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Neoliberal ideology claims that international trade is an important factor for the development of poor countries and their integration into the global economy. Rich governments' promotion of these ideals has led them to develop an array of new trade agreements such as the FTAA and CAFTA. These bilateral, multilateral, and regional accords strongly affect people at all levels of the economy--from growers and workers, to processors and consumers --by regulating pricing, tariffs, export levels, and methods of production. Though supporters claim that trade agreements bring sustainable development and economic integration, this is not the case. Rich countries maintain protections of their own exports, while their competitors in poor countries agree to open their markets. Beneficial norms, such as human rights or environmental standards, are set aside. This leads to a "race to the bottom," in which the only priority is cost effective production, at the expense of workers, resources, and sustainability. Due to these failings, the agreements tend to harm development and pull poor countries deeper into poverty.
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With an increasing number of regional trade agreements around the globe, this report tries to clarify the complex interaction between multilateral and regional arrangements. The report encourages trade between poor countries to strengthen their role in the global market. However, to foster development, governments should spread the gains of trade more equally among their populations. (United Nations Conference on Trade and Development)
Nicaraguan NGOs, labor and agriculture associations fear the effects of the Central American Free Trade Agreement (CAFTA) on Nicaraguan society. If implemented, Katarina Wahlberg argues, CAFTA will threaten food security, increase unemployment and worsen labor conditions. (Global Policy Forum)
Articles
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2014
European Parliament and Council achieved a significant breakthrough on the issue of high-speed trading. Yesterday, the EU reached an agreement over plans to reform the markets in the Financial Instruments Directive (Mifid), a law that sets the for securities markets in Europe. The application of Mifid will curb speculation, through the use of derivatives, in food, energy and other commodity markets.
2013
As talks for the proposed EU-US Transatlantic Trade and Investment Partnership (TTIP/TAFTA) continue, the European Commission has released a document describing the economic benefits of a trading partnership between the EU and the US. Other reports however suggest that the expected economic benefits from such a partnership have masked the fact that the real impetus behind a deal comes from major EU and US corporations that have joined forces to remove as many labour, health and environmental standards as possible. The environmental and social hazards resulting from this are seen as a in a devastating race to the bottom and the deal could do more harm than good. Some of the more recent articles on this topic can be found below...
On 7 October, the second round of negotiations for a far-reaching transatlantic trade deal will begin in Brussels. Amidst calls for greater openness and public participation, the European Commission has gone into propaganda mode, promoting myths about the transparency and accountability of the talks. See through its feel-good rhetoric with Corporate Europe Observatory’s myth-busting guide to secrecy, corporate influence and lack of accountability in the transatlantic trade negotiations. (Corporate Europe Observatory)
Martin Khor, director of South Centre, explains how the proposed Trans-Pacific Partnership Agreement could potentially disadvantage participating developing countries. He points out that local producers will have to compete with large foreign businesses. Moreover, the TPPA will give foreign companies more opportunities to sue governments, while also raising the prices of medicines. (Third World Network)
Talks for establishing a new trans-Atlantic trade deal between the US and the European Union was recently announced. The deal would reduce the trade barriers for over half a trillion Euros worth of goods and services that already flows between the two regions. Proponents of the free trade agreement argue that it will help strengthen both economies by making it easier for EU companies to bid on US public contracts and free up investment capital for medium-sized companies. Some fear, however, that interest in multi-lateral negotiations through the WTO will diminish further since a third of global trade will be determined by the agreement. Meanwhile, agricultural trade continues to be a contentious area as the two regions are unlikely to agree to change their policies. It remains to be seen whether the potential “tens of thousands of new jobs” will aid both economies in their recovery or widen the existing gap in inequality (Deutsche Welle).
