June's Lowdown

June 2005, Volume 7, Number 6

Edited by Jim Hightower and Phillip Frazer


CAFTA is worse than NAFTA

A corporate plan to trump our laws and the Constitution

Breaking news: The Lowdown has learned from inside sources that the president will soon deliver a major address to We the People— and it will be a stunner. In summary, Bush will call for congressional approval of a sweeping protection program for global corporate investors that will (1) give foreign corporations greater legal rights than we citizens have in our own country; (2) allow multinational corporations to override our laws (national, state, and local) whenever U.S. law conflicts with their profit expectations; and (3) usurp the Constitutional authority of U.S. courts by unilaterally transferring jurisdiction over these corporatestate conflicts out of our judicial system into superjudicial, supranational, corporate-friendly, global-trade tribunals which operate in secrecy and are even authorized to overrule U.S. Supreme Court decisions.

OK, I'm fibbing. Not about any of the substance of George's corporate protection scheme (it's all too real), but about his giving a speech about it. If any president openly proposed such a direct assault on our democratic rights and national sovereignty, people would storm the White House with pitchforks and torches, demanding impeachment for treason. So instead, Bush's assault is buried in the arcane, corporate-written language of the latest "free trade" scam, called CAFTA—the Central America Free Trade Agreement.

If you think NAFTA has been awful, wait'll you get a wafta of CAFTA. Not only does it extend all of the job-busting, farm-killing, environment-exploiting provisions of NAFTA to six more countries (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua), but it also expands the ability of foreign corporations to assert their profit interests over the people's interests, both in the U.S. and in the six Latino nations.

The Bushites have declared that CAFTA is their number-one trade priority, and their PR hucksters are spinning faster than a Maytag to try to convince the media and Congress that this deal is beyond good – it's superfabuloso! Like hawking a Veg-a-Matic on latenight TV, they're promising that CAFTA can do it all: "You'll marvel at how fast it will increase U.S. exports, spreading gleaming manufacturing jobs to every nook and cranny in our country, and you'll also gasp in disbelief at how this wonder-deal will simultaneously cause prosperity and democracy to burst forth like spring flowers among our good neighbors to the south, thus putting a chicken in every pot and a Hummer in every Central American garage."

If this hypercharged sales job sounds vaguely familiar, it's because the Powers That Be were doing the exact same song and dance 11 years ago when they were hanging NAFTA around our necks.

As we've learned the hard way, they lied. Far from generating a surging trade surplus and a flood of new jobs, as promised, that deal has eliminated more than two million US jobs and turned our $1.7 billion trade surplus with Mexico into a $45 billion deficit. Meanwhile, in Mexico, the availability of stable, full-time jobs has shrunk, and the pay and working conditions of most Mexican workers has deteriorated.

That other sucking sound

When Ross Perot opposed NAFTA in his '92 presidential run, he famously (and accurately) said that the coming job loss for U.S. workers would be so massive that it would create "a giant sucking sound." CAFTA will add to that sound, for it contains the same NAFTA incentives that led U.S. manufacturers to rush to Northern Mexico's notorious maquiladora strip in the 1990s. But, while most of the debate in Washington is over this issue of jobs, there is another much larger sucking sound that the mass media has ignored entirely and that Bush & Company hope you and Congress don't notice until it's too late. This is the sound of our people's sovereignty already being stealthily swallowed up by NAFTA—a vacuuming up that CAFTA would switch to high gear.

Corporate protectionism

Few Americans know that at the core of these scams are provisions establishing new, extraordinary rights for global corporate investors to establish properties (including intangible properties) in any of the member nations and to be "protected" from environmental, labor, health, or other regulations that We the People might choose to put on the way they operate. These provisions give "rights" to multinationals that people and independent businesses in our own country don't have.

Many Congress critters who voted for NAFTA now say that, gosh, they hadn't really read the bill, and, golly, no one told them about Chapter 11. This is the section of NAFTA that gives foreign corporations radical power that never existed in law before, including empowering corporate owners to use a private enforcement mechanism to impose their profit interests over all other interests.

For example, if a Mexican or Canadian corporation doesn't like one of our environmental restrictions, it can file a Chapter 11 action demanding that either the restriction be eliminated or that our federal government make a huge cash payment as compensation. Such a case would go before a private NAFTA tribunal, which—incredible as it sounds—has the authority to overturn our public laws and regulations or to force payment of our tax dollars to the foreign complainant.

This is not a story of "it could happen," but a story that is happening. Methanex, a Canadian company that makes a component of a gasoline additive that has been banned in California, has taken the California ban to a NAFTA tribunal. Methanex is demanding that it be awarded nearly a billion dollars for its loss of business due to the ban. Under NAFTA's rules, the State of California has no standing and cannot take any part in the case. It must rely on federal lawyers to defend the state regulation.

