Oxfam America

Background


FAIR TRADE IN THE AMERICAS

Proposed free trade agreements for Central America (CAFTA) and the Free Trade Area of the Americas (FTAA) could prove disastrous for family farmers, indigenous people, women, and others whose livelihoods are threatened by unrestrained trade.

But this theory assumes a level playing field among countries. In reality, the trading system is distorted by rigged trade rules and double standards, so that the poor are unable to benefit from the increased investment and trade. There is a clear danger that CAFTA and the FTAA will restrict Latin American countries' ability to use trade to serve the needs of the majority of poor people in the region.

The experience of NAFTA, dominated by the dumping of US corn and the decimation of Mexico’s rural sector which led to widespread emigration to the US, shows that free trade in its current form is failing to address the complex issues of poverty.

Three Reasons to Oppose FTAs

Proponents of the CAFTA and the FTAA argue that a larger free-trade zone would give smaller countries access to more economic opportunities—such as the expansion of business and trade throughout the region—and stimulate economic growth for all participants. Others see it as the newest manifestation of unfair trade rules that benefit investors and corporations, and create increased hardships for poor communities and entire national economies.

Oxfam has identified three key reasons to oppose CAFTA and the FTAA:

1. Agriculture

In the CAFTA negotiations, the US demanded duty-free access to Central American markets for all US agricultural products. This would likely decimate Central American producers, most of whom lack access to the credit, new technologies, and adequate public infrastructure necessary to expand their production and lower their costs. They will be unable to compete with US producers, who can export agricultural commodities produced with the assistance of government payments and dump them in Central America for less than it costs to produce them. The import of such commodities could destroy the livelihoods of millions of farmers in the region.

South America countries involved in negotiating the FTAA are arguing against such proposals, lest they bring similar effects to a wider group of Latin America and Caribbean nations.

2. Investment

CAFTA and the FTAA address more than trade in goods–the agreements also change the rules for investment.

Latin America and Caribbean governments would be significantly restricted in their ability to regulate foreign investment to promote their own sustainable development. CAFTA and the FTAA will give greater rights to foreign investors than to domestic investors and, ultimately, ordinary citizens. Furthermore, no binding commitments are being sought to ensure respect for labor rights and environmental regulations in accordance with international standards.

3. Access to Medicine

Intellectual property laws are usually designed to balance the needs of an inventor or company to make money from a patented idea or product with the interests of the community that would benefit from the product. Recent free trade agreements include intellectual property provisions that extend generous patent rights for pharmaceutical companies, which can price life-saving drugs out of the reach of poor people. These trade rules also limit access to low-cost generic equivalent drugs. This has severe implications for the majority of poor people in Latin America and the Caribbean, who cannot afford to pay high prices for patented drugs. If FTAs include intellectual property provisions that restrict access to medications, it could precipitate a public health crisis in the Americas.

All of the countries in CAFTA and the FTAA zone are members of WTO, which administers the Agreement on Trade Related Aspects of Intellectual Property (known as "TRIPS"). In the "Doha Declaration on TRIPS and Public Health" of 2001, WTO members affirmed their commitment to ensure that countries would not be bound by patents during public health crises. They agreed that WTO patent provisions should be interpreted in ways that will help countries fight public health problems and to seek ways to help the poorest countries to obtain affordable medicines.
What is CAFTA?
The Central America Free Trade Agreement (CAFTA) negotiated between the United States and Costa Rica, the Dominican Republics, El Salvador, Guatemala, Honduras, and Nicaragua is part of an effort by the United States to expand a doctrine of "free trade" across the hemisphere. Negotiations were finished in early 2004 and the agreement was signed by President Bush.  CAFTA must be ratified by Congress before it enters into force, and a vote is anticipated after the November 2004 election.
What is FTAA?
The Free Trade Area of the Americas (FTAA) is being negotiated between all the governments of the Americas and Caribbean (except Cuba).  It is intended to extend an open market zone across the entire hemisphere, and may even go beyond some policies regulated by the World Trade Organization (WTO).  If the FTAA moves forward, the US Congress would likely vote on it in late 2005 or early 2006. It is being negotiated by government representatives in closed meetings, and there is little news in the US press. In Latin America, FTAA is very controversial and is being covered widely in the media. Civil society groups have had minimal opportunities to gain access to the FTAA negotiations and draft documents, and have been sidelined in the formulation of an agreement that has the potential to profoundly change many aspects of their lives. Their efforts to protest the agreement are often met with heavy police repression.