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Don’t Expand NAFTA

The United States is leading the way to another corporate-friendly free-trade agreement, and it’s bringing its NAFTA partners along for the ride.

By Manuel Perez-Rocha and Stuart Trew · IPS · July 26, 2012

The United States recently announced that Canada and Mexico will join negotiations for the Trans-Pacific Partnership (TPP)—a secretive U.S.-led multinational trade and investment agreement currently being negotiated with eight other countries in the Pacific Rim region.On the other side of the Pacific, Japanese legislators are defecting in droves to try to stop the country’s entry into the negotiations. But the situation is much different in Canada and Mexico, which were admitted to the table with much fanfare during the G20 summit in June. The Japanese response is justifiable, and a recent statement of solidarity against the TPP by North American unions offers a good building block for resisting an agreement that for Mexicans and Canadians amounts to a neoliberal expansion of NAFTA on U.S. President Barack Obama’s terms.Mexico and Canada had been trying to secure a spot at the TPP table for months prior to the G20, and it became a leading story in both countries. Their anxiety played nicely into Obama’s hands, allowing the U.S. trade representative to put humiliating entry conditions on both countries — essentially giving these NAFTA neighbors a second-rate status, or what in Spanish is called convidados de palo (to be invited but without a say). Neither Canada nor Mexico will be able to see any TPP text until they finally join the negotiations in December, following the required 90-day U.S. congressional approval process. Once at the table, they will not be able to make any changes to the finished text or propose any new text in the finished chapters. There is a very real possibility that the existing TPP countries, the United States in particular, will use the following months to fashion a trap for the TPP latecomers.

North American Labor Solidarity

While most media outlets welcomed the NAFTA partners to the TPP table, national labor federations from the United States, Mexico, and Canada were cautious for very good reasons, and it wasn’t just the obviously imbalanced negotiating dynamic. On July 11, the AFL-CIO, the Canadian Labour Congress, and the National Union of Workers (UNT) of Mexico outlined some of those reasons in an important statement of solidarity, which included a vision of what they believe a 21st-centry trade agreement should look like.

The labor unions state that although they “would welcome a TPP that creates good jobs, strengthens protection for fundamental labor rights—such as freedom of association and authentic collective bargaining—protects the environment, and boosts global economic growth and development for all, American, Canadian, and Mexican workers cannot afford another corporate-directed trade agreement.” The joint statement explains that to have any positive effect on the region, “the TPP must break from NAFTA, which imposed a destructive economic model that expands the rights and privileges of multinational corporations at the expense of working families, communities, and the environment.”

The unions conclude that if “the TPP follows the neoliberal model and substitutes corporate interests for national interests, workers in all three countries will continue to pay a high price in the form of suppressed wages, a more difficult organizing environment, and general regulatory erosion, even as large corporations will continue to benefit.” Unfortunately, by all accounts, including leaked TPP chapters and statements from the U.S. trade representative, this is exactly what the Obama administration hopes to achieve through these negotiations.

Expanding Investor Rights

Instead of breaking with NAFTA, the TPP expands it in almost every chapter, from intellectual property rights to “regulatory coherence,” and from rules for increased “competition” in state-owned enterprises to opening government purchases to foreign bidders.

Particularly worrying to Canadians and Mexicans, and not mentioned in the joint statement from North American unions, are the extreme investors’ rights foreseen in the TPP. Under NAFTA, Mexico and Canada continue to be pummeled by investor-state lawsuits from U.S. and Canadian companies, or international firms using their U.S. registration to challenge government measures that can be shown to interfere with profits, even if that interference is not intended. These investment disputes, launched under NAFTA’s Chapter 11 protections, have resulted in hundreds of millions of dollars in fines or settlements to be paid out from public funds. Two recent cases against Mexico and Canada help describe the problem.

In 2009, two separate NAFTA investment panels established through the International Center for Settlement of Investment Disputes (ICSID) ruled in favour of U.S. companies Cargill and Corn Products International in their nearly identical cases against a Mexican tax on drinks containing high fructose corn syrup (HFCS), a sugar alternative. The tax was a means of levelling the playing field for Mexican cane sugar producers, who were having no luck accessing the U.S. market on equal terms to U.S. sugar producers despite NAFTA’s promises of open borders.

Cargill and CPI argued in part that the Mexican tax made soft drinks sweetened with HFCS less competitive on the Mexican market, depriving them of their national treatment rights in NAFTA. The ICSID panels did not agree that the HFCS tax amounted to a form of regulatory expropriation or performance requirement as the firms had also argued, but did agree on the national treatment claim. Cargill was awarded more than $77 million and CPI more than $58 million in damages. In the CPI case, the ICSID panel deprived Mexico of any countermeasures to defend against a one-way inflow of cheap sugar supplements from the United States.

