1. Negotiations
2. US-Andean countries

Present capacity and future development of the Andean struggle against the FTA

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An approximate (not perfect) translation from the Spanish original.

Bolpress, La Paz, 12 January 2006

Present capacity and future development of the Andean struggle against the FTA

Miguel Lora Fuentes

The region-wide campaign against the US-Andean Free Trade Agreement (FTA) made important, if partial, achievements in 2005. The FTA negotiation has been delayed thanks to social pressure, but it has not been stopped.

The Latin American social movement, in alliance with some from the business sector, is effectively resisting the offensive from government quarters which support Washington’s plan because it is more and more aware that FTAs benefit a minority and go against the interests of the great majority. In November 2005, the Mercosur countries plus Venezuela slammed the door loudly on Bush and his proposed FTAA during the IV Summit of the Americas. But localised versions of this hemispheric plan — the bilateral FTAs — continue under negotiation.

The Andean movement against the FTA has grown through the involvement of labour unions that are gradually becoming aware of the dangers of this politico-trade pact. Civil society throughout the region has also grained greater knowledge of the risks ever since the issue finally caught the attention of the mass media.

Initially it was said that the negotiations would last eight or nine rounds. After several delays, it was announced that the talks would be closed at the 14th round in December 2005. But after a year of mishaps, that objective has not been reached. For two of the three governments negotiating the FTA, there was no option but to suspend the process until 2006, accusing the United States of intransigence on its "wild" demands of trade liberalisation, especially in the agricultural sector.

The United States and the governments of Ecuador and Colombia have not been able to seal the agreement after 18 months of intense negotiations because it has been practically impossible to reconcile their interests. To find an iota of fairness in the trade confrontation between the most powerful country of the world and the developing countries is a fantasy, simply because the interests of both sides are contradictory. A recent verdict from the Andean Court of Justice (TAJ) only reaffirms this.

The TAJ ruled in December 2005 that the broad level of intellectual property protection that would be made available to multinational drug companies under the FTA goes against Andean law. It told the government of Colombia to do something about its decree protecting test data of medicines for up to five years and get back in line with Decision 486 of the Andean Community of Nations (CAN). The discussion on protection of test data for drugs cannot be resolved: the United States demands too much, and Colombia argues for the status quo, that is to say the present law. Jose Manuel Alvarez, representative of Asinfar, comments that the TAJ ruling is an incentive for national laboratories that feel affected — unable to compete with multinationals protected by subsidies — to bring forward their cases.

In spite of the FTA’s postponement, which can be considered a victory of the popular movement, it’s clear that the strength of the Andean social movements was damaged in December when Peru went ahead and signed with the United States. Alejandro Toledo, despite his low approval ratings, managed to close the FTA negotiation partly because in Peru an organised social movement similar to the formations already consolidated in Bolivia, Ecuador and Colombia does not exist. [1] The opposition has very little parliamentary representation in Peru, and the only thing Toledo wants is to protect is his personal future since he has no further professional future in Peruvian politics.

From this position, a top priority of the people’s movement against the FTA is to achieve a greater involvement of the labour sectors that still have not joined the struggle. Another is to take advantage of the electoral campaigns coming up in Peru, Colombia and Ecuador to press candidates and keep up the resistance until the US electoral campaign begins.

The elections to renew the full House of Representatives and one-third of the Senate in the United States in November 2006 could be a good opportunity to prevent any closing of the talks. To seal a controversial agreement in the middle of an electoral campaign, which will heat up in the second trimester of 2006, would be mortal for those candidates seeking re-election. Some of them have already taken position against the FTA. Some have even proposed rejection of the agreement not because it harms US farmers but because it would be bad for the Andean countries. [2]

Strategies of the Andean social movement

The Colombian Action Network against Free Trade and FTAA (Recalca) tries to maintain a very broad front, leaving issues that can divide the movement off to the side and centring its activity on national mobilisations and other actions during each round of FTA talks. In 2005, three large mobilisations were held, confirming the power of Recalca members to bring people together.

