During his first months in the White House, George W. Bush has
already tilted politics against worker safety and for tax giveaways
to the rich, but on one front--trade and global economic agreements--there
has been remarkable continuity from the Clinton era, just as Clinton
extended the agenda of the first Bush regime. However, the younger
Bush inherits a public skepticism about corporate globalization
that has deepened since his father was in office.
Despite major losses on NAFTA, creation of the World Trade Organization,
and trade relations with China during the Clinton years, the opposition
movement--based on unions and environmental groups--has grown enough
in breadth and militancy to win some battles and regularly rattle
the elite corporate chiefs and global trade and finance officials.
Most notably, opponents disrupted the Seattle WTO meeting and contributed
to derailing a Multilateral Agreement on Investment (MAI) among
the rich countries. They also blocked renewal of the president's
"fast track" trade authority, which would force Congress to vote
yea or nay on trade agreements without amendments or extensive debate.
In broad terms, the battles in the near term will follow the same
lines as over the past
aged as "presidential trade promotion authority"-- will again be the
major fight in Congress this year, but the biggest street fight--in
Quebec City and dozens of U.S. cities in late April-- will be over
the Free Trade Area of the Americas (FTAA), a proposed extension of
an even more pro-corporate NAFTA to the Western Hemisphere. In each
case, the crux of the conflict will be whether new global economic
agreements will provide meaningful protection for the environment
and labor rights.
Yet just as popular pressure is forcing government leaders to take
labor and environmental issues more seriously, those movements are
looking beyond securing such safeguards. Most global economic agreements,
like the nascent FTAA, are now less about trade and tariffs or other
barriers and more about investment, property rights, privatization,
deregulation and greater power for corporations at the expense of
governments. The critics of globalization still have a long way
to go to secure labor rights and environmental responsibility as
part of all global economic arrangements. Yet at the same time,
they are broadening their demands to include greater citizen control
over corporations, new models of development (including elimination
of debt from most poor countries) and new financial regulation to
stabilize the global economy.
The more sophisticated corporate globalizers are hoping that they
can make some minor concessions to defuse this growing popular movement.
Recognizing that the demand for labor and environmental safeguards
isn't going away, the Business Roundtable and the Emergency
Committee for American Trade--representing the biggest multinational
corporations, like Caterpillar, Boeing and American International
Group--have asked the Bush administration to make labor and environmental
standards part of future trade talks.
Their credibility as defenders of worker rights is weak. In 1978
the Business Roundtable was
the key group that killed labor law reform, which would have made
it easier for workers to exercise their internationally guaranteed
right to organize, and it has been a major promoter of deregulation
of the global economy. But their initiative is a tribute to the
strength of the popular movements and a sign of how badly big business
wants more global deals. It also creates another split within conservative,
pro-business ranks, not unlike when some nationalist Republicans
voted with the left-leaning Democrats on trade issues in recent
years. Other business groups, like the Chamber
of Commerce, and key conservatives in Congress, like House Majority
Leader Dick Armey, oppose any reference to labor or the environment
in trade deals. The first indications from Bush's trade representative,
Robert Zoellick, suggest hostility to such provisions despite talk
But the Business Roundtable's shift also poses a challenge to the
globalization. It's clear that the business groups want any labor
and environmental provisions to be as weak
as possible, providing political cover without real results. They
want to avoid binding obligations
or tough enforcement (some might accept monetary fines as penalties
for labor and environmental violations, but not the kind of trade
sanctions reserved for protecting corporate interests). Yet increasingly
labor advocates and environmentalists want stronger measures that
go beyond governments pressuring each other to enforce their own laws.
They want agreements that would enable workers and citizen groups,
not just governments, to initiate actions and that would apply sanctions
and penalties against individual corporate violators as well as governments.
How far will critics compromise with this more accommodating wing
of big business in order to strike a deal? At the end of the NAFTA
debate, the major environmental groups split, with several of the
moderate organizations endorsing NAFTA because of the side agreements
on labor and the environment that Clinton had negotiated. Their
disappointment with those side agreements helped to consolidate
later opposition to fast track.
A key test may come in a vote on the bilateral trade agreement
with Jordan negotiated at the close of the Clinton administration.
For the first time, labor and environmental protections--with provisions
for enforcement--are included in the text of a trade agreement.
