The Free Trade Area of the Americas (FTAA)
and the threat to social programs,
environmental sustainability and social justice
in Canada and the Americas
by Maude Barlow
from Stop FTAA website http://www.stopftaa.org/
The Free Trade Area of the Americas (FTAA), currently being
negotiated by 34 countries of the Americas, is intended by its
architects to be the most far-reaching trade agreement in history.
Although it is based on the model of the North American Free Trade
Agreement (NAFTA), it goes far beyond NAFTA in its scope and power.
The FTAA, as it now stands, would introduce into the Western Hemisphere
all the disciplines of the proposed services agreement of the
World Trade Organization (WTO) - the General Agreement on Trade
in Services (GATS) - with the powers of the failed Multilateral
Agreement on Investment (MAI), to create a new trade powerhouse
with sweeping new authority over every aspect of life in Canada
and the Americas.
The GATS, now being negotiated in Geneva, is mandated to liberalize
the global trade in services, including all public programs, and
gradually phase out all government "barriers" to international
competition in the services sector. The Trade Negotiations Committee
of the FTAA, led by Canada in the crucial formative months when
the first draft was written, is proposing a similar, even expanded,
services agreement in the hemispheric pact. It is also proposing
to retain, and perhaps expand, the "investor-state"
provisions of NAFTA, which give corporations unprecedented rights
to pursue their trade interests through legally binding trade
Combining these two powers into one agreement will give unequalled
new rights to the transnational corporations of the hemisphere
to compete for and even challenge every publicly funded service
of its governments, including health care, education, social security,
culture and environmental protection.
As well, the proposed FTAA contains new provisions on competition
policy, government procurement, market access and dispute settlement
that, together with the inclusion of services and investment,
could remove the ability of all the governments of the Americas
to create or maintain laws, standards and regulations to protect
the health, safety and well-being of their citizens and the environment
they share. Moreover, the FTAA negotiators appear to have chosen
to emulate the WTO rather than NAFTA in key areas of standard-setting
and dispute settlement, where the WTO rules are tougher.
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 put them all together in this openly
ambitious hemispheric pact.
Once again, as in former trade agreements like NAFTA and the
WTO, this free trade agreement will contain no safeguards in the
body of the text to protect workers, human rights, social security
or health and environmental standards. Once again civil society
and the majority of citizens who want a different kind of trade
agreement have been excluded from the negotiations and will be
shut out of the deliberations in Quebec City in April 2001.
However, the stakes for the peoples of the Americas have never
been higher, and it appears a confrontation is inevitable.
What Is the FTAA?
The Free Trade Area of the Americas is the name given to the
process of expanding the North American Free Trade Agreement (NAFTA)
to all the other countries of the Western Hemisphere except Cuba.
With a population of 800 million and a combined GDP of $11 trillion
(US), the FTAA would be the largest free trade zone in the world.
If reports coming from the Negotiating Groups working on the key
elements of the deal are correct, the FTAA will become the most
far-reaching free trade agreement in the world, with a scope that
will reach into every area of life for the citizens of the Americas.
The FTAA was launched by the leaders of 34 countries of North,
Central and South America and the Caribbean at the December 1994
Summit of the Americas in Miami, Florida. At that meeting, then
President Bill Clinton pledged to fulfil former President George
Bush's dream of a free-trade agreement stretching from Anchorage
to Tierra del Fuego, linking the economies of the hemisphere as
well as deepening social and political integration among the countries
based on the same free-market model as NAFTA.
However, little real progress was made until the next Summit
of the Americas, this one held in Santiago, Chile, in April 1998,
at which time the countries set up a Trade Negotiations Committee
(TNC), consisting of the vice ministers of trade from each country.
With support from a Tripartite Committee made up of the Inter-American
Development Bank, the Organization of American States and the
UN Economic Commission for Latin America and the Caribbean (ECLAC),
nine Working Groups were established to deal with the major areas
of negotiations: services; investment; government procurement;
market access (covering tariffs, non-tariff measures, customs
procedures, rules of origin, standards and technical barriers
to trade); agriculture; intellectual property rights; subsidies,
anti-dumping and countervailing duties; competition policy; and
As well, three non-negotiating special committees were established
to deal with the issues of smaller economies, civil society and
electronic commerce. These committees and working groups have
been meeting with increasing frequency throughout 1999 and 2000
and the early part of 2001, regularly bringing over 900 trade
negotiators and mountains of material to Miami where most of the
meetings take place.
From the beginning, the big corporations and their associations
and lobby groups have been an integral part of the process. In
the U.S., a variety of corporate committees advise the American
negotiators and, under the Trade Advisory Committee system, over
500 corporate representatives have security clearance and access
to FTAA negotiating documents. At the November 1999 ministerial
meeting in Toronto, the Ministers of Trade of the Americas agreed
to implement 20 "business facilitation measures" within
the year in order to speed up customs integration.
One of the tasks of the negotiators is to compare and consolidate
the key components of a variety of trade and investment agreements
throughout the area, including: * NAFTA - a free trade and investment
agreement between Canada, the U.S. and Mexico * MERCOSUR - a common
market of the Southern Cone countries of Brazil, Argentina, Paraguay
and Uruguay * the Andean Pact * Caricom - the Caribbean Community
As well, a number of Bilateral Investment Treaties (BITS) have
been signed between individual countries, based on the "investor-state"
model of NAFTA, whereby corporations can directly sue governments
for alleged property rights violations without first involving
their own governments.
There are some differences among these pacts and agreements;
MERCOSUR's goal, for example, is to become a common market, whereas
NAFTA has not attempted to establish common labour standards among
its three members and the U.S. clearly would not tolerate the
free movement of labour from Mexico. And MERCOSUR does contain
some social provisions and programs for displaced workers that
are absent from NAFTA.
But the similarities between these treaties far outweigh the
differences. Both NAFTA and MERCOSUR include measures to deregulate
foreign investment and grant national treatment (non-discriminatory)
rights to foreign investors. Both prohibit "performance requirements"
whereby foreign investment must enhance the local economy and
support local workers.
And both are based on a model of trade and investment liberalization
that locks in the Structural Adjustment Programs (SAPs) introduced
earlier into Latin America by the World Bank and the International
Monetary Fund (IMF). Under these programs, most developing countries
were forced to * abandon domestic industry in favour of transnational
corporate interests * turn their best agricultural lands over
to export crops to pay off their national debt * curtail public
spending on social programs and abandon universal health care,
education and social security programs * deregulate their electricity,
transportation, energy and natural resources sectors * remove
regulatory impediments to foreign investment
Tensions of leadership exist in the negotiations. Since 1995,
the U.S. Adminstration has been unsuccessful in obtaining renewal
for its "fast-track" legislation, which basically authorizes
Congress to adopt free trade agreements in full. This has given
Brazil, the undisputed economic leader in Latin America, the opportunity
to challenge U.S. supremacy in the negotiations and bid to lead
the process of economic integration of the Americas.
As well, the encroachment of the business community of the
European Union into Latin America, especially in banking, telecommunications,
automobiles and consumer products, has served as a catalyst for
the United States to reassert its leadership in the hemisphere.
The EU has been intensifying its presence in the region, negotiating
individual free trade and investment agreements with countries
such as Chile, Mexico and Brazil. The U.S. is counting on the
successful completion of the FTAA to maintain the dominance of
its corporate sector in the region.
Further pressure has been placed on obtaining a successful
FTAA in the light of the defeat of the Multilateral Agreement
on Investment (MAI) at the first ministerial meeting of the WTO
in 1996 and at the Organization for Economic Cooperation and Development
(OECD) in 1998, and the shut-down of the "Millennium Round"
meeting of the WTO in Seattle in December 1999. In fact, WTO officials
are finding it difficult to even secure a venue for a new Ministerial
meeting. As well, APEC - the Asia Pacific Economic Cooperation
Forum - is faltering and few have expectations that it will make
the hoped-for breakthrough to become a free trade and investment
Many trade observers and pundits have identified the FTAA
as the natural heir of these failed projects and are fearful that
another such failure could put the whole concept of these massive
free trade agreements on the back burner for years. In fact, in
a January 2000 statement, Associate United States Trade Representative
Peter Allegeier said that the FTAA has taken on new importance
after the fiasco in Seattle and may well aspire to go further
than the WTO, freed of the need to play the deals off against
The next ministerial-level Summit of the Americas is to be
held in Quebec City in April 2001. At this Summit, leaders will
be presented with a heavily bracketed first draft for a Free Trade
Agreement of the Americas, out of which they will start to fashion
a full text. The agreement was originally intended to be completed
for implementation by 2005, but some countries, including Chile
and the United States, are pushing to move the ratification date
up to 2003, depending on how far negotiators get at the Quebec
City Summit meeting.
What's in the FTAA?
