part 7

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Posted by Sadie from D006033.N1.Vanderbilt.Edu ( on Wednesday, April 30, 2003 at 0:47AM :

In Reply to: part 6 posted by Sadie from D006033.N1.Vanderbilt.Edu ( on Wednesday, April 30, 2003 at 0:46AM :

One hears a great deal of piety from the Bush Administration about raising global standards of living – and the president has in fact pledged to increase his foreign-aid budget by half – but the U.S. government’s primary job is to advance and protect American interests. Our leaders’ passion for “free trade” is driven not by altruism but by a desire to open new markets for U.S. firms and products.

How will we respond, though, when our overtures are rejected? There is a popular backlash building against the Washington Consensus throughout Latin America (and elsewhere). The top priority of U.S. policy toward Latin America, meanwhile, is the creation of a hemisphere-wide free-trade zone known as the Free Trade Area of the Americas. If and when it goes into effect, the F.T.A.A., which was first seriously pursued during the Clinton Administration, will be a sort of super NAFTA, including in its embrace thirty-four of the Western Hemisphere’s thirty-five countries – all but Cuba. Like NAFTA, the F.T.A.A. is a brainchild of big business, whose interests it would serve from start to finish. It would virtually eliminate barriers to foreign investment, strengthen investor rights (and gut consumer rights), eliminate tariffs, ban capital controls, and establish secret trade courts in which multinational corporations would be able to sue governments over health, labor, or environmental laws that could be shown to impede profits. The F.T.A.A. would actually go beyond NAFTA, with mandatory requirements that national markets be opened to foreign corporations not only for basic services such as banking and insurance but also for public services such as health, education, and water. Within Latin America, there is broad popular and political opposition to the F.T.A.A., which is widely seen as an economic onslaught on national sovereignty. North American firms, it is believed, simply want more access to Latin American markets, on grossly unfair terms. U.S. embassies in the region spend a great deal of time parring such arguments – presenting the F.T.A.A. as a win-win deal, trying to woo local businessmen, politicians, and opinion makers onto the bandwagon (4).

Their job would be easier if the United States did not flout the principles it espouses. Last spring, for instance, President Bush, responding to domestic political pressure, imposed steep new tariffs on steel imports. Loud protests came from Europe, East Asia, and Brazil, and complaints were soon being filed with the W.T.O. The hypocrisy was stark: the U.S. shoves free-trade doctrine down the throat of every country it meets while practicing, when it pleases, protectionism. Even more hypocritical, and economically painful, to dozens of countries in Africa and Latin America has been the latest round of U.S. farm subsidies, which may total as much as $180 billion over the next decade. Most of that windfall goes directly to big agricultural corporations (all of them big political contributors). These subsidies effectively close American markets to many poor-country food producers (we also have tariff barriers in place, just in case), while allowing U.S. exporters to flood foreign markets with cheap food, often putting poor-country farmers out of business. Global trade rules, as codified in the W.T.O.’s Agriculture Agreement, do allow countries to make direct payments to their farmers. But only rich countries, for obvious reasons, have that option. This is one of the many ways that the “level playing field” extolled by free traders does not look level from the Global South.

Our NAFTA partners – Canada and Mexico – are exempt from the new steel tariffs, a fact sometimes pointed out by U.S. diplomats campaigning for the F.T.A.A. The implication is that members of the free-trade pact may actually practice free trade with one another. But since the advent of NAFTA in 1994, the fate of Mexican workers and farmers – especially small corn farmers, the country’s rural backbone – has not been confidence-inspiring. Wages have fallen, and a half million families have been driven off their land by a collapse of prices as local markets have been swamped with subsidized corn produced by U.S. agribusiness.

The election, in October, of Luiz Inacio Lula da Silva, a socialist ex-metalworker, as president of Brazil, will likely try the Bush Administration’s commitment to respecting democratic outcomes. Lula, as he is known, has been a strong critic of neoliberalism and the F.T.A.A., and without Brazil, which has the largest economy in South America, there will be no F.T.A.A. (Pace Trade Representative Zoellick, who in remarks that infuriated Brazilians across the political spectrum, suggested that if the new government did not sign the agreement it would be welcome to trade with Antarctica.) While Lula has vowed not to renege on Brazil’s international debt, he has ambitious plans to ease his country’s terrible inequality, poverty, and hunger, and international bankers and investors have been loudly nervous about the prospect of his presidency. They caused a plunge in the value of Brazil’s currency before Lula was even elected, and it is not too much to say that they retain the power to annul the results of the country’s election by pulling out investments and calling in loans. The I.M.F., especially, with its power to extend or withhold loans, and its even greater power, through influence, to cut off lines of credit, holds the keys to Brazil’s financial stability – which is another way of saying that the U.S. holds those keys. In the Bush Administration’s quasi-theological version of political economy, democracy and free markets are two halves of a mystical whole. In reality, they can be deadly opponents, when voters decide to go against the markets.

-- Sadie
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