2012
This report by the Corporate Europe Observatory and the Transnational Institute looks at how law firms, arbitrators and financiers are fuelling and investment arbitration boom. The International investment regime has locked countries into agreements that impose a high cost on governments if they implement policy changes that affect the profits of powerful companies. Even if the policy change, such as environmental regulation, would have a positive effect on the citizens of the country, the huge legal costs incurred by states could nullify the benefits. This is not to mention that the litigation cost is borne by the tax payers of these countries. The legal industry is particularly benefiting from this litigation boom, by seeking every opportunity to sue governments using various tactics listed out in the report. (Corporate Europe Observatory and the Transnational Institute)
Investment treaties between governments are allowing private companies and investors to sue countries for billions of dollars. Companies are claiming that their investments and future profits are affected by a range of government policies, including non-compliance with new health, environmental or economic measures. Multinationals are often equipped with a powerful legal team and are capable of seriously damaging the economies of poor countries. The growing number of recent cases has given rise to global concern and a movement to amend the laws and investment treaties. (Other News)
As the United States and eight Pacific Rim nations are negotiating the Trans-Pacific Partnership (TPP) free trade agreement in San Diego, critics are saying that TPP is mainly about new corporate rights, not trade. The negotiations and their texts are open only to government negotiators and a selected group of about 600 corporate lobbyists. Through such secretive process, the officials in charge of the TPP can ensure the completion of controversial clauses such as financial deregulation in the Pacific Rim and establishment of corporate tribunals which permit transnational corporations to overrule local courts and other government agencies in disputes. The implementation of the TPP will only serve to strengthen corporate power at the expense of the public. (The Nation)
In January, a controversial initiative was taken by some WTO member countries (mainly advanced industrialized countries) to start negotiations on services on a plurilateral basis. In contrast to multilateral agreements where all WTO members are part of the agreement, plurilateral treaties are voluntary. The initiative was widely criticized by developing countries, who argue that a plurilateral convention will not give them the promised benefit of expanded exports in the developed world. In this op-ed piece, Bhagirath Lal Das presents the main reasons brought forward by those opposing a plurilateral agreement on services. (South Centre)
In early March the 11th round of Trans-Pacific Partnerships Agreement (TPPA) talks concluded in Melbourne. Negotiated between the US, Australia, New Zealand, Singapore, Malaysia, Vietnam, Brunei, Chile and Peru, the TPPA seeks to develop a comprehensive “21st century” regional trade agreement. Civil society organizations fear that the deal benefits corporations, but not workers and communities. They have raised concerns, for instance, over Investor State Dispute Settlement (ISDS) provisions that allow foreign companies to sue a government for regulatory actions. Another issue of concern is that under the proposed deal nations would not be allowed to regulate speculative capital flows to protect their economies from financial crises. (Inter Press Service)
Market liberals tirelessly defend Free trade Agreements (FTA) on the basis of the “comparative advantage theory,” which maintains that in a free marketplace each country will maximize its benefits by specializing in an activity where it has a comparative advantage. More often than not, however, FTA’s do more harm than good. The recently approved US-Colombia FTA is the latest example for trade agreement’s destructive power. The Economic Commission for Latin America and the Caribbean estimated that Colombia will suffer losses of up to $75 million as a result of competition from US imports in the textile, apparel, food and heavy manufacturing industries. Moreover, reducing tariffs will strip Colombia’s government from much needed revenues and restrict its capacity to regulate cross boarder flows of speculative finance. (Triple Crisis)
2011
EU’s free trade agreement with South Korea came into effect on July 1, 2011, and EU Trade Commissioner De Gucht has called it “the most ambitious trade deal ever conducted by the EU”. The agreement is the EU’s first trade pact with an Asian country and will largely eliminate tariffs between South Korea and its European counterparts. It is expected to raise EU exports by 19 billion Euros each year. However, while the deal does emphasize the signatories’ commitment to labor and environmental standards, concerns have begun to arise about the real potential for sustainable development under the pact. Japanese and German automotive companies are worried about maintaining competitiveness with cheaper South Korean automotives, and South Korea will be opened to the increased influence of transnational corporations. (International Centre for Trade and Sustainable Development)
