FTA: Facing The Apocalypse?


Cecilia Chérrez, Acción Ecológica (Ecuador)
January 2005

en español

The walls of Quito have become famous in recent years because many pintas (graffiti) written in the middle of the night, when police and private guards are off duty, have thrown light on truths that are silenced by those in power and which express the hopes and concerns of the people. Most recently, these pintas quiteñas (Quito graffiti) have asked if the Free Trade Agreement (FTA) that the US is pushing on Colombia, Peru and Ecuador means that our days are numbered. Reading the message gives a sensation of inevitable doom looming around the corner.

Since negotiations for an FTA with the US were announced a year ago, more and more sectors of the population have come to realise that the claims of "free trade" are false. The US is not about to make concessions on its trade advantages. The enormous imbalance between the three Andean nations and the US give Washington the capability to use the FTA to impose a military strategy linked with the Plan Colombia that is progressing in parallel with the trade talks. This trade agreement is one of the most aggressive versions of a matrix of FTAs that the US has signed with other nations. And the FTA itself is building the Free Trade Area of the Americas (FTAA) by fragmenting Latin America through bilateral or subregional treaties.

"Letter to Santa Claus"

Those who know most about the enormous pretensions of the United States with the Andean FTA — arbitrarily dubbed "Andean", as two of the five member nations of the Andean Community are not participating — are the official negotiators themselves. Christian Espinosa, head of the Ecuadorian team, commented to several business delegates that the US "proposal" presented by surprise at the first round of talks in Cartagena was like a letter to Santa Claus. [1]

But it should be made clear that the US negotiators are not in these talks to drop any of their demands. They know that their government, through its various programmes and mechanisms, has the power to act like Father Christmas. At all the rounds held between May and November last year (in Cartagena, Chicago, Lima, Puerto Rico, Guayaquil and Tucson), they have been clarifying their position. For example, the US has said from the start that there will be no flexibility regarding the reduction or elimination of its agricultural subsidies — that this subject would only be discussed within the WTO. Also out of bounds, they have said, are any concessions regarding US demands on the subject of intellectual property, which include the patenting of plants and animals, almost doubling the time that their pharmaceutical companies could enjoy monopoly control over drugs, and something similar for agrochemical products. As well, their position that the Andean price fixing mechanism, adopted by all members of the Andean Community to protect their domestic agricultural production against variations in the price of imported farm goods, be eliminated by their FTA counterparts is said to be non negotiable.

With the arrogance of someone who knows that he or she has the upper hand, the US negotiating team unilaterally disqualified an intellectual property advisor hired by the Colombian team and ran the agenda of the last round in Tucson at will. They cut the time slot for agriculture issues to barely two days, limited to half a day the meetings with each Andean country and reduced to another half day the schedule for the joint meeting.

What is really tragic about this process is that what the three teams from the Andean countries are negotiating is to extend access to the US market for a handful of export products like cut flowers, tuna, bananas, certain fruits and asparagus — all of which are responsible for causing very serious environmental and social impacts. The objective is to maintain the preferential tariffs agreed upon within the US’ Andean Trade Preferences Act which expires in 2006. This seems quite unlikely at this point. The fear of losing these preferences is in any case letting the US win all sorts of concessions from the Andean negotiators, who are also being watched at home by the concerned export sectors.

These sacrifices to the US team mean that the great majority of the people in the three countries will suffer the consequences of the entry of transgenic food, as well as used machinery, textiles and tires, euphemistically presented as "remanufactured products". It means that our foreign debt will be treated under the same conditions and with the same guarantees agreed upon to protect US investment, which implies that any controversy that might arise — for instance regarding the illegitimacy or odiousness of the debt — could be taken to an international court of arbitration run by trade rules.

Not only that. For the United Status, these free trade agreements are opportunities for deepening the influence of neoliberalism in the signatory countries. The US Trade Representative, Robert Zoellick, holds that his country can secure greater reforms in the "underdeveloped countries" through FTAs than through the International Monetary Fund. All the more so through the "Andean" FTA because the US can advance its military agenda in the subregion given that, as Zoellick puts it, this treaty is a "natural ally of Plan Colombia". [2] The US trade and the military agendas are moving forward in parallel here.