Even if Methanex doesn't end up collecting the full sum in this case, NAFTA has elevated this (and any) self-serving corporation to the level of a sovereign nation, on a par with the government of the United States of America. The corporation already has forced U.S. taxpayers to spend $3 million on this one case.

Likewise, various U.S. corporations are using NAFTA's Chapter 11 to sue the governments of Mexico and Canada. UPS, for example, is claiming that the delivery of parcels by Canada's postal service is an illegal public subsidy under the rules of NAFTA, undermining UPS's market share there. Thus, says UPS, Canada's taxpayers owe it $160 million. So far, 42 corporations have filed NAFTA cases against laws and regulations set by supposedly sovereign governments in the U.S., Canada, and Mexico—making demands that total more than $28 billion from taxpayers.

Now comes CAFTA, fully loaded with all of NAFTA's astonishing, antidemocratic, procorporate provisions. But CAFTA goes where even NAFTA did not dare tread. It would expand the scope of corporate protectionism through two provisions.

One declares that the corporate investments to be protected from public actions include not only real property, but also the owners' "assumption of risk" and their "expectation of gain or profit." Hello. This officially sanctions corporate socialism, making the taxpayers liable for corporate business risks and responsible for the profits its owners "expected" to make.

Second, a little technicality in Article 10.12 of CAFTA broadens the corporate reach dramatically. Under NAFTA, a U.S. corporation cannot file a case with these tribunals against our own national, state, or local laws. But CAFTA rips a multibillion-dollar loophole into that prohibition. It would allow the foreign subsidiaries of U.S. corporations to file such cases against national, state, or local government actions here at home. Unlike smaller businesses, global corporations have subsidiaries everywhere, so this gives them a right that our hometown companies don't have. Phillip Morris, for example, could use a Central American subsidiary to challenge U.S. tobacco laws in a CAFTA tribunal.

Assault on the states

It's incredible to me that the media continues to label the reign of the Bushites "conservative" when they've demonstrated again and again that they are Big Government extremists, constantly working to usurp state authority and centralize government power in the executive branch. Now, with CAFTA, they're using trade policy to bend our state governments not only to federal whim, but also to the agenda of global corporate power.

Their point of attack is the usually mundane procurement policies that each state sets to govern its purchases of such stuff and services as vehicles, office spaces, uniforms, legal advice, and computers.

In September 2003, Bush's trade representative quietly sent an official letter to every governor. Using innocuous-sounding bureaucratic language, the letter asked that the governors assist the United States of America "in our trade negotiations." It specifically requested their "voluntary commitment…to be covered under the government procurement provisions of new [trade] agreements." The letter assured the governors that this was no big deal, flatly stating, "Your agreement would not require [your state] to change its current government procurement practices."

Apparently, gullibility is a gubernatorial requirement in 28 states (now 27, New Hampshire rescinded its commitment May13),for that's how many governors signed on to this flimflam, blithely committing their states to conform their purchasing policies to international rules that, at the time, were not even written!

When the CAFTA text was released last year, Public Citizen's Global Trade Watch sent a memo to state legislators and attorneys general— a group of officials that had not even been notified, much less consulted, either by Bush's trade office or by their own governors. The memo was a shocker, revealing that the White House had lied to the governors. Chapter 9, Article 9-2, does indeed require any state that signed on to make its purchasing policies conform to CAFTA rules. Forbidden policies include:

Buy America. Signatory states cannot give preference in their purchases to local companies or to Made-in-the-USA products, nor can they refuse to spend their tax dollars on companies that are moving a state's jobs offshore.

Green purchases. Specifications that products contain recycled content, that food be mercury-free, or that energy come from renewable sources are forbidden, as are requirements for certain environmental or consumer-safety labels.

Corporate record. Corporate suppliers cannot be disqualified from state purchasing contracts because of their human rights, labor, or environmental practices. Even the use of sweatshop and child labor must be overlooked.

Living wage/prevailing wage. States cannot require contractors to pay fair wages or to treat their workers and unions fairly.

Human Rights. States cannot refuse contracts with corporations from countries that suppress workers and citizens, even countries that are brutal dictatorships.

It's awful enough that Bush & Company are proposing to commit our federal government to such antidemocratic terms, but it is absurd that governors would so meekly go over the same cliff, surrendering their state's sovereignty and the very principle of federalism. And lest you think that a state can simply ignore the CAFTA rules after signing on the dotted line, any CAFTA nation can take a signatory state to a trade tribunal for failure to comply—and state officials are not allowed inside to defend their policies. It gets worse: If the state loses the case, our federal government is obligated by CAFTA to use all of its Constitutional powers (such as cutting off state funding) to force the state to comply with the tribunal's ruling.