The Bolivian Movement of Struggle against the FTA and the FTAA, apart from exposing the deep contradictions of free trade and highlighting the impacts of trade liberalisation on the daily lives of the people, has based its fight on three tactics:

1. To build a single movement with multiple platforms in order to construct a multiple resistance.
2. To deploy a legal strategy against laws which underpin the free trade model.
3. To neutralise the propagandistic offensive of the government and the exporters in favour of the FTA by showing who would be the real beneficiaries of the trade agreement with the US.

Up to now, the actions of the Bolivian movement have held the government back from entering into any official negotiation process with the United States. [3]

The Ecuador Decides campaign continues with its goal of collecting enough signatures to trigger the need for a referendum to decide on the fate of the FTA. This process is linked to different political issues, like calling for the establishment of a Constituent Assembly. [4] Their campaign strategies involve education, alphabetisation, permanent social pressure and institutional manoeuvres to pressure Congress as a means of developing allies among parliamentarians. Twenty-two deputies have registered their signatures of opposition to the FTA so far, though this is no guarantee. The final fight, which will unfold in January and February of 2006, is still ahead. [5] CONAIE, on the other hand, has announced that the government will be overthrown if it dares to sign the FTA and has conducted numerous mobilisations, of which the one in December 2005 during the last round in Washington stands out.

In Peru, pressure from farmer unions has become the most important social force against the FTA. In November 2005, 15,000 people came into the streets of Lima, including farmers and irrigation beneficiaries. Never in history was this kind of mobilisation seen in the city. Although the rice growers, spread across 23 unions, are not very well organised, and in other crops the situation is worse, strikes have already been announced because people feel that they’re past the stage of demonstrating in the street.

The fruits of the anti-FTA campaign

In Colombia, several popular consultations have been held to evaluate the level of rejection toward the FTA. Public surveys in the combative zone of Cauca in the first months of the year, votes held in specific farming sectors such as rice, wheat, barley and potato, and a consultation commissioned by the Central Workers Union among 300,000 citizens all confirm that most people are against the agreement. Research conducted by public universities reveal that a wide majority of the population is opposed to the FTA. The same results were validated by the communal movement in the neighbourhoods of Bogotá

The Colombian campaigns have involved intense educational work with round tables, panels, training, audio-visual productions, script writing, etc. And this work is reflected in the survey results. Before the campaigns, 65% of the people were in favour of the FTA. Today, 65% say no, while only 30%-35% support it.

In Peru, it is said that five months ago 60% of the population were in favour of the FTA and 40% against. At this moment, the majority rejects the agreement. Even the mass media, which until now have been pro-free trade, are worried because they feel that the government is not transparent since the official and complete text of the FTA will only be presented to the public three months after signature.

In Ecuador, the government itself acknowledges that 80% of the Ecuadorians are against the FTA. A university consultation registered over 90% opposition. Some weeks ago, the Popular Front of Pichincha consulted 5,000 people in central Quito and more than 80% said no to the FTA.

The different Andean organisations involved in the anti-FTA campaigns see these results as a great success against that the well-financed pro-FTA campaigns run by the elites and corporate lobbies. While they could not convince the people this year, they will return in force in 2006 with foreign funding. The main achievement, says the anti-FTA organisations, is that the FTA is now squarely on the national agenda and is being debated throughout society.

Workers and businessmen get involved

Awareness raising work in the Andean countries about the risks of the FTA is no longer exclusively the work of activist groups. More and more labour unions are starting to get involved in the struggle, which only shows that free trade does not necessarily benefit everyone in the same way, especially in the agricultural sector. That is what we see in Colombia, Ecuador, Bolivia and Peru.

After the Peruvian government signed its FTA with the US, conservative farmer organisations which previously supported the agreement have now come out against it. For example, dairy farmers - who have spent 40 years selecting their herds — now show their opposition to the problems that unbridled trade liberalisation will carry. The same goes for the sugar producers, who express themselves with much force in Peru.

The Peruvian agro-exporters are not very happy with the signing of the FTA, although their leaders support it. Producers and traders themselves are planning to go on strike in the first months of 2006 if Congress insists on ratifying the agreement. Luis Zúñiga, president of the National Convention of Peruvian Agriculture (Conveagro) considers that President Alejandro Toledo betrayed his mother country by signing with the United States behind the backs of those who will be most affected, the farmers in the countryside.