Essentially, the planned FTAA is an expansion of the existing
NAFTA, both in terms of including many new countries in the pact
and in terms of extending free trade's reach into new sectors,
based on tough new WTO provisions. In a statement that accompanied
the original 1994 Miami Summit, the Ministers made a series of
recommendations in the form of a Declaration. In it, they said
that agreement had been reached on several key "Objectives
and Principles," including:
* economic integration of the hemisphere * promotion of the
integration of capital markets * consistency with the World Trade
Organization (WTO) * elimination of barriers and non-tariff barriers
to trade * elimination of agricultural export subsidies * elimination
of barriers to foreign investment * a legal framework to protect
investors and their investments * enhanced government procurement
measures * new negotiations on the inclusion of services
Since then, information about just what is contained in the
FTAA working documents has been sparse. However, from meetings
with the United States Trade Representative's office, members
of Public Citizen's Global Trade Watch report that the U.S. is
intent on liberalizing services, including health care, education,
environmental services and water services. As well, the FTAA will
include provisions on investment similar to those in the defeated
Multilateral Agreement on Investment and Chapter 11 of NAFTA,
whereby corporations will be able to sue governments directly
for lost profit resulting from the passage of laws designed to
protect health and safety, working conditions or environmental
The "Miami Group" - the U.S., Canada, Argentina
and Chile - are also intent on forcing all countries of the Americas
to accept biotechnology and genetically modified foods (GMOs),
thereby promoting the interests of biotech companies such as Cargill,
Monsanto and Archer Daniels Midland over the survival needs of
small farmers, peasants and communities throughout Latin America.
Finally, reports Public Citizen, the U.S. is trying to expand
NAFTA's corporate protectionism rules on patents to the hemisphere,
rules that give a company with a patent in one country the monopoly
marketing rights to the item throughout the region, thereby robbing
local people of access to traditional medicines.
As well, reports from the negotiators themselves have inadvertently
found their way into the public domain. An October 7, 1999 confidential
report from the Negotiating Group on Services was recently leaked;
it contains detailed plans for the services provisions of the
FTAA. Sherri M. Stephenson, Deputy Director for Trade with the
Organization of American States, prepared a paper for a March,
2000 trade conference in Dallas, Texas, in which she reported
on the mandate and progress of the nine Working Groups by sector.
FTAA Web sites and Canadian government documents contain important
information as well.
Put together, these reports expose a plan to create the most
far-reaching trade agreement ever negotiated. The combination
of a whole new services agreement in the FTAA combined with the
existing (and perhaps even extended) NAFTA investment provisions
represent a whole new threat to every aspect of life for Canadians.
This powerful combination will give transnational corporations
of the hemisphere important new rights, even in the supposedly
protected areas of health care, social security, education, environmental
protection services, water delivery, culture, natural resource
protection and all government services - federal, provincial and
Mandates of the Nine Negotiating Groups
The mandate of the Negotiating Group on Services is massive:
"To establish disciplines to progressively liberalize trade
in services, so as to permit the achievement of a hemispheric
free trade area under conditions of certainty and transparency"
and to develop a framework "incorporating comprehensive rights
and obligations in services." It is a new agreement and meant
to be compatible with the General Agreement on Trade in Services
(GATS) - the WTO services negotiations now in progress.
The General Agreement on Trade in Services was established
in 1994, at the conclusion of the "Uruguay Round" of
the GATT and was one of the trade agreements adopted for inclusion
when the WTO was formed in 1995. Negotiations were to begin five
years later with the view of "progressively raising the level
of liberalization." These talks got under way as scheduled
in February 2000, chaired by Canada's Ambassador to the WTO (and
former International Trade Minister) Sergio Marchi. The common
goal of Europe, the U.S. and Canada is to reach a general agreement
by December 2002.
It is called a "multilateral framework agreement,"
which means that its broad commission was defined at its inception
and then, through permanent negotiations, new sectors and rules
are to be added.
Essentially, the GATS is mandated to restrict government actions
in regards to services through a set of legally binding constraints
backed up by WTO-enforced trade sanctions. Its most fundamental
purpose is to constrain all levels of government in their delivery
of services and to facilitate access to government contracts by
transnational corporations in a multitude of areas, including
health care, hospital care, home care, dental care, child care,
elder care, education (primary, secondary and post-secondary),
museums, libraries, law, social assistance, architecture, energy,
water services, environmental protection services, real estate,
insurance, tourism, postal services, transportation, publishing,
broadcasting and many others.
The FTAA negotiating services agreement is even more sweeping
than the GATS. As well as incorporating "comprehensive rights
and obligations," it will apply to "all measures [defined
by Canada as 'laws, rules, and other official regulatory acts']
affecting trade in services taken by governmental authorities
at all levels of government." As well, it is intended to
apply to "all measures affecting trade in services taken
by non-governmental institutions at all levels of government when
acting under powers conferred to them by government authorities."
The services agreement, says the Negotiating Group, should
have "universal coverage of all service sectors." Governments
are granted the right to "regulate" these services,
but only in ways compatible with the "disciplines established
in the context of the FTAA agreement." The framework of the
services agreement has six elements of consensus.
* sectoral coverage ("universal coverage of all service
* most-favoured-nation treatment (access granted to investors/corporations
from any one FTAA country must be granted to investors/corporations
from all FTAA countries)
* national treatment (investors/corporations from all FTAA
countries must be treated the same as domestic and local service
* market access ("additional disciplines to address measures
that restrict the ability of service providers to access markets")
* transparency (disciplines "making publicly available
all relevant measures which may include among others, new laws,
regulations, administrative guidelines, and international agreements
adopted at all levels of government that affect trade in services")
* denial of benefits ("FTAA members should be able to
deny the benefits of the services agreement to a service supplier
that does not meet such criteria." Criteria could include
"ownership, control, residency, and substantial business
This list represents sweeping new authorities of a trade agreement
to overrule government regulation and grants huge new powers to
service corporations under an expanded FTAA. For instance, if
national treatment rights in services are included in the FTAA,
all public services at all levels of government would have to
be opened up for competition from foreign for-profit service corporations.
This agreement would disallow any government or sub-national government
from preferential funding to domestic service providers in services
as diverse as health care, child care, education, municipal services,
libraries, culture, and sewer and water services.
The combination of this sweeping services agreement with the
proposed extension of the investment rules grants unprecedented
new powers to the FTAA and the private interests it promotes.
For the first time in any international trade agreement, transnational
service corporations will gain competitive rights to the full
range of government service provisions and will have the right
to sue any government that resists for financial compensation.
That the real goal of this services/investment juggernaut is to
reduce or destroy the ability of the governments of the hemisphere
to provide publicly funded services (considered "monopolies"
in the world of international trade) is seen clearly in the words
of OAS Deputy Trade Director Stephenson:
"Since services do not face trade barriers in the form
of border tariffs or taxes, market access is restricted through
national regulations. Thus the liberalization of trade in services
implies modifications of national laws and regulations, which
make these negotiations more difficult and more sensitive for
The FTAA Negotiating Group on Services has requested the organization
of national inventories of measures affecting (i.e., inhibiting)
the free trade in services.
The mandate of the Negotiating Group on Investment is to establish
"a fair and transparent legal framework to promote investment
through the creation of a stable and predictable environment that
protects the investor, his investment and related flows, without
creating obstacles to investments from outside the hemisphere."
It builds on the investment chapter of NAFTA, Chapter 11, which
is, as legal trade expert Barry Appleton explains, "the very
heart and soul of NAFTA."
NAFTA was the first international trade agreement in the world
to allow a private interest, usually a corporation or an industry
sector, to bypass its own government and, although it is not a
signatory to the agreement, directly challenge the laws, policies
and practices of another NAFTA government if these laws, policies
and practices impinge on the established "rights" of
the corporation in question. Chapter 11 gives the corporation
the right to sue for compensation for lost current and future
profit from government actions, no matter how legal these actions
may be or for what purpose they have been taken.
Chapter 11 was successfully used by Virginia-based Ethyl Corp.
to force the Canadian government to reverse its legislation banning
the cross-border sale of its product, MMT, an additive to gasoline
that has been banned in many countries and that Prime Minister
Jean Chretien once called a "dangerous neurotoxin."
S.D. Myers, an American PCB waste-disposal company, also successfully
used a Chapter 11 threat to force Canada to reverse its ban on
PCB exports - a ban Canada undertook in compliance with the Basel
Convention banning the transborder movement of hazardous waste
- and successfully sued the Canadian government for $50 million
(US) in damages for business it lost while the short-lived ban
was in place.
