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A Regulated-Economy Agreement for the Americas

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DURING THE WEEKEND of April 20–22, 2001, the leaders of countries in North, Central, and South America met in Quebec, Canada, to approve an agenda for establishing free trade throughout the western hemisphere by 2005.

The news media gave a great deal of attention to the thousands of demonstrators who clashed with the police. Representing a wide variety of diverse groups and organizations, their common theme was their resistance to and fear of “globalization.” An assortment of anti-growth environmentalists and leftist-oriented enemies of capitalism joined special interests wishing to oppose international market competition. Statements of government leaders in the meeting that pronounced their appreciation for environmental issues and “worker’s rights” were viewed as a bone thrown to the protesters.

In his speech at the conference, President Bush said that a free-trade area for the Americas would be combined with a “strong commitment to protecting our environment and improving labor standards.” But in later comments, he added,

While I understand that some [trade] unionists are interested in making sure there’s labor protection, I don’t want those labor protections to be used to destroy the free-trade agreement.

Bush also said that he was “committed to using the Tropical Forest Conservation Act to help countries redirect debt payment toward local projects that will protect biodiversity and tropical forests.” But it was pointed out by critics that the U.S. federal budget had earmarked only $30 million to help fund this proposal.

Therefore, the real agenda, many in the news media suggested, especially in the case of the United States, was to open the door to further unbridled capitalism throughout the western hemisphere. American corporations would have unrestricted opportunity to invest and employ wherever the maximum profits could be earned.

The door would be opened to a further “race to the bottom,” in which American workers would lose job security and have to compete with low-wage labor in Latin American countries. And workers in Central and South America would find themselves exploited by U.S. employers taking advantage of “cheap labor.” The environment would be unprotected from misuse and depletion by private companies concerned only with short-run financial gains at the expense of the earth’s natural heritage.

The proposed establishment of a vast free-trade zone from the northern reaches of Canada and Alaska to the southern tip of Tierra del Fuego by the end of 2005 was not likely to be met, it was said, because a number of Latin American countries were suspicious of U.S. intentions and feared that their economies would not be able to successfully match gringo competition.

After all, warned President Vicente Fox of Mexico, “we cannot allow ourselves to drift at the mercy of the whims of market forces.”

But in fact the Declaration of Quebec City, which was signed by the heads of the 34 countries in attendance, showed that the demonstrators need not have had any fears that an unrestricted capitalism was about to be unleashed on the western hemisphere.

Nor was there any reason for believing that either the United States or any of the other nations of the Americas were really interested in creating what President Bush had called in his speech “an age of prosperity in a hemisphere of liberty.” His claim that “the solution does not lie in statism and protectionism; the solution lies in more freedom” rang hollow in terms of the policies to which the member governments actually committed themselves.

With respect to the environment, these governments stated that their purpose was

to strengthen environmental protection and sustainable use of natural resources with a view to ensuring a balance among economic development, social development, and the protection of the environment.

On the issue of poverty, the political leaders said,

We commit to further efforts to reach international development goals, especially the reduction by 50 percent by the year 2015 of the proportion of people living in extreme poverty.

On rural problems, they said,

We commit ourselves to promote programs for the improvement of agriculture and rural life and agro business as an essential contribution to poverty reduction and integral development.

On the issue of migration, they stated,

We are committed to ensuring dignified, humane treatment with appropriate legal protections … and safe and healthy labor conditions for migrants.

And they would “take effective measures against trafficking in human beings.”

On the topic of education, they assured their citizens,

We have agreed to a series of policies to improve access to quality education through teacher training, education in civic values, and in the use of information technologies both in our classrooms and in measuring progress toward achieving these goals.

On the role of government in health care, they said,

We emphasize that good health and equal access to medical attention, health services and affordable medicine are critical to human development and the achievement of our political, economic, and social objectives.

On civil rights, they promised they were for

the eradication of all forms of discrimination … as well as the promotion of gender equality and to achieving the full participation of all persons in the political, economic, social, and cultural life of our countries.

On international conflict, the leaders stated,

We reiterate our full adherence to the principle that commits states to refrain from the threat or use of force, in accordance with international law.

And on the war on drugs, they emphasized,

[We] reiterate our commitment to combat new, multi-dimensional threats to the security of our societies. Foremost among these threats are the global drug problem and related crimes. We renew our commitment to the full implementation of the Anti-Drug Strategy in the Hemisphere [and] effective hemispheric cooperation in the struggle against all the factors that constitute the global drug problem.

