FTAA Spells Seriously
Bad News For Jobs
‘Trade Promotion' (Fast Track) Crucial to Stopping NAFTA Expansion
Chuck Grassley is worried. That’s good and
In April, the
Iowa Republican released a General Accounting Office report on the
status of negotiations to create the Free Trade Area of the Americas
(FTAA). What the report revealed caused Grassley great concern.
Senator said, "the negotiations have a long way to go in terms
of achieving their key market access objectives."
other governments in the Americas don’t believe the U.S. has the
political will to wrap up the agreement or sideline labor rights and
the Senator said, "the GAO reports that some FTAA participants
believe that the President’s absence of trade promotion authority
has thwarted the negotiations." And that galls Grassley.
day that goes by without renewing the President’s trade promotion
authority while our officials sit at the negotiating table is a lost
opportunity for America," Grassley groused. "Every trade
negotiation has its own momentum. When it is lost, that momentum is
terribly difficult to recover."
the case of FTAA, that’s good news. What isn’t: Grassley
declared that he is "more determined than ever to push for
legislation this year to renew the President’s trade authority
with the broadest possible scope, so the President can negotiate
market-opening trade deals on a multilateral or a regional
introduced by Senators Roberts (Kan.), Gramm (Tex.) and Hagel (Neb.)
would give the President trade promotion authority. Further, the
Permanent Trade Promotion Authority and Market Access Act of 2001
would extend trade promotion authority indefinitely.
is "trade promotion authority"? It’s what used to be
known as "fast track." Fast track gives the President the
authority to negotiate trade agreements with approval, but not
amendments, by Congress. Hampered by fast track/trade promotion
authority, Congress would be powerless to propose amendments to
protect labor rights, jobs or the environment. Congress could only
approve or reject a trade deal. Fast track gave President Clinton
tremendous leverage in pushing NAFTA through Congress.
authority expired in 1994. In the backlash against the failures of
NAFTA — and as result of the campaign mounted by labor and its
allies — Congress refused to renew fast track.
Sen. Grassley realizes, labor’s success in blocking a trade
promotion bill will go a long way to blocking the expanded version
of NAFTA that is FTAA.
For working people, the North American Free Trade Act was bad
news. The news could get a lot worse.
The United States and other governments in the Americas
are currently negotiating a trade deal to cover the entire Western
Hemisphere (except Cuba). Scheduled to take effect in 2005, the Free Trade
Area of the Americas would be like NAFTA — but even more of a threat to
jobs, living standards and democracy.
The Free Trade Area of the Americas (FTAA) would dramatically expand
Geographically: NAFTA links the economies of three nations; FTAA
would encompass 34.
Corporate rights: FTAA would give corporations more rights under
law, taking the strongest provisions of NAFTA, the World Trade
Organization and the (unratified) Multilateral
Agreement on Investment. In
particular, corporations could sue governments for profits
"lost" due to laws protecting workers, consumers or the
Coverage: FTAA would cover not only manufacturing and investment,
but also consumer and public services — everything from
child care and transportation to insurance and drinking water.
Even more than NAFTA, this new exercise in "free" trade would
override democracy — attempts by communities to determine living
standards, working conditions and the norms of doing business could be
"The goal of the FTAA is to impose the failed NAFTA model of
increased privatization and deregulation hemisphere-wide," according
to the organization United for a Fair Economy.
Impetus for an ever-expanding trade bloc based on the U.S. economy has
come in large part from corporate fears here about the emergence of a
powerful European single market (see timeline, at left). Hemispheric trade
agreements on this side of the Atlantic are U.S. capital’s response to
this perceived competitive threat. First came the Canada-U.S. free trade
agreement in 1989, followed by NAFTA in 1994.
Governments throughout the Americas agreed to the concept of a
hemispheric trade deal at the first Summit of the Americas in 1994. The
second Summit in 1998 established a trade negotiating committee and
working groups on topics including agriculture, services, investment,
dispute resolution, intellectual property rights, market access and
government procurement. Negotiating groups met in 2000.
The negotiations have taken place in secret, off limits to the public
and news media — but not to big business. More than 500 corporate
representatives have security clearance and access to FTAA draft
documents. In addition, corporate committees advise U.S. negotiators.
In January, the Office of the U.S. Trade Representative responded to
demands for disclosure by releasing copies of summaries of U.S. positions
on FTAA. While vague, these summaries indicate that FTAA proposals
incorporate the strongest provisions from NAFTA, MAI and WTO. (Copies of
FTAA drafts have not been given directly to members of the U.S. Congress
— but our representatives are allowed to view them in the U.S. State
Dept. reading room.)
The Multilateral Agreement on Investment (MAI) was another secret
scheme designed to give capital the upper hand in the global economy.