It is clear that there is very little negotiation involved in this FTA and quite a bit of complicity with the geopolitical vision of the US, since the presidents of the Andean countries involved have pre-announced their support for the outcome. When the press and mass media broadcast the debate about the rigidity of the US on the subject of intellectual property and agricultural subsidies, Lucio Gutiérrez simply declared that "the best alternative to the FTA is the FTA". Alejandro Toledo, weeks before offering the US and Colombia support for their plan for hemispheric security, including the regionalisation of the so-called Patriot Plan proposed by Uribe, said that "the free trade agreement will be signed, yes or yes".

The CEPAL report and short-term views: the tip of the iceberg

With a delay of three months, the UN Economic Commission for Latin America and the Caribbean (CEPAL) published the results of a study about the impacts of the FTA in Ecuador. It concluded that, among other things, maize and rice farmers, the largest part of the national workforce, are among those who will be most greatly affected.

Growing maize is an activity carried out throughout the inter-Andean zone and represents 32.6% of the regional economy, the majority of the producers being indigenous campesinos. According to the last census in 2000, maize is grown by 45,600 production units, 70% of which are at the subsistence level, where the cereal is associated with other products that are essential to the local and national diet. Similarly, rice is produced by an appreciable portion of the 23,700 families who grow subsistence crops in a large part of the coastal region and represents 36.7% of the economy of that area.

This means there is a high risk of social displacement threatening thousands of campesino families in Ecuador give the competition from similar products and other changes to the agricultural sector that the FTA will bring. But this has not altered the position of the government, judging by the lack of official statements following the publication of the study.

The Colombian government, on the other hand, has expressed its support for protective measures to avoid increased conflict in the countryside, while they negotiate the full liberalisation of this sector affecting twelve million people, according to a recent report distributed by the Colombian Action Network Against Free Trade and the FTAA (RECALCA). The report quotes the Colombian Ministry of Agriculture stating that the protection of national cotton, bean and chicken production will be increased, milk imports will remain closed, not a single grain of rice will enter the country from October 2004 to the end of 2005 and the ban on the entry of white maize will be extended.

Given that signing the FTA means the Andean countries will lose the right to adopt rules or measures to protect national production, US negotiators complained to the Colombian government about its ambiguity and demagogy. During the Tucson Round, they went further to say that Colombia was not ready to deal with the subject of agriculture.

In this manner, buoyed by the blind sacrificial attitude of the Andean negotiators, US agribusiness firms can see how the path is opening up for them to expand the new model of genetically engineered agriculture which they control, thus guaranteeing the food dependence of our countries.

Rights of foreign investors: putting the cards on the table

In January 2004, the US embassies in Peru and Ecuador warned the two governments that if they wanted to sit at the negotiating table for an FTA they would have to resolve pending disputes with US business interests beforehand. There were nine companies involved in the case of Peru and at least four in Ecuador. Given the pressure on national institutions and laws, it is likely that some of these grievances were settled with public resources. It is hard to verify whether that was done legally and correctly.

But there were exceptions. One of the companies protected by the US embassy in Ecuador is Occidental Petroleum, which protested the payment of value added tax (VAT) for purchases that had nothing to do with its hydrocarbon operations in the country, including the purchase of pedigree dogs, footballs, tennis balls, whisky and interior decorating materials. Occidental sued the Ecuadorian government in a London court, demanding a payback of US$75 million. Ecuador’s Attorney-General appealed the case, arguing, on top of other things, that the company had violated the contract it had signed with the government.

The case remains unresolved. But it has sparked interest among 50 other companies, including eleven oil firms, which are also now demanding the return of VAT.

This shows how transnational corporations strategically use international trade arbitration, which is designed to favour business interests. They gain advance warning of the regulations included in FTAs to defend the rights of investors. It also becomes clear that the position of the United States is to intervene in a variety of ways to assure that those rights are fully guaranteed and that their businesses can operate with immunity and impunity.

The strategy of international trade arbitration is also useful for businesses to resolve legal disputes regarding human rights or environmental law, as was attempted in the case of Texaco, which tried to move a suit to an international court, thereby becoming the plaintiff instead of the defendant.

Not only did the US Ambassador in Ecuador, Kristy Kenney, exert pressure to have the Occidental Petroleum case resolved, but the Deputy Trade Representative, Peter Allegeier, second to Zoellick, threatened to block the FTA negotiations at the fourth round in Puerto Rico in August if the case were not quickly brought to an end. Because the cases of some businesses have not yet been "resolved" in Peru either, Allegeier said that "the United States does not have any problems with pursuing the FTA with Colombia alone".