In Peru, 98% of the farmers have less than 20 hectares and 84% less than five hectares. Barely 2.6% of the cultivated area is dedicated to export production and only 28% of exports go to the United States. Therefore, less of 1% of the cultivated area in Peru is destined to the US market, whereas 80% of the farmers sell their produce on the domestic market.

The sensitive products for Peru are wheat, maize, sugar, cotton, milk, meats and barley. In the last round of negotiations, the Peruvian government completely surrendered the national wheat market, as it did for barley, cotton and oilseeds as well. It opened the domestic market to 500,000 tonnes of tariff-free US maize imports and 74,000 tonnes of rice. The sugar producers hoped to be the winners, but at the last minute it was agreed that imports of corn syrup, a substitute for sugar in industrial processing, will be liberalised in five years. Peruvian agriculture lost on all accounts, according to Zúñiga.

The proof that agricultural trade liberalisation will hit small Peruvian farmers the hardest is that some prices - rice, for example — have already begun to fall. In 2005, Peru produced enough rice for the domestic market. But rice from Uruguay and the United States is coming in. And while the imported rice is more expensive than local rice, the mere fact that the imports were sitting in the ports sent local prices down. Retailers are handling the game of supply and demand rather well. So if more than 100,000 tonnes of high-priced imports sent local prices falling in 2005, imagine what will happen to small farmers when more than 70,000 tonnes of US grains arrive at zero tariff.

According to Zúñiga, duty-free imports of wheat has effects on other crops. The people living in the highlands of Peru, who traditionally eat potato, now prefer to eat noodles and biscuits.

The problem is not that Peruvian farmers are less productive than their US counterparts and that they fear the competition. The problem is that North American competitors receive millions in subsidies while the Peruvian productive sector is on its own. In the 1980s, agrarian organisations were dismantled. And at present, there is no credit because commercial banks do not lend to farmers. More of 90% of the growers must get loans from retailers and intermediaries at interest rates ranging from 4% to 10% a month. The State has also let go of public agricultural research centres, passing them off to private sector control. Finally, the compensations proposed by the Toledo government will only benefit some 5% of the farming population who are formal producers. Ninety per cent of Peruvian farmers are informal producers.

In Colombia, people that had hopes in the FTA — like the Society of Colombian Farmers (SAC), the health sector, the poultry industry and oil palm producers — have begun to change their mind as they learn how their interests will be affected.

The concentration of land in Colombia is acute. Of the 45 million hectares in use, 40 million are devoted to cattle ranching and five to agriculture. The livestock industry is not a model of modern productive activity, as there is less than one cow per hectare.

The main Colombian crop is coffee. It is grown over 800,000 hectares, mainly on slopes, by small farmers working with precarious technology. Modern productive agriculture in Colombia can only be found on 1.5 million hectares. Here you find rice, oil palm, sugar cane, some of country’s maize production and horticulture.

This model went into crisis after 1990, causing disaster in the Colombian countryside with the de-institutionalisation of research, marketing and credit. Colombia used to import 700,000 tonnes of food. Today, it imports 10 million tonnes. Right now, poverty, unemployment and under-employment affect more than half the population.

The United States wants to liberalise its sales of rice, wheat, barley, oats, cotton, soy bean, maize, potatoes, powdered milk, pork and beef to Colombia. Although it has a legal framework to protect the rural sector, the Colombian government has been caving in to US demands and offering temporary alternatives. Though the FTA has still not been signed, the government is already eliminating tariff preferences. The government promised it would protect eight products, but in the last round of negotiations it gave in on rice, maize and chicken parts. Colombia offered the United States the tariffed-free entry of 47,000 tonnes of rice, 500,000 tonnes of maize and 1,000 tonnes of chicken parts, while the United States demanded 200,000, two million and more than 30,000 respectively.

In Colombia, three positions with respect to the FTA have been commonly known: one which holds that the treaty is no good because it is part of a perverse model; one saying that the FTA is the solution to all problems; and the in-between view that Colombia could negotiate "a good FTA". But illusions disappeared in the last rounds of negotiation and the in-between view is gone. Right now, a small group of businessmen want the agreement while a broad range of in-between people do not want the treaty, or at the least want it postponed and the rate of negotiations to slow down. It’s fair to say that in Colombia opposition to the FTA has grown very quickly, as critics are the majority now and only a small portion of the financial sector is in favour.