Moreover, the Clinton administration invited the AFL-CIO
to join discussions of the language during the negotiations. While
U.S. labor participants did not get everything they wanted, they
concluded (along with their Jordanian counterparts) that the terms
were acceptable. However, Jordan is a special case: A very small
country, it trades little with the United States; its new labor
laws are quite progressive; and there's a foreign policy interest
in strengthening the Jordanian economy to foster peace in the Middle
Citizen's Global Trade Watch criticized the Jordanian agreement
as a model for future deals because the language is loose (for example,
calling on the parties to "strive to ensure" that they don't relax
their domestic environmental or labor laws for economic gain) and
that the obligations and enforcement mechanisms are far weaker than
for business interests (such as intellectual property rights).
Some Democrats are pressing Bush to submit the Jordanian agreement
promptly, testing the administration's willingness to accept the
labor and environmental language, but Iowa Republican Sen. Charles
Grassley has suggested lumping fast track authority together with
the Jordanian deal and a Vietnamese bilateral agreement (which does
not include labor or environmental protections) as well as potential
bilateral agreements with Singapore and Chile.
Although the Senate seems likely to remain a safe haven for trade
deals, the House is up for grabs, with crucial votes likely to be
swung by campaign contributors, friction between the two political
parties, or foreign policy interests in voting for a package that
includes trade deals with Vietnam or Jordan. Without Clinton in
the White House, Democrats may be more willing to oppose Bush and
fight for a new model of trade agreements, but anti-globalist right-wing
Republicans might also feel party pressure to back Bush. In any
case, labor, environmental and other progressive critics of corporate
globalization are already planning grassroots pressure campaigns
on legislators from both parties.
At the end of her term, Clinton trade representative Charlene Barshefsky
skepticism about the need for fast track authority. Indeed, the Clinton
administration negotiated hundreds
of trade agreements without fast track, which has been used only five
times since it was first granted to President Nixon. But fast track
has both symbolic and practical value for the administration, in suggesting
to trading partners that it can deliver approval of any terms negotiated.
Bush had wanted fast track--or at least progress toward it--before
the Summit of the Americas in Quebec on April 20 as part of his campaign
to accelerate negotiation of the FTAA.
Although Quebec largely will be a formal display by hemispheric
heads of state (with the substantive ministerial negotiations occurring
earlier in April in Argentina), the Bush administration has made
the FTAA a top priority and would like to accelerate negotiations
to conclude a deal in two years rather than the scheduled four.
American corporations are anxious to consolidate their historic
dominance over the region and to use the deal to influence negotiations
at the World Trade Organization. While discussions about new agreements
on services and agriculture continue at the WTO, it is uncertain
whether there will be support for a new broad round of negotiations
when the WTO meets in tiny Qatar this fall, far removed from the
protesters of Seattle but still riven by internal disagreements
that blocked a new round in 1999.
FTAA negotiating groups from 34 countries (excluding Cuba) have
come up with an FTAA text that, in the language of negotiators,
is "heavily bracketed," meaning that most of the tough points are
unsettled. So far that text has been kept secret, although citizen
groups in the United States have sued to get it released. But judging
from position papers or other documents from the Canadian and U.S.
government, it is possible to get some sense of what the FTAA might
Although the proposed FTAA is often described as NAFTA for the
Americas, it actually "goes far beyond NAFTA in its scope and power,"
according to Maude Barlow, chairwoman of The
Council of Canadians, Canada's largest public advocacy group.
"Essentially, what the FTAA negotiators have done, urged on by the
big business community in every country, is to take the most ambitious
elements of every global trade and investment agreement--existing
or proposed--and pull them all together."
The FTAA will likely include the worst--that is, the most pro-corporate
and anti-democratic--elements of both NAFTA and the WTO (as well
as the failed MAI). For example, while NAFTA focused on trade in
goods, the FTAA is likely to open up trade and investment in all
services, including health, education and other now predominantly
public services. The United States is pushing for rules that would
open up all services to international corporations unless they were
specifically excluded, rather than selectively agree on "liberalization"
of specific service sectors.
The FTAA is also likely to include the NAFTA provision--not in
the WTO--that gives corporations the right to sue governments over
violations of the agreement and to have the decisions made by secretive
international tribunals with no (or perhaps minimal) public voice.
Under NAFTA, corporations have successfully sued governments to
overturn regulations or receive compensation for potential lost
profits as a result of regulations protecting health and the environment.
For example, the Ethyl Corporation forced Canada to reverse its
ban on the sale of a dangerous gasoline additive, and Metalclad
Corporation won a judgment requiring Mexico to pay $16.7 million
on the grounds that environmental laws prohibiting its toxic waste
processing plant were the equivalent of expropriation.
Judging from available information, the FTAA would prohibit regulation
of speculative capital flows (such as Chile formerly imposed). It
would adopt standards on safety and health from the WTO that give
higher priority to trade and put stricter limits on regulation than
under NAFTA. It would impose tougher protection of intellectual
property rights, like patents (including the criminal penalties
for violations established under NAFTA but not the WTO). It would
open the door to privatization of many public services through rules
on government procurement and competition.