Holy Thomas Paine! These governors are giving up their state's authority to decide how and with whom their tax dollars are spent, transferring these basic democratic decisions to an unelected, unapproachable foreign trade entity created by and for global corporations. This is the surrender of state sovereignty without a shot being fired, a bill being introduced, a hearing being held, an election being called, a public discussion being generated—nothing…except some gooberheaded governors mindlessly responding to a White House letter. That's embarrassing.

The good news is that nine of 28 governors who had signed on to CAFTA have now rescinded their agreement, either because they finally read the thing, or because legislative leaders and grassroots groups kicked their butts. In Maryland, when Governor Robert Ehrlich refused to withdraw his pledge to George, the legislature passed a bill revoking it for him, while also stating explicitly that binding the state to an agreement with foreign powers is a legislative function. Ehrlich vetoed the bill, but the legislature promptly overrode his veto.

Where's the media?

There are many more time bombs buried in the dense text of CAFTA, yet the media powers either are willfully ignorant of them or have chosen not to bother us citizens with the information. Perhaps they're too busy with their nonstop titillations about Michael Jackson's Neverland capers to pay attention to the slippage of democratic control here in the homeland.

If any of the inquiring minds of the media wanted to give you a heads up, not only would they dig into Articles 9 and 10, but also Article 11. This is a convoluted provision that appears at first glance to exempt local government services (such as education, energy, and health care) from privatization bids by foreign corporations—but, in fact, does the exact opposite.

It says that if a local government function in the U.S. or the other six nations is in competition with private firms that provide such service, then the government must allow all corporations—specifically including foreign corporations—to bid on privatizing that public service. You don't have to be Joseph Pulitzer to realize that this is a rather important story with huge ramifications for local governments and democratic sovereignty. But… silence from the incurious media.

Article 11.8 (2) is another explosion of democratic control, for it allows the secretive trade tribunals to render judgement on whether any particular government regulation in the service sector is "necessary." Requirements to protect the privacy of our personal information, for example, could be subject to challenge by foreign corporations under this proviso, allowing a CAFTA tribunal to decide if such a requirement is necessary, regardless of the fact that We the People had already decided through our legislative process that it is necessary.

There are also provisions that could empower foreign corporations (or the foreign subsidiaries of U.S. corporations) to challenge such democratically decided policies as our national law banning tobacco ads targeted to children, our state laws establishing renewable energy goals, or our local zoning laws to restrict the size and location of big-box stores. Excuse me for having expectations of journalism, but wouldn't this assault on democratic decision-making seem to be a worthy subject of inquiry?

We don't hafta

W and his corporate buddies are pushing with all their might to get Congress to rubberstamp CAFTA, with Bush even wrapping this antidemocratic scheme in the rhetoric of freedom. But it might not work this time, for people in our country and in Latin America are catching on to the ugly reality behind such high-sounding rhetoric."

"Free trade" is now a bitter epithet in Latino countries—a euphemism for corporate exploitation, expropriation, and domination, mostly by US-based corporations. CAFTA might be non-news here, but it has become a political flash point in the very nations that Bush points to. For example, while Bush recently stood with the president of Guatemala and talked glowingly about freedom, he said nothing about the thousands of Guatemalans who have poured into the streets in protest. Far from responding with expressions of democratic rights, the army opened fire, killing two and wounding nine.

In Honduras, when the congress rushed through the ratification of CAFTA, more than a thousand angry demonstrators surrounded the capitol building, causing the terrified legislators to flee. "We chased them out, and then we went into the chambers ourselves," said one of the protest leaders. "Then we constituted ourselves as the congress of true representatives of the Honduran people, and voted to scrap congress's ratification." Likewise, opposition in Costa Rica is so intense that the country's president now says that he won't even submit the pact for ratification until it's reviewed and approved by a citizens panel.

Meanwhile, back in our own capitol, George doesn't have the votes to ram CAFTA down our throats, or he would've already done it. He signed it in May 2004—a year ago— and can submit it to Congress whenever he chooses, but this deal is so stinky that members he can usually count on to haul corporate water are balking. Most of the corporateinclined Democrats are just saying no, and many of his own party's Congress critters—especially some from the South—are getting such local heat that they've backed away.

But the Bushites and the lobbyists are out in full force trying to bribe, cajole, and kneecap enough members to try to squeak out a corporate victory. The hope of a people's victory relies on—what else— the people. As Sam Adams put it at the founding: "If ever a time should come when vain and aspiring men shall possess the highest seats in government, our country will stand in need of its experienced patriots to prevent its ruin."



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