Free Trade Agreements (NAFTA, CAFTA, FTAA, TPP, WTO)

 

According to the The Balance: Free Trade Agreement Pros and Cons the downfalls of free trade agreements are as follows:

1. Increased jobs outsourcing
Reducing tariffs on imports allows foreign companies to expand and hire workers. Low-cost imports make it difficult for U.S. companies in those same industries to compete, so they may reduce their workforce. Many U.S. manufacturing industries that can’t compete did, in fact, lose business and lay off workers as a result of NAFTA. Another fact: one of the biggest criticisms of NAFTA is that it sent jobs to Mexico.

2. Theft of intellectual property
Many developing countries don’t have the same protection for patents, inventions, and new processes as the United States and the laws they do have aren’t always strictly enforced. Companies that take advantage of free trade agreements in these countries often have their ideas stolen. They must then compete with lower-priced domestic knock-offs.

3. Crowd out domestic industries
Many emerging markets are traditional economies that rely on farming for most employment. These small family farms can’t compete with subsidized agri-businesses in the developed countries.  As a result, they lose their farms and must look for work in the cities, aggravating unemployment, crime, and poverty.

4. Poor working conditions
Multi-national companies may relocate jobs to emerging market countries that don’t have adequate labor protections. As a result, women and children are often subjected to grueling factory jobs in sub-standard conditions.

5. Degradation of natural resources
Emerging market countries find their timber, minerals and other natural resources depleted as the multi-nationals move in. Without environmental protections, deforestation and strip-mining reduce their jungles and fields to wastelands.

6. Destruction of native cultures
As development moves into former pristine areas, indigenous cultures can be affected as local peoples are uprooted and often killed.

7. Reduced tax revenue
Without import tariffs and fees, many smaller countries must find ways to replace that revenue.

 

WTO: World Trade Organization

Established in 1995 after the Uruguay Round of global trade talks, the World Trade Organization (WTO) is a powerful global commerce agency that transformed and expanded the General Agreement on Tariffs and Trade (GATT) into an enforceable global commerce code.

The World Trade Organization (WTO) promotes the free trade agenda of multinational corporations above the interests of local communities, working families, and the environment, and has systematically undermined democracy around the world.

Unlike United Nations treaties, the International Labor Organization conventions, or multilateral environmental agreements, WTO rules can be enforced through sanctions. This gives the WTO more power than any other international body. The WTO’s authority even eclipses national governments.
  • WTO rules are written by and for corporations, putting profits above people and the planet.
  • WTO rules trample labor and human rights.
  • WTO rules render environmental protections illegal.
  • WTO rules stand between dying people and the medicine that will save their lives.
In November 1999, 50,000 people went to Seattle to challenge this corporate agenda and to demand a more democratic, socially just and environmentally sustainable global economy. The protests succeeded in shutting down the trade talks and derailing the expansion of the WTO. Since the Battle in Seattle, the WTO has continued to meet in various inaccessible and remote locations around the world to forage onwards.

 

 

Controversial US Trade Agreement

NAFTA: The North American Free Trade Agreement

NAFTA,was signed in 1994 by the governments of the USA, Canada and Mexico, was supposed to have been a boon to consumers, boosted employment and strengthened economies north and south of the border. Reality has been very different. Local laws have been overturned in favor of corporations not even based in the same country. Court decisions have been vacated by NAFTA tribunals that are completely unaccountable to the citizenry. In Mexico thousands of farmers have been forced out of their livelihood when U.S. agricultural conglomerates dumped cheap corn and hogs on the market.

NAFTA also installed a corporate bill of rights, allowing corporations to launch legal challenges against governments when the legislations of one of the ‘partner’ countries proves a barrier to that corporation’s bid for profit. When a government is sued and deemed in violation of NAFTA, penalties are paid from the public purse. Some of these costs are already well documented. When California attempted to ban MTBE, a toxic gasoline additive, the Canadian manufacturer sued the state for nearly $1 billion. When a Mississippi court ruled in favor of a small funeral home against the Canadian funeral conglomerate Loewen Group, the corporation successfully sued the state, leaving the American judicial system at risk. US based UPS sued the Canadian Postal Service for offering similar delivery services.

According to the Balance article: 6 Problems With NAFTA

U.S. Jobs Were Lost

Since labor is cheaper in Mexico, many manufacturing industries moved part of their production from high-cost U.S. states. Between 1994 and 2010, the U.S. trade deficits with Mexico totaled $97.2 billion, displacing 682,900 U.S. jobs. But 116,400 losses occurred after 2007. The 2008 financial crisis could have caused them instead of NAFTA.

