[NYTr] "Free" Trade Agreements & Latin American Integration

[All the News That Doesn't Fit]

Progreso Weekly - Oct 11, 2007
http://progreso-weekly.com/index.php?option=com_content&task=view&id=181&Itemid=1


The free-trade agreements and Latin American integration

Apropos the referendum in Costa Rica on the FTA with the United States

By Eduardo Dimas

"...the concept of a free market is a trap to fool the weak..."
-Theotonio Dos Santos, Brazilian economist and academician.

Professor Theotonio Dos Santos is right. The concept of a free market
is a trick that allows the rich countries to control the economies of
the poor nations. However, several weak Latin American governments have
refused to sign FTAs with the United States because they consider them
to be harmful to their national interests. In the cases of nations that
have signed them, more than just weakness is involved.

As I write this article, the results of the referendum that asked the
people of Costa Rica to decide if they approved an FTA with the U.S.
have been published. The FTA was approved by 51 percent of the voters;
48 percent voted against it. More than 40 percent of the 2.6 million
Costa Ricans with the right to vote failed to exercise that right.

It is fair to acknowledge that this was a test of democracy, because in
the rest of the Central American nations the FTAs were approved by the
Parliaments, without the participation of the popular vote. Also, the
presidents of the isthmus nations signed the Central American and
Dominican Republic agreement (CAFTA-DR) with the United States in 2005.

The government of President Oscar Arias -- Nobel Peace Prize winner, I
don't know why -- did everything in its power to get the FTA approved,
including fearmongering among the people and discrediting the leaders
of the opposition to the FTA. The president himself campaigned hard to
get the agreement approved.

In the days prior to the referendum, White House spokesman Dana Perino
declared that Costa Ricans should understand that if they rejected the
FTA, the United States would not renegotiate a new treaty, because it
has never done so. She also threatened Costa Rica with losing some of
the foreign-trade benefits the country receives as a member of the
Initiative for the Caribbean Basin.

For her part, U.S. trade representative Susan Schwab declared that the
Costa Rican voters should “think twice” before rejecting the FTA,
because that could create problems for the country's trade with the
United States. These were not veiled or indirect threats; they
represented blatant blackmail that, needless to say, proved effective.

The “best” part of the United States' FTA with Central America,
including Costa Rica, is that it is conceived as if all the economies
were equal, as if there were no abysmal differences between each other.
Let me give you a figure: the sum total of the gross domestic products
(GDPs) of the six Central American countries combined is a bit more
than 1 percent of the United States' GDP. Costa Rica's GDP is 554 times
smaller than the United States'.

Almost all the Central American nations have had to reform their
constitutions to incorporate the FTA, which leads many observers to
think that the agreement is more important than each nation's Magna
Carta. Costa Rica would be no exception.

To open the markets to the competition of agricultural products
subsidized by Washington, to allow U.S. companies to deal with national
companies on an equal basis, or introduce their products free of tariff
is not only suicidal for the national interests, it is downright stupid.

Yet, it happens. At this moment, the governments of Colombia, Peru and
Panama, whose parliaments already approved the FTA with the U.S., are
lobbying in the U.S. Congress so the American legislators may approve
them. U.S. functionaries, such as Commerce Secretary Carlos Gutiérrez,
are pressuring the legislators to approve the agreements because, he
says, “they are of vital importance to the United States.”

And this leads us to another aspect of the problem. The FTAs are a
source of division within the process of integration Latin America is
living through. The more FTAs are signed and approved, the more
difficult the economic unity of Latin America will be, and the greater
will be the ability of the U.S. government to torpedo that unity. One
could think that, for the U.S. government, the FTAs are more of a
political instrument than an economic affair.

On the Latin American side, the elements that advocate the agreements
with the U.S. are precisely the sectors of the oligarchy that are most
closely linked to the transnational capital, especially U.S. capital,
such as the agricultural export and financial sectors. A typical
example is President Oscar Arias, whose family, a longtime member of
the Costa Rican oligarchy, owns a sugar mill engaged in the manufacture
of ethanol for a business firm in California.

Therefore, it is not idle to think that the other Latin American
countries that promote approval of the FTAs with the U.S. are
representative of the same oligarchic interests. And they care little
about the ruination of the small and mid-size businesses and the
destruction of the national agriculture, which would be incapable of
competing with the American products subsidized by Washington. Bear in
mind that those products would enter those countries paying no tariffs.

The best example of what happens to Latin American countries that sign
FTAs with the U.S. is Mexico. After almost 13 years, the surrender of
the Mexican economy to the United States is almost complete. Mexico
depends almost totally on the United States for its foreign trade (88
percent.) Ninety-four percent of Mexico's bank capital is in foreign
hands, mostly the U.S. and Spain. And 87 percent of its industry has
become the property of transnational corporations.

In the agricultural sector, farmers have experienced a gradual but
constant pauperization. About 40 percent of the farmers -- several
million people -- have lost their lands. Mexico used to produce its own
needs and exported rice, corn, beans, cotton and milk. Today, it has
import ever-increasing amounts of those products. Seventy-eight percent
of the production of corn tortillas, Mexico's traditional food, is
produced by U.S. companies.

In El Salvador, a small and overpopulated Central American nation, the
effects of the FTA are already felt. Thousands of peasants have been
ruined and thousands of jobs have been lost in the “maquiladora”
industry, itself a terrible form of exploitation. In the rest of the
Central American countries, the situation is similar.

In other words, the governments of the United States and the Latin
American countries that promote the FTAs as part of the “free market”
know their consequences perfectly well. Some hide behind the theory of
the “trickle-down effect.” That means that the free market will create
such a flow of wealth that “it will trickle down to the poorest sectors
of the population” and improve their living conditions.

In Mexico, the opposite has happened. And the same is happening now in
the Central American countries that have operational FTAs. Lamentably,
that will happen in all the others. The FTAs are not only traps for the
weak. They are a way for the U.S. and its allies to maintain control
and exploitation over the peoples of Latin America and to impede their
economic and political unity, a unity that is being promoted by the
Common Market of the South (Mercosur) and principally by the Bolivarian
Alternative for the Americas (ALBA.)