• Obama’s credibility will be on the line if he tries to distort reality in order to justify that conditions are right for a Free Trade Agreement to be implemented.
• President Obama voted before against a Free Trade Agreement and should do it again.
In 2004, the Bush Administration, with great concentration, rammed through the Central America Free Trade Agreement (CAFTA-DR), solidifying a free market pact between the United States and the countries of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. The United States Congress is currently considering the ratification of legislation to extend similar free trade agreements (FTAs) to Colombia and Panama.
The bills introducing the formation of individual FTAs between the United States and two of its trading partners, Colombia and Panama, were first drafted between the Bush Administration and the presidents of their respective countries, and have experienced prolonged delays. In Washington, the remaining FTAs are mainly being blocked by Democratic legislators. Representative Rodney Frelinghuysen (R-NJ), a proponent of the FTAs, reintroduced the bills with no co-sponsors on December 16, 2009, after which it was referred to the House Ways and Means Committee. The Colombian Congress already has acted on the FTA, which was signed by President Álvaro Uribe in November 2006 and now only awaits Washington’s ratification and the White House’s signature. The FTA with Panama occupies a similar status, having been ratified by that country’s National Assembly on June, 28, 2007. It too awaits approval from Washington’s legislative branches.
A Critical Evaluation: Who Benefits From Free Trade?
The stepped-up debate over the relative merits of trade measures has spilled over from the Bush era and is both legal and moral in its outline. As an Illinois senator, Barack Obama voted against the FTA with Colombia, drawing upon charges of the country’s grievous human rights abuses against its trade union figures. Still, Colombian President Álvaro Uribe and Washington’s supporters are hopeful that Obama will reverse his stance and the legislation will be passed, which would allow Bogotá to join the ranks of other Latin American countries that have already been integrated into a free market with the U.S., before the Colombian strongman leaves office in August.
However, the Colombian president and his government’s hardly disguised hostilities to the country’s organized labor cadres have managed to hinder their own cause. Carolina Barco, Colombia’s ambassador in Washington, is calling upon the Obama Administration to move swiftly toward securing passage of the FTA, claiming “developments in Colombia since the beginning of this government in 2002, in terms of general security, labor laws and worker’s conditions have clearly and thoroughly improved.” United States Trade Representative Ambassador Susan Schwab stressed in her speech at Washington’s Woodrow Wilson Center that overall economic growth depends on the United States’ ability to sell both its goods and service exports abroad. Schwab also believes that the passage of “the FTA would ensure reciprocity and equal access to U.S. exporters, especially small- and medium-sized business owners, who must now pay 5 to 15 percent, and even as much as 35 percent tariffs on certain exports to Colombia.” A main source of the Republican Party’s dismay over the failure of Speaker of the House Nancy Pelosi to bring the FTA bills up for a vote is rooted in the reality that, as a result of the passage of both the Andean Trade Preference Act and the Caribbean Basin Initiative, Colombians and Panamanians already enjoy lowered, and in many instances tariff- free entrance into the U.S. for a number of their goods and services.
On the other side of the spectrum, Democrats, including the newly appointed Chairman of the House Ways and Means Committee, Sander Levin of Michigan, insists that because of the relatively low percentage of total exports from the United States entering into the Colombian and Panamanian markets, “The size of the trade between our nations is, of course, not the driving factor for the U.S. in determining the significance of these two FTAs.” Levin is committed to integrating the International Labor Organization’s (ILO) standards for the observance of human rights in the Latin American countries which are candidates for an FTA to participate in the discussion over the language of the FTAs. Levin recently traveled to Peru and Panama to research the effects of the FTA on the ground. In his subsequent report, he explained the reasons for the bill’s lack of movement in the House, stating:
In most of the nations of Latin America the majority – often the vast majority – of the population is impoverished. They feel on the outside looking in. Globalization is increasingly resisted because so many people are not sharing in its benefits, including the benefits of expanded trade.
Levin went on to urge United States lawmakers to utilize their ability to positively impact the masses of Latin America by revising the FTA so as to “encourage participation in the structures of these societies, starting in the workplace where one might collectively impact one’s economic status, rather than sanctioning a system that discourages such participation.”
FTA As the Central Plank of Trade Legislation
Chairman Levin is not alone in his opposition to the FTAs as they now exist; other well-situated lawmakers have agreed that Bogotá has not pushed hard enough for genuine labor reforms and an end of the violence toward union leaders. Secretary of State Hillary Clinton voiced her own opposition to the FTAs, with her primary concern being that the benefits of globalization are not reaching down to Colombian workers. The evident gridlock on Capitol Hill underscores the reality that President Obama has not yet changed his position and appears to support further evaluation of the FTA legislation.