U.S. Wages Were Suppressed

Not all companies in these industries moved to Mexico. The ones that used the threat of moving during union organizing drives. When it became a choice between joining the union or losing the factory, workers chose the plant. Without union support, the workers had little bargaining power. That suppressed wage growth. Between 1993 and 1995, 50 percent of all companies in the industries that were moving to Mexico used the threat of closing the factory.By 1999, that rate had grown to 65 percent.

Mexico’s Farmers Were Put Out of Business

Thanks to NAFTA, Mexico lost 1.3 million farm jobs. The 2002 Farm Bill subsidized U.S. agribusiness by as much as 40% of net farm income. When NAFTA removed trade tariffs, companies exported corn and other grains to Mexico below cost. Rural Mexican farmers could not compete. At the same time, Mexico reduced its subsidies to farmers from 33.2 percent of total farm income in 1990 to 13.2% in 2001. Most of those subsidies went to Mexico’s large farms. (Source: “Exposing the Myth of Free Trade,” International Forum on Globalization, February 25, 2003. “Tariffs and Tortillas,” The Economist, January 24, 2008.)

Maquiladora Workers Were Exploited

NAFTA expanded the maquiladora program by removing tariffs. That’s where U.S.-owned companies employed Mexican workers near the border. They cheaply assembled products for export back into the United States. The program grew to employ 30 percent of Mexico’s labor force.  The workers had “no labor rights or health protections,” according to Continental Social Alliance. In addition, the”workdays stretch out 12 hours or more, and if you are a woman, you could be forced to take a pregnancy test when applying for a job,” . (Source: “Lessons of NAFTA,” Worldpress.org, April 20, 2001.)

Mexico’s Environment Deteriorated

In response to NAFTA competitive pressure, Mexico agribusiness used more fertilizers and other chemicals, costing $36 billion per year in pollution. Rural farmers expanded into marginal land, resulting in deforestation at a rate of 630,000 hectares per year. (Source: “NAFTA’s Promise and Reality,” Carnegie Endowment, 2004.)

According to the Public Citizen NAFTA:

  • created new privileges and rights for multinational corporations that incentivized the offshoring of investment and jobs by eliminating many of the risks normally associated with moving production to low-wage countries.
  • Empowered  thousands of multinational corporations to bypass domestic courts and directly “sue” governments before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums to be paid by America’s taxpayers, including for the loss of expected future profits. These corporations need only convince the lawyers that a U.S. law or safety regulation that we rely on for a clean environment, essential services, and healthy communities violates their NAFTA rights. Their decisions are not subject to outside appeal and the amount they can order taxpayers to give corporations has no limit.  Taxpayers have paid more than $370 million to multinational corporations awarded by NAFTA tribunals, over toxic bans, environmental and public health policies, and more, with more than $50 BILLION pending in ongoing cases.
  • Limited regulation of services, such as trucking and banking; extend medicine patent monopolies; limit food and product safety standards and border inspections; and waive domestic procurement preferences, such as Buy American policies.
  • Rolled back consumer safeguards, including key food safety protections

CAFTA: The Central American Free Trade Agreement

Negotiated by the governments of the United States, Guatemala, Honduras, Nicaragua, Costa Rica, and El Salvador, the Central American Free Trade Agreement (CAFTA) would impose the failed policies of the North American Free Trade Agreement (NAFTA) throughout Central America and the Caribbean. The agreement would undermine workers’ rights, drive countless family farmers off the land and ultimately lay the groundwork for the expansion of NAFTA throughout the hemisphere.

According to Global Exchange CAFTA:
1. CAFTA Expands a Proven Disaster
CAFTA would expand the failed NAFTA model of international trade to five additional Central American countries with plans to include the Dominican Republic already under way. But 10 years of NAFTA have shown just how devastating these agreements can be for working families and the environment. In the United States, over 766,000 jobs have been lost due to NAFTA. In the maquiladora zones along the US-Mexico border, wages are low, union organizing is suppressed, and industrial pollution has dramatically increased cases of hepatitis and birth defects among workers. NAFTA should be repealed, not expanded.

2. CAFTA Contains No Protection for Workers and the Environment
CAFTA contains no meaningfully enforceable standards that might prevent countries from lowering their public health, workplace safety, and environmental laws in order to attract investment. Our experience with NAFTA has shown how corporations use this arrangement to pit workers in each country against one another in a “race-to-the-bottom” in wages and environmental protections. Trade agreements are presented to the public as a vehicle for economic development, but when these agreements fail to condition trade access on enforcement of international labor and environmental standards, only corporate CEOs see the benefits.

