Equitable trade and Southern Africa: A cookie cutter approach will cost lives and livelihoods

U.S.-SACU FTA Working Group

Equitable Trade and Southern Africa: A Cookie Cutter Approach Will Cost Lives and Livelihoods

Statement released 3/27/2006

The United States-Southern Africa Customs Union free trade agreement (US-SACU FTA) negotiations began in June 2003 to create the first US free trade area with Africa. The Southern Africa Customs Union, which originated in 1889, is one of the oldest formal trading blocks and includes Botswana, Lesotho, Namibia, South Africa, and Swaziland. As organizations that have worked for many decades in Southern Africa and in the U.S. on issues that concern this region, we share goals of a more just, sustainable and prosperous human society in the region. In this spirit, we raise serious concerns related to the negotiations of the U.S.-SACU FTA and offer recommendations that are essential to a more just trade relationship between the United States and the nations of Southern Africa.

Although the negotiations continue to start and stall and the text remains a total secret, based on the experience and precedent of other US FTA’s, it is not difficult to anticipate how the U.S.-SACU FTA will unfold. Looking at the North American Free Trade Agreement (NAFTA), US-Chile FTA, and Central American Free Trade Agreement (CAFTA) models helps us anticipate what will be included. After twelve years, the accumulated evidence surrounding NAFTA demonstrates that any agreement crafted along the lines of that accord would have potentially adverse environmental, economic and human consequences for many people in the United States and Southern Africa.

Democratic Participation and Transparency

US-SACU governments should take active steps to facilitate direct and meaningful engagement from civil society in negotiating the proposed US-SACU FTA. The exclusion of both U.S. and SACU workers, women, indigenous, ethnic populations, and others whose community will be affected by the FTA is unacceptable.

Although South Africa has established The National Economic Development and Labour Council (Nedlac) to serve as a mechanism for civil society to discuss social and economic policy concerns with government, broad participation and full transparency between all parties remains a hurdle.

The U.S. and other SACU countries do not have such formal structures. U.S. and SACU governments and trade officials must bridge the gap between the formal negotiating process and civil society by formally establishing a mechanism allowing affected sectors in all countries direct influence in negotiations. Further, US-SACU negotiations have not made available draft texts, proposals, timelines or agendas for the established channels of civil society to have an informed debate. It is essential that U.S.-SACU FTA negotiations extend, beyond the business sector, the appropriate mechanisms for democratic participation.

Negotiations should not move further without direct involvement from the affected communities and civil society groups in both the United States and SACU countries. We call for access to draft texts as they develop so that an informed public discussion can shape the outcome of negotiations.

Worker Rights

The U.S.-Jordan Free Trade Agreement (2000) was the first trade agreement that contained an enforceable commitment to respect the International Labor Organization (ILO) core labor standards, as well as enforce domestic labor laws, in the core of the agreement that were subject to the same dispute settlement as the commercial provisions. Since that time, every FTA negotiated has dramatically weakened the Jordan provisions, by making only one commitment in the labor chapter subject to dispute settlement or enforcement (to enforce own laws), and setting up a parallel and inferior dispute settlement mechanism. In this model, the only worker rights requirement is that countries should effectively enforce their own labor laws. Although provisions in CAFTA show an attempt to use fines as an enforcement mechanism, they will likely be ineffective because penalties are levied on governments of the countries where the violations occur, not the companies that violate.

With corporations’ increased ability to relocate in search of lower labor costs, a "race to the bottom" has ensued. This trend is disproportionately felt by low-skilled labor that are forced to compete for jobs. Communities are also forced to compete for investment by requiring less of employers. The global race to the bottom has been a significant factor in the stagnation of job quality in the U.S. and the spread of sweatshop labor in Southern Africa. With no existing social provisions in the SACU mandate and the lack of resources for enforcement of member country labor laws, the U.S.-SACU FTA is likely to perpetuate rather than help this problem.

Lesotho saw an increase in jobs under the Africa Growth and Opportunity Act, but many of these jobs had people working under sweatshop conditions, including coercion. With the demise of the global Multi Fiber Agreement and its quota system, investment became more volatile with factories closing literally overnight and managers leaving the country without fulfilling their obligations to pay employees. Those that did not leave use the threat of doing so as a way to gain leverage over workers, thereby preventing them from organizing or joining unions.

The U.S.-SACU FTA should provide the space for participating countries to create policies that retain and create jobs that respect ILO labor standards.