The FTAs could be useful tools of foreign policy if the reality was that U.S. lawmakers would likely not ratify them without ensuring that Washington’s social and economic goals for Colombia were secured in the end. As President Obama has put it, the legislatures will be “moving forward with existing agreements in a way that upholds our values.” Similarly, U.S. Trade Representative Ron Kirk is saying the right thing by stressing the priority of securing labor rights in a testimony given to the U.S. Senate Finance Committee, when he said “We are hopeful we can come to some resolution [on the proposal] with members of [U.S.] Congress over the next several months, if not weeks . . . so that we can then go back to Colombia with a finite list of what we’d like to see get done.” Constituencies in both countries agree that if passed, the bills have the potential to strengthen ties between the U.S. and its conservative allies in Colombia and Panama, a reward for good behavior in a region where the leftists have made important gains. However, any decision is not being taken lightly in the region because, unlike the current trade agreements with these nations, FTAs do not get periodically reevaluated and renewed. Therefore, once the legislation is enacted, the countries would be free from having to adhere to changing U.S. preconditions and elevated standards.
The Backbone of Trade; the Workers Must be Considered
The House Committee on Education and Labor led a discussion on February 12, 2009 examining widespread violence against union leaders in Colombia; it evaluated the workers’ abilities to exercise their fundamental human rights. The Colombians who testified before the House body confirmed the profound skepticism regarding the ongoing violence and impunity demonstrated by Bogotá’s security forces. This violence was carried out by Uribe administration offices as well as the excesses of the paramilitary resulting in “systematic government policy.” The committee went on to report that 2,694 union members have been murdered in Colombia in the last 24 years. The attorney general’s office reported that only 1,104 of these cases ever have made it to court, which means that 60 percent of the cases were never heard by a judge. Additionally, 97 percent of all those that went to court never resulted in prosecution. In such cases, the individuals who masterminded the crimes are rarely investigated, leaving only the low-level right-wing paramilitary gang members who actually committed the murders to face justice, and even then, they rarely are convicted and sentenced.
Grounds For Implementing Free Trade
The FTA is likely not to be implemented until the guarantee of dissent and protest can be freely exercised, and Colombians are granted the fundamental freedom of association. Currently, there are over 18 million workers in Colombia; less than 3 million of these are union members because local law establishes that only those related through work contracts can join unions, which means that millions are unilaterally denied the “freedom to unionize.” Current legislation inherently undermines many trade union rights. Therefore, the decision must be to recognize that Colombian workers are seen by the authority as being either little more than commodities or as powerless individuals with vey limited collective bargaining rights.
During the Bush presidency, the administration avoided including a required adherence to the UN’s ILO’s internationally recognized labor and human rights standards. Despite Congressman Levin’s best efforts, the “enforce your own laws” stance (given the current if woefully inadequate benchmark) is currently reflected in the pending FTA legislation. To show that the issue is not a trivial one, over 60 percent of all union leaders killed throughout the world are Colombian. Washington’s hesitation to press on with the ratification of the bilateral free trade agreement implies that further improvements in its terms are obligatory, although this is far from certain.
Narcotics Intertwined in Free Trade Agreement: A Closer Look at Panama
In addition to a continued investigation of human rights abuses, the Obama administration must critically analyze other clauses attached to the trade measure. Colombia and Panama are connected along a politically relaxed, but violence-charged border separating Central from South America. It is speculated that Colombia’s leftist armed guerilla forces, the FARC, have strengthened their trafficking connections in Panama where some of their illicit earnings apparently are protected in off-shore tax havens. The Obama administration has been slow to ratify the FTA with Panama because of that country’s infamous tax havens and other financial and laundering loopholes, as well as the massive corruption rampant in all three branches of the country’s government. What the Obama administration is not at all aware of is the country’s low grade human rights record and the anti-democratic nature of the Panamanian president, Ricardo Martinelli. As for the FARC, clearly it is not the only player or even a major one, in the country’s money-laundering schemes. U.S. corporations, multinationals and private investors also have taken advantage of the lax banking policies and compromised legislation fiercely defended by conservative businessmen and by Martinelli.
Considering the declared War on Drugs and the hefty funds and military equipment being directed by the U.S. at Bogotá by Plan Colombia, many believe that by ratifying the FTA, Washington would be shooting itself in the foot by virtually sanctioning the increasing violence within the country, and the persistence of narcotics flowing out of the country. Yet convincing Washington to reevaluate its own questionable tactics that aid these repressive activities invoked by Uribe has been no small achievement. Uribe has undermined the extradition of acknowledged paramilitary personnel to the U.S. to stand trial, allowed the wiretapping of his political foes, and tolerated the military’s use of the infamous “false positive” scheme. Under the pretext that they were members of FARC, this method of extermination permitted the military to murder innocent young men, even going so far as to reward the country’s lawless military for these acts. Due to protection by outdated laissez-faire policies, a passed and signed FTA with Colombia and Panama has the potential of encouraging not only banking secrecy and tax evasion, but also tolerating discrimination against an intimidated work force.
