International Trade Talks to be held in New Orleans, July 28

Notes on the Trade Talks, Local Implications

The talks on CAFTA in New Orleans will affect Louisiana, and by extension the Southeast U.S., in many ways. In short, fishing, farming, manufacturing, local and state government, environmental quality, and coastal wetlands restoration are all involved in these trade agreements.

On the broadest level, CAFTA is an extension of NAFTA south to Costa Rica. It is also a vehicle to broaden the amount of power and authority these trade agreements have over areas other than trade, which is important for leveraging other negotiations going on.

The other negotiations in question are the Plan Puebla Panama (PPP), the Free Trade Area of the Americas (FTAA), and the World Trade Organization (WTO).

The negotiating process towards CAFTA began only in January of this year, and the Bush administration expects a finished agreement by January 2004. This is vastly quicker than past agreements have been negotiated (NAFTA took around 6 years).

So it's apparent that the agreement is being shoved on the Central American nations and the U.S. and Central American public. It isn't known what is being negotiated because the talks are in private, and the text of the agreement is a "national security" secret. Not even the Congress is allowed to see the negotiating text.

But it's believed that a total removal of tariffs on agricultural goods, reduction in anti-dumping powers, increased power to overrule national food safety rules, and increased power for investors to sue governments over regulations they don't like are on the table.

One clear consequence of this will be further harm to Lousiana shrimpers, an already endangered constituency. More U.S. corn and beans being dumped on Central America will move farmers off the land, which will open up new land for industrial aquaculture, or shrimp farming. Also legal remedies to control the importation of these shrimp will be reduced.

The overall impact will be more imported shrimp with fewer routes available to stop it. Already some 40% of the Louisiana shrimping fleet has gone out of business in the past few years, so this may be the death knell for them. Similarly sugar cane, strawberries, dairy, truck farming and other agricultural activities could be devastated in the Southeast, never mind the damage done to Central American farmers.

Now why is Central America so important in these trade plans? Because Central America (and one of its major U.S. state trading partners, Louisiana, and other parts of the Southeast, like southern Mississippi and Alabama, Florida, and the Carolinas) are in a strategic region to advance or hold back the entire trade agenda.

Currently the Panama Canal is inadequate to handle all the goods being moved from East Asia into the United States. And the same businesses that profited from the boom along the U.S./Mexican border in NAFTA would like to move south, where wages are lower and agriculture is better.

Mexico's government has an interest in doing this because they want to develop the south of their country, and control the Zapatista rebellion there. By doing so, they hope to keep their country competitive against other countries being brought into the free trade system by creating their own "colonies" south of their border and inside their country that they can make money off of.

That's where the Plan Puebla Panama comes in. This is supposedly a development plan of the Mexican and Central American governments, but it's also backed by the Bush people and the major international banks. It's basically a major infrastructure plan. They want to build "dry canals" of highways and railways across Southern Mexico and Central America to bring containerized freight from the Pacific to the Atlantic. Along these highways they want to bring industry to assemble things like appliances or clothes using raw materials imported from Asia and cheap labor in less-developed regions of their country.

Running through all of the literature on PPP is shifting agriculture from subsistence crops to export crops, especially shrimp farming and industrial tree plantations. They want to move the rural population out of the mountains and forests, where some of them are in rebellion against the government, and put them working in factories. Then they will use foreign investment to convert their farms, growing corn and beans mostly, into tree plantations, cotton and soybean fields, and in coastal regions, industrial shrimp farms.

The local population is more or less totally against the plan, because while they want development in terms of things like medical care and electricity, they don't want to be forcibly relocated from their lands and they see this "development" as just a way to take advantage of them and control them. CAFTA is the legal document that will provide the framework for implementing the Plan Puebla Panama.

CAFTA is also a way of moving the rest of South America and the rest of the world towards less regulation on agricultural goods and more imports and exports, which will undermine the food safety, anti-dumping, and tariff barriers Louisiana fishers and lots of other U.S. producers can use to try to control imports and maintain decent prices. That's where CAFTA and FTAA intersect.

FTAA is basically expanding NAFTA to the entire Western Hemisphere. It is scheduled for final approval by January 2005. The big countries in South America, Brazil, Venezuela, and Argentina, are opposing the Bush proposals on agriculture, food safety, regulation, and investor rights. They carry significant weight, especially if they are joined by the smaller South American countries.

To try to frustrate this alliance, Bush is making CAFTA a major priority to finish in 2003 so that he will have the Central American countries "locked in" with the U.S. going into FTAA negotiations. This will allow him to push the U.S. position stronger than if he was negotiating with South America alone.