Sun Belt Water Inc. of Santa Barbara, California, is suing
the Canadian government for $14 billion because British Columbia
banned the export of bulk water in 1993, thereby closing any opportunities
for the company to get into the water-export business in that
The Negotiating Group on Investment has made substantial progress
in including in the FTAA the same or enhanced investor-state rights
that exist currently in NAFTA, including:
* basic definitions of investment and investor
* scope of application (very broad)
* national treatment (whereby no country can discriminate
on behalf of its domestic sector)
* most-favoured-nation treatment (whereby access to investors
from one FTAA country must be given to investors of all FTAA countries)
* expropriation and compensation for losses (whereby an "investor"
or corporation can claim financial compensation for lost business
and profit from the creation or implementation of regulation,
including environmental laws, from the government of another NAFTA
* key personnel (the ability of corporations to move their
professionals and technicians across borders outside of the normal
* performance requirements (limits on or the elimination of
a country's right to place performance requirements on foreign
* dispute settlement (whereby a panel of appointed trade bureaucrats
can override government legislation or force the government in
question to pay compensation in order to maintain the legislation)
The inclusion of such sweeping investment provisions is a
way of introducing a form of the Multilateral Agreement on Investment,
a proposed OECD investment treaty that was abandoned in the face
of massive civil society resistance, into the FTAA. Combined with
proposed strengthened provisions on market access, agriculture
and intellectual property rights and sweeping new proposed provisions
on services and government procurement, these investment provisions
will grant new powers to the corporations of the hemisphere. Such
powers will allow them to challenge all government regulations
and activities, and undermine the ability of all governments to
provide social security and health protection to their citizens.
3. Government Procurement
The mandate of the Negotiating Group on Government is very
clear: "To expand access to the government procurement markets
of the FTAA countries" within a new agreement. This will
be done by achieving a "normative framework that ensures
openness and transparency of government procurement processes,"
ensuring "non-discrimination in government procurement"
and "impartial and fair review for the resolution of procurement
This FTAA mandate on government procurement appears to go
further than that of the FTAA's WTO counterpart, the WTO Agreement
on Government Procurement, whose aim is to prevent governments
from fostering domestic economic development when purchasing goods.
Measures targeted by the WTO include favouring local or national
suppliers, setting domestic content standards or imposing community
investment rules. For now, the WTO does not enforce market access
or national treatment rules on the purchase of direct government
goods and services.
However, the FTAA Negotiating Group appears to go much further
and open up all government contracts, services and goods to competitive
bidding from other FTAA countries' corporations. The Negotiating
Group has requested an inventory of the relevant international
classification systems and a compilation of each government's
4. Market Access
The mandate of the Negotiating Group on Market Access is to
select a methodology and timetable for the elimination of all
remaining tariffs and "non-tariff" barriers and agree
upon the pace of tariff reduction. Tariffs are border taxes; under
both NAFTA and the WTO, they have largely been eliminated in Canada
and the Americas.
Non-tariff barriers are all the rules, policies and practices
of governments, other than tariffs, that can impact on trade.
Non-tariff barriers can potentially include everything governments
do, including delivering services and protecting the health and
safety of their citizens. Their inclusion in the mandate of this
Negotiating Group expands the scope of NAFTA market access provisions
These provisions are expanded in another important way. Under
NAFTA, market access is subject to national treatment. This means
that imported goods coming into a country from another NAFTA country
must be treated "no less favourably" than domestic goods.
But national treatment in NAFTA did not extend to government procurement
or to domestic subsidies and was applied to services only in a
limited way. This protected most government programs from national
Under the proposed FTAA rules, however, it appears that services
will be covered more fully by the market access rules. As well,
government procurement restrictions that allow governments to
protect local providers will be more open to challenge from an
expanded mandate of the government procurement provisions. And
the ability of foreign for-profit service corporations to use
the national treatment provision to challenge government services
monopolies will be greatly expanded under a proposed new agreement
Further, the Negotiating Group on Market Access has also been
charged with identifying and eliminating any unnecessary "technical
barriers to trade" in line with the WTO.
The WTO Technical Barriers to Trade (TBT) Agreement is an
international regime to harmonize environmental and other standards
which effectively creates a ceiling but no floor for such regulation.
Under its rules, a nation must be prepared to prove, if challenged,
that its environmental and safety standards are both "necessary"
and the "least trade restrictive" way to achieve the
desired conservation goals, food safety or health standard. This
means that a country bears the burden of proving a negative -
that no other measure consistent with the WTO is reasonably available
to protect environmental concerns. The WTO TBT Agreement also
sets out an onerous procedural code for establishing new laws
and regulations so arduous that it is very difficult for any nation
While there are provisions in NAFTA on technical standards,
they are not as stringent as those found in the WTO TBT Agreement.
NAFTA does require that technical barriers not constitute "an
unnecessary obstacle to trade." However, NAFTA acknowledges
the right of all parties to maintain standards and regulatory
measures that result in a higher level of protection than would
be achieved by measures based on international standards as long
as they apply these standards in a way that does not discriminate
between national and domestic goods. By choosing the stronger
provisions of the WTO, FTAA negotiators have introduced tougher
restrictions on the governments of the Americas and their right
to regulate in the best interests of their citizens.
The mandate of the Negotiating Group on Agriculture is to
eliminate agricultural export subsidies affecting trade in the
hemisphere, based on the WTO's Agreement on Agriculture (AOA);
"discipline" other trade-distorting agricultural practices;
and ensure that "sanitary and phytosanitary measures"
are not used as a disguised restriction to trade, using the WTO
agreement as a model.
The FTAA's AOA agriculture provisions set rules on the trade
in food and restrict domestic agriculture policy, down to the
level of support for farmers, the ability to maintain emergency
food stocks, set food safety rules and ensure food supply.
The WTO Agreement on the Application of Sanitary and Phytosanitary
Standards (SPS) sets constraints on government policies relating
to food safety and animal and plant health, from pesticides and
biological contaminants to food inspection, product labelling
and genetically engineered foods. As with TBTs, the WTO SPS Agreement
goes further than NAFTA.
The NAFTA provisions do not in themselves impose any specific
standards; they set out a general approach to ensure that SPS
measures are used for genuine scientific reasons, not as disguised
barriers to trade. Member countries are still allowed to take
SPS measures to protect human, animal or plant life and health
at the level they consider "appropriate." While NAFTA
"encourages" the parties to harmonize their measures
based on relevant international standards, the WTO seeks to remove
decisions regarding health, food and safety from national governments
and delegate them to international standard-setting bodies such
as the Codex Alimentarius, an elite club of scientists located
in Geneva, largely controlled by the big food and agribusiness
The WTO SPS Agreement has been used to defeat the use of the
"precautionary principle," which it held not to be a
justifiable basis upon which to establish regulatory controls.
(The precautionary principle allows regulatory action when there
is risk of harm, even if there remains scientific uncertainty
about the extent and nature of the potential impacts of a product
or practice.) By choosing the WTO SPS Agreement over the NAFTA
SPS provisions, the drafters of the FTAA are moving to totally
remove the right of individual governments of the Americas to
set standards in the crucial areas of health, food safety and
6. Intellectual Property Rights
The mandate of the Negotiating Group on Intellectual Property
Rights is "to reduce distortions in trade in the Hemisphere
and promote and ensure adequate and effective protection to intellectual
Intellectual property refers to types of intangible property
such as patents which generally grant their holders an exclusive
power. Trade rules on intellectual property extend this exclusive
right, often held by corporations, to the other signatory countries
to the agreement. As of January 1, 2000, all FTAA countries are
now subject to the rules of the WTO Agreement on Trade Related
Aspects of Intellectual Property Rights (TRIPS).
This agreement sets enforceable global rules on patents, copyrights
and trademark. It has gone far beyond its initial scope of protecting
original inventions or cultural products and now permits the practice
of patenting plants and animal forms as well as seeds. It promotes
the private rights of corporations over local communities and
their genetic heritage and traditional medicines. It allows transnational
pharmaceutical corporations to keep drug prices high; recently
TRIPS has been invoked to stop developing countries from providing
generic, cheaper drugs to AIDS patients in the Third World.
The FTAA Negotiating Group on Intellectual Property has speculated
that it might go beyond the WTO TRIPS Agreement in certain unspecified
areas. Certainly, through the additional powers of Chapter 11,
the investor-state clause, intellectual property rights in the
FTAA will have the additional enforcement powers of cash fines
and harsh penalties.
7. Subsidies, Anti-dumping and Countervailing Duties
The mandate of the Negotiating Group on Subsidies, Anti-dumping
and Countervailing Duties is to "examine ways to deepen existing
disciplines provided in the WTO Agreement on Subsidies and Countervailing
Measures and . . . to achieve a common understanding with a view
to improving, where possible, the rules and procedures regarding
the operation and application of trade remedy laws in order not
to create unjustified barriers to trade in the Hemisphere."
The WTO Agreement sets limits on what governments may and
may not subsidize. It has been strongly criticized by many developing
countries as favouring northern countries and large agribusiness
concerns. As well, Article XXI of the GATT exempts activities
in the military sphere, including massive government research
and export subsidies, in order to protect governments' "essential
security interests." Because the security exemption shields
the war industry from WTO challenge, it spurs government spending
on the military and any industry related to national security.
Since the majority of global military spending is concentrated
in the economies of a few northern countries, the WTO security
exemption gives these countries an enormous competitive edge over
other, smaller countries.
8. Competition Policy
The mandate of the Negotiating Group on Competition Policy
is to "guarantee that the benefits of the FTAA liberalization
process not be undermined by anti-competitive business practices."
The Negotiating Group has agreed to "advance toward the establishment
of juridical and institutional coverage at the national, sub-regional
or regional level, that proscribes the carrying out of anti-competitive
business practices" and "to develop mechanisms that
facilitate and promote the development of competition policy and
guarantee the enforcement of regulations on free competition among
and within the countries of the Hemisphere."