Small Farmers in the United States and Southern Africa

In Southern Africa, where about 70 percent of the population lives in rural areas and suffers the greatest poverty levels,the impact of a trade agreement which does not address the needs of all farmers, especially poor ones, will lead to increased inequalities. In the region, the average per capita dietary energy supplies have declined over the past 15 years, to 2,160 calories per day against a requirement of 2,700;endemic drought turns chronic hunger into serious malnutrition, for the young and the weak (e.g. people living with HIV/AIDS). Impoverished and small-scale farmers (often female heads of households) produce primarily for local and national markets and simply cannot compete with large agribusinesses on the national or world markets. Regional food security relies most on access by rural women to productive resources, such as land, credit, farm inputs and market infrastructures.

Any trade agreement that covers agriculture must recognize national food sovereignty by guaranteeing governmental authority to pursue tariffs and subsidies that safeguard food security, increase food crop diversification and protect the environment. The United States government must prevent private and public dumping of U.S. grains in the region that adversely affects small scale farmers. Such farmers are unable to compete against imported agricultural goods sold below their own production costs or indeed, below the cost of agribusiness production in the U.S.

Current U.S. domestic farm policy, despite subsidies of billions of taxpayer dollars, is destructive of small and medium producers as well as the environment,and therefore, if exported via trade agreements, this agro-system could become harmful to other regions.Free trade agreements are inappropriate instruments to provide sustainable rural development and entitlement to food, either in the U.S. or in Southern Africa.

The U.S.-SACU FTA must contribute to rural development strategies, in the U.S. and Southern Africa, that promote subsistence and small-scale farms, dedicated to enhance food sovereignty and environmental sustainability. Countries should be able to enact legislation that protects products with special economic, social or cultural importance,such as corn and beans, from trade liberalization.

Intellectual Property Rights

The SACU agreement must not promote the monopolized control over nature, science and technology by global corporations. Instead, the fundamental right of governments to safeguard traditional knowledge, protect public health, and expand access to essential medicines must be upheld.

Access to Medicines

The SACU countries have the highest rates of HIV in the world and AIDS, as well as other treatable diseases, threaten to devastate the societies and economies of the region. Any trade treaty must not diminish Southern African countries’ rights to secure the production, import, export and provision of affordable medicines to respond to the HIV/AIDS epidemic and other public health problems. The 2001 WTO Doha Declaration, to which the U.S. and SACU countries are signatories, explicitly reaffirms governments’ rights to “protect public health and, in particular, to promote access to medicines for all.” The United States must not pursue provisions, known as "TRIPS plus," that would undermine countries’ rights to act in the interest of public health. These TRIPS plus provisions include restricting compulsory licensing or preventing access to test data by governments and potential generic manufacturers.

Given the concerns around intellectual property and access to necessary medicines especially in this vulnerable region of the world, the U.S. should take Intellectual Property Rights out of the current negotiations.

Traditional Knowledge

The Africa Union has long opposed patents on life and therefore, no trade agreement should require private intellectual property rights over bio-resources (seeds, plants, animals). In Southern Africa, the Africa Model Legislation provides legal alternatives for protecting breeders’ rights, while fully honoring farmers’ rights over seeds .Private intellectual property rights over bio-resources rewards transnational corporations, not small scale farmers growing food crops from saved seeds.

Southern African governments must be allowed to enact restrictions on genetically-modified organisms that they deem necessary to sustain regional crop varieties. Any US-Southern African trade agreement must recognize governments’ authority to determine and implement publicly legislated safety standards for imported food products and not require abrogation of other international treaties, such as the Cartagena Biosafety Protocol. Under this Protocol,member governments cannot be required to permit entrance of food or agricultural products whether as food aid or commodities—treated with specific forms of technology that are of public concern, such as genetically modified organisms and irradiated foods.

In the U.S.-SACU FTA, small agricultural producers’ rights should take precedence over Intellectual Property Rights where agricultural genetic resources are concerned. Additionally, the U.S.-SACU FTA should not interfere with a country’s ability to live up to the commitment it made in ratifying the Cartagena Protocol and its parent Convention on Biological Diversity.

Investment, Capital Flows and Government Procurement

Any trade agreement should preserve government authority to regulate foreign investment in order to achieve national sustainable development policies. Governments should be able to protect public interest laws from suits and establish performance requirements in order to support an emerging productive sector or meet community development plans. This includes using government contracts to promote gender equality, social justice and respect for human rights. Equally, governments should be able to impose capital controls to protect their economies and citizens from destructive flows of speculative investment.

Despite the need to offset the economic legacy of colonialism, conflict and apartheid, participating countries could lose the right to enforce their affirmative action policies. This includes programs like South Africa’s Black Economic Empowerment initiative.

