FREE TRADE = INSECURITY

FREE TRADE = INSECURITY

A Positive U.S. Trade Agenda Would Support Security
in the Andean Region and the World

by Sarah Anderson

At a time of heightened concerns about global security, it is in everyone’s interest to develop trading and investment relations that promote “real security,” encompassing economic, human, financial and political security. Unfortunately, the proposed trade pacts with Peru and Colombia are not likely to advance this important agenda. Instead, they would perpetuate a failed U.S. trade model that primarily benefits the few, while exacerbating the root causes of instability -- namely poverty, weak human rights protections, and financial and political volatility.

• FREE TRADE AND ECONOMIC INSECURITY

The Colombia and Peru free trade deals would restrict the authority of governments to play responsible roles in ensuring that trade and investment benefit the poor and the middle class. It would prohibit governments from employing selective trade barriers and investment restrictions that were used by most successful economies in the world (e.g., South Korea, Taiwan and even the United States) as part of their national development strategies. Studies also show that overall in the developing world, economies with high import barriers performed better in the 1990s than those with low barriers.

With regard to the Andean trade deals, there is particular concern about how the agriculture provisions will affect poverty. In Colombia, where some 23 percent of the workforce is employed in agriculture, the lifting of agricultural tariffs could be devastating. Although the Colombian government promised throughout the negotiations to defend sensitive products, it ultimately caved under U.S. pressure and agreed to open the door wide to heavily subsidized U.S. imports of key crops. For example, it agreed to allow tariff-free imports of more than 2 million tons of corn and 79,000 tons of rice during the first year of the agreement, with a commitment to raise that amount by about 5 percent per year. It also agreed to immediate tariff-free entry to other commodities of importance to rural income and employment, including cotton, wheat and barley.

Impact on Drug Production

The U.S. government will have spent $5.4 billion to reduce coca cultivation in Colombia between 2000 and 2007, and plans to continue to spend over $600 million per year for the next several years. Yet a trade agreement that eliminates or reduces tariffs on products grown by small farmers, the major producers of illegal coca, would likely lead to a surge of heavily subsidized U.S. imports, forcing Colombian farmers lacking other options to join or return to illegal drug production. According to a Colombian Agriculture Ministry report, “If Colombia [does not take] adequate measures in defense and support of agricultural producers, rural problems could worsen and many of its inhabitants would have no more than three options: migration to the cities or to other countries (especially the United States), working in drug cultivation zones, or affiliating with illegal armed groups.”

• FREE TRADE AND HUMAN INSECURITY

Current U.S. trade policies lack meaningful provisions to strengthen human rights protections. With regard to labor rights, the Andean deals require only that governments enforce their own laws, with no incentives for bringing deficient laws up to international standards, addressing systemic problems, or preventing a rollback of labor protections. Thus, while the deals expand investor rights, they give working people no new protections against oppression and violence. In Colombia, freedom to organize is under attack in the most severe way imaginable -- more than 2,200 trade unionists have been murdered since 1991, more than in any other country. Most murders of trade unionists are in connection with their regular trade union activity. The government has failed to bring to bring to justice those responsible for the several hundred murders that have taken place in the past three years.


Impact on Indigenous Communities

The Mexican Zapatistas launched their uprising on the day the North American Free Trade Agreement went into effect, declaring that the deal would be “a death sentence for indigenous people.” In Ecuador, indigenous groups have recently staged massive protests against free trade negotiations between their government and the United States. In Colombia, leaders from the Nasa indigenous community organized a referendum on the proposed free trade agreement in the province of Cauca in which 51,330 out of 68,448 registered voters participated and 98 percent voted “no.” Indigenous representatives gathered at the 2005 Summit of the Americas issued a statement rejecting free trade agreements “because they affect the integrity of our lands, territories and resources, thus restricting, alternating and diminishing the exercise of our rights as Indigenous Peoples.”

In addition to agricultural concerns cited above, indigenous communities throughout Latin America have objected to intellectual property rights provisions promoted by the U.S. government that give large corporations the right to obtain patents on indigenous medicines and other traditional knowledge. They have also opposed reforms carried out as conditions for trade pacts that open the door to logging and development in native lands or otherwise subject indigenous rights to the interests of international investors.

• FREE TRADE AND FINANCIAL INSECURITY

The U.S. government continues to require provisions in trade agreements that ban countries from using controls on capital flows to protect against international financial insecurity. This ignores the lessons of the global financial crisis of the late-1990s, when uncontrolled capital flight resulted in tens of millions of lost jobs and other negative impacts for hundreds of millions of people around the world, including in the United States. Because countries which had capital controls (e.g., Malaysia and Chile) fared better than others, even the International Monetary Fund has changed its position and is recommending that some countries keep such controls.

• FREE TRADE AND POLITICAL INSECURITY

Current U.S. trade and investment policies undermine the role of citizens in shaping their economic futures. Negotiations are conducted in secret, with little opportunity for citizen input. Provisions in the deals favor the rights of corporations. Most egregious are investment rules that allow private foreign investors to sue governments directly in secretive international tribunals over laws that might diminish their profits, including public interest regulations. These limitations on the democratic process are particularly troubling in the Andean region, where political and economic marginalization has stoked widespread protests and political insecurity.

A New Trade and Investment Agenda that Supports Security
in the Andean Region Would Include:

• democratic and accountable negotiation processes
• protections for small farmers and indigenous communities
• increased community-based alternative development to help small farmers turn away from drug crops
• mechanisms to strengthen labor and environmental standards, as defined by international law
• investigations and prosecutions of attacks on trade unionists in Colombia to ensure freedom of association
• space for national governments to pursue development strategies that support social and environmental goals
• debt cancellation and aid targeted at serving the poor to help level the playing field between rich and poor countries and regions
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Sarah Anderson directs the Global Economy Project of the Institute for Policy Studies and is the co-author of Field Guide to the Global Economy (New Press, 2005). IPS is an independent center for research and education founded in Washington, DC, in 1963. Contact: saraha@igc.org or 202 234 9382 x 227.