Basically, the goal of competition policy, relatively new
to trade negotiations, is to reduce or eliminate practices that
appear to protect domestic monopolies. Canada is proposing that
each country adopt measures and "take appropriate action"
to "proscribe anti-competitive business conduct."
Ostensibly, the aim is to promote competition, but the result,
particularly for developing countries, is that they are often
forced to break up their existing monopolies, only to find that
they have given foreign-based transnational corporations golden
opportunities to come in and pick off the smaller domestic companies
and establish a whole new monopoly protected by WTO agreements
such as the TRIPS and the Financial Services Agreement, both of
which protect global mega-mergers.
9. Dispute Settlement
The mandate of the Negotiating Group on Dispute Settlement
is "to establish a fair, transparent and effective mechanism
for dispute settlement among FTAA countries" and to "design
ways to facilitate and promote the use of arbitration and other
alternative dispute settlement mechanisms, to solve private trade
controversies in the framework of the FTAA."
It is yet to be seen whether the FTAA dispute settlement mechanism
will mirror the NAFTA model or the WTO model. However, the Negotiating
Group's mandate includes "taking into account inter alia
the WTO Understanding on Rules and Procedures Governing the Settlement
of Disputes." If this is the case, then the FTAA dispute
settlement system between governments is more likely to resemble
the more punitive system of the WTO than the NAFTA.
Under NAFTA, a country that loses a case before a dispute
resolution panel must either accept the ruling and offer "appropriate
compensation" to the other government or risk retaliation
of "equivalent benefits." NAFTA does not create a common
set of trade laws for the member countries. NAFTA dispute panels
rule on the basis of the domestic trade laws of the importing
The role of a WTO dispute panel, however, is to decide whether
a country's disputed practice or policy is a "barrier to
trade," and to overturn the offending practice or policy
if it is deemed to be. Under the WTO Dispute Settlement Body,
a country, often acting on behalf of its own corporate interests,
can challenge the actual laws, policies and programs of another
country and strike down its domestic laws. A losing country has
three choices: change its law to conform to the WTO ruling; pay
permanent cash compensation to the winning country; or face harsh,
permanent trade sanctions from the winning country.
Dozens of nation-state health, food safety and environmental
laws have been struck down through this WTO process. Needless
to say, the rulings affect poor countries differently than wealthy
ones. Sanctions against a country that depends on one or two export
crops for survival can be devastating. It is little surprise that
the majority of WTO challenges have come from wealthy countries.
In fact, the United States initiated almost half of the 117 WTO
challenges launched between 1995 and 2000.
Of course, the recourse to private "investors" (i.e.,
corporations) in NAFTA's Chapter 11 does not exist in the WTO.
It would appear that the FTAA negotiators will choose to retain
the powers of private dispute settlements contained in the investor-to-state
provisions of NAFTA, while opting for the more stringent conditions
of the WTO to settle state-to-state disputes. This would be in
keeping with the other proposals for the FTAA; whichever existing
(or even proposed) model has the strongest "disciplines"
is the model of choice for the FTAA.
The three non-negotiating committees have also been meeting.
The Committee on Small Economies has "recognized the
asymmetries" between the different countries of the Americas
and the need to come up with a plan "in order to create the
opportunities for the full participation of the smaller economies
and to increase their level of development." However, the
plan appears vague, consisting mostly of providing "a database
of technical assistance needs of smaller economies." Nowhere
in this committee's mandate is there an acknowledgement of the
enormous disparity between the wealthy and the poor of the hemisphere,
both between and within countries.
The Committee on Civil Society acknowledges that "civil
society has emerged as a new actor in the trade dialogue."
Although its mandate is "to receive inputs from civil society,
to analyze them and to present the range of views to the FTAA
Trade Ministers," the purpose of any dialogue is "to
maintain transparency in the negotiating process and to conduct
the negotiations in such a manner as to broaden public understanding
and support for the FTAA." It appears that the Committee's
real role is not to listen, but to keep up the appearance of real
dialogue. In fact, says Stephenson, the benefit of this Committee's
work "may diffuse pressures related to issues of labour and
The Joint Government-Private Sector Committee of Experts on
Electronic Commerce, on the other hand, is a very important committee
whose subject has all the hallmarks of an emerging sector. Electronic
commerce has exploded in recent years. United States E-commerce
sales were close to $30 billion (US) in 2000, up 75 percent in
one year, and may account for one quarter of world trade by 2005,
the year the FTAA is to be ratified. The U.S. has identified a
goal of adopting worldwide rules for a global non-regulatory,
market-oriented E-commerce regime. Many billions of dollars every
year could be lost if taxes are removed from this kind of trade,
leaving governments with even more reduced funding bases for government
The committee, heavily dominated by the most powerful corporate
producers of Internet hardware, software and communications equipment,
such as Microsoft and AT&T, has already carried out extensive
analyses of E-commerce issues and is exchanging views with other
organizations such as the WTO and the OECD. It has mandated several
key studies on all aspects of trade and E-commerce, and is clearly
a growing powerhouse within the FTAA family.
Finally, the FTAA Trade Negotiations Committee has identified
three areas for "early harvest agreements" - on forestry,
energy and fisheries - which it hopes will be agreed upon at the
April 2001 Ministerial Summit in Quebec City. This means that,
in these areas, agreement could be reached before the 2005 deadline
for full FTAA ratification to remove tariffs from these environmentally
sensitive resources, with no opportunity for public input.
What Is Canada's Position on the FTAA?
Canada has taken a leading role in the FTAA process (as it
has in the MAI, the WTO and the GATS). The Canadian government
has become an enthusiastic champion of NAFTA and its expansion,
and has been pursuing individual free trade and investment agreements
with Latin American countries like Chile, El Salvador, Guatemala,
Honduras and Nicaragua. Canada chaired the initial 18-month phase
of the FTAA negotiations set up in Santiago in April 1998, and
is on record in its support of extending a model of deregulated
trade and privatization to Latin America.
At a March 1999 meeting of the Standing Committee on International
Trade, George Haynal, Assistant Deputy Minister, Americas, Department
of Foreign Affairs and Trade (DFAIT), said: "The hemisphere
has gotten its act together. It has some way to go, but our engagement
is with an area that is ready to engage us on our terms."
Added Bob Anderson, Vice-President, Americas, Canadian International
Development Agency (CIDA): "Virtually all of the countries
have bought into the Washington Consensus in some form or other.
That Washington Consensus implies a whole series of sequenced
reforms. What we in CIDA have tried to do is identify those kinds
of reforms where Canada has some particular expertise, some comparative
DFAIT has been strongly criticized by civil society, labour,
human rights and other non-governmental organizations for its
past lack of consultations with any groups but business. For instance,
when citizens groups in Canada heard about the MAI in late 1996,
they were told by DFAIT that no such treaty existed. After they
got a hold of a copy of the text in March of 1997, the groups
acquired a list of government MAI consultations; it showed that
DFAIT had been meeting with the Canadian Chamber of Commerce and
the Canadian Council on International Issues - the international
arm of the BCNI - as early as 1993, four years before the government
later admitted it was even involved in such negotiations.
So on December 13, 2000, when DFAIT announced that it was
releasing the government's negotiating position on the FTAA, calling
it an unprecedented act of transparency, many groups were very
pleased. At last, a meaningful consultation could begin. However,
so much is missing from this document that, only months before
the Quebec City meeting, it is impossible to gauge Canada's position
on the most contentious of the issues.
Four areas - investment, services, dispute settlement and
intellectual property rights - are missing altogether, and many
questions remain in a number of other key sectors.
Areas of Concern
The Government of Canada says that it has made no submissions
to the Negotiating Group on Investment to date. This is hard to
believe. Canada was chairing the process during the period that
the Negotiating Group on Investment came up with its mandate and
spelled out a very ambitious position on investment (set out in
detail above) that includes national treatment, services and investor-state
As well, in its introduction to its published negotiating
position, DFAIT states its clear support for an investment agreement
in the FTAA: "In recognizing that investment is the main
engine for growth, Leaders further committed themselves to creating
strengthened mechanisms that promote and protect the flow of productive
investment in the Hemisphere." Then, in its own draft Preamble,
DFAIT calls for all governments to commit to "establishing
a fair and predictable framework for promoting and protecting
International Trade Minister Pierre Pettigrew has said that
he will not sign the FTAA if it contains the investor-state clause
(Chapter 11) of NAFTA. This appears to be in direct contradiction
to the commitments that have been made by his department's negotiators.
There is an urgent need for the government to clarify its exact
position on investment immediately.
Similarly, DFAIT says it has made no submissions to the Negotiating
Group on Services either. Again, Canada was chairing the hemispheric
Negotiating Group that came up with the sweeping definitions of
services, including national treatment, universal coverage and
extended market access.
It is clear from the introduction to Canada's position that
the Canadian government looks favourably on including services
in the FTAA: "Specifically, they (the Leaders) noted that
the elimination of impediments to market access for goods and
services among our countries will foster collective economic growth."
