At the time of writing, the parliaments of Chile and Argentina are putting together a Free Trade Agreement (FTA) between the two countries. This FTA was signed in January 2018, with the objective of extending the Agreement of Economic Complementarity (AEC) Nº 35 in force since 1996.

This Agreement is framed as the convergence between the Pacific Alliance and Mercosur blocks. This fact is fundamental in understanding the political importance of this Agreement. During the Summit of the Pacific Alliance celebrated in July in Puerto Vallarta, Mexico, a plan of action to advance the convergence of the two blocks was proposed, something which has been under negotiation for at least a year. The Chilean President Sebastián Piñera indicated that they propose to generate a “great free trade zone in Latin America” [1]. This bilateral Agreement advances this objective, since realizing this convergence requires the member countries to sign bilateral FTAs among themselves, in accord with the regulations of the Pacific Alliance.

The new regional FTAA: new treaties, old themes

The Chile-Argentinian FTA has been presented as a new innocuous “regulatory framework” in bilateral relations, posing no danger, that simply “deepens and extends the bilateral juridical framework of economic space” already regulated by the AEC Nº 35. In effect, it is to be an FTA that does not modify the substance of trade between Chile and Argentina. This gives rise to a question: what is the meaning of this Free Trade Agreement if it does not modify the conditions of trade between them? We already know the answer: the FTAs deal with much more than customs and duties. We are in fact speaking of agreements that result in the deregulation and liberalization of a wide range of economic activities that in recent decades have been in the hands of the States, especially in public services: provision of basic services, education, health, pensions, mail, telecommunications, transport in general, etc. These activities have gradually passed to private hands on the assumption that only small, agile and efficient “modern States,” can attract foreign investment in our territories.

Hence, as was the case with the FTAA, over ten years ago, the new FTAs are the legal tool of private forces that push for an indiscriminate economic opening in our countries. This takes place through the so-called “regulatory themes” or “themes associated with trade”, some of which were incorporated in the decade of the nineties as Services, Public Contracting, Telecomunications, Investments, Intellectual Property and Sanitary and Phytosanitary Measures (and today we could add E-Commerce). Several of these themes were incorporated in the negotiation agenda of the World Trade Organization (WTO) in 1994, due to pressure from the most powerful US transnational companies (such as the Hollywood industry, the big pharmaceuticals and the service companies). In the same period these themes were added to the Free Trade Agreements negotiated by the US such as NAFTA, and later to the proposal of the FTAA. Now they appear again in Treaties such as the TPP-11.

This Agreement also has new themes that refer to the internal regulatory processes of countries stemming from the mechanism of Regulatory Coherence and “good regulatory practices,” which have been inserted in the chapters on Facilitation of Trade and Technical Obstacles to Trade. Regulatory Coherence involves the trend towards achieving compatibility and homogenisation of the internal legislation of countries as well as their internal regulatory processes [2]. The term “Transparency” defines a new mechanism for state regulation that implies a dialogue with stakeholders in the face of new regulations that will be adopted within the legal order. This process of dialogue is framed as a notion of “good regulatory practice” implying that the States facilitate to the maximum the free movement of enterprises, freeing foreign investors from the burden of the bureaucracy and administrative procedures. This mechanism is now promoted by international fora such as the OECD and the G20, and was incorporated in the TPP-11 and in the limited Transatlantic Treaty (TTIP). These mechanisms intervene directly in the democratic mechanisms of State decision making [3].

The inclusion of all these themes has been strongly criticised by civil society over the past 25 years, precisely because it implies property privileges for transnational companies and foreign investors, whose rights are converted de facto into the new standard for legislation, while it undermines the possibility of applying human rights, dispositions that become “soft law compared to private rights. Through this kind of agreement, companies can sue States in tribunals of international arbitration (such as the ICSID), while the States can only bring a company to court for violations of human rights or environmental regulations in their own national tribunals, where they are then accused of being partial or lacking objectivity. Various cases of lawsuits brought by companies against States have generated great international debates, since they demonstrate precisely the inequality between their respective rights [4].

“Modern” themes of the FTAs or empty shells?

In addition to the themes from the nineties, this Agreement also incorporates some more recent themes, which make it possible to present recent FTAs as “modern regulatory frameworks.” This refers to chapters on Gender and Trade, Environment and Development with an emphasis on the role of the Micro, Small and Medium Enterprises (MiSm&ME).

But these chapters are only empty shells, that is to say that they are not operative, they do not set out specific objectives or schedules of work, nor do they stipulate any obligation for States to fulfill specific policies that are in accord with these chapters.

In addition, it is specified in these chapters that States cannot use the mechanism of Solution of Controversies of the Agreement itself (Chapter 18) to object that the goals of these chapters are not being observed or fulfilled, or that the other State is violating access to the dispositions of any of these chapters. This demonstrates that these chapters attempt to pad out empty themes in the FTA, but do not have a real operative capacity.

For example, the Chapter of the MiSm&ME only lays out a number of statements that the Parties recognize that the MiSm&MES are incorporated in bilateral trade. To follow up, it establishes a MiSm&ME Committee, the only specific objective proposed in the Chapter. Nevertheless, in the face of any divergence between the Parties, there is an emphasis that both will make an effort through dialogue, cooperation and consultation to resolve problematic situations.

The same thing occurs with the chapters on Labour, the Environment, and Gender: the modality in which the clauses are formulated stems from the “recognition” by the Parties of the importance of the defence of labour and environmental rights, but does not establish the possibility that one State can take action against the other for the violation of such rights. In this sense, everything is left to the area of goodwill.