World-wide in scope, MAI was kept closely under wraps — few members of
Congress had any idea of its existence. Citizens’ groups got hold of a
copy, however. Public Citizen (founded by Ralph Nader) posted the text on
its website. Once exposed, MAI was doomed — its provisions were that
Unfortunately for the peoples of the Americas, many of FTAA’s
provisions are likely to copy those of MAI. Like the global plan, the
hemispheric trade agreement would force signatory nations to:
Treat foreign corporations no less favorably than domestic
Access granted to corporations from any one FTAA country must be
granted to corporations from all FTAA countries.
Remove performance requirements — rules established by local
government to protect the local economy. For example, a living wage, using
local suppliers or minority businesses, or reinvesting in the local
Allow corporations to sue governments directly for alleged
restrictions on profit-taking.
Submit to a dispute-resolution process involving international
panels, not domestic courts.
And MAI’s not the only model. The services agreement of the WTO (the
General Agreement on Trade in Services, or GATS) seeks to open the service
sector of each nation to transnational corporate penetration. According to
trade specialist Maude Barlow, FTAA negotiators are combining the most
extreme features of NAFTA and GATS.
FLUSH IF THEY LET US
"Services is the fastest growing sector in international trade,
and of all services, health, education and water are shaping up to be the
most potentially lucrative of all," writes Barlow. The goal is the
dismantling of public services. "The FTAA negotiating services
agreement is even more sweeping than the GATS," she says. "It
calls for ‘universal coverage of all service sectors’ at every level
of government and gives sweeping new powers to the service corporations of
the hemisphere to move wherever they want and demand equal access to
government funding now reserved for domestic public programs."
That could remove basic services — everything from education to water
supply — from local control.
Leaked documents indicate that FTAA will copy NAFTA’s Chapter 11,
which gives corporations the right to sue governments for the loss of
profits — including the anticipated loss of profits.
"The real goal of GATS and the FTAA is to dramatically reduce or
completely destroy the ability of governments anywhere to legislate or
regulate on behalf of their citizens," says Barlow.
FTAA would bar any government (local, state or national) from giving
preference in services as varied as health care, child care, education,
municipal services, libraries, culture and sewer and water services.
ANY DOC WILL DO
Among the possible effects of FTAA on services are removal of national
licensing standards for medical, legal and other professions, allowing
doctors licensed in one country to practice in any country, regardless of
the level of training; and privatization of public schools, and postal
No government could enforce a requirement that the goods and services
it purchases come from its own country.
FTAA negotiators seek to eliminate all tariffs and
"non-tariff" barriers. Tariffs are border taxes on goods,
largely eliminated already under NAFTA and WTO. Non-tariff barriers are
the rules, policies and practices of governments that can impact on trade.
"By choosing the stronger provisions of the WTO, FTAA negotiators
have introduced tougher restrictions on the governments of the Americas
and their right to regulate in the best interests of their citizens,"
That could include food safety regulations, warns Barlow, national
chairperson of the Council of Canadians and author of several books on
globalization. After examining WTO and NAFTA language, she concludes,
"the drafters of the FTAA are moving to totally remove the right of
individual governments of the Americas to set standards in the crucial
areas of health, food safety and the environment."
A trade deal may be negotiated in secret, but ultimately the fate of a
scheme like FTAA lies in the public process of Congressional debate and
voting. Public exposure halted MAI. The labor and environmental movements
and concerned citizens denied President Clinton "fast-track"
negotiating authority, successfully blocking expansion of NAFTA — up
until now. The fight against fast track will be crucial to stopping FTAA.
UE members are already fighting back. As reported in the May UE NEWS,
union members took part in protests April 21 in Chicago and
of the third Summit of the Americas.
Education and mobilization can prevent this latest assault on jobs, the
environment and democracy.
"We will stop GATS; we will defeat the FTAA; and we will begin the
long journey of building democratic institutions to serve our rights at
every level from the local to the global," says Maude Barlow.
(This article is based in part on a training prepared by Robin
Alexander, UE director of international labor affairs, and on FTAA for
Beginners, published by United for a Fair
Seven Years of NAFTA
Against NAFTA Expansion
The experience of seven years with the North American Free Trade
Agreement (NAFTA) may be the best argument against the Free Trade Area of
the Americas (FTAA), the plan to extend NAFTA throughout the Western
Hemisphere but with an expanded scope and more rights for corporations and
NAFTA has been a disaster for workers in all three countries: the U.S.,
Mexico and Canada.
For workers in the U.S., NAFTA has meant lost jobs and stagnating
wages, and an economy distorted by a ballooning trade deficit.
NAFTA promoters promised that increased trade would mean more jobs.
They were part right — since NAFTA took effect on Jan. 1, 1994, exports
to Mexico grew by 147 percent, and exports to Canada by 66 percent.
But something else happened, too. The shift of capital from the U.S. to
Mexico meant the loss of jobs here and more imports from Mexico. Imports
grew dramatically faster than exports. Imports from Mexico grew by 248
percent, those from Canada by 79 percent.