Free trade agreements (FTAs) have proliferated around the globe in recent years. Conventional economists and politicians claim FTAs create enormous wealth for everyone, but these claims are largely unsubstantiated. Instead, FTAs have precipitated fractious trade unions that largely mirror the fragmented trade blocs prior to World War II. Far from the win-win situation posited by comparative advantage theory, in the real world free trade has created winners and losers. (Foreign Policy)
US President Barack Obama has claimed that the Doha Round of trade negotiations will fail if the large emerging economies do not agree to greater market access. The US contends that the recent rise of the larger developing economies must come with heightened responsibility. At this point it remains unclear whether the global trade deal will ever be completed. More importantly, regional trade blocs are supplanting the WTO trade rounds as the most significant arbiters for trade. (BBC News)
The Indian government moved ahead with further market integration by signing trade pacts with Japan and Malaysia. India's rapidly growing economy is reliant on exports of goods and services and these agreements are meant to facilitate continued growth. Asian economies are quickly breaking down barriers to trade with unknown future consequences. (Indian Express)
Japan's Prime Minister plans to sign the Trans-Pacific Partnership Agreement with the EU, US, South Korea, and Australia. The regional trade agreement will eliminate all tariffs within ten years. The US has an interest in concluding the FTA, which will provide more trade with the US and exclude China. (Wall Street Journal)
2010
WTO members propose to expedite Doha negotiations hoping to complete the Development Round by mid 2011. The least developed countries have expressed concern about the scheduling of meetings and their ability to fund their experts' prolonged stay in Geneva. No solutions were suggested by rich countries. If a conclusion cannot be reached at the multilateral level, it may lead to collapse of the negotiations. (Third World Network)
The EU is currently holding talks that could stop the supply of generic medicines from India, known as the pharmacy of the developing world. Millions in developing countries rely on these medicines, and would have no opportunity to get the drugs they need without generics. "Europe! Hands off our Medicine" is Médecins Sans Frontières' (MSF) campaign to try and push Europe to back down over controversial plans to cut off the supply of these affordable generic medicines. The campaign's day of action will coincide with World AIDS Day on Wednesday December 1st. Many of the generic drugs under threat are antiretrovirals, used to treat HIV/AIDS patients. If the production and sale of these affordable medicines is stopped, millions will be left without the drugs that they need to stay alive. (Medecins Sans Frontieres)
African farmers and small entrepreneurs risk going out of business if the EU Economic Partnership Agreements (EPA) are signed. European industries and large-scale agriculture will overshadow the African local market and will cause unemployment. European food corporations bring subsidized food into the African region, threatening the food-based industries and long-term food security. The EU claims the EPA to have a development agenda, but the agreement, will harm prospects for African industrialization as well as regional integration. Development should be the main goal in the EPA negotiations, not EU trade interest. (Pambazuka)
If the US Congress and the South Korean parliament approve the Free Trade Agreement (FTA), public power in both countries will be weakened and corporate power strengthened - at the expense of public needs and capacities. Free trade reinforces the very same trends that generated the economic crisis. US President Obama speaks of the FTA "creating new jobs and opportunities for people in both countries" but without mentioning the possibility of wage reductions, deregulation and negative environmental consequences. (Foreign Policy In Focus)
Taiwan and China are in the process of negotiating the terms of the Economic Cooperation Framework Agreement (ECFA). If implemented, ECFA will eliminate trade tariffs between China and Taiwan, initiating a flood of Chinese consumer goods into Taiwan. ECFA has raised debate and dissent in Taiwan as many of its low-skilled workers are afraid that their consumer products will not be able to compete. Conversely, technology based firms will profit from the agreement as Taiwan has an edge over China in the market. The tradeoff between the low-skilled workers suffering while the technology sector thrives is characteristic of the double-edged sword of free trade agreements. (BBC)
European Union and Latin American leaders meeting in Madrid agreed to resume trade negotiations. The talks got stalled in 2004 due to disagreements over tariffs and farmer subsidies. Spanish Prime Minister Jose Luis Rodriguez Zapatero, whose country holds the rotating six-month presidency of the EU, said a free trade agreement would lead to an extra five billion euros in exports per year between the two blocs.
Conventional wisdom has long held that liberalizing trade leads to economic growth and rapid technological change, with all sides benefitting from open markets. Policy analysts are now questioning whether that is really true. Free trade is leading to a number of problems that hadn't been previously calculated. The author contends that a renewed debate on free trade is in order.