In Bolivia, the national bourgeoisie is beginning to split up because of the FTA. The exporters of oilseeds in the east refuse to "realistically accept" that the Andean tariff preferences are going to disappear if Andean countries sign FTAs with Europe and the United States, as suggested the Secretary General of the CAN, Alan Wagner.

The soy bean traders — who are aware that in five, 10 or 15 years they are going to lose the soy bean market through a virtual break-up of the CAN - have for the first time issued an official notice in December 2005 on the dangers of the FTA. In the west of the country, the textile exporters are now isolated with their clamours in favour of free trade.

The vegetable oil chain as a whole - primary producers, processing industries and exporters - sells more than $450 million worth of soy bean each year to the Andean market. That is: $212 million to Peru, Colombia and Ecuador, and approximately $240 million to Venezuela, the country which has begun to buy transgenic oils from the United States.

The Bolivian Confederation of Private Businessmen (CEPB) and the Santa Cruz Chamber of Exporters (Cadex), which includes the Association of Oilseed Producers (Anapo) and the Agricultural Chamber of the East (CAO), are demanding that the government find a formula to maintain markets and preferences in the subregion. They are worried because their exports have fallen by $80 million in the last months.

The leader of Anapo, Carlos Rojas, thinks that signing the FTA will almost immediately destroy the market for Bolivian soy because it will mean the gradual elimination of tariffs for beans, cakes, crude and refined oil, among other by-products, in favour of US supply. This would put at risk the consolidation and very future of a sector generating almost $500 million dollars a year in foreign revenue — 25% of Bolivia’s annual exports - and over 120,000 jobs, not to mention more than $700 million worth of investments.

In a public debate between Marcos Iberklade, the owner of the first textile export operation to the United States (Ametex), and Pablo Solón, an activist with the Bolivian Movement of Struggle against the FTA and the FTAA, new contradictions facing Bolivian businessmen were exposed. While Iberklade calls for the opening of markets for his textiles, the soy business people foresee the end of Bolivian agribusiness. In this context, the textile sector is forced to recognise that the FTA negotiations imply much more than haggling over the selling price of shirts and trousers.

In Ecuador, the situation is the same. More and more people who are not exactly from the lowest classes, for example cattle ranchers and truckers, are joining the struggle because they recognise the dangers of the FTA. The tuna exporters start making noise when they see that, in the best of cases, the FTA will give them the same preferences as the Andean Trade Promotion and Drug Eradication Act (ATPDEA), while the textile industry has begun asking itself if an FTA with inflexible rules of origin will help them at all.

The weaknesses of the social movement against the FTA

The resistance movements have managed to place the FTA in the centre of national debate and to get public opinion against it, despite the lavish campaign in favour of the agreement financed by the US and the very few sectors that benefit from free trade. [6] The people of Ecuador have able to paralyse the government in its wish to sign the FTA. In Colombia, the government, in the heat of a re-election campaign, is doubting whether it can pay the political cost of signing an already unpopular treaty. And the people of Bolivia has been able to keep their country outside the formal negotiating process.

These are only partial victories, however. In spite of all the effort, social sectors that are very important in terms of numbers and representation have not yet become involved in the struggle against the impositions of Washington — like teachers in some countries or workers from the health sector, for example.

It is clear that the closing of the deal with Peru is not real because the USTR will not be able to present a lone country agreement to the US Congress and Congress will not want to approve individual bilateral treaties instead of a joint Andean FTA, despite what some members of the Peruvian Executive say. Nevertheless, Peru’s signing shows a lack of clear sense of the political value of the FTA as a weak point of the campaign. To some extent, the Peruvian movement was defeated in December 2005 because it had lost sight of the fact that the FTA is a political agreement than more than a trade agreement. [7]

Considering that in 2006 the FTA will be a central issue for each of the Andean governments going into election campaigns, the opposition work has to advance towards political slogans.

The FTA makes development in the Andean countries conditioned to the narrow interests of a few transnational corporations and some very small export concerns who make their profits at the expense of the overall social and productive growth of our countries. But basically it is an exit strategy for the United States which is facing an untenable trade deficit and increasingly raw competition from China and the European Union.

