U.S. Free Trade Policy Not as Free as It Appears

The Quebec "Summit of the Americas" has put a spotlight on the ambiguities and contradictions of economic integration in the Americas.

Washington wants to lower barriers to trade, but not too far. It wants to make goods flow more freely across borders, but not people. It opposes foreign monopolies, but seeks special treatment for some of its own. It wants democracy, but does not want to address the economic prerequisites for democracy. Above all, it wants economic integration, but without meaningful political integration.

In the name of free trade, Washington is decimating the economies of the Eastern Caribbean. These small, developing countries depend heavily on banana exports, and until recently benefited from an arrangement guaranteeing them a fixed share of the European market. That annoyed U.S. producers like Chiquita and Dole, that run banana plantations in Central America. Their lobbyists, who funnel large campaign contributions to presidential and congressional candidates, started collecting their IOUs.

The U.S. filed a complaint with the World Trade Organization, which agreed that the system allotting a certain quota to the countries of the Eastern Caribbean acted as a restraint on trade.

But turn from bananas to sugar, and it's another story. The White House and Congress continue to support a sugar import quota that keeps the price of sugar artificially high. That's costly for U.S. consumers, who relish sugar in almost everything they eat. But without the price supports, the U.S. sugar industry would collapse, and so would most of the threat that industry poses to the Everglades. However, like Chiquita and Dole, Big Sugar is well represented in Washington, where the profits it makes are recycled into more campaign contributions.

Another type of monopoly that enjoys favor in Washington is that associated with patents. Travelers abroad usually notice that pharmaceuticals often cost a fraction of what they cost here.

That is because they are sold way above actual production cost, which the drug companies are able to do thanks to patent protection. That is what is behind the current crisis over prescription costs for Americans on Medicare. It was also the source of a major public relations gaffe --- the drug companies lawsuit (now dropped) aimed at preventing South Africa from obtaining affordable AIDS medicines to address the epidemic afflicting their poorer citizens.

In its approach to economic integration, the United States, unlike Europe, has a strong tendency to favor well-connected corporate interests. Mexican president Vicente Fox got it right: "You cannot have genuine democracy in a society where there is so much inequality of poverty, as happens in many areas of Latin America, including Mexico."

The European Union has met the challenge of inequality with regional development funds, by which the wealthier countries contribute to the development of public infrastructure in the poorer countries. It is no coincidence that once poverty-stricken Ireland and Spain are now booming.

The European Union long ago set a goal -- now in effect -- of eliminating barriers to the free flow of labor between member countries. President Fox is challenging the U.S. to set a similar long-term goal with Mexico. The Bush administration seems interested in developing a guest-worker program, but not in accepting Fox's goal. Nor is it willing to follow the European example of setting common labor standards, which bolsters the impression that it wishes to maintain a cheap workforce abroad. But, as Fox said, democracy does not thrive in conditions of strong inequality.

It is not surprising that the American approach to integration favors corporate interests -- after all, they alone have any real influence. In Europe, where economic integration has been accompanied by political integration, the process is now guided by the European Parliament that gives the people a real say.