What is the FTAA?

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This week the city of Miami will be hosting an international meeting of all the governments of the Western Hemisphere (except for the communist government of Cuba). The topic of the meeting is the highly controversial Free Trade Area of the Americas (FTAA). The FTAA is an expansion of the now 10-year-old North American Free Trade Agreement (NAFTA), which eliminated trade restrictions between Canada, the US, and Mexico.

In its previous gathering in Quebec City, Canada in 2001, the FTAA was met with incredible resistance where the perimeter fence protecting those at the meeting from the voices of dissent (yes, there will be a fence in Miami as well) was torn down and the Canadian police were overwhelmed by the amount of people actively resisting the summit.

But why were so many people protesting in Quebec City, and why are thousands of protestors, many of them young people, going to Miami to protest? In order to better understand how the proposed expansion of a continental free trade zone could negatively affect the rest of the countries in central and southern America, it is useful to look at what NAFTA has done for the people of Mexico and the US.

NAFTA allows free trade between Canada, Mexico, and the US. This may sound like a good thing for the economies of the countries, but working people of North America and the environment have suffered negative consequences.

Workers and Farmers

ftaa flyer
A flyer for the protests.

Seven years into NAFTA, the minimum wage in Mexico has dropped 18 percent while the manufacturing wage has dropped 21 percent. The drop in manufacturing wages has come with the increase of maquiladoras, which are factories established within Mexico that are run in sweatshop conditions. During these first seven years of NAFTA the number of maquiladoras in Mexico jumped from 546,433 to 1,240,840 (more than double). These jobs, however, did not come out of nowhere, but are jobs that had once resided in the US. Many companies have escaped south of the border for cheaper labor and lax environmental laws. While the number of US workers that have lost their jobs due to NAFTA is not available, as of June 2001, 356,000 workers had qualified for a special retraining program for workers whose previous employees had moved to Mexico or Canada or had shut down due to competition from these countries.

One of the counter arguments against this critique is that the corporations that move to Mexico are providing a source of income for the population by providing them with work. This is not the case as the number of people living in poverty has actually increased by about 10%, even though productivity has also increased by 47.7 percent.

Also, many of the employees of the newly formed maquiladoras were not necessarily unemployed from the start. The central aspect of free trade, as the name implies, is the free flow of goods into and out of countries without any imposition of tariffs. As a result, large farming corporations from the US have flooded the Mexican market with cheaper crops. Farmers who have traditionally relied on agriculture for their sustenance and income have not been able to compete with the large American corporations and have been pushed to working in maquiladoras.

The Environment

The effect that NAFTA has had on the environment is especially devastating. Corporations that are constantly looking to maximize their profits are cutting their costs, and the environment is paying the price. According to research done at Tufts University, air pollution levels in Mexico have doubled in the three years following the implementation of NAFTA. While US and Canadian corporations benefit from NAFTA, they do so at the expense of the Mexican environment.

Those who participated in the creation of NAFTA -- many of them the same people who reside on the boards that govern corporations -- have not considered protecting their own environment. One of the starkest examples of this is a case brought forward by Canadian corporation Methanex.

Under Chapter 11 of NAFTA, corporations are able to sue governments for profit losses (whether they actually lost profits or potentially might lose profits). In 1999 Methanex attempted to sue the state of California for $1 billion because of a ban on MTBE. MTBE, a gasoline additive, was banned due to the environmental and health impact it had in polluting groundwater. Methanex was claiming that this ban was a trade barrier. The NAFTA panel that examined the case refused to award Methanex the $1 billion in estimated losses.

The environment and people of Mexico have not been as lucky as those of California. In 1997, US corporation Metalclad sued the Mexican government for a local decision to stop the construction of a hazardous landfill near the city of Guadalcazur in the state of San Luis Potosi. After three years the NAFTA panel decided that the Mexican Government was to pay $16.5 million in damages to Metalclad.

FTAA: Bigger and Worse

The FTAA would effectively expand NAFTA to all of the western hemisphere. By opening up the markets of large economies such as Brazil and Argentina, the FTAA would crush the local autonomy of indigenous communities, put labor under immense pressure from corporate control, and devastate one of the world's most biodiverse environments.

Why are the leaders of these countries allowing such horrible trade agreements to literally take control of the internal affairs of their countries? The answer is twofold. First of all, they are left without a lot of options since most of the governments of Latin America are already underneath a huge amount of international debt accumulated by years of borrowing from the International Monetary Fund and the World Bank and now are in a disadvantaged negotiating position. Their unstable economies enable the US to strong-arm the countries of Latin America who are desperate for stability and relief from financial burden.

The second part of the answer lies in the true nature of most Latin American governments. While in recent years great changes have taken place in electoral politics all over Latin America (Brazil, Venezuela and Argentina), most of the leaders still represent the economically privileged class and race of their countries. Indigenous representation is still far from realization and many leaders are also investors looking to profit from free trade agreements through relationships with multinational corporations.

This misrepresentation is being challenged today with popular uprisings across the hemisphere (and soon in Miami).

This past October in Bolivia, a huge revolt led by indigenous and working people ousted the president Gonzalo Sánchez de Lozada (Goni) because of his insistence in implementing neo-liberal policies. He fled with his family, interior circle of ministers (including the minister of defense who undoubtedly would have been held accountable for the 80 civilian deaths that had occurred in the past month during protests) and $85 million from the National Bank. His current location is particularly significant because it is none other than the city of Miami... and while Goni might be safe in Florida, his ideals, embodied in the FTAA, are not.

Read more: Why are people protesting the FTAA? | Day One | Day Two | Day Three

Ali Tonak graduated from Bard College after studying molecular biology. He is currently employed as a construction worker.

Source of statistics: http://www.ips-dc.org/downloads/NAFTA%20at%207.pdf

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