Canada also just lost an important investor-state dispute with Exxon Mobil, which could cost the Canadian government as much as $65 million. At issue were measures requiring offshore oil and gas producers in the province of Newfoundland and Labrador to turn over a portion of their profits to research and development or education and training programs.  A NAFTA investment panel ruled in favor of the company, which claimed that the measures were an illegal performance requirement on the firm. Three Canadian courts had previously upheld the legality of the measures, and the Canadian government had excluded the legislation enforcing the measures from national treatment and other investment protections in NAFTA, making the investment panel ruling extremely perplexing. The frustration is worsened by the fact that Exxon Mobil was the richest company in the world in 2011. Under NAFTA and the TPP, investors have rights but no enforceable responsibilities to the countries in which they are operating.

These are just two local cases amid a myriad of investor lawsuits against countries all over the world. Though the Obama administration recently released a new model Bilateral Investment Treaty, it is almost identical to NAFTA, with only modest safeguards for regulation in the public interest — safeguards that closed-door tribunals are under little obligation to take into account. In fact, the trend globally is for these secret tribunals to rule expansively in the interest of corporations, perhaps as a means of perpetuating the system by making it more attractive to investors. There is simply no justification for reproducing the investor-state dispute regime in the TPP. In fact, NAFTA should be renegotiated to remove investor-state dispute settlement from Chapter 11.

This outcome—removing extreme investment protections from the TPP—is not out of the question. In June of this year, before a negotiating round in San Diego, California, 130 state legislators from all 50 states and Puerto Rico signed a letter to President Obama’s senior trade official warning that they will oppose the deal unless the administration alters its current approach. In the letter they say that “Our experience with NAFTA and other trade deals shows that investor-state dispute settlement is used by large corporations to undermine state and federal laws they don’t like – laws that are fully constitutional, that do not discriminate, and that are needed to protect public health and safety.”

There is also the question of Australia, the one TPP partner refusing to abide by these investment rules. In April 2011, the Australian government released a new trade policy that discontinues the inclusion of investor-state dispute settlement in bilateral or regional trade agreements. Despite their second-rate status at the TPP table, Canada and Mexico could eventually help the United States put pressure on Australia and others who doubt the value of these extreme corporate rights. But public pressure might prove strong enough to foil these efforts, as it did when the Multilateral Agreement on Investment was ditched in 1999, followed by the Free Trade Area of the Americas (FTAA) in 2005.

A New FTAA, A New Struggle

With Canada and Mexico joining the TPP, the agreement is looking more and more like a substitute for the FTAA. So it is not surprising that opposition to the TPP is growing as quickly as it did against that former attempt to expand the neoliberal model throughout the Western hemisphere.

The intense secrecy of the TPP negotiations is not helping the Obama administration make its case.In their statement, North American unions “call on our governments to work with us to include in the TPP provisions to ensure strong worker protections, a healthy environment, safe food and products, and the ability to regulate financial and other markets to avoid future global economic crises.” But the truth is that only big business is partaking in consultations, with 600 lobbyists having exclusive passwords to online versions of the negotiating text.

A majority of Democratic representatives (132 out of 191) have expressed that they are “troubled that important policy decisions are being made without full input from Congress.” They have written to U.S. Trade Representative Ron Kirk to urge him and his staff to “engage in broader and deeper consultations with members of the full range of committees of Congress whose jurisdiction touches on the wide-ranging issues involved, and to ensure there is ample opportunity for Congress to have input on critical policies that will have broad ramifications for years to come.” In their letter, the representatives also challenge “the lack of transparency of the treaty negotiation process, and the failure of negotiators to meaningfully consult with states on the far-reaching impact of trade agreements on state and local laws, even when binding on our states, is of grave concern to us.”U.S. Senators, for their part, have also sent a letter complaining of the lack of congressional access to the negotiations. What openness and transparency can we in Canada and Mexico expect when the decision to join the TPP, under humiliating conditions, was made without any public consultation?

NAFTA turns 20 years old in 2014. Instead of expanding it through the TPP we must learn from NAFTA’s shortcomings, starting with the historic lack of consultation with unions and producers in the three member countries. It is necessary to correct the imbalances in NAFTA, which as the North American union statement explains enhanced corporate power at the expense of workers and the environment. In particular, we need to categorically reject the investor-state dispute settlement process that has proven so costly, in real terms and with respect to our democratic options in Canada and Mexico. The unions’ statement of solidarity provides a strong foundation for the growing trinational opposition to the TPP in Leesburg, Virginia, and beyond.

July 26, 2012 Posted by | Economics | , , , | Leave a comment

Our Perverse War on Drugs

By FIRMIN DeBRABANDER | CounterPunch | July 17, 2012

Perhaps the most humiliating legacy of our nation-building venture in Afghanistan is the stubborn narco-state flourishing under our noses. The opium crop in Afghanistan has doubled since US forces deposed the Taliban, and the drug trade threatens to dominate the country as never before when our forces leave in 2014. How did this happen?

By and large, it seems US forces followed a policy of turning a blind eye to the opium crop, on the premise that poor farmers are not our main enemies in Afghanistan, and attacking their livelihood would turn them to the Taliban. To combat opium production, our principal initiatives included helping farmers cultivate alternate crops, and setting up an independent court system to try traffickers. While these have shown some promise, progress has been slow, and funding for these programs is drying up. Crop eradication was on our minds, too, but we charged the Afghan forces with that task. Their efforts, however, have been undermined by political corruption on the ground.