The political leaders also emphasized that only democratic nations would be allowed to participate in the Free Trade Area for the Americas. Governments that they deemed not sufficiently “representative” would be excluded from the club.

They concluded by emphasizing that this and previous Summits of the Americas “exist to serve people.”

So where was the commitment to a free-trade policy for the Americas? Tucked away in the middle of this six-page Declaration were two paragraphs specifying what the goals were:

Free and open economies, market access, sustained flows of investment, capital formation, financial stability, appropriate public policies, access to technology and human resources development, and training are key to reducing poverty and inequalities, raising standards, and promoting sustainable development. We will work with all sectors of civil society and international organizations to ensure that economic activities contribute to the sustainable development of our societies.

The Declaration added that

free trade, without subsidies or unfair practices along with an increasing stream of productive investments and greater economic integration will promote regional prosperity, thus enabling the raising of the standard of living, the improvement of working conditions of people in the Americas, and better protection of the environment.

They also said, “We attach great importance to the design of an Agreement that takes into account the differences in the size and levels of development of participating economies.”

The full details of the Free Trade Area of the Americas Agreement are to be worked out by January 2005, and the agreement is to be implemented no later than December of 2005.

The real commitment

What the United States and the other 33 nations committed themselves to is in fact a regulated-economy agreement for the Americas. Environmental planning will determine land and resource uses for economic development. Government policies will be targeted to somehow “plan” the reduction of “extreme poverty” by 50 percent within 14 years.

Government programs will ensure the political improvement of rural life and the agricultural economies throughout the Americas. Migration will clearly not be free; instead, these governments will suppress the “trafficking in human beings” so that the only movements of people in the Americas will be the types and numbers of migrants of which they approve.

Governments are to determine and cooperate in the training of teachers in the public-school systems, accompanied by political indoctrination in proper “civic values” so that the citizens of these countries will learn to appreciate all that their governments so benevolently do for them. The United States and the other member countries will cement the movement towards greater socialized medicine by ensuring that everyone in the Americas will have equal access to health care and “affordable” medications.

The dangerous trend towards group privileges in place of individual rights will be reinforced through various racial and gender “equality” rules and standards that will further limit freedom of association and personal choice.

And the deadly, invasive, and violent “war on drugs” will be not only continued but more vigorously pursued at the expense of personal freedom, destruction of private property, and further corruption of the social and political process.

The limited attention given to actual international trade matters in the Declaration makes it clear that the governments of the western hemisphere are burdening their 800 million people with an internationalization of the interventionist-welfare state.

The only reference to free trade calls for no subsidies or “unfair practices.” The rest of the two paragraphs, if taken as they are written, imply activist governmental policies to direct investment flows and capital formation, provide access to technology for various groups, and target vocational training to meet political goals to reduce “poverty and inequalities” and promote “sustainable development.”

Reinforcing this interpretation is the stated intention to bring to the planning and interventionist table a number of international organizations such as the International Monetary Fund, the World Bank, the World Trade Organization, and the International Labor Organization, as well as a variety of special-interest groups that euphemistically go under the umbrella tag of “civil society.”

The purpose will be to set goals and target selected groups and sectors of the national economies in the Americas, especially those considered deserving of redistributive shares of various sorts and privileged access to investments for development.

Free trade is not difficult

As Pierre Lemieux concisely pointed out in an editorial in the Wall Street Journal (April 24, 2001),

Economists have known for centuries that free trade can be promoted without free-trade agreements. A country’s inhabitants would obtain many of the advantages of free trade if only their own government would stop imposing restrictions on imports…. In other words, if you want free trade, just trade.

All that a government has to do is repeal the domestic laws and legislative acts that prohibit, restrict, or tax the free movement of goods, capital, and people within and between their country and the rest of the world. It’s as simple as that. International agreements and treaties are neither necessary nor required to remove the artificial political barriers that stand in the way of individuals’ searching out and entering into those exchanges and associations that they consider most advantageous for their personal improvement and well-being.

But in spite of the rhetoric that will no doubt be used by the Bush administration in lobbying for fast-track trade negotiating power and passage of any final treaty, the stated goals of any western hemispheric agreement based on the Quebec Declaration have almost nothing to do with free trade. It represents just a new and additional stage in the further implementation of the regulated economy, this time to be extended through another intergovernmental accord.

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    Richard M. Ebeling is a professor of economics at Northwood University. He was formerly president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).