In the draft Preamble, Canada calls for "enhancing market
access for trade in goods and services" and acknowledges
"the importance of regulatory reform to advancing trade liberalization."
Certainly, if Canada takes a position at the FTAA similar
to its position at the GATS, it will be promoting negotiations
in which, as the government's own WTO position paper states, "nothing
is off the table, a priori, including the politically sensitive
areas of health and education."
To see what Canada is likely to support, we can look to the
existing GATS agreement as well as the proposed additions. The
GATS currently covers all service sectors and modes of supply
as well as most government measures, including laws, practices,
regulations and guidelines - written and unwritten. No government
measure that affects trade in services, whatever its aim, even
for environmental or consumer protection, for universal coverage
or to enforce labour standards, is beyond the scope of the GATS.
Essentially, the agreement prohibits discrimination against
a foreign supplier in all covered areas notwithstanding the conditions
under which services are provided and regardless of the human
rights or environmental record of the provider. Parties have also
agreed that some rules apply "horizontally" or across
the board, whether or not the area has already been listed with
the GATS. One "horizontal" rule is that all regulations
in any given sector, including social services, must be "Least
Trade Restrictive" and all member WTO countries must be prepared
to include market mechanisms wherever possible, even in social
At present, public services provided by government are technically
applicable for exemptions. Hence, some countries have claimed
exemptions for their publicly funded social security programs.
But under GATS article 1.3C, for a service to be considered to
be under government authority, it must be provided "entirely
free." That means that the sector in question must be completely
financed by government and have no commercial purpose. All government
services supplied on a commercial basis - even if it is not-for-profit
- are subject to GATS rules, as are government services publicly
supplied but in competition with commercial suppliers. Since hardly
any service sector in the world is entirely commercial-free, this
exemption is increasingly meaningless.
In the new round of negotiations, GATS officials will attempt
to expand access to domestic markets and governments will be under
great pressure to list more of their services and exempt fewer.
The powerful northern countries will be pressing for more binding
market access provisions, pressing developing countries for guaranteed,
irreversible access to their markets and eliminating many more
As well, GATS officials are seeking to place severe restraints
on domestic regulations, thereby limiting governments' ability
to enact environmental, health and other standards that hinder
free trade. Article VI:4 calls for the development of any "necessary
disciplines" to ensure that "measures relating to qualification
requirements and procedures, technical standards and licensing
requirements do not constitute unnecessary barriers to trade."
This provision would also apply horizontally. Governments would
be compelled to demonstrate that regulations, standards and laws
were "necessary" to achieve a WTO-sanctioned objective,
and that no less commercially restrictive alternative was available.
Further, the new talks are aimed at developing new GATS rules
and restrictions, intended to further restrict the use of government
subsidies, such as those used in public works, municipal services
and social programs. A particularly threatening development is
the demand for an expansion of the "Commercial Presence"
rules. Commercial Presence allows an "investor" of one
GATS country to establish a presence in any other GATS country
and compete not only for business against domestic suppliers but
for public funds against domestic publicly funded institutions
All of this is taking place under Canada's leadership; Canada's
WTO Ambassador, Sergio Marchi, is chairing the WTO GATS negotiations.
There is no reason to believe that the Government of Canada would
take a substantively different position on services in the FTAA.
* Intellectual Property Rights and Dispute Settlement
Again, the absence of Canada's position on these two crucial
areas from the document is very disturbing. As with services and
investment, Canada was in the chair during the negotiations that
led to the proposed mandate outlined above. The notion that the
Canadian government is not in full compliance with the Negotiating
Group on Intellectual Property Rights and the Negotiating Group
on Dispute Settlement is not credible.
* Technical Barriers to Trade
Canada is proposing a new and separate chapter on the subject
of Technical Barriers to Trade (TBTs) based on the TBT provisions
of the WTO. (These are the rules that state a nation must be prepared
to prove, if challenged, that its environmental and safety standards
are both "necessary" and the "least trade restrictive"
way to achieve the desired conservation goals, food safety or
health standard.) These rules are of great concern to Canadian
environmentalists and groups concerned with food and animal safety,
as they have been used to strike down health and safety regulations
around the world.
DFAIT says there is a need for a "broader framework"
of discussion and commitment than exists in the proposed FTAA
and recommends establishing a new Committee on TBTs which would
meet regularly and provide technical assistance to the developing
countries of the Americas in order to assist them to deregulate
"unjustified use of government regulatory powers that have
an undue (more restrictive than necessary) or discriminatory impact
Canada's Preambular language expressing its hope of finding
ways to "better protect the environment" is negated
by the strong anti-environmental language of its position on TBTs.
The Government of Canada is a hawk on the issue of agriculture.
It is calling for the total elimination of export subsidies for
agricultural products "as quickly as possible" and to
prevent their re-introduction "in any form." It is also
calling for the "maximum possible reduction or elimination
of production and trade-distorting domestic support," even
though the elimination of farm subsidies has had a devastating
impact on Canadians farmers, and it wants to "accelerate
the elimination of tariffs for originating agricultural products."
It is bullish on non-tariff measures and regulations, calling
for a zero-tolerance policy on restrictions on imports.
DFAIT also strongly endorses the WTO Agreement on the Application
of Sanitary and Phytosanitary Measures (SPS) in the FTAA. (The
WTO Agreement on SPS sets constraints on government policies relating
to food safety and animal and plant health, from pesticides and
biological contaminants to food inspection, product labelling
and genetically engineered foods.) Like TBTs, these rules are
seen by many as a way to reduce or eliminate government regulations
that protect human and animal health in favour of private interests.
As with TBTs, the Government of Canada wants to "facilitate"
day-to-day SPS activities within the hemisphere and proposes the
establishment of a "Consultative Group on SPS" to provide
a "regular forum for consultations, problem-solving and institutional
cooperation." The committee would look at harmonization,
risk assessment and transparency, among other things. Canada's
strong leadership on this form of deregulation, particularly in
light of the deteriorating environment of the countries of the
hemisphere, as well as the lowered standards resulting from giant
corporate farms, is great cause for concern.
* Government Procurement
The Government of Canada is also a hawk on the issue of government
procurement in the FTAA, calling for full transparency and the
publication of all laws, regulations, judicial decisions and administrative
rulings to do with government procurement. "Canada agrees
that making public the rules and administrative measures related
to doing business with a government is an important aspect of
the Free Trade Agreement of the Americas."
But DFAIT goes further, calling for a prohibition of "any
type" of offset. Offsets, DFAIT explains, are "measures
imposed or considered by an entity prior to or in the course of
its procurement process that encourage local development or improve
its balance of payments accounts by means of domestic content,
licensing of technology, investment, country-trade or similar
requirements." In other words, DFAIT supports the elimination
of all the ways in which governments ensure that foreign investment
return some local good to a community in return for the profit
transnational corporations gain from such access.
If Canada followed this formula proposed by DFAIT, all sorts
of affirmative action, community investment and local hiring programs
would have to be eliminated when dealing with foreign-based transnational
Canada is calling for very strong language around competition
policy in the FTAA "to ensure that the benefits of the FTAA
liberalization process are not undermined by anti-competitive
business practices." However, DFAIT is strangely mute on
the question of "official monopolies and state enterprises."
Its hawkish position on government procurement coupled with its
strong position on competition, as well as its apparent pro-services
bias, may put Canadian public institutions, such as the CBC, in
What Impact Will the FTAA Have on Canadians?
The expanded powers proposed for the FTAA in combination with
Chapter 11 of NAFTA and the introduction of "universal coverage
of all service sectors" pose a grave threat to Canada's social
programs. Universal health care, public education, child care,
pensions, social assistance and many other social services are
now delivered by governments on a not-for-profit basis.
Until the recent GATS negotiations, and now the FTAA negotiations,
Canada has always maintained that these social programs were a
fundamental right of citizenship for all Canadians, and have exempted
them from trade agreements. However, with these two agreements,
the Canadian government is opening up itself, and every other
level of government, to trade-sanctioned threats by transnational
service corporations keen to break down the existing government
monopolies in the hemisphere.
Services is the fastest growing sector in international trade,
and of all services, health, education and water are shaping up
to be the most potentially lucrative of all. Global expenditures
on water services now exceed $1 trillion every year; on education,
they exceed $2 trillion; and on health care, expenditures exceed
$3.5 trillion. In Canada, the service sector accounts for 75 percent
of all jobs.
These and other services have been targeted by predatory and
powerful entrepreneurial transnational corporations that are aiming
at nothing less than the complete dismantling of public services
by subjecting them to the rules of international competition and
the discipline of the WTO and the FTAA. (Already over 40 countries,
including all of Europe, have listed education with the GATS,
opening up their public education sectors to foreign-based corporate
competition, and almost 100 countries have done the same in health
In the United States, health care has become a huge business,
and giant health care corporations are registered on the New York
Stock Exchange. Rick Scott, the president of Columbia, the world's
largest for-profit hospital corporation, says that health care
is a business, no different from the airline or ball-bearing industry,
and he has vowed to destroy every public hospital in North America,
as they are not "good corporate citizens." Investment
houses like Merrill Lynch and The Lehman Brothers predict that
public education will be privatized in the hemisphere over the
next decade the way public health has been, and say there is an
untold amount of profit to be made when this happens.
