Why the Stakes Are So High for Trade Talks

Why the Stakes Are So High for Trade Talks—Web Exclusive

The big post-Cancun news is that a coalition of developing countries, led by Brazil, has dramatically weakened the formerly sweeping text of the proposed Free Trade Area of the Americas; the recent FTAA negotiating meeting in Miami called for an "a la carte" treaty proposal that will allow countries to opt out of some areas. Meanwhile, the full-strength Central American Free Trade Agreement will likely come to a vote in Congress this spring. Why are activists so worried about "free" trade agreements?

The WTO, and other so-called "free trade" treaties such as NAFTA and the proposed Free Trade Area of the Americas, are actually highly political, negotiated documents in which stronger countries often set the labyrinthine rules to their advantage. For example, when the WTO was formed, wealthy countries simply pushed through a classification system in which their massive farm subsidies are defined as "not trade distorting"—in utter defiance of both reason and suffering Third World farmers.

Of course, there would be nothing wrong with some guidelines for trade in order to help (rather than hurt) the poor, or in order to cut the risk of harmful financial crises, or in order to let democratic governments make choices for their own people. Still, many developing countries were willing to give up their right to set such guidelines, because the WTO promised a fair, rule-based system in which, it said, poor countries could grow and gain jobs.

In reality, wealthy countries often run roughshod over poor ones at the negotiating table. Here’s how:

* Powerful countries such as the United States routinely use their influence, including threats to withhold foreign aid, to get their way in trade negotiations. U.S. influence shows up in the WTO agreement-writing process also. Although such negotiations are supposed to be run by consensus, here’s how they actually work: negotiators articulate very different views, and then the chair produces a draft text that closely represents the wishes of the U.S. and Europe. For example, the draft text in Cancun announced the start of negotiations on four new, complex issues—even though seventy developing countries had come out against such negotiations, and the previous WTO meeting had agreed they would happen only if there was an "explicit consensus" on the matter. Developing countries’ only recourse is to refuse the entire draft text for the meeting—which they did in Seattle and Cancun.

* Poor countries frequently find that they have little to negotiate with, since international institutions such as the IMF and World Bank have already forced them to open up markets, slash tariffs on imported goods, and privatize many government services at fire sale prices. The IMF and World Bank have the power to do this because they control loans aimed at economic development, and because the sky-high interest rates of the eighties have left many developing countries struggling under massive, unpayable debt loads.

* Trade negotiations are extraordinarily complex and technical, and poor countries can’t come close to hiring the lawyers and researchers they need in order to understand what their specific country should bargain for. Poor countries’ negotiators are sometimes offered research help by organizations, such as US AID and the World Bank, which are controlled by the wealthy countries on the other side of the negotiating table. This is called "technical assistance," although "fox guarding the henhouse" might often be a more accurate description.

After its setbacks at WTO and FTAA meetings, the U.S. has redoubled its divide-and-conquer strategy, in which it pushes to negotiate treaties with individual countries (and, in the case of the proposed Central American Free Trade Agreement, pliable regions). The citizens of the U.S. and other wealthy nations can play a key role in stemming the tide of lopsided trade agreements. First, we can demand that draft treaties be made public during negotiations, to give citizens of every affected country time to respond. The negotiating texts for the proposed FTAA were kept secret for years (although hundreds of corporate representatives were cleared to see them); the public is still in the dark about CAFTA’s details.

Second, we can ask our legislators to take a hard look at proposed trade treaties put before Congress, including CAFTA this spring. A number of religious groups, including World Vision, Lutheran World Relief, and the Presbyterian Church USA, have expressed concern that CAFTA may harm labor rights and the environment, prevent poor people from getting low-cost AIDS medicines, deter governments from stopping harmful financial crises, and threaten essential services such as water for countries’ poorest citizens. In this election year, there is a good chance that CAFTA could be defeated, especially in the House of Representatives.

Find out more:

Read the letter by religious groups concerned about CAFTA.


The activist group Health Gap provides information about how CAFTA may roll back hard-won WTO rules that allow poor countries facing the AIDS pandemic to buy low-cost generic drugs.


In a report from the Cancun WTO meeting in November, James E. Hug, S.J., (of the Catholic justice group Center of Concern) explains some of the reasons why developing countries feel frustrated about the workings of the WTO.


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