Since the global financial crisis, even the IMF has acknowledged that capital controls are a legitimate part of a country's toolkit to ensure economic stability. The United States and other major economies around the world have also realized that the financial stability of their trading partners is in their own interest. Despite this, capital controls stand in violation of the bilateral investment treaties and free trade agreements the US and the WTO have forged in the last two decades. This paper analyzes the flawed economic theory and history of these trade regimes, and offers a range of policy options more consistent with the realities of the 21st century. (Tufts University)
2009
International trade agreements facilitate the flow of goods and money; but, workers and small farmers often do not benefit from these agreements. WTO's Director-General confirmed the inequality generated by economic globalization saying that "trade liberalization creates winners and losers." Recent studies have shown that NAFTA has caused many Mexican small farmers to migrate because they could not compete with US producers on the corn market. (The Huffington Post)
Three academic experts have written a report called
"The Future of North American Trade Policy" to discuss potential reforms of NAFTA. The authors emphasize that NAFTA is not a substitute for a coherent national development strategy. Among the reform areas discussed are services, manufacturing, agriculture, investments, intellectual property, environment, labor and migration.
(Americas Policy Program)
The signatories of NAFTA do not seem to benefit from the agreement, as NAFTA-related job loss increases in the US; Mexico's small farmers cannot compete with the imported corn from the US and Canada complains about big investors suing the country according to a right stated in Chapter 11. Senators and representatives in the US have taken the first step to restructure NAFTA by presenting a TRADE Act to Congress. Over 100 000 small farmers are also protesting in Mexico to remove corn and beans from the agreement. (American Program)
Russia has halted its negotiations to join the WTO and now seeks to gain joint membership together with Kazakhstan and Belarus. Moscow is giving a high priority to this new approach which aims to "strengthen regional integration" in central Asia, as well as to reinforce Russia's hand in a multipolar world (
The Moscow Times).
2008
Korean authorities have found bone fragments – even an entire spine - in shipments of US beef. Consequently, South Korea banned the import of US beef, as it did not comply with Korean food safety standards. This article reports on how the US uses Free Trade Agreement (FTA) "negotiations" to force South Korea to remove the ban on US beef and relax food safety standards. Besides the health risk involved, domestic farmers get pushed off the market by subsidized US imports. The author concludes that FTAs pressure weaker nations into relinquishing their food sovereignty, their control of national food safety and their right to reject genetically modified products. (Foreign Policy in Focus)
"Official rhetoric" praises the free trade negotiations between the EU and India as occurring between two "allies." In reality, the EU and India are extremely unequal partners, with India standing to gain much less from a free trade deal than the EU. The EU has supported India with development aid for decades, but this agreement on trade liberalization will "undermine poverty elimination, food security and social balance." (World Economy & Development In Brief)
2007
The European Union is pressing former European colonies to sign an Economic Partnership Agreement before the end of 2007. The EU is attempting to reverse its previous discriminatory trade practices with these countries and appease the World Trade Organization. African and Pacific countries report of massive lobbying and threats by the EU to withhold aid should the poor countries fail to sign the agreement. (Guardian)
The author of this allAfrica article urges Uganda and other African countries to oppose the Economic Partnership Agreements (EPA) with the EU and instead use tariffs and subsidies to promote economic growth. Pointing to the success Korea and Taiwan had following such policies, the author argues that the African continent will not benefit from the free trade promoted by the Europeans, but from fair trade.