If services are included in the FTAA, as they so clearly appear
to be, foreign for-profit health, education and other social service
corporations from anywhere in the hemisphere will have the right
to establish a "commercial presence" anywhere in Canada.
They will have the right to compete for public dollars with public
institutions like hospitals, schools and day care centres. Standards
for health, education, child care and social work professionals
will be subject to FTAA rules and review to ensure they are not
an impediment to trade. Degree-granting authority will be given
to all hemispheric-based education corporations. Foreign-based
telemedicine services will become legal in Canada. And Canada
won't be able to stop the transborder competition of low-cost
health and education professionals.
If any government at any level in Canada attempts to resist
these developments and tries to maintain these services in domestic
control, every service corporation of the hemisphere will have
the legal right to sue for financial compensation for lost revenues
under the investor-state provisions of the FTAA. This is not speculation;
in areas covered by the current NAFTA, there have now been many
precedents of governments reversing decisions and paying onerous
compensation packages to private interests affected by public
As well, there is already a disturbing precedent in health
care under the existing investment provisions of NAFTA. A March
2000 legal opinion by Canadian trade expert Steven Shrybman shows
that when Alberta passed Bill 11, which permits for-profit corporations
to compete with public hospitals for public funding to provide
health care "services," it gave trade-sanctioned rights
to U.S. for-profit foreign corporations to set up shop not only
in Alberta, but in any province in Canada and to sue for compensation
if denied this access.
"While in theory a government could retreat from contracting
out health services to private companies, that government would
face the full force of foreign investor compensation claims for
not just present, but future losses. The costs of compensation
resulting from re-establishing a public system would be prohibitive."
The reality is simple: once privatization is established in
any public sector, it would be almost impossible to reverse. With
time, Canadian governments would no longer be able to afford to
publicly fund health care, social security programs and education
as they would have to be prepared to give equal access to such
funding to private contractors from the other FTAA countries.
Canadians have already seen a steady erosion of their social
security under the new rules of economic globalization and trade
agreements like NAFTA and the WTO, as Canada's economy has merged
into the American orbit and American rules. Socially, Canada now
looks more like the U.S. than in any time in its history, with
its huge gaps between haves and have-nots. In Canada, as in the
U.S., while great prosperity abounds in some quarters, great poverty
is growing in others.
In fact, Canada has experienced the highest rise in child
poverty in the industrialized world in the last decade - the same
years in which the number of millionaires has tripled and corporate
salaries have grown at an average of about 15 percent a year.
In the very free trade years that corporate salaries skyrocketed,
workers' wages rose just 2 percent, less than the rate of inflation.
The cuts to social programs and Employment Insurance (only
one third of unemployed workers now receive EI benefits they have
paid for, compared to almost 80 percent in 1989) have been so
deep that Standard and Poor says that the myth of a "kinder
Canada" must be put to rest. For the first time in 1999,
says the New York-based ratings institute, Canada spent less on
its elderly and unemployed than did the United States.
With the proposed FTAA, the assault on social security will
The FTAA draft, as it now stands, contains no safeguards for
the environment. The original mandate for the FTAA, drawn up at
the first Summit of the Americas in Miami in 1994, contained a
promise to promote economic integration of the hemisphere in such
a way as "to guarantee sustainable development while protecting
the environment." A major Summit on Sustainable Development
was held in Bolivia in 1996 in order to ensure that the principles
of the 1992 Rio Earth Summit would be integral to the FTAA process.
Out of that meeting (at which civil society groups and environmentalists
were notably absent), came 65 initiatives know as the "Santa
Cruz Action Plan," and a new body, the OAS Inter-American
Committee on Sustainable Development.
However, the whole process was badly underfunded and had no
clear mandate for action; it has been widely regarded as a failure.
As a consequence, the whole goal of sustainable development was
completely dropped from the FTAA's new mandate at the Santiago
Summit in 1998, and the tracks of trade and environment were completely
separated. With George W. Bush now in the White House, it is even
more certain that environmental concerns about the hemispheric
free trade deal will be set aside.
The Canadian government's recently published "position
paper" on the FTAA contains a reference to the environment
in its proposed Preamble. It calls for the FTAA to commit to "Better
protecting the environment and promoting sustainable development
by adopting trade and environmental policies that are mutually
supportive." However, Preambular language in trade agreements
is non-binding and unenforceable, so any promise in this section
of the agreement is fairly meaningless. In any case, it is not
possible to find compatibility between a trade agreement that
contains investor-state rights for corporations and environmental
As briefly documented above (see Investment in "What's
in the FTAA?"), and well documented in a number of other
sources, the investor-state provisions of NAFTA have already had
a very serious impact on government environmental policy. Not
only have a number of health and environmental regulations in
Canada, the United States and Mexico already been successfully
challenged by the corporations of the continent, Chapter 11 is
used to create a "chill effect," whereby governments
are warned not to contemplate certain new regulatory measures
for fear of running afoul of the investment provisions of NAFTA.
As legal trade expert Steven Shrybman explains: "The
investor-state suit provisions of NAFTA represent nothing short
of a radical departure from both the domestic and international
legal norms in at least three fundamental ways. First, by providing
corporations with the right to directly enforce an international
treaty to which they are neither parties, nor under which they
have any obligations. Second, by extending international commercial
arbitration to claims that have nothing to do with commercial
contracts and everything to do with public policy and law. Third,
by creating substantive legal rights - concerning expropriation
and national treatment that go far beyond those available to Canadian
citizens or businesses."
Any new regulations that are brought to Parliament or any
provincial legislature can be challenged by American corporations
with interests in the sector in question. In essence, governments
have to be prepared to pay dearly for the right to protect the
ecological, human and animal health concerns within their mandate.
As trade lawyer Barry Appleton explains, "They could be putting
liquid plutonium in children's food; if you ban it and the company
making it is an American company, you have to pay compensation."
To avoid this scenario, Canadian federal and provincial governments
now have to allow all prospective environmental and natural resource
protection regulations to be vetted by DFAIT. In an October 2000
exchange at a Parliamentary Environment Committee meeting, Liberal
MP Clifford Lincoln asked senior DFAIT officials Nigel Bankes
and Ken Macartney whether it was true that International Trade
Minister Pierre Pettigrew is fighting against the inclusion of
the precautionary principle in domestic environmental legislation,
such as the proposed new law to protect endangered species, so
as to ensure that Canada is in compliance with the WTO. The trade
bureaucrats confirmed that this was indeed so.
Environment ministers now have less power over their jurisdiction
than their trade counterparts. When the environment ministers
of the three NAFTA countries announced in December 1998 that they
were going to allow the Commission for Environmental Co-operation
(CEC) - the NAFTA side deal that has become a toothless "environmental
watchdog" - to scrutinize these Chapter 11 cases, they stepped
way over the line drawn for them by DFAIT and its sister agencies
in Washington and Mexico City. Months later, the environment ministers
totally retracted the new powers, reigning in the agency so far,
in fact, that they stopped just short of dismantling it altogether.
Given this track record, and the dropping of the goal of sustainable
development from the principles of the FTAA process, there is
little reason to believe that environmental concerns will fare
much better in the hemispheric trade pact.
While there is no separate FTAA Negotiating Group on energy
or any mention of the subject in the Canadian government's "position
paper," there is a consensus to come up with an "early
harvest" agreement on energy at the Quebec City Summit in
April. In fact, it is highly likely that the FTAA will mirror
the controversial energy provisions that were integral to both
the Canada-U.S. Free Trade Agreement and NAFTA.
In these agreements, negotiators created an anti-environment,
anti-conservation, deregulated continental energy policy based
on short-term, high-cost, high-profit exports and controlled by
transnational energy corporations with little interest in rising
prices or the environmental consequences of their actions. If
this deregulated energy regime gets extended to the hemisphere,
it will have devastating consequences in the fight to reduce the
overuse of climate-warming fossil fuels in the countries of the
In Canada, to comply with these NAFTA provisions, the National
Energy Board was stripped of its powers and the "vital-supply
safeguard" that had required Canada to maintain a 25-year
surplus of natural gas was dismantled. No government agency or
law now exists to ensure that Canadians have adequate supplies
of our own energy in the future. (The United States, however,
declared that its 25-year reserve was necessary for national security
purposes, and maintained it.)
Export applicants, Canadian or American, were no longer required
to file an export impact assessment and the all-Canadian gas distribution
system was abandoned, setting off a frantic round of North-South
pipeline construction. Export taxes on our energy supplies were
banned, resulting in the loss of a source of tax revenue for governments
and giving American customers, who don't have to pay the GST,
a price advantage over Canadian consumers.