The fight against the FTA has emerged as a product of the interimperialist battle for Latin America and in that context there is no middle ground. It is not possible to arrive at a fair agreement, a hope that still lingers among some people in the region, because in essence the treaty is contradictory: the interests of the empire and the colony are opposed.

We must recognise very clearly that free trade is of no use to small economies and that it is only one part of the US strategy of global domination. Free trade is a tool to establish a model and a kind of international relationship that condemns to us to remain a colony. To confront this model, we have to move beyond unionism which only sees immediate interests and not the overall problem. The FTA throws into question the very nature of democracy. It fractures community and threatens sovereignty by imposing on us a supranational political constitution adapted to the interests of the empire. [8]

On the other hand, many have said that a solution would be to renew the ATPDEA. But this law is not about simple trade preferences. The preferences it provides are strongly tied to political conditionalities: we must participate in the FTAA, we must cooperate with the US at WTO, we are forced to join the fight against terrorism, we have to bring down drug trafficking, we cannot become a communist country, etc.

The political conditions are extremely strong and the tariff preferences are small. Nominally they cover a large amount of tariff bands, but in the best of cases they concentrate exports in 20 or 30 bands. In those areas where there are exports, the ATPDEA imposes stingy rules of origin and regulations so that the exports are concentrated in maquilas assembling goods with North American inputs. [9]

The United States uses the ATPDEA like a decoy. It says that the FTA negotiations would serve to go beyond the ATPDEA, but it’s the other way around. The anti-drug agreement will be the goal at the end, not the starting point. Without preferential treatment, cocaine production will increase, the Colombian negotiating team has said. Regina Vargo responded that one thing is trade and another thing is drug trafficking. [10]

Strategies to follow in the future

a) Unity is important: In this new stage of fight against the FTA, stronger Andean coordination is needed. The links between the countries of the region are fragile, even though everyone has a strong sense of belonging. The most consolidated institutional group is the is the Andean Labour Council, organ of the CAN. But it has little capacity to coordinate mobilisation.

The problem is that Andean countries are not perceived as allies but as competitors. The coordination of the Andean governments in the negotiation was a failure, because whenever a difficult point came up it got transferred to bilateral talks - with the ultimate effect that Peru ended up signing on its own.

If Peru granted certain thing under sanitary measures, it became a motive for blackmail and forcing the others. Andean solidarity never existed. It was broken by Colombia when there was dispute over tariffs in the FTAA.

We have to promote the widest national and Andean unity, and bring public shame on the very small sectors that, hungry for their own benefits, are ready to sacrifice all our nations.

b) Take advantage of the electoral campaign: We have to put the FTA squarely on the agenda of public discussion and take advantage of the presidential campaigns to press to the political parties and progressive forces to not vote for the FTA. The plan consists of postponing the signature and placing the FTA at the highest level of campaign issues. Candidates should be cornered until they adopt clear positions of opposition to the agreement.

In the political sphere, realism and electoral pragmatism are starting to take the upper hand. In the upcoming presidential campaigns in Peru (April), Colombia (July) and Ecuador, the FTA will be the subject of central debate and nobody who hopes to be elected or re-elected would be so clumsy as to defend it publicly, knowing that it is a threat to farmers or to the health of the citizens.

There are pro-Uribe senators in Colombia who are against the FTA, just as there are parliamentarians seeking re-election who will not vote for the agreement. The position of the new Bolivian government is to avoid FTAs of the likes currently on the table. In Peru, Conveagro and its allies like the Health Forum, the Not This Way­ campaign, artists, the educational sector and many commentators who changed position hope that the present congress does not ratify the FTA. Zúñiga recognises that it is difficult for the social movement to win, because a third of the congressmen are turncoats offering no guarantees. Two parties are in favour of the agreement, National Unity (Lourdes Flores) and Possible Peru (the government party). On the left, Javier Diaz Canseco, the Aprista party and Ollanta Humala will not support an FTA. Nor will Popular Action, which now has three representatives in Congress.

c) Legal actions: Activists of the region are working to improve their use of legal tools to stop the free trade model imposed by the United States. In Colombia, public interest actions have been launched to get courts to ban the FTA. In December 2005, the Andean Court ordered the Colombian government to nullify its national decree extending the patent rights of pharmaceutical companies, as it was ruled illegal under Andean law.

