News: Trade Secrets

Business and government meet behind closed doors

Jymi Bolden

(L-R) Carlos Sequiera, Melvin Redondo, Anabel Gonzales, Regina K. Vargo, Eduardo Ayala and Salomon Cohen hold a press conference after negotiating.

Negotiations that could affect hundreds of millions of people took place in Cincinnati last week. More than 350 trade delegates and business leaders from the United States, Guatemala, Nicaragua, Costa Rica, Honduras and El Salvador held a week of closed sessions Feb. 24-28 at the Millennium Hotel downtown.

The negotiations are for a proposed treaty called the Central American Free Trade Agreement (CAFTA). The negotiating session had been scheduled for El Salvador but moved here instead, according to Cherrene Horazuk, executive director of the Committee in Solidarity with the People of El Salvador.

Cincinnati was a natural place for the talks because of its business community's strong international ties, according to Regina K. Vargo, assistant U.S. trade ambassador for the Americas.

But CAFTA critics believe there was another reason: Hundreds of thousands of people have protested CAFTA in El Salvador, and the country holds elections in mid-March.

The trade representatives likely wanted a quieter place to work, suggests Tom Ricker, co-director of the Quixote Center, a Maryland nonprofit organization working for social justice, particularly in Nicaragua.

"To go to El Salvador was going to guarantee an enormous demonstration," Ricker says.

Global trade is incredibly complex. The substance of it all is in factories and fields, in hospitals and universities, in mines and shiny office buildings and in prices and wages.

The alphabetical world order
If you want to know how global trade works, learn some acronyms: WTO, IMF, NAFTA, FTAA and now CAFTA.

These are the organizations and trade agreements that serve as the referees and rules for international trade.

· The World Trade Organization (WTO) creates the fundamental rules of international trade and settles disputes.

· The International Monetary Fund (IMF) is a kind of global bank created in 1945. It now has 184 member countries. The IMF often loans development funds to needy countries, with the goal of boosting international trade.

· The North American Free Trade Agreement (NAFTA) is a treaty among Mexico, Canada and the United States.

· The proposed Free Trade Agreement of the Americas (FTAA) is a priority of the Bush administration and corporate leaders. It would essentially extend NAFTA to every country in North and South America except Cuba. Congress has imposed a negotiating deadline of Jan. 1, 2005.

· CAFTA, a first step toward the FTAA, could be finished by late 2003. It would give members leverage against Brazil and Venezuela, whose presidents are critical of existing free trade agreements.

Except for the IMF, the acronyms represent organizations and agreements that sprung up after the collapse of the Soviet Union in 1989. Together they've fostered a new era of global mobility for corporations, eliminating the longstanding maze of national tariffs and subsidies, creating a more predictable playing field for business and boosting privatization of public services.

Supporters of NAFTA, for example, say it created billions in increased trade and private investment and thousands of new jobs, thereby raising everyone's living standards.

One in 10 Ohio jobs are related to international trade, and Ohio exports $30 billion in products, making it the seventh largest exporting state, according to Vargo.

"Ohio is one of the strongest manufacturing states in the U.S.," she said.

However, the trade organizations face growing criticism by labor, environmental and human rights groups around the world — criticism that first publicly manifested in the 1999 Seattle protests.

Critics say "free trade" is mostly about freedom for businesses — not for workers. They cite steadily increasing poverty in Mexico and the loss of 700,000 U.S. jobs since 1994, the year NAFTA took effect. They say these deals mostly benefit a corporate elite, not average workers, many of whom are unable to form effective unions and thereby obtain bargaining power.

Most importantly, critics say, these agreements place the rights of business above laws. One example is NAFTA's Chapter 11, which allows businesses to sue governments whose laws hurt corporations' potential profitability. In 1997 Metalclad, a U.S. company, successfully sued a Mexican municipality for $15.6 million because it had denied a construction permit for a toxic dump, according to Public Citizen.

So far 20 lawsuits have been filed, seeking a total of $3.48 billion in damages, according to Public Citizen.

On the other hand, the IMF cites hundreds of millions of dollars in loans for sustainable development.

