The World Bank, the IMF and FTAA
Halifax Initiative Statement on the FTAA
The proposed FTAA is nothing new for the Americas. It is another step in the forced:
- implementation of trade and investment liberalization,
- privatization of industry, agriculture and services,
- introduction of labour market "flexibility" (removal or enforced absence of labour standards),
- reduction in public sector expenditures in areas such as health, education and economic development maintenance of high interest rates to attract foreign investors.
These processes have been ongoing in Latin America and the Caribbean for over twenty years through World Bank and IMF imposed loan conditions and structural adjustment programmes (SAPs).
Modelled on NAFTA, a free trade agreement for the Americas will limit governments' abilities to:
- use performance requirements that facilitate economic development
- use subsidies and tariffs to grow domestic industries that may be important to achieve employment goals or to enable a country to compete in a sector internationally.
- protect public services including cultural production
- pass or strengthen legislation to protect the environment, health and labour standards.
- control capital inflows and outflows, increasing risks in newly industrialized economies to financial crisis
The Halifax Initiative Coalition demands that governments engaging in the FTAA discussions recognize and respond properly to these problems:
- Too often, trade and investment take place in secret, and without respect for environmental, human rights and social considerations.
- The "Washington Consensus" or trickle-down model of the market system has failed to increase growth or decrease poverty, inequity and environmental degradation.
- The gap between the rich and poor has widened,
- The ownership of assets and wealth has become increasingly concentrated
- Many small businesses and small farmers have been forced into bankruptcy as a result of trade and financial liberalization
- Export orientation has resulted in increased resource exploitation and damage to the environment.
- Policies of labour market "flexibility" have led to increases in job instability, poorer working conditions, and weakened respect for workers' rights.
- Liberalized investment policies displaced local farmers
The Halifax Initiative rejects any trade agreement that would:
- reduce a government's ability to retain public ownership over public goods and services
- create a chill effect on increasing labour and environment standards, due to a NAFTA-style investor-state dispute mechanism that allows non-discrimination between domestic and foreign investors and uses a broad definition of expropriation.
- further deepen the race to the bottom by accelerating trade and investment liberalization, increasing dependency on external capital
- define investment, transfers, and national treatment so as to severely restrain the ability of governments to regulate even short-term speculative capital flows, in order to prevent or manage a financial crisis. Recent experience with international capital markets suggests that it is not an appropriate time to negotiate a new investment agreement that would limit signatory countries' abilities to regulate the flow of capital across international boundaries
- fail to address the debt burden of Central America, Latin America and the Caribbean. The debt of the poorest countries in the hemisphere is not on the FTAA agenda at all, and that there is no discussion of the fact a significant portion of the debt is illegitimate. This debt constitutes the most significant barrier to development. There must also be recognition of the "ecological debt" that is owed to Third World countries that have suffered the effects of extracting their natural resources - like petroleum, minerals, forests and marine and genetic resources - and the environmental damage that accompanies these largely to the benefit of industrialized countries and transnational corporations.
- be negotiated in secret, without public participation, no requirements for parliamentary/congressional debate and which fails to negotiate with indigenous peoples.
Like the World Bank and IMF, the FTAA presumes a model of development that measures progress in terms of degree of liberalization, export orientation and sees a public role reduced to maintaining a stable investment climate and "law and order".
The Halifax Initiative calls on governments of the hemisphere to:
- immediately cancel the debt of the poorest countries of the hemisphere
- immediately put in place processes such as that in Argentina to determine the illegitimate and ecological debt which must be cancelled.
- impose limits on currency convertibility, during time of financial crisis, or under other circumstances in which the government determines that such action is in the national interest,
- implement a currency transaction tax, or "speed bump," on short-term speculative capital in order to promote long-term investments over short-term inflows
- impose a ceiling, or other restrictions, on foreign borrowing by domestic banks.
- use performance requirements to support domestic sectors with high employment or cultural significance,
- adopt high standards on trade and equity financing to ensure environment, local communities, indigenous, labour and human rights are protected,
- reject World Bank and IMF structural adjustment programmes.
The constant downward pressure exerted from the export/import and investment community to lower standards has resulted in a race to the bottom in which international commitments on human rights, including labour and indigenous rights and environmental protection are discarded. Latin America experienced much higher growth and much lower levels of inequity in the decades before SAPs. From 1960 to 1980, income per person in Latin America grew 73% compared to 7% in the decades of SAPs. Latin America has the highest rates of inequitable wealth distribution in the world. as a result of financial liberalization. Two-thirds of foreign direct investment in Latin America is devoted to mergers and acquisitions. . Multinational banks are less likely to provide credit for domestic small business than for the trans-national corporations who are the biggest clients. Women suffer discrimination in the labour market and have thus been most negatively affected by polices of flexibility, especially indigenous women and those in rural areas. forced to choose between tilling slopes prone to deadly mud slides and clearing forests for new crop land worsened the devastation wreaked by Hurricane Mitch. So also did export orientation which resulted in the loss of mangroves, a natural barrier to hurricanes.