If FTA is passed, there will likely be fewer limits on those who already have been taking advantage of Panama’s offshore banks and little stipulation regarding the amount such malefactors can invest or where the transactions ultimately will be registered. Essentially, if the United States enters into FTAs with Colombia and Panama, Washington will be required by law to treat all involved parties and groups like it would any other trading partners, as well as any financial transactions being made regardless of their sometimes questionable auspices. Multiple levels of favoritism, currently being negotiated, are not necessarily entirely preferential to what now exists. The solution may be, however, clearly more complex, and might involve a multi-pronged approach to fiscal and trade performance, perhaps starting with raising the white flag on a failed drug war.
Panama City – No Acropolis
Drugs aside, Panama’s recurrent history of corrupt governments should present enough negative evidence to serve to derail any agreement in the first place. The Citizens Alliance for Justice and the Foundation for Due Process of Law have requested that the current Panamanian government convene for a hearing by the OAS’ Inter-American Commission on Human Rights. After the Martinelli government had tried and failed in its attempts to prevent the hearing (which took place on March 23) the authorities feebly defended the present administration in the face of serious charges of corruption, concentration of power and the attempted intimidation of society.
Panamanian human rights advocates under the leadership of Jose Miguel Antonio Bernal, have condemned President Martinelli for suspending the Attorney General, Ana Matilde Gómez, four years before her term was to end. She was replaced with the chief executive’s handpicked choice Giuseppe Bonissi, a purely political move that underscores the non-existent separation of powers in the nation. Despite heavy U.S. investment over the years, the lack of transparency within the Panamanian judicial branch continues to gnaw at the nation and the institution is regarded as one of the most corrupt in Latin America.
Like many other Latin American countries, Panama has to struggle to maintain a balanced and objective media, which is particularly difficult to achieve since government authorities are admittedly paying much of the print and electronic media to publicize its causes and run its propaganda. Ratification of an FTA with Panama would be tantamount to rewarding the government’s sharp attacks on press freedom and, therefore, many TV and radio stations as well as the tabloid press cannot be considered credible forces while the interests of the general public are all but excluded from the process of honest governance.
The Hypocritical Bullying Scheme
There is always the risk that developing countries with severe poverty may plunge even further into abject poverty following the implementation of bilateral free trade arrangements. There are particular risks if these agreements feature tariff-free borders and an adequate social net is not in place to help domestic producers at a disadvantage. The private sector adroitly has managed to work its modalities into the framework of U.S. trade policy and attain complete plenary access to society, thereby being able to parade its free trade banner in a most convincing manner.
Nuts and Bolts of Free Trade
The truth that has been so masterfully muted by its defender is that the U.S. at the present time does not have a hands-off free trade system. The U.S. and Europe provide government subsidies to sensitive commodities and produce. Since this allows the U.S. agro-industry to undersell its competitors, U.S. farmers pose a real threat to the developing world. Developed countries have the upper hand in national and international markets because their prices tend to be lower, thus allowing them to corner markets that otherwise would not be available. Lawmakers win because they get reelected for maintaining the subsidies that keep foreseen consumers as well as local voters content. Low prices in the grocery stores make most of those involved in the process satisfied with U.S. dominance in the world market. All of this is made possible by the untouchable agro-industry lobby, which is comprised of some of the most powerful influence peddler lobbyists in Washington.
Those who lose, regardless of whether they too quickly adopt free trade policies, are the developing countries. They do not have the luxury or the availability of government subsidies, so naturally, their local prices tend to be higher, leading their governments to either hopelessly gamble their products on the world market or barricade their economies with tariffs. The result of this scheme is grim; U.S. citizens enjoy slightly cheaper farm products, and developing countries struggle to feed their population. While certain prominent lawmakers, economists and lobbyists shout about the triumph of free trade, it becomes difficult to hear the qualitative whisper of the U.S.’s real priorities: security, job protection and keeping food prices low back home.
Free Trade Fuels Hunger and Poverty
In his speech to a joint session of Congress on February 24, 2009, President Obama promised that, “We will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship jobs overseas.” At present, the FTA bills proposed for Colombia and Panama are in line with the previous pledges set forth in the administration’s CAFTA-DR legislation. According to the Library of Congress, the bills “Recognize the importance of reduced trade barriers to the United States for promoting economic development, creating jobs, and solidifying relations with trading partners.”