The Insiders
After a week of closed sessions, the CAFTA talks last week ended with an hour-long, high-tech press conference. It was the first and only time the trade representatives as a group faced unfiltered questions from the public.

More than a dozen print, TV and radio reporters from the United States and Central America were in the room; other reporters called in questions. Translators broadcast through a network of wireless headsets.

The reporters tried to determine how intensely the delegates had debated labor, intellectual property, agricultural and other issues. A reporter from El Salvador said some Salvadoran business leaders were concerned the early labor proposals would favor the United States.

Vargo said she didn't know which proposals the reporter was referring to, but the United States is committed to joint negotiations.

"This is a mutual free trade agreement," she said.

Other representatives said they were still educating themselves on the six different labor markets.

"On the Central American side, this is an issue that has focused our attention at this round," said Anabel Gonzalez, special ambassador for U.S. trade affairs for Costa Rica. "This, we feel, has been fundamental to moving forward."

None of the countries are ready to express an opinion on the labor issue yet, Gonzalez said.

Vargo announced the United States is establishing small business assistance centers in Central American countries and helping with their telecommunications needs.

The U.S.-Chile trade agreement released Feb. 28, but not yet approved by Congress, is a model for CAFTA, according to Vargo.

"People will see a very strong resemblance between the two," she said.

Although there is a lot of work left before CAFTA is finished, the representatives were optimistic it could happen by year's end.

"We feel comfortable ... that it is achievable and that we'll work in that direction," Gonzalez said.

It might seem difficult for the six countries to reach an agreement, said Carlos Sequiera, Nicaragua's chief negotiator.

"(But) five of the parties are working as a single unit," he said, referring to the Central American countries.

The outsiders
Critics such as Ricker sometimes have a difficult time getting answers and information about these negotiations. The working FTAA draft was released without identifying which country expressed which view, for example.

"It's hard to mobilize opposition if you don't know what's in the agreement," Ricker says.

After the press conference, Vargo said a detailed CAFTA draft would probably be released "a month and perhaps longer" before Congress gets it.

That's not much time for a complex document to be digested by academics, much less the general public.

Ricker and others also wonder how much input labor and environmental groups are having with CAFTA.

Vargo said CAFTA advisory committees include several environmental and labor groups, such as the Sierra Club and AFL-CIO. But the labor committee has been a sham, according to Dan Radford, executive secretary-treasurer of the Cincinnati AFL-CIO Labor Council.

"We gave input, but there has been no impact at all," he said. "This has been just a feel-good committee we've participated in. Someone should be at the table representing those who have been impacted (by international trade)."

Few of the Bush administration's appointees on the committee ask fundamental questions about free trade, according to Horazuk. Critics of free trade are often characterized as totally opposed to international trade, but the issue isn't whether there should be global trade, but how it's carried out, she says.

"Trade in and of itself is not a bad thing," Horazuk says.

Critics might support free-trade agreements if they did a better job protecting the environment and workers' rights — agreements that place "human beings at the center rather than corporate profits," Horazuk says. "If these agreements are such a great thing, then they shouldn't be afraid of (public scrutiny)."

About 60 protesters gathered Feb. 28 outside the Millennium Hotel for speeches and a march downtown, chanting, "CAFTA and NAFTA's got to go! Hey, hey! Ho, ho!" and "What do we want? Fair trade! When do we want it? Now!"

NAFTA has had one positive effect, according to Dan La Botz, a Miami University history professor who focuses on Mexican labor issues.

"It's created a new spirit of allegiance (between unions)," he says.

Michael Flynn and his wife, Sylvia Castellanos, originally from Guatemala, spoke at the rally. Castellanos worked for Guatemala's Popular Movement — a social reform group — and opposes all the existing trade agreements because of their results.

Countries such as Guatemala have weak, sometimes corrupt governments, she said. Corporations know and exploit this to their advantage. They also threaten to move factories from one country to another if workers organize.

Flynn, who works with Su Casa Hispanic Ministry, offered a key question about CAFTA, NAFTA and other trade agreements.

If free trade is good for business, why don't we have free trade for labor — meaning open borders — so workers can move the way corporations do? ©

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