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April
4, 2001
Ten reasons
for Canadians to join with other citizens and protest the Free
Trade Area of the Americas meetings in Quebec City
By Duncan
Cameron
1. The FTAA will not be
free trade. Trade Minister Pettigrew has said as much: the FTAA
is an extension of NAFTA. We know NAFTA is not a free trade deal:
all the American protectionist measures still apply: just ask
a P.E.I. potato farmer, a softwood lumber worker, or a steelworker.
So, under the FTAA, the U.S. will still act against successful
Canadian exporters -- and against exporters from anywhere in
the Americas as well. Worse, because of the recent Byrd amendment
to U.S. trade law, it is U.S. companies, and not the government,
that will collect any countervailing duties imposed on foreign
exporters. It has become a profit opportunity for American companies
to initiate protectionist trade actions.
2. For the Americans,
international agreements like the FTAA are instruments of U.S.
policy. The U.S. is the worlds dominant power and has no plans
to give up any of the advantages that status brings with it.
On trade, for over 50 years, they have pursued a carrot and stick
approach. Under the NAFTA/FTAA the carrot is reduced tariffs
and apparent increased access to their market. The stick is that
U.S.trading partners have to give up the industrial policy measures
they need to develop products for American customers, world exports,
and even the home market. And if, despite this, any exporters
become too successful for American taste, see point one above,
and point three below.
3. NAFTA incorporates
American protectionist measures in the agreement, and so will
the FTAA. These measures are sometimes worse than before the
trade deals. In NAFTA, the U.S. has the right to retaliate --
take measures of equal commercial effect against any industry
it wants -- to any Canadian cultural initiative it says hurts
U.S. entertainment industries. Contrary to what Liberal and Tory
Ministers have told us, culture was not exempted in previous
trade deals. The true meaning of the "Canadian cultural
exemption" is that the U.S. gets a free hand to retaliate
against anything Canadian. It does not have to prove its own
industry has been injured before it acts against Canada, as it
would have had to do following its own trade rules! That's why
we have not had any new cultural programmes and why we have cut
back or eliminated the old ones.
4. U.S. corporations
want the right to be treated as a corporate citizen of every
other FTAA country. The FTAA negotiations propose to protect
and to extend the rights of foreign capital, including the right
to establish operations anywhere, and to sue for any potential
profits lost, say, because of government policies on the environment,
or because governments want publicly-owned corporations to supply
a good or service. As well, it would give new, very valuable
intellectual property rights to largely U.S. corporations. In
fact the U.S. is the only country of the 34 FTAA countries that
stand to benefit from these rights, since all others are net
importers of patents, and trade marks. In pharmaceutical drugs
alone, the cost to the Canadian consumers of NAFTA rules is measured
in billions.
5. The FTAA will promote
the international capital model of development. As with NAFTA,
the key variables in this model are the rate of interest on foreign
loans, the exchange rate, and the rate of growth in export markets,
mainly the U.S. itself. All of these variables are most affected
by U.S. economic policies, especially monetary policy. The U.S.
operates monetary policy in response to developments in its domestic
economy, not in the Americas. When U.S. interest rates go up,
the cost of servicing foreign debt kills off any export surplus
gains for other nations, and dampens markets for exports at the
same time.
6. Latin America and
the Caribbean need comprehensive action on debt not the FTAA.
Coming to Quebec City we have 32, mostly debt laden, poor countries
being asked to open their borders to more foreign investment
which has to be serviced through an export surplus. It is hardly
conceivable that all 32 can simultaneously achieve the level
of surpluses needed to pay down existing debt. And remember,
the FTAA is about promoting inward investment which will result
in new, increased debt levels.
7. The FTAA is not mainly
about lower tariffs for exports or cost savings for consumers.
The reduction of tariffs had little to do with NAFTA, nor will
it with the FTAA negotiations. For instance, the average tariff
on all Canadian exports to the U.S. was one per cent before the
first FTA. The average tariff on dutiable U.S. imports from Canada
was four per cent. Once the much broader GST replaced the previous
tax on manufactured goods (to make Canada more competitive under
the FTA) consumers gave back more than they gained from tariff
reductions.
8. Canada's NAFTA dollar
will be no higher, and may even be lower, when it becomes the
FTAA dollar. The exchange rate has everything to do with what
happens under the trade deals. From the beginning of bilateral
trade talks with the U.S. in the 1980s, until 1991, three years
after the first FTA took effect, the Canadian dollar appreciated
by 17 percent. That was like putting a 17 per cent tariff on
Canadian exports to the U.S. and simultaneously removing a 17
per cent tariff on imports. The Canadian economy faltered badly
in that period and really didn't begin to grow steadily again
until the currency fell to the 65 cent U.S. range late in the
1990s. That's the NAFTA dollar. But there are limits to the acceptability
of currency devaluation. What if we have to devalue our way out
of the next bad patch, say to the 50 cent U.S. level? Call that
the prospective FTAA dollar.
9. Accepting the FTAA
means facilitating U.S. dominance. Capital now flows from poor
countries to the richest. This reflects unequal power relations
in the Americas not sound economic principles. The FTAA means
linking the rate of exploitation of natural resources --including
energy and agriculture, to the needs of American consumers. (Why
not build stronger national economies instead?)
10. In promoting the FTAA,
Canada is doing American bidding. After the U.S. Congress blocked
fast track negotiating authority, Canada began taking the lead
in promoting the FTAA. Since the Monroe Doctrine, where the U.S.
arrogated to itself the role of the hemispheric boss and guardian,
Canada has largely avoided taking sides in disputes within the
Americas or even participating in hemispheric affairs. Now that
we are playing a role, why should it be to act as the surrogate
for the U.S.?
Canada's history,
our economic structure, and policy needs suggest that we have
much in common with Caribbean and Latin American nations. We
need to establish a development model that serves their citizens
needs and ours, not the U.S. government, and the transnational
corporations. CP
Duncan
Cameron
is a political economist at the University of Ottawa. He can
be reached at: dcamero@uottawa.ca
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