By Ryan Yousefi
By Chuck Strouse
By Terrence McCoy
By Terrence McCoy
By Terrence McCoy
By Michael E. Miller
By Kyle Munzenrieder
By Michael E. Miller
This issue puts the "free" in free trade by tearing down the barriers between nations and letting goods flow unfettered across borders. The current draft mandates that member countries eliminate tariffs on all imports from other member countries within ten years after the FTAA goes into effect. Taxing exports or limiting exports in any other way is a no-no, even if a government is trying to fight a food shortage or wants to keep at home vital natural resources such as gas or water. To give everyone in the Americas equal access to all markets, all "nontariff trade barriers" must go too. So, for example, there can be no national environmental or health restrictions on goods entering the country, says the draft, that are "more restrictive of trade than necessary."
From staplers to tanks, if a government needs something, it must give every company across the Americas a fair shot at making the sale. And we're not just talking about national governments, but provincial, state, and municipal governments as well. So no more sweetheart deals for a close relative's firm. No special consideration for goods made in the 'hood. Unless a government wants to risk being sued for presenting an "unnecessary barrier to trade," the only criteria to be used when evaluating a contract will be price and quality. That means no national government can exclude goods from another nation as a way of protesting, say, human-rights abuses. Good thing for el exilio Cuba is cut out from the get-go, or there'd be no more embargo.
Intellectual Property Rights
From now on, when we say "patent" or "copyright" anywhere in the Americas, we mean it. As the draft now stands, music pirates -- whether street-corner cassette peddlers or sophisticated file-sharers -- can do jail time. But intellectual property doesn't end with artistic creations. The FTAA extends patent protection to organic material like genetically altered seeds and to lifesaving drugs as well. So farmers can be busted if they don't kick the habit of saving seeds from previous harvests to plant the next crop. And companies making generic drugs, like the cheap AIDS treatments made and sold in Brazil, may have to go through costly drug trials as a way of making competition with the big pharmaceutical companies fair. Given how much some member nations depend on generic drugs to care for citizens who are sick and poor, there's a proposal for allowing states to grant licenses to generic companies without trials, but the United States at present is opposed to such a provision.
May I help you? Then whatever I do for you is fair game for free trade. The free flow of trade applies not only to tangible goods -- stereos, surfboards, submarines -- but to services as well. That means the stuff we're used to getting from private companies, like banking, insurance, telecommunications, and tourism. And other things some of us are accustomed to getting from the government: water, education, police protection, library services, healthcare, unemployment checks. If a government wants to be piggy about public service and deliver the goods all by itself, it will run afoul of the rules for free trade and will likely pay a hefty price to any company who feels left out. Some of the smaller countries don't like this rule at all, so there is debate over whether small economies could be exempt from opening their national markets for services.
This is a major sticking point between the United States and the nations to the south. The goal is to eliminate all "export subsidies," but export subsidies come in many guises. In the United States, powerful interests in steel, citrus, and sugar don't want to give up the domestic dole they've enjoyed for decades. Still that's not the only source of disagreement. Other countries are picky about allowing genetically modified foods within their borders -- but regulations against such foods could be considered an "export subsidy" for domestic goods. The same goes for such "export subsidies" as any domestic laws that allow a country to control the food supply or price by stockpiling foodstuff.
The aim is to create a stable and predictable business environment throughout the hemisphere to protect the investor and the investment. This is necessary, goes the argument, in less stable countries where assets could be unilaterally seized. To provide recourse, foreign corporations would be given "most-favored nation" status and protected under "national treatment" clauses. The concern is that foreign companies would be able to challenge a nation's regulations such as social and environmental standards. And this is where the NAFTA Chapter 11 model would apply (see "NAFTA: Saint or Sinner?" page 32): Foreign companies would be allowed to sue governments over regulations that affect their profits. Opponents claim that settling disputes in this way circumvents a country's legal system and is skewed toward big business.
Antidumping and Countervailing Measures:
The FTAA wants to prevent the sale of products in another country at less than fair market value. The problem is figuring out what fair market value is. What one country complains is "too cheap," another counters is simply a reflection of higher productivity or lower labor costs. Whoever you believe, the language here is now so squishy as to be meaningless. If the negotiators can come up with clear language, this provision could level the playing field between big countries and the little guys.
If the FTAA goes into effect, how will the new rules be enforced? If government A accuses government B of breaking the rules, then A can challenge any of B's laws, programs, or policies that appear to violate the FTAA. An FTAA panel would decide if there is in fact a violation. If there is, government B has three choices: change its laws; pay compensation to A; or risk heavy trade sanctions from the rest of the member countries. But a company doesn't need to get its own government on board to sue another country for violating the FTAA. Resorting to the investment rules (see Investment), a company can sue another country directly for lost profits. A corporation can, for example, make a government pay to compensate for any profits lost due to domestic environmental or health regulations.
Free trade means all trade, so if a government tries to keep a monopoly over a certain national market -- whether that's oil or education -- foreign firms and investors have a right to sue for a piece of the action through a supra-national body the FTAA would set up. That doesn't mean an end to all state-run businesses; it just means that any business run by the state must allow for open competition. Critics worry that such privatization would hit the poor and the civil service, who depend on state enterprise, the hardest. $