cuba and Venezuela recently announced a further challenge to theFTAA called the Bolivarian Alternative for the Americas.

Venezuelan President Hugo Chavez has called it “an alternative to the perverse FTAA, which they have been trying to impose on us for years. The FTAA is dead!”

Paul Martin's Liberal government continues to argue that the FTAA, like the parrot, isjust “resting.” But the customer isn't buying.

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