Most important, the trade agreements imposed a system of "proportional
sharing" whereby Canadian energy supplies to the U.S. are
guaranteed in perpetuity. In an astonishing surrender of sovereignty,
the Government of Canada agreed that it no longer has the right
to "refuse to issue a licence or revoke or change a licence
for the exportation to the United States of energy goods,"
even for environmental or conservation practices.
This led to a spectacular increase in the sale of natural
gas to U.S. markets; since 1986, exports have more than quadrupled
to over 8.5 billion cubic feet a day. About 55 percent of total
Canadian gas production is exported to the U.S. where American
distribution companies, supplying a much larger population, have
been able to sign long-term contracts at rock-bottom prices. Canadian
consumers are left to compete for their own energy resources against
an economy 10 times bigger with rapidly dwindling reserves and
accelerating demand. The story in oil is the same. Canada now
produces 2.3 million barrels a day and ships 1.3 of those barrels
to the U.S.
The free trade agreements committed Canada to an energy policy
driven by massive, guaranteed exports to the U.S., corporate control
of supplies and an economic policy more dependent than ever on
the exploitation of primary resources. Because they exempted Canadian
government subsidies for oil and gas exploration from trade challenge,
they ensured that Canadian public funds would continue to pay
for uncontrolled and environmentally destructive fossil fuel exploration,
a process that has already destroyed habitats in the North and
that threatens the sensitive spawning grounds off Cape Breton
and Newfoundland, all to the benefit of transnational corporations.
In the FTAA, these provisions will very likely extend to all
the countries of the Americas, who should be made aware of the
resulting loss of sovereignty over their energy supplies and their
environmental responsibility to husband those resources well.
Similarly, it is unlikely that the United States would not
extend the provisions of NAFTA concerning water to the other countries
of the hemisphere under the FTAA. these provisions establish a
continental water market in the case of the commencement of commercial
water exports; for the countries of Latin America concerned about
water privatization schemes, this is an issue urgently needing
Chapter 3 of NAFTA establishes obligations, including national
treatment rights, regarding market access for the trade in goods.
It uses the General Agreement on Tariffs and Trade (GATT) definition
of a "good," which clearly lists "waters, including
natural or artificial waters and aerated waters" as a good,
and adds in an explanatory note that "ordinary natural water
of all kinds, other than sea water," is included.
When the NAFTA deal, and its predecessor, the Canada-U.S.
Free Trade Agreement, were being negotiated, opponents urged that
water be clearly exempted from them altogether. The governments
said no, arguing that no water was being traded commercially at
that time in any of the NAFTA countries; therefore, water in its
"natural" state was safe. Critics argued that any such
protection was temporary at best and that the moment any jurisdiction
started selling its water for commercial purposes, key provisions
of NAFTA would become applicable, putting public control of water
There are three key provisions of NAFTA that place water at
risk once it is traded. The first is national treatment, whereby
no country can discriminate in favour of its own private sector
in the commercial use of its water resources. Once a permit is
granted to a domestic company to export water, the "investors"
- i.e., corporations - of the other NAFTA countries have the same
"right of establishment" to the commercial use of this
water as the domestic companies. This applies to provinces as
well; if British Columbia allows the commercial export of bulk
water, all provinces will have to allow national treatment rights
to the same foreign companies as well.
The second provision is Chapter 11, the investor-state clause.
It applies to water in two ways. First, if any NAFTA country,
state or province tries to allow only domestic companies to export
water, corporations in the other NAFTA countries would have the
right to sue for financial compensation. Second, if any NAFTA
government introduced legislation to ban bulk water exports, by
that act water would automatically become a commercial "good";
foreign investors' Chapter 11 rights would be triggered by the
very law that excludes them, and they could demand financial compensation
for lost opportunities.
The third key provision is Article 315, "proportional
sharing," the same provision that has created a continental
market for Canada's energy supplies. Under Articles 315 and 309,
no country can reduce or restrict the export of a resource once
the trade has been established. Nor can the government place an
export tax or charge more to the consumers of another NAFTA country
than they charge domestically. Canadian exports of water would
be guaranteed to the level they had acquired over the preceding
36 months; the more water sent south, the more water required
to be sent south. Even if new evidence were found that massive
movements of water were harmful to the environment, these requirements
would remain in place.
The proposed FTAA adds another threat to water sovereignty
and conservation. "Environmental Services" are included
in the list of services now being negotiated by the GATS. It is
very likely that environmental services, which include water services,
will similarly be included in the FTAA. This means that public
water services could be challenged under the national treatment
provisions of the proposed agreement, forcing public services
such as water delivery and wastewater treatment to be privatized
and contracted out to transnational water corporations like Suez
Lyonnaise des Eaux and Vivendi. If any government attempts to
maintain its water services in public hands, these corporations
would have enormous compensation rights under Chapter 11.
This loss of public control of water is a very serious one
for Canada, and of even greater urgency for the countries of Latin
America, where water privatization, strongly promoted by the World
Bank, is spreading very quickly.
Combined with the TBT and SPS agreements of the WTO and the
plans for "early harvest" agreements in forests and
fisheries, the proposed FTAA appears to be a disaster for ecological
stewardship for the Americas.
No mention is made of culture or cultural exemptions in the
mandates of any of the Negotiating Groups. Canada does mention
culture in the Preamble to its position paper: "Recognizing
that countries must maintain the ability to preserve, develop
and implement their cultural policies for the purpose of strengthening
cultural diversity, given the essential role that cultural goods
and services play in the identity and diversity of society and
the lives of individuals." Again, however, this Preambular
language is largely decorative. It is very likely that culture
will either be fully included in the hemispheric pact or there
will be a cultural "exemption" similar to the one that
exists in NAFTA. And that is almost as bad as having culture fully
The terms on culture were clearly set out in NAFTA Annex 2106.
While one article (2005:1) exempts the cultural industry from
the agreement with the exception of tariff elimination, divesture
of an indirect acquisition, and transmission rights, another (2005:2)
puts culture right back in by giving the U.S. the right to retaliate
against Canada with measures "of equivalent commercial effect"
and to do so using sectors unrelated to culture. Yet another (2011:2)
permits the U.S. to circumvent the dispute settlement procedure
when it retaliates. Other sections of the agreement, particularly
dealing with investment, competition policy and monopolies also
infringe on the right of Canadians to protect cultural policy.
This means that the U.S. has the legal right to unilaterally
decide if a Canadian cultural measure is "inconsistent"
with NAFTA, to retaliate against Canada and to select the nature
and severity of the retaliation. Canada has no legal rights whatsoever.
It cannot even request a panel to judge whether U.S. accusations
are justified and, if so, to ensure U.S. retaliation is commensurate
with the offence.
It appears from the mandate of the FTAA Negotiating Committees
that an additional risk to Canada's cultural programs will find
its way into the FTAA in the services chapter. If cultural services
are included in the definition of services, as they appear to
be ("universal coverage of all service sectors"), and
the principles of national treatment and most favoured nation
apply to these cultural services, as they also appear to do, then
government subsidies to the arts and culture could not be allocated
exclusively to Canadian artists, publications, production companies
and the like.
There are really only three forms of cultural protections
left in Canada in the wake of WTO rulings: government subsidies,
such as those given to the CBC or to book publishers of Canadian
titles; Canadian content quotas, such as content regulations in
radio and television; and investment policies, such as investment
controls limiting non-Canadian investment in broadcasting, telecommunications
and cable companies.
Under a regime that allowed the direct challenge of government
programs, all three could be deemed trade illegal. Just as in
social programs, any government support of a Canadian "service"
- in this case, cultural services - would have to be applied in
a non-discriminatory manner; American and other corporations of
the hemisphere in the entertainment industry could demand equal
rights to compete and receive government funding. As with social
programs, any government that continued to favour the Canadian
cultural sector could be sued for compensation under Chapter 11
by transnational industry corporations, from big-box retailers
to movie networks.
If the proposed FTAA is adopted unchanged, Canadian cultural
diversity and Canada's cultural industries will become a relic
of a past time.
Agriculture and Food Security Canada's farmers have already
felt the full blast of global competition, as the Canadian government
has slashed farm subsidies and farm income support far more and
far faster than have its major trading partners. As a result,
1999 and 2000 were the worst years for Canadian farmers since
1926, the year that the Canadian government began to keep such
By choosing the WTO agreements on agriculture (AOA) and standards
(SPS and TBT), the FTAA negotiators plan to give new powers through
this pact to curtail the traditional rights of Canada's farmers
and to downgrade Canada's food safety laws. Under WTO disciplines,
farmers can no longer collectively negotiate prices for products
with both domestic and foreign buyers. And the elimination of
domestic agriculture price supports to protect farmers has left
them at the mercy of international prices.
Because the WTO prohibits import and export controls, only
the big - big farms, big countries, big corporations - can survive.
As a result, the WTO's Agreement on Agriculture has almost exclusively
benefited large agribusiness corporations around the world no
matter what their country of origin.
Furthermore, the WTO AOA assault on non-tariff measures, such
as environmental standards and supply management programs, has
been used to downgrade safeguards to public health and protection
for farmers. For example, through the WTO, the U.S. has successfully
challenged Japan's health-related pesticide residue testing requirements
for agricultural imports. Countries can no longer maintain emergency
food stocks in anticipation of drought or crop failure; they must
now buy what they need on the open market. "Food self sufficiency"
now means having enough money to buy food, not the domestic ability
to produce it.
