As the world’s leaders and trade officials gather at three international meetings in late 2005—the Summit of Americas in Mar del Plata (November), Asia Pacific Economic Cooperation forum in Busan, South Korea (November), and the World Trade Organization ministerial in Hong Kong (December)—to discuss trade and development issues, they would do well to consider the impact of free trade agreements in the Western Hemisphere. 1. Negative Trade-Offs The trade-offs between gaining greater access to the U.S. market and the displacement caused by loss of national markets to imports often lead to negative net results. When compounded by a decrease in participation in other regional and global markets, the result is both politically and economically negative. 2. Long-Term Harm Concessions to U.S. demands in FTA negotiations can have long-term detrimental effects. Under the North American Free Trade Agreement, Mexico has seen the erosion of the smallholder farmer economy, the loss of traditional knowledge of land and biodiversity use in rural communities, food dependency, obstacles to the construction and consolidation of South-South links, and greater inequality in income distribution. It is also losing national sovereignty, cultural diversity, and important policy tools for national development. 3. Insufficient Protection Special product protection, safeguards, or longer liberalization periods are insufficient to solve the problems caused by massive imports. A strategic product cannot be left to distorted market forces. Moreover, the examples of sorghum and white corn displaced by yellow corn imports illustrate the insufficiency of offering special protection to specific products. 4. Preempt Other Integration Strategies The Free Trade Agreements with Mexico, Chile, Central America, and potentially the Andean region severely hamper the development of other potentially more advantageous options of economic integration. The value of regional integration is not merely to create a trading bloc to compete and negotiate more effectively with developed countries but to rethink regional integration and develop joint tools for sustainable production and trade. When done ideally—in a more horizontal manner, among nations that share common challenges, with national development and wellbeing cast as primary goals—regional integration could be a far more equitable and sustainable course than the FTA model currently imposed by the United States. 5. Divide and Conquer Strategy Washington’s divide-and-conquer strategy forces nations to concede in other areas in order to assure market access, and uses sticks over carrots to impose a model that benefits U.S. economic and security interests and large corporations. For this reason, FTAs with the United States should be avoided. Nations must evaluate alternative forms of economic integration and assess all options. The gains offered are limited and short-lived; the price is likely to be the long-term sustainability and stability of the country. 6. Trade Tied to U.S. Foreign Policy Not all trade costs are quantifiable, and among the highest costs of FTAs with the United States today are the political costs. In U.S. FTA negotiations, everything—trade being often a minor issue—is on the table, whether explicitly or implicitly. And in the center is the renewed U.S. drive for global hegemony. Trade policy is an instrument for this hegemonic control, and it is now closely tied to security policy. Political costs of trade dependency on the United States can be very high. In the “with us or against us” mentality of the war on terrorism, trade relations become another lever of control. Another cost is the erosion of possibilities for greater regional economic integration. 7. Incorporate Silent Voices Trade agreements should incorporate the silent voices in the negotiations process and debate. Small producers, especially farmers, are particularly vulnerable and have a weak voice in national politics. Incorporating them into talks is necessary not only to enhance democracy and transparency but also to arrive at a better agreement. They hold important truths about the productive and social structures of their countries. 8. Trade Must Consider Other Values Cost-benefit analysis of extraterritorial trade and investment must include benefits and values that are now ignored by the international market but which are vital to developing countries and the world. These include livelihood generation, cultural diversity, food sovereignty, protection of ecosystems, and biodiversity. 9. Invert Current Trade/Development Equation The current equation that has trade policy driving national development policy must be inverted. Development policies should drive trade and investment policies and agreements, not vice versa. As is, trade agreements, together with imposed rules about investment and finances, systematically supplant or preempt the formulation of national development policy. Sustainable and equitable development policies must be the result of bottom-up not top-down planning that give priority consideration to local, national, subregional, and regional needs rather than to the demands of the world’s largest economies and corporations. - Talking Points #4 — Free Trade Agreements Lessons in Latin America These Talking Points were prepared by Laura Carlsen, director of the Americas Program of the International Relations Center (IRC), online at www.irc-online.org . Carlsen is the author of numerous essays and book chapters on globalization, and speaks widely on trade and development.