The United States is essentially offering the promise of freer
access to its domestic market and greater multinational investment
in Latin America in exchange for rules that strengthen the dominance
of corporations--mainly based here--over the economies and governments
of the hemisphere. The FTAA would lock in the model of development--maximizing
exports, shrinking the public sector--that has already been imposed
through the structural adjustment programs of the International
Monetary Fund with unimpressive results and great hardship for the
vast majority of Latin America. It also would put additional downward
pressure on Mexican wages as more Latin American countries compete
for the transfer of United States manufacturing or other portable
work to the broader new free trade area. This in turn would exacerbate
threats to many jobs and wages in the United States.
There is apparently--but not surprisingly--no provision for protection
of labor rights or the environment in the FTAA. The United States
claims to have raised the issues but found no support. But unlike
NAFTA, where the main Mexican labor federation supported the government's
hostility to labor rights, there appears to be unity among the hemispheric
labor movement for labor rights in the FTAA. There is also a growing
network of environmental and other citizen movements working together
throughout the Americas.
Government negotiators are also divided. Canada's trade minister
Pierre Pettigrew has opposed the right of investors to sue governments.
Canada also has been involved in trade tiffs with both Brazil and
the United States. Brazil is reluctant to accelerate negotiations,
since it wants to consolidate its growing influence in South America,
and despite defection by Chile, the Mercosur nations of the southern
cone--including Brazil--put a higher priority on their common market
than on the FTAA. Small Caribbean countries are worried that their
special needs are being ignored.
While the Bush administration sets its sights on negotiating the
FTAA, it is ignoring the
potential time bomb of the growing U.S. trade deficit, which, based
on the experience with NAFTA, might grow even bigger with the FTAA.
Over the past three years, the
driven mainly by a rapidly growing imbalance in imports and exports
of manufactured goods--
has soared, reaching a record 3.7 percent of GDP at the end of last
year. Developing countries with low wages and few labor rights, especially
China, are accounting for a growing share of the deficit. The growth
of the U.S. economy has masked a dramatic trade-related phenomenon:
Although manufacturing jobs usually increase during a boom, since
early 1998 the United States has lost more than 400,000 manufacturing
This has had devastating consequences on some industries, like
steel, which suffers from "dumping" by desperate exporters in a
world with an excess of capacity to produce steel and depressed
markets outside of the United States. The shrinkage of American
manufacturing is partly a result of global trade deals and shifts
of investment by U.S. companies to other countries; it is also partly
a result of an overvalued dollar. A more general problem is that
the incomes of the world's working population, including those in
the United States, have not grown enough to buy the goods being
produced. Indeed, in much of the world, as inequality grows, the
buying power of working people is actually declining, partly as
a result of the deregulated global economy. The result is that the
U.S. and world economies are in a precarious position.
Much of the U.S. boom, which has made possible the consumption
of the world's exports, has been financed by a stock market bubble
and a great increase in consumer debt by the majority of Americans
without stock portfolios. But with the bubble bursting and job losses
mounting, the United States cannot so easily buy everyone's goods.
The Federal Reserve needs to lower interest rates to stimulate the
economy and to reduce the value of the dollar, but a depreciating
dollar would hurt many countries, including Japan, that are already
vulnerable. It could also lead to withdrawal of investment in the
United States, the world's largest debtor nation (as a result of
our ongoing trade deficits).
Will all this lead to a global financial crisis? AFL-CIO economist
Tom Palley likens the problem to a bathtub, where the level of debt
created by trade deficits is the water in the tub. As long as there's
more space, the water--or deficits--can keep gushing in. But a crisis
comes when the tub is full. The problem is nobody knows how big
the tub is. But the growth in trade deficits is clearly unsustainable
over a very long period.
So at a time when deregulation and corporate globalization have
increased the instability and inequality of the global economy,
the rich countries--led by the United States--are pushing for less
restraint on corporate power and international markets. If an international
crisis does occur, threatening the global system, workers will still
be the primary victims. If those workers were able to organize to
raise their wages and social income supports, then the developing
crisis might be averted or lessened.
The coming battles over fast track, the FTAA, WTO agreements on
services, and other global policy disputes are, at heart, questions
of redistribution of wealth and power. Echoing his domestic initiatives
on taxes, personal bankruptcy regulations and workplace safety,
Bush's agenda for the global economy is to accelerate the redistribution
well underway to those who are already rich and powerful, even at
the risk of the system as a whole.
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