In view of the fact that the fourth round was concluded with the negotiating teams from the three Andean countries, one can assume that it was not convenient for the US to abandon the process.

Controlling biodiversity and the entry of GMOs: the hidden aces

On the same day that the US Ambassador to Ecuador pressured the government on behalf of the US companies, she also referred to the need to approve a law on biodiversity that was stalled in parliament due to its controversial content. Days later, the minutes of a working meeting held at the offices of the Nature Conservancy in Quito were published (leaked), describing the participation of representatives from the US Agency for International Development, the Fundación Natura, Ecociencia and the Fundación Rumicocha, and how they agreed on a both low- and high-intensity strategy to secure parliamentary approval of the law in record time (15 days) by pressuring legislators and the Environment Ministry, as well as through a propaganda campaign in the mass media.

Several articles of the law make possible the granting of permits to administer protected areas in Ecuador and the neighbouring countryside to foreign NGOs and research institutions that can make use of the "goods" and "services" they offer. This will unleash an aggressive move to market environmental services, causing the displacement of local communities, undermining their territorial rights and easing the surrender of control over biodiversity and water resources. Other articles of the law open the country to the introduction of transgenic crops.

Since then, national indigenous peoples’ organisations such as CONAIE have reached an appreciable level of awareness and mobilisation regarding the threats contained in the law and the dangers of neoliberal conservationist language.

For their part, the NGOs and the US embassy have remained active, widely promoting the idea of marketing environmental services to local governments in the provinces, aware of the fact that the administrative territories of these local authorities are in the biological corridors designed by big conservation groups with headquarters in the United States, such as the World Wildlife Fund, Conservation International and The Nature Conservancy. The corridors scheme will connect areas of high biological diversity not simply in one country but across several countries. Examples include: the Chocó-Manabí corridor in Ecuador and the northern coastal region of Peru; the northern Andes ecoregional complex, comprised of the Venezuelan Andes, the Sierra Nevada of Santa Marta in Colombia, all of the Ecuadorian inter-Andean alley and that of northern Peru; the corridor of the Condor Range, including Amazon Basin areas in Ecuador and Peru; and the maritime corridor of the Galápagos (Ecuador), Gorgona and Malpelo (Colombia), Coiba (Panama) and Isla de Coco (Costa Rica).

The Central America Free Trade Agreement that was signed, but not yet ratified, between the United States and several Central American countries includes provisions for environmental services with cross-border characteristics. Apparently, this allows foreign capital to invest in the marketing of environmental services given the transboundary nature of biological or ecological corridors.

Furthermore, conservation NGOs most comfortable with market principles have begun a campaign to ratify the Cartagena Protocol on Biosafety, in order to safeguard another element of the biodiversity law in case it is not approved.

By hook or by crook?

Behind the FTA, or together with it, there is a web of enormous strategic interests of the US government, private companies and American NGOs. As often happens, several local allies have sprung up in their defence, suggesting the possibility that a request for US assistance will be made in order to smother social conflicts in the three countries that are negotiating the agreement. [3]

There is growing social discontent which has been massively expressed in the streets of several cities where the negotiating rounds have taken place. The protests have broken the repressive force exerted by the host governments to protect the official meetings. Acting within their constitutional rights, campaigns and coalitions are being organised to demand that the peoples of the three countries be consulted by referendum to determine if they accept this charter of slavery or not.

On the other hand, opposition from local businessmen and productive sectors is not negligible and could shake up from within the process of finalising this FTA, as already occurred with the FTAA.


[1The head of the Ecuadorian negotiating team for the FTA could not avoid making the comment among several delegates from the business sector after the US surprisingly presented its proposal to the negotiators from Colombia, Ecuador and Peru, demanding that they sign a confidentiality agreement. Thus the negotiations are secret. During the negotiating rounds, business representatives, some NGOs and legislators have participated in "the room next door", receiving very brief daily summaries of what goes on.

[2In the letter presented by Zoellick to the US Congress on 18 November 2003.

[3Ivonne Baki, Trade Minister of Ecuador, expressed such a request in a statement to the Ansa press agency, published in La República in Lima in early November 2004.