From: Witness For Peace Date: 02 Jul 92 13:41 PDT Subject: WFP Myth of the Month: June 1992 Message-ID: <1563600169@igc.org> Lines: 279 Status: RO Witness for Peace 1492-1992 Expose the Myths: Calling for a Just World Order Myth of the Month--June 1992/Free Trade MYTH: Trade with Europe benefitted the colonies and free trade agreements will benefit the poor Latin American nations today. RESPONSE: Far from benefitting the colonies, trade with Europe diverted time and resources away from production for Indian consumption. Slavery and extraction of resources contributed significantly to the ongoing impoverishment of the original inhabitants of the Americas. Likewise today, free trade agreements will exacerbate the process of impoverishment of Latin America's peoples and the depletion of their resources and environment. Colonial Trade Trade between the colonies and Europe developed on very unequal terms. Disregarding the needs and rights of indigenous people, European colonists (Spaniards, British, Dutch, Portuguese and others) unilaterally decided what would be produced based exclusively on European needs. Moreover, colonial trade reflected the European attitude that the "New World" was theirs because they had "discovered it." People, land and natural resources were ravaged rather than respected. Columbus' arrival brought plunder, pillage, ecological devastation, genocide, slavery and widespread hunger. Hunger and malnutrition continue to plague Indian communities throughout the Americas today. However, hunger and malnutrition were for the most part unknown to them before Columbus. The colonists' emphasis on production for export resulted in land being taken away from the Indians and concentrated in hands of the ruling Europeans. With more and more land dedicated to export crops, food production was no longer sufficient to feed the Indians. The appropriation of Indian land that began with the Europeans continues today due to the renewed emphasis on export-agriculture. The indigenous population has never fully recovered from the "discovery." According to a recent Washington Post article: [On the] 500th anniversary of Columbus' voyage the people he found when he arrived--and insisted on calling "Indians"--are at the bottom of the social and economic ladder, an underclass in the land their forbearers ruled. Throughout the continent whites of European ancestry constitute the wealthiest and most powerful class, while Indians are among the poorest and most disenfranchised. (June 23, 1991) U.S. Interventionism in the 1990s: Enterprise for the Americas Initiative Unfortunately for Latin America, exploitative trade relationships have not been limited to the colonial period; they have been a characteristic of the last 500 years. The most recent manifestation of the extraction of the South's wealth by the North is the free trade agreement (FTA), part of President Bush's Enterprise for the Americas Initiative (EAI). The main purpose of the Enterprise for the Americas Initiative is to create a free trade zone from "Alaska to Tierra del Fuego." Many in Latin America and the U.S. view the Initiative with skepticism. They say the EAI is today's equivalent of the Alliance for Progress in the 1960s: a strategic solution to U.S. needs. Facing increasing challenges and competition from Japan and the European unification in 1992, Bush's plan is designed to secure access to resources that will boost the U.S.' position vis--vis competing economic blocs. The Development GAP, an economic policy advocacy group in Washington, DC, calls the Initiative "America for the Enterprises," humorously making reference to its true nature. Free Trade Agreements A key component of the Enterprise for the Americas Initiative is the free trade agreement. Many view the FTAs as a simple continuation of the neoliberal economic model that the IMF, the World Bank and USAID have promoted in Latin America for the last decade (see Myth of the Month, May 1992). According to the Development GAP, "the agenda of the Bush Administration in pursuing this trade agreement focuses on securing guaranteed access to an abundant supply of natural resources, on the one hand, and access to a large pool of cheap labor on the other." There are many Latin American countries that have signed preliminary agreements with the U.S.: Bolivia, Chile, Colombia, Ecuador, Costa Rica and Nicaragua. Jamaica, Venezuela, Peru, El Salvador and Guatemala are in the process of negotiating such an agreement. The Mexican case is an indicator of things to come for Central and South America. Mexico most likely will be the first Latin American country to sign a free trade agreement with the U.S. However, Mexico has had a preliminary agreement with the U.S. since 1987 and is already well integrated economically with the United States. Currently, 70 percent of Mexico's exports go to the U.S. and 65 percent of Mexico's imports come from the U.S. However, the free trade agreement will have repercussions for Mexico that go far beyond economic integration. A recent confidential memo from John Negroponte (U.S. ambassador to Mexico) to Bernard Aronson (U.S. Undersecretary of State for Latin American Affairs) published by the Mexican weekly Proceso is revealing--and disturbing. According to Negroponte, the signing of a free trade agreement between Mexico and the U.S. would "institutionalize a North American orientation in Mexico's foreign policy." Negroponte points out in his memo to Aronson that the free trade agreement would mean the beginning of the political as well as economic integration of Mexico and the U.S. It is interesting to note that Negroponte was U.S. ambassador to Honduras in the early 1980s and supervised the formation of the contra army. Former Sandinista foreign ministry official, Alejandro Bendana, said in a recent editorial in the Nicaraguan daily Barricada that in the past, protecting and securing U.S. hegemony meant containment of the Sandinista revolution by use of military intervention. Today the same hegemony is protected by economic intervention in the form of free trade agreements. Bendana points out that "in the name of neoliberalism and modernization Latin American nations will have to give up the characteristics of sovereign nations, renouncing control not only of their foreign policy but also of monetary, fiscal, customs and environmental policies as well." Integration between Mexico and the U.S. has been achieved through an unprecedented restructuring of the Mexican economic and legal systems. So far, Mexican restructuring has produced: * weakened labor legislation and the dismantlement of collective bargaining, which significantly weakens the labor unions' power; * progressive elimination of subsidies for basic consumer items (such as corn and tortillas) and increased rates for public services (transportation, utilities, etc.); * sustained deterioration of the real wage (60 percent loss of purchasing power between 1980 and 1989); * almost unrestricted openness to foreign capital investments and to imports critically weakening local production; and * accelerated privatization of state enterprises (telephone, steel, airline, petro-chemical, railroad, etc.). In other words, to qualify for an FTA, Mexico is forced to dismantle the welfare state and eliminate any safety net for the poor majorities. The signing of an FTA depends on even further transformations of the Mexican economic and political system. This move toward greater austerity is even more sobering if one takes into account that 40 million Mexicans--half the population- -live below the poverty line and 17 million live in extreme poverty. Like trade between the colonies and Europe in the past, free trade will mean increasing dependence of Latin American countries on the U.S. Elliot Abrams, President Reagan's Undersecretary of State for Latin American Affairs and a strong supporter of the contra war, said to a Mexican paper that "giving up sovereignty is the price [Latin Americans] must pay to stop being poor: prosperity has its costs." The free trade agreement will also: * legally formalize and accelerate the process of integration; * broaden deregulation beyond tariff areas to areas such as investment, intellectual property and services and financial markets; * further the negative impact on wages, labor and environmental standards, land ownership and agricultural production; and * increase the already high economic disparity between Mexico and the U.S. EXAMPLES: The Maquiladora Industry: U.S. Production Moves South Maquiladoras (or maquilas) are factories located in Mexico and other Central American countries where foreign goods are assembled from imported parts and then re-exported to the U.S. Most of the maquiladoras are owned by U.S. or Korean companies. The maquiladora sector has grown considerably in recent years in both Mexico and Guatemala. Maquiladoras are excellent examples of what free trade is all about--and what awaits Latin America under the Enterprise for the Americas Initiative. In Mexico, more than 65 percent of maquiladora workers are young and female. U.S. corporations save approximately $8 billion a year in labor costs. The average hourly wage in a maquiladora is $.88. Maquiladora wages are not enough to meet workers' most basic and essential needs. Comparable jobs in Mexico's major cities pay two or three times what maquiladoras do. Environmental pollution is another characteristic of the maquiladora industry in Mexico. Environmental groups already consider the U.S.-Mexico border--where many of the maquiladoras are concentrated--to be a disaster area. Weak Mexican environmental and labor legislation--the major lures for U.S. corporations--pose a serious threat to the region's people, air, water supply and land. There are currently some 255 maquiladoras operating in Guatemala. A recent report by the minister of labor, Mario Solrzano, cited many legal and human rights violations in the maquiladoras. The following violations were mentioned: 1) failure to enroll workers in Social Security; 2) forced labor of both adults and minors--in extreme cases workers have been locked inside the plants until production goals set by the owners were met; 3) physical violence and other mistreatment of workers; 4) excessively long work days, sometimes as long as 20 hours; 5) inadequate hygiene and safety conditions; and 6) workers under 14-years-of-age. Effects of Free Trade on the U.S. The Watsonville, California-based Green Giant food processing plant recently moved the bulk of its operations to Irapuato, Guanajuato, Mexico. Lured by reduced tariffs and cheap labor--Mexican laborers make less than $4 a day--Green Giant laid off 382 workers in California. The Teamsters Union estimated that the move will save Green Giant about $6 million yearly in wages and benefits. Labor unions, including electricians, garment workers, the auto-workers and the A.F.L.-C.I.O. are increasingly worried about loss of U.S. jobs as free trade agreements are signed. The Economic Policy Institute says that free trade for the U.S. means fewer plants being opened in the U.S., which means fewer jobs being created for U.S. workers. Increased competition for jobs mean lower wages. The Institute estimates that those hit the hardest would be the 75 percent of the labor force that does not have a college degree. Creating a Transnational Popular Movement Ford workers in Mexico have mobilized to form a workers' solidarity movement with workers in Ford plants in the U.S. and Canada. Faced with government repression for their union activities, Mexican Ford workers have decided that they need to struggle along side those workers in the U.S. and Canada whose jobs are threatened by possible plant closings. While it is true that in the short run the outcome of the FTAs looks bleak for the poor in the Americas, an opportunity exists to form a transnational popular movement. CALLING FOR A JUST WORLD ORDER: * Form a study/discussion group to learn more about the Enterprise for the Americas Initiative and free trade agreements. For further readings see "Resources" below. * Become a Witness for Peace Media/Legislative Contact to receive regular updates on how to affect foreign aid legislation (use the sign-up sheet provided in the packet). * Write to your congresspersons and tell them why you oppose an FTA agreement that does not take labor and environmental rights into account. * Write to your local media and tell them what you have learned about the effects of FTAs on U.S. and Latin American workers and environment. * Go on a Witness for Peace delegation to Guatemala or Nicaragua and experience first hand work conditions in maquiladoras and agro-export enterprises (see enclosed delegation schedule). * If there are any corporations in your area which are moving their operations to Mexico, join laid-off workers in calling for justice and other protest actions. DISCUSSION QUESTIONS: 1. In what ways will a free trade agreement with Mexico affect the area you live in? Why? How will it affect Mexico? 2. What would a just free trade agreement look like? What kind of labor, social and environmental legislation should accompany a free trade agreement? RESOURCES: "The New Gospel: North American Free Trade," Report on the Americas, NACLA: Vol. XXIV, No. 6 (May 1991). (The entire issue is dedicated to free trade). "Fast Track to Unemployment," Amy Lowery and David Corn, The Nation, June 3, 1991, pp. 735-738. "Background and Perspectives on the U.S.-Mexico-Canada Free Trade Talks," American Friends Service Committee, April 10, 1991. Development GAP, 1400 I Street NW, Suite 520, Washington, DC, 20005, has produced several resources on free trade agreements.