The rights established under international human, labor and environmental agreements and conventions should take precedence over investor rights. The Investor-State clause in NAFTA, the US-Chile FTA and CAFTA grants foreign investors the right to sue governments for compensation over public-interest laws that could undermine their potential profits. Alarmingly, 42 cases have been filed thus far by corporate interests and investors under NAFTA’s "Chapter 11" investor provision, many against local environmental, public health and safety laws. With only 11 of the 42 cases finalized, some $35 million in taxpayer funds have been granted to five corporations that have succeeded with their claims. Investment disputes between countries should be resolved in an accountable and transparent manner, and with the participation of all affected parties.

The U.S.-SACU FTA should preserve government authority to regulate foreign investment, avoid prohibiting performance requirements, and have no investor-state clause.

Essential Services

Essential services are services that help meet peoples’ human rights to food, education, health and basic utilities like water and electricity. Fundamentally, essential services are not tradable commodities and access to basic necessities must not be subject to the negotiated rules of free trade. As such, they should not be included in FTA negotiations.

At a minimum, essential services must be exempt from the "national treatment" standards, which mandate foreign service providers be treated at least as well as domestic providers. Unlike in CAFTA and the U.S.-Peru FTA, it is also essential that a blanket "negative list" approach to service sector liberalization, which would require liberalization services not specifically excluded by the state party, be rejected.

Previous liberalization and commodification of essential services in Southern Africa has been deeply contentious and led to increased prices, stratification of service levels by wealth, and inability of governments to effectively and pro-actively protect health and safety of people through these services.

Fundamentally, the rights of governments to decide which, where, when or whether to open services to foreign providers must be upheld. All services essential to the people and development needs should be excluded form the U.S.-SACU FTA.

Conclusion

In 2002 when the US Trade Representative notified Congress that the Administration intended to initiate free trade negotiations with Sub-Saharan nations, the claim was that this FTA would “bring new hope and prosperity to Southern Africa,” and “further drive regional growth and development.” By excluding the principles laid out in this statement, the resulting FTA will fail to provide sustainable development. Unfortunately, indications are that current US-SACU negotiations will model other FTA’s (such as the CAFTA and the US-Chile FTA) that ignore these principles. This is a matter of grave concern to all who seek equitable and just trade relationships between the U.S. and the nations of Southern Africa.

The elements and standards in this statement are essential to a trade agreement that could foster a more just, sustainable and prosperous human society, and U.S.-SACU FTA negotiations must be evaluated on the basis of their inclusion. To summarize, these include:

- Negotiations should not to move further without direct involvement from the affected communities and civil society groups in both the United States and SACU countries. We call for access to draft texts as they develop so that an informed public discussion can shape the outcome of negotiations.
- The U.S.-SACU FTA should provide the space for participating countries to create policies that retain and create jobs that respect International Labor Organization labor standards.
- The U.S.-SACU FTA must contribute to rural development strategies, in the U.S. and Southern Africa, that promote subsistence and small-scale farms, dedicated to enhance food sovereignty and environmental sustainability. Countries should be able to enact legislation that protects products with special economic, social or cultural importance,such as corn and beans, from trade liberalization.
- Given the concerns around intellectual property and access to necessary medicines especially in this vulnerable region of the world, the U.S. should take Intellectual Property Rights out of the current negotiations.
- In the U.S.-SACU FTA, small agricultural producers’ rights should take precedence over individual property rights where agricultural genetic resources are concerned. Additionally, the U.S.-SACU FTA should not interfere with a country’s ability to live up to the commitment it made in ratifying the Cartagena protocol and its parent Convention on Biological Diversity.
- The U.S.-SACU FTA should preserve government authority to regulate foreign investment, avoid prohibiting performance requirements, and have no investor-state clause.
- Fundamentally, the rights of governments to decide which, where, when or whether to open services to foreign providers must be upheld. All services essential to the people and development needs should be excluded form the U.S.-SACU FTA.

This Statement is endorsed by the following U.S.-SACU FTA Working Group Members:

ActionAid International USA
Action LA Coalition
ACTUP (AIDS Coalition to Unleash Power), New York
Africa Action
Africa Faith and Justice Network
Agricultural Missions Inc
American Friends Service Committee
American Medical Students Association
Association of Concerned African Scholars
Center of Concern
Church World Service
Foundation for Integrative AIDS Research (FIAR)
Friends of the Earth - U.S.
HealthGAP (Global Access Project)
International Brotherhood of Teamsters Union
Lutheran World Relief
Oxfam America
Peace No War Network
PLANT (Partnership for the Land and Agricultural Needs of Traditional Peoples)
Priority Africa Network
Student Global AIDS Campaign
Student Trade Justice Campaign
TransAfrica Forum
Justice and Witness Ministries, United Church of Christ
United Students Against Sweatshops
United Students for Fair Trade
Washington Office on Africa

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source: AFSC