3. CAFTA Promotes Sweatshop Labor
CAFTA would ignore standards set by the International Labor Organization and instead require only that countries continue to enforce existing domestic labor laws, regardless of how inadequate these laws may be. In the context of Central America—where laws fall far below international standards and governments are often actively hostile towards unions—this model amounts to no less than a recipe for rampant labor violations. CAFTA will no doubt lead to an expansion of the region’s maquila industry, already one of the world’s most developed.

4. CAFTA Drives Family Farmers Off the Land
Thousands of small family farms in both the US and Central America will be lost because of CAFTA—much like what has already happened to U.S, Mexican and Canadian farmers under NAFTA. Meanwhile, giant corporate farms like ADM and Cargill will be the ones benefiting most from their downfall and the trade agreement. The threat of CAFTA is especially ominous for farmers in Guatemala, where nearly 60% of the population support themselves on agriculture. CAFTA would likely force a massive migration of erstwhile farmers to large urban areas to work in the maquila industry, or to risk the dangerous journey to the U.S.

5. CAFTA Privatizes Public Services
CAFTA investor rules will make it impossible for governments in Central America and the US to give preferences to public service providers. Under CAFTA, domestic regulations protecting people’s right to food, education, health, and basic utilities could be considered “barriers to trade” and open to challenges by multinational corporations. CAFTA would require that governments bid out for services contracts, resulting in price increases, reduced access, and compromised quality that would most severely impact the vulnerable in our society, such as children, the poor, and the elderly.

6. CAFTA Expands Corporate Power
CAFTA would expand NAFTA rules that allow corporations to sue governments over any law that might stand in the way of their ability to profit. These rules have already been used 27 times since 1994 to challenge some of our most cherished public health, workplace safety and environmental laws. The threat of being sued forces governments to either pay large fines or to pass only pro-business legislation.

7. CAFTA Undermines Public Health
CAFTA provisions to protect and expand the patent monopolies of US pharmaceutical companies in Central America will undermine access to affordable generic AIDS drugs and increase the price of medicines. Meanwhile, hundreds thousands of HIV-positive Central Americans are in immediate need of treatment or else they will die. Of the six Latin American countries with the highest prevalence of HIV, four are Central American.

FTAA: The Free Trade Area of the Americas (FTAA)

The Free Trade Area of the Americas (FTAA) was an attempt to create a neoliberal free trade agreement that expanded the North American Free Trade Agreement (NAFTA) to every country in North America, Central America, South America and the Caribbean, except Cuba. Negotiations began right after the completion of NAFTA in 1994 and were supposed to have been completed by January 1, 2005.

The FTAA was not signed due to social movements across the hemisphere, governments of the countries of Venezuela, Argentina, Bolivia, and Brazil said NO to a model that has increased poverty across the globe, and are instead searching for a better model of regional integration. After several rounds of negotiations and summits greeted by civil society counter summits and protests, the negotiation for the FTAA were abandoned in November 2004.

TPP: Trans-Pacific Partnership

The TPP is a trade agreement, negotiated in secret with hundreds of corporate advisors, signed by 12 Pacific Rim countries, excluding China, in February, which covers 40% of the world’s economy. But all 12 nations need to ratify it. The member states are the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. The pact aims to deepen economic ties between these nations, slashing tariffs and fostering trade to boost growth and potentially create a new single market, something like that of the EU.  The agreement was tentatively abandoned in November 2016 following the U.S. Presidential election.

18000 tarriffs will be affected including either eliminating or reducing tariffs and other restrictive policies from agricultural products and industrial goods.  Under the agreement, tariffs on US manufactured goods and almost all US farm products be eliminated.

Criticism and Concerns

  • Lacked transparency while it was negotiated
  • Could intensifying competition between countries’ labour forces, reducing workers pay and rights.
  • The TPP would grant new rights to thousands of multinational corporations to bypass domestic courts and directly “sue” the governments before a panel of three corporate lawyers, including if governments pass a law to combat climate change or improve energy efficiency that may hinder multinational corporations profits.
  • The TPP would provide large pharmaceutical firms new rights and powers to increase medicine prices and limit consumers’ access to cheaper generic drugs.
  • TPP would require countries to accept food imports that do not meet local safety standards
  • The TPP includes and supports countries notorious for horrific human rights abuses
  • Removes “Buy Local” policies
  • REduces internet privacy
  • The TPP would limit when and how governments may regulate essential services we all rely on – like water, electricity, health care and more.
  • Roll back Wall Street Reforms from the 2008 recession.

For more info on the TPP follow this link.

 

Learn more

Public Citizen: WTO

Public Citizen: NAFTA

Global Exchange: NAFTA

The Balance: 6 Problems with Nafta

Expose the TPP: Issues

 

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