May 27, 2001. Chicago
Tribune.By Alfredo S. Lanier. Alfredo S. Lanier is a member of the Tribune
editorial board.
Last month's protests against free trade and globalization in Quebec
City--and in Washington, D.C., last year, and in Seattle the year before
that--were as loud as they were ironic.
Most of the demonstrators were young, white Canadians and Americans,
representing myriad agendas, from labor and gay rights to environmentalism and
anarchism, and some even got in occasional plugs for Castro and the Sandinistas.
What brought them all to Quebec City, however, was a concern about the harm that
globalization and free trade are supposedly inflicting on the darker-skinned and
less fortunate folk in the Third World.
Except that's precisely the opposite of what leaders from developing nations
in the Western Hemisphere are clamoring for. All of them--including Cuban
President Fidel Castro, who wasn't invited--desperately wants more money to help
get their countries out of poverty. And trade and foreign investment are the way
to get that money. It's a straightforward proposition that somehow was lost on
the anti-globalization protestors, or perhaps clouded by their other political
agendas.
At the Summit of the Americas in Quebec City, representatives from all 34
countries in the Western Hemisphere (except Cuba) gathered to launch the Free
Trade Area of the Americas, extending from Alaska to Tierra del Fuego. For those
who opposed the 1994 North American Free Trade Agreement among Canada, Mexico
and the U.S., the proposed FTAA is a quantum expansion of a bad idea--"NAFTA
on steroids."
FTAA would cover 800 million people from countries with an estimated
combined gross domestic product of $11 trillion.
The Council of Canadians, a public interest group based in Ottawa and led by
Maude Barlow, has been fighting free trade initiatives since 1985, when NAFTA
was just in the talking stages. According to her, NAFTA has been a disaster for
Canada, and FTAA would be much worse.
"After we signed our first free trade agreement, the Canadian
government began cutting benefits, the environment has suffered and our labor
laws have been weakened," Barlow said. "Those agreements make life
tougher for an awful lot of people."
Manifesto
"The FTAA is about placing democracy under corporate control; it is
about weakening health and environmental protections, privatizing public
services, commercializing education and, in general, hindering governments from
ever again directly serving the public interest," said a manifesto
published by the council before the summit in Quebec City.
Graham Russell, executive director of Rights Action, a non-profit group with
offices in Toronto and Washington, worries that the net result of free trade
agreements will be "to legalize and institutionalize present systems of
poverty and repression, further entrenching corporate rights." He said the
media should take a closer look at the possibilities of the Cuban economic model
and what the Sandinistas tried to do in Nicaragua.
There's scant chance of that. If anything, one look at Cuba's economic rigor
mortis should be enough to send every other Latin American leader scampering in
the opposite direction--and embracing free trade.
That is exactly what is happening in Latin America, despite the persistent
protest. In addition to NAFTA, during the past seven years Mexico has negotiated
free trade agreements with 31 countries, most recently with Israel. Brazil,
Argentina, Uruguay and Paraguay joined to form Mercosur, the largest free trade
pact outside the European Union and NAFTA. Most other Latin American countries
have crafted bilateral trade agreements among themselves.
This trend seems to reflect a unanimous realization that what those
countries most need is money. Whether the issue is better health care,
education, housing, transportation or a cleaner environment, they all cost
money.
And the most promising way to raise the cash is by promoting exports and
foreign investment.
For decades, Castro's Utopia was kept alive by multibillion-dollar
remittances from the Soviet bloc. But when communism collapsed in 1989, Cuba's
economy shrank by more than 40 percent, and even Castro had to turn to
conventional fundraising, such as courting tourists and foreign investors.
Economic stagnation
And during the 1970s, most Latin American countries financed vast expansion
of government sector services largely through external borrowing. By the end of
the 1970s, that layaway plan proved unsustainable and led to a decade of
economic stagnation and hyperinflation--the "lost decade" of the
1980s.
That has brought Latin America back to trade and foreign investment. Chile
was one of the first countries to undertake market reforms, first under the
dictatorship of Gen. Augusto Pinochet and later under democratically elected
governments, and the first to reap the accompanying economic growth.
Some of the loudest opposition to NAFTA and now FTAA is coming from American
organized labor, which ultimately fears competition from cheaper foreign labor
and job losses. Earlier this year, the AFL-CIO blasted FTAA and demanded a new
agreement with "enforceable workers' rights and environmental standards in
its core." It's curious to note, however, that since NAFTA was signed the
U.S. has enjoyed record-low unemployment.
It is the developing countries--much more so than the U.S.--that most
fiercely oppose the imposition of labor standards by another country.
"That is not the proper role of the U.S.," said Guillermo Calvo,
director of the Center for International Economics at the University of
Maryland. "What labor groups don't want here is competition and by trying
to impose our labor standards on other countries that can't afford them, they
are essentially ruling out free trade agreements."
"Higher wages cannot be decreed," said Luis de la Calle, Mexico's
undersecretary of international trade negotiations. "We wish that our wages
were higher, even as high as those in the U.S., but that has to be the result of
economic growth, and not the other way around."
Even though some critics see maquiladora assembly lines along the
U.S.-Mexico border as hellholes, the factories have triggered a stampede of
workers from other parts of Mexico who evidently believe those jobs are
preferable to whatever they were doing before. And the northern states of
Mexico, which historically have benefited most from U.S. investment, also report
lower levels of poverty than most other regions.
Likewise, trying to impose U.S. environmental standards on countries that
cannot afford them amounts to a poison pill for any free trade agreement.
Wealth creation
"Undoubtedly, poorer countries have far worse systems for protecting
environmental quality," said Brink Lindsey, director for trade policy
studies with the Cato Institute, a libertarian think tank. "But that is a
direct result of their poverty, along with a host of other problems. The
long-term solution for that is wealth creation, not building protectionist
tariff walls around the country that impede trade."
Lindsey and others, including Mexican government officials, instead point to
Mexico as a poster child for the benefits of free trade. Its trade with the U.S.
has grown 150 percent since NAFTA was signed and is now about $260 billion.
Exports to the U.S. increased threefold from 1991 to 1999, rising from $43
billion to $134 billion. In 2000, Mexico enjoyed an $18 billion trade surplus
with the U.S. ($10 billion of that in oil sales) and has received about $67
billion in direct foreign investment since NAFTA went into effect. Much of that
influx of money has gone to modernize and transform the Mexican economy.
"Korea in the early 1960s was almost as poor as West Africa, until it
integrated itself into the world market," Lindsey said. "There would
be nothing more wonderful than to see Mexico turn into another Korea, and to see
15 other Koreas in the developing world. But you can't do that without free
trade." | 