East African governments and NGOs question the benefits of the economic partnership agreement (EPA) with the EU. These trade agreements have not encouraged countries to add value to their exports, so many countries remain dependent on unrefined primary product trade, such as coffee and sugar. They also face further barriers as the EU increasingly hinders imports of industrialized products from outside the Union. The African countries are also concerned that their industries will not be able to out-compete Asian imports. (Inter Press Service)
Nobel laureate Joseph Stiglitz warns that Free Trade Agreements (FTAs) do not benefit poor countries. By regulating intellectual property, the FTAs restrict countries' access to generic medicine, leading to the death of thousands of poor people from curable diseases. Stiglitz argues further that the FTAs threaten the sovereignty of poor countries whose governments may lose the ability to promote local businesses and to raise funds for development through taxes and tariffs. Countries such as the US are concerned not only with trade, but with promoting "a particular agenda." (Star Online)
Leading up to the September 2007 round of negotiations of the Economic Partnership Agreements with the EU, sixteen Common Market Eastern and Southern Africa (COMESA) countries oppose the EU's attempt to lower trade barriers which will open African markets to EU products. Such a decision would have devastating effects on African industrial capacity and tariff revenues. COMESA also draws attention to the absurdity of the EU using a relatively developed country such as South Africa as a standard for the African continent's capacity to handle lost revenue. (Inter Press Service)
This Foreign Policy in Focus article illustrates the negative economic effects of the US-South Korea Free Trade Agreement (FTA)on Korean agriculture. The FTA would seriously undermine Korean agricultural production and food safety laws, leading to a complete restructuring of the local agricultural practice. Korea's National Policy Institute estimates that the country's agriculture may well disappear within the next 10-15 years as a result of the new FTA. Washington has suggested that the FTA could function as a blueprint for other US trade liberalization agreements with countries across Asia, which would lead to similar adverse consequences.
At the annual NAFTA summit, the US, Canada, and Mexico discussed how to secure borders while allowing the free flow of goods and services across borders. But critics are concerned that NAFTA constitutes a "super-government" with no accountability to citizens who are directly affected by the agreements. In the US for instance, some fear that the decisions made by the Bush administration at NAFTA "may actually undermine the security and sovereignty of the US." Meanwhile Mexico is concerned that the US is meddling in its internal affairs. (Christian Science Monitor)
Peruvian citizens are protesting in large numbers after Peruvian President Alan Garcia signed on to a free trade agreement with the US. While Garcia's shift toward neo-liberal economic policy benefits the national economy, it has not improved conditions for the majority of Peru's population, which "survives on less than a dollar a day." Many analysts argue that the Bush administration is trying to secure free trade agreements with Latin American countries including Peru, Colombia, and Panama in order to counter Venezuelan President Hugo Chavez's leftist influence in the region. (Toward Freedom)
This
Oxfam report finds that rich countries are using regional and bilateral trade deals to attain "enormous irreversible concessions" from poor countries, making these agreements far more damaging to development than anything proposed under World Trade Organization negotiations. Arguing that these deals have "grave implications" both for the environment and for economic growth, Oxfam calls for trade rules that recognize the rights of developing countries and work to reduce poverty.
The Bush administration has put a free trade deal with Malaysia on hold after Kuala Lumpur signed an energy agreement with Iran. This Inter Press Service article argues that the US – desperate to isolate Iran over its nuclear program – is attempting to pressure the Malaysian government to abandon its deal with Iran. However, Malaysian Trade and Industry Minister Rafidah Aziz stated in response that the free trade negotiations will not be "held hostage to any political demand."
2006
Under World Trade Organization rules, the European Union's preferential trade agreements with 79 countries of the Africa, Caribbean and Pacific (ACP) group are "no longer legal." Gathering in Khartoum for its heads of state summit in December 2006, the ACP group discussed the January 2008 replacement of the preferential EU-ACP trade agreements with EPAs (Economic Partnership Agreements), where parties have to open their markets reciprocally. The summit issued a statement calling for more EU aid to compensate for lost tariff revenues and finance investments in infrastructure to prepare domestic industries for increased competition. (Agencia de Informacao de Mocambique)
Despite the official suspension of the WTO negotiations, "it's a mistake to believe that nothing is happening under WTO auspices," says Susan George of Transnational Institute in this piece. The EU trade commissioner has been holding GAT (General Agreement on Tariffs)-related negotiations - one of them hidden from the European Parliament - ultimately serving to limit countries' possibilities for regulating entry of transnational corporations into their markets. On a parallel basis, the EU tries to "cover the world" with bilateral trade agreements promoting "total market access in all areas for European transnationals," says the author.