However, it is highly unlikely that the pending FTAs, as now drafted, will produce an increased number of jobs at home with the right circumstances. Because the legislation does not mandate the necessity of subscribing to high labor standards in Latin America, U.S. labor must compete for jobs against unprotected and grossly lower-paid workers overseas. As a result, free market trade is being greeted by profound skepticism by U.S. labor interests here, as well as in the developing world, where many workers openly question free trade’s ability to promote sustainable growth among the poor nations.
Apologists for FTAs throughout Latin America claim that Mexico is a sterling example of hobbled economic growth after NAFTA (see related article, The Colombia FTA: A Less Attractive Face for Trade?, by COHA research associate Jennifer Acosta). On the contrary, opponents of FTAs insist that economic growth more likely will turn out to be distinctly skewed. Statistics offered by Columbia University economist Jeffery Sachs denote a much gloomier perspective: “Mexico is being stretched apart right now, where the northern states are growing at 3 or 4 percentage points faster than the southern states.” The southern states of Mexico that make up a substantial portion of the country’s agricultural sector are largely disconnected from the economic boom primarily located in the manufacturing sector, located in the north. Moreover, NAFTA’s environmental regulations often have been spurned, or at least disregarded, by major multinational corporations causing severe degradation and increasing negative health and nutritional issues in the poor shanty towns that can be found surrounding the maquiladores.
The documentary Maquilapolis highlights the failures of NAFTA through uncovering the hardships endured by laborers in these Mexican assembly plants. These maquiladores have provided jobs for workers who otherwise may have gone unemployed, yet they must bow to critically low wages, long hours and unsafe conditions. The heightened violence due to the War on Drugs, which is associated with rampant corruption, has hammered away at what stability remains along the Mexican- U.S. border economy. Despite NAFTA, Mexico is facing greater instability and violence, further proof that FTAs do not guarantee affluence or good governance. The same fate could be true for workers in Colombia and Panama if these FTAs are passed in accordance with those who, if only for political reasons, would deem NAFTA-type results a success at any cost.
Fair Trade to Confront Festering Inequality?
Free trade could potentially advance inequality in countries like Colombia and Panama that already are rife with severe economic disparities between the rich and the poor. According to GINI statistics, 49.2 percent of Colombians live below the poverty line. A report entitled “Social Panorama of Latin America 2004,” published by the Economic Commission for Latin America (ECLAC or CEPAL in Spanish), found that “the marked degree of income concentration is one of the hallmarks to be found in Latin America’s panorama. This status has earned the region the dubious distinction of being the most inequitable area on the planet in terms of income distribution, even when compared with less socially developed regions with higher poverty rates.”
Enacting an FTA before local governments adequately address such deep-seated issues would be akin to courting economic suicide; this would mean insisting that those in power must at least pretend to improve living standards. Otherwise, a great upheaval appears to be inexorably a major fact of life in the region . The verities on the ground are that reduced trade barriers, or tariffs, are a point of serious contention among the masses. For example, Colombia certainly does not offer the same agriculture subsidies that routinely protect large scale farmers in the United States. It is likely that reducing tariffs would doom small Colombian farms to fail in a free trade market environment. Many Colombians fear that cheap, chemically-grown United States crops would flood their market. Rather than offering healthy competition, subsidized U.S. agriculture could destroy their basic production indicators.
The Rolling Ball of Globalization
Integration into the world market is necessary for an economy to advance in the globalized modern era. The hesitation in Congress over pending FTAs with Colombia and Panama, coupled with the security anxieties that FTAs will most likely create, will prove that such market integrations come with some damaging strings attached. While the pros and cons are being debated endlessly, the question remains whether the Obama administration will muster the grit to revamp the measures, or throw them at Congress all together. Rather than press economic-oriented legislation that will also achieve unwelcomed political goals, the White House might want to decide that those denouncing Colombia’s alliance potential with the U.S. might be listened to and that courting Bogotá for military bases and the possibility of joint strike forces may come at too high of a price. Not often mentioned in this militarized atmosphere projected by the potential Plan Colombia are military bases, which are to be used by the U.S. in its anti-drug surveillance and security interest that might be occurring at the same time as the resurrection of the Fourth Fleet. Colombia agricultural interest may also argue that unlike free trade, which does not necessarily get offered a competitive price for their goods, fair trade guarantees local workers a basic standard of living, which also consequently avoids economic self-destruction.
One in six people are currently suffering from hunger and malnutrition, especially in the global south. There will be even more of these manifestations if the world population grows to a projected 9 billion by 2050; if so, a new and innovative economic system might prove to be vital for the survival of the world’s poor. If President Obama is sincerely trying to restore a “sense of fairness” to pending free trade agreements, he need not look further than the outlines of a Fair Trade agreement, as it does not contradict the essence of what high minded free trade should look like, but only the ideology that all too often patronizes it.