In Bolivia, petitions have been filed with the Constitutional Court. Activists presented a motion of unconstitutionality against the concession of water supplies in La Paz and El Alto to the French transnational company Suez. Under the Constitution, water sources are natural resources that can only be allocated with the approval of Congress, a requirement that was ignored in the case of Aguas de Illimani (AISA), a subsidiary of Suez. The Constitutional Court approved the motion in December of this year. Also, a direct motion of unconstitutionality has been filed against law Number 1593 — which ratified Bolivia’s membership in the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, under the World Bank — and against certain articles of six bilateral investment treaties (BITs) signed with Argentina, the Netherlands, France, United Kingdom, Spain and the United States granting investors of those countries the privilege of using private arbitration instead of Bolivian courts in case of possible claims against the Bolivia state. The ICSID Convention and the BITs transgress articles 135 and 228 of the Political Constitution of the State by allowing foreign investors, in case of dispute, to go to non-national authorities to make demands and apply sanctions against the state using foreign laws.

d) Engage new sectors: The continental people’s movement is aware that it cannot force parliaments to vote against the FTA. How, then, can it increase the pressure?

Colombia’s experience reveals that the opposition movement can grow as more sectors — such as the coalition for cultural diversity, artists, journalists - get involved. The idea would be, for example, to avoid that the struggle related to health is exclusively concentrated in the sphere of the pharmaceutical industry and involves health workers unions as well. Intellectual property must stop being a technical subject for specialists and become a real concern for workers in the health field.

The same with environmental issues. People have not taken up the defence of the environment. Engaging business is one of the objectives, mainly with respect to the suppliers of state purchases, small companies (to identify concrete losers in each country and to campaign accordingly), teachers unions and other large unionised sectors that have not been mobilised up to now. If the Andean social movement wants to be able to deliver a good fight, the key is to reach out to new sectors.

e) Don’t take too much for granted: Bush’s manoeuvring space has been reduced by the failures in Iraq, scandals with multinational companies, domestic policy, the economic crisis and the speculative bubble. (It will be very painful for everyone when the economy lands, as Greenspan put it.) But experience suggests that no one should fall asleep thinking that Bush has lost control.

Activists in the North think it’s possible to generate political support in the United States by taking advantage of the fact that industrialised countries also lose with free trade. Take the case of the General Motors, which keeps firing more and more workers to contract cheap manual labour abroad. The unions know that a portion of these jobs are going to Third World countries and they feel threatened. The same is happening in the case of textiles. In this context, there is space to influence the debate.

On another level, certain members of US Congress are increasingly interested in the issue. They are now looking into how much opposition the FTA faces in the countries of South America and it’s possible that a group of them will visit the region between March and April 2006. A well prepared document could usefully support this congressional initiative.

2006: the year of the FTA’s defeat?

The outgoing Andean governments do not have the legitimacy to impose an agreement and Bush does not have the necessary power to get the FTA approved in Congress. To wit, look at how CAFTA could not enter into force as planned on 1 January 2006.

On the other hand, the FTA is already unpopular in most of the societies negotiating it. In all the involved countries there will be presidential and legislative elections, and the different candidates will not be able to defend an unpopular treaty in the public arena. The conditions facing the opposition struggle are more favourable this year than in 2005.

Progress has to be consolidated through concrete steps:

– Make studies and opinion polls that confirm the widespread disapproval of the FTA more visible and more available. As far as possible, commission opinion surveys in each country to assess the level of rejection of the FTA.
– Determine the real size of those sectors in favour of the FTA (identify the people by name) and contrast this information against the list of affected sectors.
– Reach more people by asking basic questions: How will the FTA affect their daily lives? Bring the discussion down to earth, touch people with a new and "sensitive" language, shift from general talk to emotional talk. At 90 minutes into the game with the United States, the public must know how much the FTA will increase unemployment, emigration, health care bills and services like telephone, water or public transportation.
– Step up the advocacy work toward local governments, mayorships, regional authorities and prefects that could help strengthen the fight. Get them to take a concrete position and commit to it.
– Unify social mobilisation and pull together an Andean front that demonstrates its unity in the first quarter of the 2006 with a joint mobilisation in which new sectors participate, especially teachers. The burial or at least the postponement of the FTA will depend on the success of such a coordinated mobilisation.

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