The ‘Doha Declaration on the TRIPS Agreement and Public Health' asserts that WTO members must allow poor countries' to produce generic medicines to protect public health. Five years after its enactment, Oxfam reviews the agreement, and finds that rich countries display a very poor record of honoring their promises. Through free trade agreements, the US negotiates "TRIPS-plus" rules that increase patent protection and undermine poor countries' public health safeguards, while EU countries let their companies benefit from the US negotiated rules. Oxfam calls for rich countries to stop pushing for stricter intellectual property rules, for poor countries to resist TRIPS-plus rules, and for the WTO to review the impact of TRIPS on public health.
This Inter Press Service article reports on the disturbing announcement by EU Trade Commissioner Peter Mandelson that the EU must pursue a policy of "opening markets abroad" and will start negotiating a new generation of bilateral trade agreements. Following the collapse of the World Trade Organization Doha Round of negotiations, the EU thus sadly seems to embrace a unilateral approach of using economic might to force agreements upon individual poor countries. Agreements that mainly benefit western corporations while causing losses of jobs and income in these countries.
This paper published by Focus on the Global South analyzes the Bolivarian Alternative for the Americas (ALBA) as a substitute to the neoliberal US-supported Free Trade Agreement of the Americas and other Latin American integration efforts such as Mercosur. The ALBA initiative – organized by Presidents Hugo Chavez, Fidel Castro and Evo Morales of Venezuela, Cuba and Bolivia respectively – aims to promote regional integration through "social welfare and equity" rather than trade liberalization. The authors conclude that the widespread support ALBA receives in the region demonstrates that the majority of Latin Americans no longer have faith in the neoliberal model that has left so many mired in poverty.
Given the "corrupt system of campaign-contributions-for-subsidies" in US politics, it came as no surprise that the Doha trade negotiations failed to produce the promised development agreement. In fact, former World Bank Chief Economist Joseph Stiglitz argues, poor countries feel relieved that they steered clear of a "development" agreement maintaining the status quo or making them worse off. World leaders must now avoid creating a myriad of unfair bilateral trade agreements. Particularly aiming at Europe, Stiglitz strongly appeals to governments not to follow the US example of unilateralism in the international trade system. (Guardian)
NAFTA has had detrimental consequences on multiple sectors of the Mexican economy. NAFTA grants more power to transnational companies, while reducing the bargaining power of the common worker. The
full report by the
International Federation for Human Rights addresses the shortcomings of current labor policy in Mexico and calls for reform.
The Presidents of Cuba, Venezuela and Bolivia signed a People's Trade Agreement (PTA) proposed by Bolivian Head of State Evo Morales. Opposing most existing free trade agreements (FTAs), the PTA considers trade and investment not as ends in themselves but rather as "potential paths to development." Most FTAs lead to exploitation of natural resources and destruction of poor countries' small and medium size industries. To transfer economic benefits to the people, the PTA states, governments should regulate foreign investors and transnational companies on their territories. (Quest for Peace)
As the discussion on US immigration law heats up, AlterNet looks at the North American Free Trade Agreement (NAFTA) which originally promised to reduce illegal immigration through fostering development in neighboring Mexico. Although increased trade and foreign investment reflect NAFTA's "smashing success", Mexico's population suffers from its negative consequences, such as decreased real wages. In addition, few Mexicans benefit from an exporting industry that imports 97% of the parts processed in its factories.
The US has signed another free trade agreement with a Middle-East country, this time with Oman. This agreement will promote US corporate interests in the region and increase the pressure on bigger countries like Egypt and Saudi-Arabia, to join a Middle-East Free Trade Area (MEFTA). Trade-watch groups fear the agreement will harm development and make the region more economically dependent on the US. Inter Press Service
The planed free trade area between the US and Thailand would harm Thailand's economy. By eliminating tariffs on agricultural goods, highly subsidized US farm goods will flood the local market and increase poverty among millions of farmers. In addition, the trade deal's provision on intellectual property rights will prevent Thailand from providing cheap generic anti-HIV drugs to its 670,000 infected people. (Inter Press Service)
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