The net export deficit between the U.S. and its neighbors grew from
$16.6 billion in 1993 to $62.8 billion in 2000, in real dollars.
That deficit translates into lost U.S. jobs. As of September 2000, more
than 260,000 U.S. workers had qualified for a special NAFTA retraining
program for people who lose their jobs because their employer moved
production to Mexico or Canada or because of direct import competition
from those countries.
LOST JOB OPPORTUNITIES
Further, the Economic Policy Institute estimates that the trade deficit
led to the loss of more than 765,000 jobs since the implementation of
NAFTA. "These job losses are spread across all 50 states and the
District of Columbia, with the biggest losses — where more than 20,000
job opportunities were eliminated per state — in California, Michigan,
New York, Texas, Ohio, Illinois, Pennsylvania, North Carolina, Indiana,
Florida, Tennessee, and Georgia."
This job elimination has exerted powerful downward pressure on workers’
wages, leading to several years of stagnating wages in the midst of an
Displaced manufacturing workers looked for jobs in the service sector,
where the average wage is 77 percent of the average manufacturing wage.
The expanded labor pool depressed wages. In manufacturing, corporations
resisted wage increases (or attempted to bargain down wage levels) by
threatening to move to Mexico. In organizing campaigns, employers
threatened to move jobs if workers exercised their right to have a union.
IMPACT ON MEXICO
With NAFTA, Mexico became more attractive to U.S. investors. U.S.
capital fueled an increase in foreign investment, from $4.4 billion in
1993 to $10.2 billion in 1998. NAFTA brought about both short-term,
speculative investment in the Mexican stock market and long-term
investment in factories and other businesses. As a result, Mexican exports
to the U.S. increased from $49.4 billion in 1994 to $109.7 billion in
1999. And the number of Mexicans employed in factories that produce goods
for export more than doubled, from 420,000 in 1990 to 1.3 million in 2000.
But for Mexican workers, the experience of NAFTA has been anything but
"Despite the increases in foreign investment and exports,"
writes Sarah Anderson of the Institute for Policy Studies, "Mexico
has faced extreme financial instability, rising poverty, falling wages,
and increased environmental problems under NAFTA." The NAFTA
provisions that encouraged capital flows into Mexico also made the country
vulnerable to rapid capital flight, Anderson says. NAFTA plunged Mexico
into financial crisis. Mexican-owned business went bankrupt. Interest
rates soared. The purchasing power of ordinary Mexicans declined.
Meanwhile, without import protections, hundreds of thousands of small
farmers have been forced off the land.
The incomes of salaried workers have fallen by 25 percent since 1991;
the incomes of the self-employed have fallen by 40 percent. Manufacturing
wages dropped by 21 percent between 1993 and 1999. The labor side
agreement to NAFTA has provided little assistance to workers trying to
During the 1990s the Mexican minimum wage lost nearly 50 percent of its
purchasing power. "The number of Mexicans living in ‘severe’
poverty (surviving on less than $2 per day) has grown by four million
since NAFTA began," writes Anderson. "Adding those who face ‘moderate’
poverty (earning $3 per day), the total number of Mexican poor comprises
over half the population, up from 47 percent in 1994."
NAFTA has brought an alarming increase in industrial pollution — and
increase in public health problems — to the border region. Mexican
natural resources are under threat from U.S.-based corporations like
Under NAFTA, Mexico has seen its total debt burden grow by nearly $20
billion between 1994 and 1998. Debt service has diverted funds from social
programs. The awful pressure of debt forces Mexico "to attract
foreign investment by any means necessary" — which includes
ignoring the misery and oppression of workers and ruination of the
environment and public health.
NO GAIN FOR CANADIANS
Between 1989, when Canada entered into a free trade agreement with the
U.S., and 1996, the country’s manufacturing sector experienced a 13
percent decline. Imports destroyed more jobs than exports created. Living
standards declined and slowed. Income inequality worsened. To be more
"competitive," the Canadian government cut public spending and
slashed the safety net — and cut taxes paid by the corporations and the
Hard to express in dollars and cents, but also important are the NAFTA
rules that give corporations new powers and privileges. For example, NAFTA’s
Chapter 11 includes a clause which allows private corporations to sue
governments for compensation if a country’s regulations reduce profits.
A Canadian firm, Metalclad, is suing the U.S. for almost $1 billion to
protest a California regulation on water contamination.
NAFTA says plenty about what a trade deal shouldn’t look like.
Unfortunately, FTAA will be much more of the same — unless stopped.
(This report is based on "Seven Years Under NAFTA" by Sarah
Anderson of the Institute for Policy Studies and "NAFTA at
Seven," issued by the Economic Policy
(See also: Our Capitol Hill Shop Steward tells how UE
members asked their members of Congress to identify just one plant that
opened in their districts as the result of NAFTA. You might be able to
guess how well our lawmakers did by the title of our story: "Lawmakers Flunk NAFTA Test"
UE News - 06/01