The WTO SPS agreement has had a terrible impact on the right
of the world's citizens to safe food. Canada and the United States
successfully used the SPS agreement to strike down a European
ban on North American beef containing harmful, possibly cancer-causing
hormones. The EU, deeply sensitive to lingering concerns about
mad-cow disease, implemented a ban on the non-therapeutic use
of hormones in its food industry, citing many studies linking
them to illness. The WTO panel demanded "scientific certainty"
that these hormones cause cancer or other adverse health affects,
thus eviscerating the precautionary principle as a basis for food
The FTAA appears poised to promote a model of agriculture
to the hemisphere where food is not grown by farmers for domestic
consumers, but by corporations for global markets. The results
will be far-reaching indeed.
What Impact Will the FTAA Have on the Countries of Latin
America? The countries of Central and South America and the Caribbean
are being given all sorts of promises about the FTAA: more liberalized
trade and investment will create the biggest trade powerhouse
in history, thereby spreading prosperity to the many millions
of the region currently without work or hope, they are told.
Latin Americans should examine these promises very carefully
before jumping into this pact.
The reality is that Latin America has been living under this
FTAA model for over a decade. It is based on the Structural Adjustment
programs of the World Bank and the IMF that Latin Americans know
well. It was the deregulation and privatization imperatives of
structural adjustment that forced most to dismantle their public
infrastructures in the first place. In order to be eligible for
debt relief, many dozens of the countries of the Americas were
forced to abandon public social programs, allowing for-profit
foreign corporations to come in and sell their health and education
"products" to "consumers" who can afford them.
Now these countries are allowed to maintain the most basic
of public services only for the poor; but these services are so
inadequate that the corporations aren't interested in them, and
many millions of people in the hemisphere go without the most
basic of education and health services. Not surprisingly, Latin
American countries are experiencing an invasion of U.S. health
care corporations, like Aetna International and American International,
who report a 20 percent growth in the region per year.
Under the FTAA, this process will accelerate, wiping out traditional
medicine, education and cultural diversity. In fact, worldwide
economic and cultural harmonization is the goal, says one top
U.S. WTO official, who adds, "Basically, it won't stop until
foreigners finally start to think like Americans, act like Americans
and - most of all - shop like Americans." The last decade
of trade and investment liberalization has already caused great
suffering in Latin America. Interest rates on debt payments have
soared from 3 percent in 1980 to over 20 percent today. Latin
America, as a region, has the highest rate of inequitable income
distribution in the world. After swallowing its free market medicine,
it now has a poverty rate higher than it was in 1980 and the buying
power of Latin American workers is 27 percent lower. Eighty-five
percent of all job growth has been in the precarious sector with
no benefits or protections.
Mexico, eight years into NAFTA, now has record-high poverty
rates of 70 percent; the average minimum wage lost more than three
quarters of its purchasing power in those years. Ninety million
Latin Americans are now indigent and 105 million have no access
to health care whatsoever. Child labour has grown dramatically;
there are now at least 19 million children working in terrible
conditions. Massive environmental degradation has resulted from
the region's desperate rush to exploit its natural resources and
the use of pesticides and fertilizers has tripled since 1996;
there are now 80,000 chemical substances produced and used in
The exploitation of Latin America's natural resources by Canadian
and U.S. corporations now taking place would dramatically increase
under a hemispheric pact. Transnational mining, energy, water,
engineering, forestry and fisheries corporations would have new
access to the precious resource base of every country and the
investor-state right to challenge any government that tried to
limit their access to them. The ability of governments to protect
the ecology or set environmental standards regarding the extraction
of natural resources would be greatly reduced, as would the right
to ensure local jobs from any activity of foreign corporations.
Joining the FTAA under these circumstances would be "tantamount
to suicide," says the coalition of trade unions of the Southern
Cone countries. In December 2000, the major unions of Argentina,
Brazil, Paraguay and Uruguay held the MERCOSUR Trade Union Summit
where they called upon their governments to submit the FTAA to
national plebiscites, which they believe would result in its defeat.
The FTAA process is deepening the already growing poverty of the
region, the union leaders said, putting "limits on national
institutions that should decide the future of each country, while
pushing aside the mechanisms that allow society to ensure a democratic
administration of the state."
If the terms and recommendations of the FTAA Negotiating Groups
are the substantive basis for a hemisphere trade pact, the whole
process is totally unacceptable and the citizens of the Americas
must work to defeat it entirely. In spite of government protestations
that they have negotiated these new trade and investment rules
in full collaboration with their citizens, the proposed FTAA reflects
none of the concerns voiced by civil society and contains all
of the provisions considered most egregious by environmentalists,
human rights and social justice groups, farmers, indigenous peoples,
artists, workers and many others. Every single social program,
environmental regulation and natural resource is at risk under
the proposed FTAA. As it appears to stand now, there is no possible
collaboration to make this trade pact acceptable.
That is not to say that the citizens of the Americas are opposed
to rules governing the trade and economic links between our countries.
In the wake of the failed MAI, Canadian civil society groups held
a national inquiry called Confronting Globalization and Reclaiming
Democracy, in which hundreds of groups participated. The results
show clearly that, based on a different set of fundamental assumptions,
such as the United Nations Universal Declaration on Human Rights
and strong environmental rules, Canadian citizens would be prepared
to enter into a process to develop closer ties with other countries
in the Americas and around the world. However, it cannot start
with the assumptions and goals of this FTAA.
This process must begin by revisiting current international
trade agreements like the WTO and NAFTA; it is time for a new
international trading system based on the foundations of democracy,
sustainability, diversity and development, and much good work
is being done on these alternatives. As a beginning, Chapter 11
must be removed from NAFTA; water must be exempted; the energy
provisions rewritten with an emphasis on conservation; and culture
must be truly exempted.
Most important, the world of international trade can no longer
be the exclusive domain of sheltered elites, trade bureaucrats
and corporate power brokers. When they understand what is at stake
in this hemispheric negotiation, the peoples of the Americas will
mobilize to defeat it. That is the fate it deserves.
Maude Barlow is the Volunteer Chairperson of The Council of
Canadians, Canada's largest public advocacy group, and a Director
with the International Forum on Globalization. She is the best-selling
author or co-author of 12 books. Her new book, Global Showdown:
How the New Activists are Fighting Global Corporate Rule, co-authored
with Tony Clarke, will be published by Stoddart in February 2001.
Free Trade of the Americas, Canadian Government Release: Canada's
Proposals for the FTAA Agreement, Department of Foreign Affairs
and International Trade, December 13, 2000, Ottawa.
The State of the FTAA Negotiations at the Turn of the Millennium,
Paper prepared for the conference, "Trade and the Western
Hemisphere," organized by Southern Methodist University,
Dallas, Texas, March 25, 2000, by Sherri M. Stephenson, Deputy
Director for Trade, Organization of American States.
Report to the Trade Negotiations Committee, Restricted Document
by the FTAA Negotiating Group on Services outlining its mandate,
leaked in October 2000.
Services and Trade in the Western Hemisphere: Liberalization,
Integration and Reform, Collection edited by Sherri. M. Stephenson,
Brookings Institute, Washington, 2000.
Social Exclusion, Jobs, and Poverty in the Americas, Paper
prepared for the Americas Civil Society Forum, November 1999,
Toronto, by the Hemispheric Social Alliance and Common Frontiers-Canada.
Forgotten Promises and Forgotten Lessons: The OAS, the FTAA
and Environmental Protection, Paper prepared for the International
Centre for Democratic Development Workshop, Windsor, June 5, 2000,
by Christine Elwell of the Sierra Club of Canada.
Navigating NAFTA, A Concise User's Guide to the North American
Free Trade Agreement, Barry Appleton, Carswell, Toronto, 1994.
MAI, The Multilateral Agreement on Investment and the Threat
to Canadian Sovereignty, Tony Clarke and Maude Barlow, Stoddart,
Whose Trade Organization? Corporate Globalization and the
Erosion of Democracy, Lori Wallach and Michelle Sforza, Public
Citizen, Washington DC, 1999.
GATS: How the World Trade Organization's New "Services"
Negotiations Threaten Democracy, Scott Sinclair, The Canadian
Centre for Policy Alternatives, Ottawa, Ontario, 2000.
The World Trade Organization, A Citizens' Guide, Steven Shrybman,
The Canadian Centre for Policy Alternatives, Ottawa, Ontario,
and James Lorimer and Co. Ltd, Halifax, Nova Scotia, 1999.
Invisible Government, the World Trade Organization: Global
Government for the New Millennium? Debi Barker and Jerry Mander,
International forum on Globalization, San Francisco, 2000.
Also, with research on services from Ellen Gould, Vancouver;
on E-commerce from Sarah Anderson of the Institute for Policy
Studies, Washington; and on Latin America from Karen Hansen-Kuhn,
of the Development Gap, Washington.