In the specific case of the chapter on Gender and Trade (Chapter 15) this FTA notes that the objective is to achieve the “most equitable participation of men and women in trade, industry and the world of work.” The focus is on “the economic empowerment of women,” but nothing is said about the impacts that trade liberalization has on all areas of women’s lives.[5].

Different reports and investigations [6] have already shown that instead of breaking the structural inequalities of gender, recent trade liberalization has reinforced these inequalities in giving growing power to multinational businesses that are directed by men [7]. These Agreements are generally signed without analysing their differential impact on men and women.

In addition, the FTA proposes an increase in the participation rates of women in the economy since this would contribute to sustainable economic development (Art. 15.13). This point of departure is questionable since there is evidence that shows that trade does not always result in better living conditions. Trade – on some occasions – provokes an increase in the rate of activity, but the jobs generated are of low quality, with low wages and precarious conditions. A case that demonstrates this is the proliferation of maquilas in Mexico after the signing of NAFTA, where those employed are in the majority poor women, migrants, with very low wages and working days of over 12 hours, leaving them in a state of severe labour and social vulnerability.

Another FTA without debate or impact studies

Finally, we see that there continues to be a repetition of the modus operandi of all the FTAs in the region: a new process of ratification behind the backs of the citizens and without impact studies that indicate the need for this Agreement.

Two incidents indicate the way in which this is being treated in both Congresses. On one hand, the Argentine Senate, where the FTA was recently presented for ratification, only sent the agreement to one commission, that of Foreign Relations, where the only invited representatives of “civil society” were the Argentinian Chamber of Commerce and Services, the Argentinian Chamber of Biofuels, the Chamber of Exporters and the Union of Industrialists of Argentina (UIA). Excluded from this “debate” were representatives of sectors affected by the regulatory chapters of the Agreement, which, as we said, are its strong parts: representatives of health care organizations, education, women, union organizations, organizations of M&MEs, of the countryside, etc.

On the other hand, in the Chilean Congress, members of the Democratic Revolution, part of the Frente Amplio, presented a Resolution that was approved by an ample majority on August 2, 2018 [8], where they “requested from the Ministry of Foreign Relations an evaluation of existing free trade agreements and a better standard of evaluation for agreements in future treaties of this kind and their modifications.” This request of the members, without precedent in Chile and we could say in the whole region, is taking place in the country that has signed the greatest quantity of agreements at a global level, which points to the existence of discomfort in some political and social sectors concerning the effects that these FTA have had in the country since they came into force.

These incidents point to two key factors: 1) the lack of transparency in the discussion of an FTA [9] that, as we have indicated, has direct impacts on the capacity of States to regulate on a great number of matters; 2) the growing demand concerning the need not to adopt these FTAs without impact studies regarding their prior effects on a wide range of social and economic sectors [10], and without prior consultation, of a binding character, with the affected communities.

In a context of strong global uncertainty, the strategy of signing an FTA should at least be questioned and discussed in the light of empirical evidence from 25 years of FTAs at a global level, and with clear impacts on Latin American countries. Definitively, our countries cannot continue to sign agreements that prioritize the rights of corporations over social rights.

20/08/2018

(Translated for ALAI by Jordan and Joan Remple Bishop)

- Luciana Ghiotto is a resercher with CONICET-Argentina with a seat in the Universidad Nacional de Sann Martín (UNSAM). She is a Member of ATTAC Argentina and of the Assembly “Agentina mejor sin TLC”. Collaborator with the Transnational Institute (TNI).

- Patricio López is a Chilean journalist, who has participated in the Plataforma Chile Mejor sin TLC. He is the director of the Radio Universidad de Chile.

[1] http://www.t13.cl/noticia/politica/video-alianza-del-pacifico-pinera-anuncia-intenciones-converger-alianza-mercosur

[2] Article: “Las reglas para la facilitación de inversiones: un análisis desde los mecanismos de cooperación reguladora”, by Luciana Ghiotto and Adoración Guamán, to be published shortly, CLACSO.

[3] Report: “La negociación sobre reglas para la Facilitación de Inversiones” by Luciana Ghiotto, 2016, Transnational Institute; in: https://www.tni.org/es/publicacion/la-negociacion-sobre-reglas-para-la-facilitacion-multilateral-de-las-inversiones

[4] For example, the cases of Chevron vs. Ecuador, Metalclad vs. México or Suez, Sociedad General de Aguas de Barcelona SA and Vivendi Universal SA vs. Argentina. See all these cases in: www.isds-americalatina.org

[5] https://mundo.sputniknews.com/radio_voces_del_mundo/201712061074526207-tlacan-influencia-en-mujeres-hispan-tv-youtube-bloqueo/

[6] See the report of the McKinsey Global Institute: The power of parity, 2015, in: https://www.mckinsey.com/featured-insights/gender-equality/the-power-of-parity-advancing-womens-equality-in-the-united-kingdom

[7] https://www.policyalternatives.ca/publications/monitor/how-canada-can-tackle-gender-inequality-through-trade

[8] Cchamber of Deputies, Chile, Proyecto de Resolución número 119, August 2 2018.

[9] https://chilemejorsintlc.cl/senador-juan-ignacio-latorre-con-los-tlcs-hay-una-perdida-de-soberania-del-estado-respecto-a-las-empresas-transnacionales/

[10] Joint declaration of the Assembly Argentina mejor sin TLC and the Plataforma Chile mejor sin TLC: “Tratado de Libre Comercio entre Chile y Argentina: ¡Basta de Tratados sin debate y a espaldas de los pueblos!”, June 2018; in: https://mejorsintlcorg.files.wordpress.com/2018/06/declaracion-tlc-chile-argentina-junio2018.pdf