Resisting the FTAA

The Free Trade Area of the Americas (FTAA), an initiative to expand North America Free Trade Agreement (NAFTA) to 34 nations of the Western Hemisphere (with the exception of Cuba), brought thousands of protesters to Miami this past week, as well as a delegation of Harvard students sent by the Institute of Politics to observe the action. Media mogul Conrad Black has labeled activists who resist trade liberalization “the political equivalent of football hooligans.” He maintains that, “They are incapable of coherent articulation and they should be dispelled with as little force as necessary whenever they become disorderly. They should not be accorded any credence in discussions of serious issues.”

In Black’s universe of compassionate conservatism, a kinder, gentler pepper spray or water cannon might be in order. The benefits of FTAA should be so obvious that only social “misfits” and “foreign carriers of the anti-American lunacy” are apt to challenge its triumph. This week’s issue of U.S. News & World Report noted that security police had apparently taken such advice to heart and were indeed searching for less violent techniques to deal with incipient anti-FTAA unrest; but one Miami shop clerk claimed to be packing a .357 magnum just in case. “The entire city was paved over with riot cops,” exclaimed Harvard student Madeleine S. Elfenbein ’04, who found herself unceremoniously jailed during the demonstrations.

Earlier in this month, several female workers from Honduras came to Harvard and explained to students their conviction that FTAA would likely worsen conditions in their country’s maquiladoras. Making clothes for the firm of Sean “Puff Daddy” Combs (a.k.a. P. Diddy), Lydda Eli Gonzalez told of poverty wages, long overtime hours, firings for pregnancy and water supplies found to be contaminated with stomach-churning levels of fecal matter. For these denizens of the sweatshops, so-called free trade is not fair trade. Designed to strengthen the freedom of capital, FTAA brings few or no safeguards for the rights of workers.

Export-processing zones in Central America have provided a laboratory for FTAA-style arrangements, and they are delivering union-smashing managements, vandalized public services, and a ravaged physical environment. Meanwhile, the apparel workers who came to Harvard have been denounced in the Honduran media as “terrorists,” as the ‘T-word’ replaces the ‘C-word’ (communist) as the primary means of discrediting agents of social change.

For the past two decades, trade liberalization and privatization of public enterprise has carried the day under a banner known as the Washington Consensus. NAFTA, the World Trade Organization (WTO) and the FTAA are among the institutions and frameworks designed to enshrine the Washington Consensus. Harold McGraw III, the chair of the Business Roundtable’s international trade and investment task force, cites World Bank estimates that the removal of trade barriers “could add $2,800 billion to the world economy by 2015, of which $1,500 billion would accrue to developing countries, lifting 320 million people out of extreme poverty.”

Yet, what has happened during the two decades since widespread expansion of the Washington Consensus? In 1980, the richest 10 percent of nations had 77 times higher median income than the poorest 10 percent; by 1999, it had grown to 122 times. Prior to the victory of the Washington Consensus, Latin America and the Caribbean experienced a 75 percent growth in per capita GDP from 1960 to 1980 but since then has stagnated with total growth of 7 percent. Sub-Saharan Africa actually tumbled 15 percent during this period after experiencing a 34 percent growth in the previous two decades—an era supposedly stifled by onerous tariffs and over-regulation.

Now it would appear that the rich countries have done quite well by this unleashing of free markets. But, alas, much of the benefits have gone to the wealthiest sectors of society. Under President Bill Clinton, who engineered the passage of NAFTA, the ratio of CEO wages to those of the average U.S. worker skyrocketed from 113 to 1 in 1991 to 449 to 1 at the end of his presidency. According to the Congressional Budget Office, from 1979 to 1997, the average household in the lowest quintile declined significantly, while the average household in the top 1 percent soared from $256,400 to $644,300. Households in the middle quintile barely rose. Yes, someone is cleaning up from the Washington Consensus, and it is clearly not Joseph and Josephine Six-Pack.

Three-time Pulitzer prize-winning journalist Thomas L. Friedman speaks for most of the North American elite when he condemns “these anti-WTO protesters—who are a Noah’s ark of flat-earth advocates, protectionist trade unions and yuppies looking for their 1960s fix.” Yet, even within the World Bank and the International Monetary Fund, there are some new voices admitting that the Friedman world view and policy prescriptions have led to misery for much of the world. In many Ivy League economic circles and among the Business Roundtable, the Washington Consensus remains inviolate. When it comes to Consensus, though, General George S. Patton may have been on to something as he paused to remark: “When everyone agrees, someone is not thinking.” In Miami, the FTAA failed to achieve the assent of many Latin American governments and, much to the chagrin of Friedman and Conrad Black, may have to undergo serious re-thinking.

John T. Trumpbour is research director of the Labor & Worklife Program at Harvard Law School.