The issues with FTAA are basically the same with CAFTA and NAFTA: removing protections of agriculture, fewer regulations, more rights for investors, restricting the rights of local, state governments to control economic conditions. The FTAA negotiators will be meeting in Miami, FL this November 20-22, 2003.

Finally the WTO. The World Trade Organization is the world's trade regulator, and negotiator of reductions of tariffs. Their members are most of the world's countries. They started operation in 1995.

One of their major responsibilities is to rule on trade disputes between member countries. This has often involved issues of food, whether its use of chemicals or hormones, genetically modified organisms, or the turtle-shrimp case as it's known, which was a U.S. law that restricted imports of shrimp caught without using Turtle Excluder Devices.

In all these cases the environmental or food safety laws that were challenged were ruled "WTO-illegal" and then the violator country is supposed to change its laws or pay compensation, and failing that counter-tariffs are assessed by WTO on that country's exports. This occurred when the European Union refused to import U.S. beef tainted with growth hormones, and the WTO tried to force them to at U.S. insistence, then the WTO allowed the U.S. to slap retaliatory tariffs on European exports like wine, cheese, and specialty meats.

The basic point is that this unelected body has gained too much power to rule on what food is safe and what food is not, and what laws can and can't be passed in any given country, state, or local government.

Other impacts of the trade negotiations on Louisiana are the forcing of privatization of public services, changes in the legal structure that will protect a $2 billion judgement in favor of the oyster industry in Louisiana, and the building of some major airport projects in the River Parishes of Louisiana.

New Orleans mayor Ray Nagin, the enthusiastic host of the CAFTA talks in his city, has been since taking office trying to sell off the Sewerage and Water Board. So far the water company has remained public largely because of the citizens of the city organizing to block it.

One of the aspects of these trade agreements is that they will mandate that public services be available for privatization. If governments impose what are thought of as "excessive" conditions on buying public services, or bar their sale altogether, then under these agreements the government could be forced to sell, even if the public is against it.

About the oyster suit, the case boiled down to the oyster industry claiming the future profits of their oyster beds, not just their current value or the value of their investment in them, in compensation for damages stemming from a coastal wetlands restoration program. This created the $2 billion number, which has indefinitely stalled any attempt to implement freshwater diversion projects to restore the coast.

NAFTA contains a similar provision, called Chapter 11. This Chapter allows foreign corporations to sue national governments for policies that could harm the profitability of their investments. The state of California was hit with several billion dollars in a judgement by a chemical company that sold a gasoline additive that the state banned. Canada has been hit with several of these judgements, as has Mexico, and the judges that handle these cases are special NAFTA judges, who answer to nobody, aren't elected, and cannot be appealed. They could conceivably overrule even the U.S. Supreme Court or the U.S. Congress.

The legal precedent of the oyster case is part and parcel of this radical change in the legal profession pioneered by NAFTA. What it could do directly to Southeast agribusiness is that if tariffs or sanitary restrictions were imposed on imports, then multinational agribusiness interests could sue the U.S. over those restrictions, and demand money for their lost profits.

About the airports, Louisiana is a big part of this larger trade network that I discussed earlier, namely the "dry canals" in Central America. (I suspect that other Southeast U.S. states have similar projects on the drawing board.) Between White Castle and Donaldsonville on the Mississippi River there is a $5 billion airport project in the planning stages. It's four 12,000 foot runways, with a port facility on the river, a rail connection, and highway access. This would be a cargo airport, designed to take advantage of the explosion of trade with South America in the next few decades. This will undermine the air cargo business in New Orleans and Baton Rouge. I call it a Trojan Horse to devastate the entire Louisiana economy with cheaper imported products. A mirror-image project is planned near Mexico City, but has been stopped so far by local opposition.

Currently people in Louisiana are organizing a response to these negotiations to advance the issues that we're working on. You are invited to come to Louisiana this summer to participate. Your assistance in bringing speakers, resources, information, money, etc. is appreciated.

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Online CAFTA Resources

Comprehensive coverage of CAFTA can be found at www.cispes.org

www.whitehouse.gov/news/releases/2002/01/20020116-11.html

www.counterpunch.org/kyer0912.html

www.americaspolicy.org/articles/2002/0202catrade.html

www.americaspolicy.org/commentary/2003/0301cafta.html

www.americaspolicy.org/commentary/2003/0301cafta-opp_body.html

www.americaspolicy.org/commentary/2003/0302caftacr.html

www.americas.org/News/Features/200303_MarApr_NoGuerra/200303_CAFTA_Weiss.htm
www.cispes.org/english/Campaign_Against_CAFTA_FTAA/CAFTA_Facts.pdf