Underscoring the futility of our drug war in Afghanistan is the impact of the current blight on opium poppies in the country. At first glance, this might sound like a God-send: crop eradication at its best. However, something happened that we American capitalists should have anticipated. With opium supply suddenly scarce, the price of the crop soared. This has in turn enriched –and entrenched—the big dealers, inspired farmers to double down on next year’s crop to make up for current losses, and likely attracted more people to the drug trade in a very poor country. The result of this blight illuminates the main problem of crop eradication: it drives up prices, providing more incentives surrounding the drug trade.

In Latin America, our anti-narcotic efforts have largely featured interdiction, eradication, and assaulting the drug gangs. Our tactics on this front were recently highlighted by reports of a bloody incident in Honduras where local forces, with US financing and support, have been intercepting drug traffickers from South America in the remote Honduran jungle. The Honduran forces mistakenly killed unarmed civilians while intercepting a drug shipment. Notable in our efforts in Honduras is the extensive involvement of the US military. The Honduran forces who conducted this raid flew out of one of the three bases the US military operates in that country. The forces were tipped off by our military’s Southern Command in Miami, carried to the location by State Department helicopters, and accompanied by DEA agents. For all intents and purposes, the US seems to be waging war in Latin America.

So far it seems the most obvious result of our aggressive approach in Latin America is increasingly grotesque violence. Since Mexico started its crack down on the drug cartels, thanks to US prodding and support, the country has suffered 50,000 deaths. Mexican cartels have exploded, resorting to mass killings, beheadings, mutilation—body parts found in bags in public squares—assassinations of government officials. Savage violence surrounding the drug trade is spreading through the countries of Central America as we ramp up interdiction efforts there. The brazen and pervasive violence is testimony to what’s at stake, namely, the incredibly lucrative US drug market. The sum total of our efforts in Latin America compounds the problem.

As the New York Times Magazine explained in a recent expose on the Mexican drug cartels (“The Snow Kings of Mexico”, 6/17/12), the cost of drugs on the street is largely determined by the amount of risk assumed in getting the product to market. So: make the risk greater and the prices rise; more dealers get involved, and jockey (or kill) for a piece of the action.

This is why, our former ambassador to Colombia has argued, we must pair our negative policies with economic development in Latin America. If we build schools and hospitals, and help develop businesses in the region, we can reduce incentives to enter the drug trade. And yet, as long as the drug trade remains so lucrative, it’s reasonable to suppose, incentives to enter it will always be powerful.

What strikes me in the many prongs of our current war on drugs is how we seem to focus on everything but ourselves—and go to great efforts in so doing. We monitor the nations our drugs come from, and toil to frustrate traffickers thousands of miles from our borders. We work to change the economic conditions on the ground in very poor nations—no small task—while poor neighborhoods at home beg for attention. We enlist our military, the largest in the world, to stem the flow of drugs northward. And none of it works. These efforts have the opposite effect of what we intend, for they drive up prices and stoke the drug trade. The traffickers will do anything to get the product to market as a result: Colombian gangs have built submarines for this purpose; the Mexican cartels use catapults to launch drugs over our multi-million dollar border fences.

We’d rather do anything but zero in on demand here, but it’s so clear this would be the cheapest, most direct, most effective, most humane solution. It makes you wonder if we want to win the war on drugs at all.

Firmin DeBrabander is an Associate Professor of Philosophy at the Maryland Institute College of Art.

July 17, 2012 Posted by | Corruption, Economics, Militarism, Timeless or most popular | , , , , | Leave a comment

Mexico: Indigenous Leader Murdered in Michoacán

Weekly News Update on the Americas | June 6, 2012

The body of indigenous teacher and activist Teódulo Santos Girón was found on May 16 in the town cemetery in La Ticla in the western Mexican state of Michoacán. According to official sources, Santos Girón, who had just finished his term as a local official in the indigenous Nahua community of Santa María Ostula, had been kidnapped in La Ticla the night before; he was shot in the head and in the body.

Santos Girón was active in promoting maintenance of the Náhuatl language and culture, and he was a strong supporter of the center-left Party of the Democratic Revolution (PRD) who also admired the indigenous rebels of the Zapatista National Liberation Front (EZLN), based in the southeastern state of Chiapas. He helped lead the movement of Ostula residents that occupied disputed land near the Pacific coast in the summer of 2009. The occupiers were subsequently granted more than 1,000 hectares by Michoacán’s state government, but drug dealers and other forces have been trying to drive the community out of the area. As of last December, 28 community members had been murdered, including leaders Trinidad de la Cruz Crisóstomo (“Don Trino”) and Pedro Leyva Domínguez [see Update #1110].

(La Crónica de Hoy (Mexico) 5/18/12; La Jornada (Mexico) 5/19/12)

June 6, 2012 Posted by | Full Spectrum Dominance | , , , , | Leave a comment