The AFL-CIO appreciates this opportunity to express our views to the Committee of Government Representatives on the Participation of Civil Society (CGR) with respect to the negotiations over the Free Trade Area of the Americas (FTAA). The AFL-CIO is a federation of more than sixty unions, representing 13 million working men and women in the United States.

The AFL-CIO believes that expanded trade and investment can provide opportunities for growth and development in the Americas only if it is accompanied by rules that will help ensure that growth will be stable and sustainable, that the benefits of growth will be shared, and that it will contribute to, rather than detract from, social cohesion and human development. Over the last twenty years many countries in Latin America have embraced market liberalization policies, but these policies have failed to produce the shared, sustainable, and democratic growth the region requires. Inequality has remained the same or increased in every Latin American country in the 1990s. Poverty has increased in El Salvador, Mexico, Nicaragua, Peru and Venezuela during the same period. Unemployment and informal employment are still unacceptably high, and financial crises have thrown people out of work, families into poverty, and entire economies into deep recession. Finally, egregious violations of workers’ rights - abuse of child labor, gender discrimination, repression of independent union organizing, and murders of trade union leaders - continue to mark much of the region. The FTAA must contain policies specifically designed to address these challenges. Simply replicating the provisions of past agreements like the North American Free Trade Agreement (NAFTA) is a recipe for failure.

Since 1995, the AFL-CIO has been meeting regularly with the Inter-American Regional Organization of Workers (ORIT-ICFTU) to share a common trade union position on the FTAA. Since 1997, the AFL-CIO has also participated in a broader network of citizens’ groups from the hemisphere called the Hemispheric Social Alliance. The Alliance includes trade unions, women’s groups, farmers, peasants, environmentalists, human rights activists and many other organizations that do not want to see NAFTA expanded wholesale throughout the Americas. The Alliance has developed alternatives to the FTAA that provide guarantees for workers’ rights and the environment, preserve the ability of governments to regulate in the public interest, and promote broad-based economic development.

These proposals, along with others from civil society, have been presented to the FTAA negotiators throughout the FTAA process. The AFL-CIO has twice submitted comments to the CGR and made regular submissions to U.S. negotiators. Unfortunately, these recommendations are completely absent from the current draft text of the FTAA.

We believe that the FTAA must incorporate:

• enforceable worker rights and environmental standards in its core;
  measures to ensure that countries retain the ability to regulate the flow of speculative capital in order to protect their economies from excessive volatility;
• debt relief measures that will improve the ability of the developing countries to fund education, health care, and infrastructure needs, thereby contributing to closing the gap between rich and poor nations, and reducing inequality within nations;
• equitable and transparent market access rules that allow for effective protection against import surges, dumping, and unfair trade subsidies; and
• a transparent, inclusive, and democratic process, both for the negotiation of the FTAA and for its eventual implementation.

In addition, FTAA negotiations on investment, services, procurement, and intellectual property must not undermine the ability of governments to enact and enforce legitimate regulations in the public interest:

• investment rules should not discipline so-called indirect expropriations, should rely on government-to-government rather than investor-to-state dispute resolution, and should contain a broad carve-out allowing governments to regulate corporate behavior to protect the economic, social, and health and safety interests of their citizens;
• services rules should be negotiated sector by sector, should not apply to public services, and should not include commitments on temporary work visas until these visa programs are revised to protect the rights of all workers;
• government procurement rules should allow federal, state and local preferences for domestic purchases to continue and should give governments scope to serve important public policy aims such as respect for human rights and worker rights, environmental protection, economic development and social justice; and
• intellectual property rights provisions should allow governments to limit patent protection in order to protect public health and safety, especially regarding patents on life-saving medicines and life forms.

These issues are addressed in turn below.

Workers’ Rights: The FTAA’s rules governing international trade and investment will affect the living standards and communities of working people all over the hemisphere. As the San Jose Ministerial Declaration states, “the negotiation of the FTAA shall take into account the broad social and economic agenda contained in the Miami Declaration of Principles and Plan of Action with a view to contributing to raising living standards, to improving the working condition of all people in the Americas and better protecting the environment” (emphasis added). This goal should be at the center of the FTAA negotiations.

Unfortunately, the AFL-CIO sees few signs that the FTAA process has fulfilled this mandate. There is no chapter on labor issues in the draft FTAA text. No negotiating group, no study group, not even an official discussion on labor issues has occurred within the FTAA negotiating process. Only one provision relating to labor has even been proposed in the FTAA, and this provision would be non-binding. ¹ Unless the FTAA includes enforceable protections for core workers’ rights, we are likely to see the same kinds of job loss, wage depression, and rights violations throughout the hemisphere under the FTAA that have characterized NAFTA.

NAFTA has not raised living standards or improved working conditions in the U.S., Mexico and Canada as its promoters promised. Trade between the NAFTA countries grew dramatically in the past nine years, but this growth has been very unbalanced, with the benefits disproportionately favoring multinational corporations, often at the expense of workers, family farmers, communities, and the environment in all three NAFTA signatories. U.S. workers lost hundreds of thousands of good jobs under NAFTA, Canadian wages have fallen below U.S. levels, and average real wages have fallen for workers in Mexico.

The NAFTA labor side agreement has not protected workers’ rights. In Canada, Mexico and the United States, fundamental workers’ rights continue to be abused with impunity. The North American Agreement on Labor Cooperation (NAALC) has very limited enforcement powers, especially when contrasted with the commercial provisions of NAFTA. Although NAALC cases have led to many hearings and reports on labor issues, virtually no concrete changes have been made to countries’ laws or practices to improve workers’ rights.

To truly promote growing employment and better working conditions, the FTAA must include enforceable worker rights standards in the core of the agreement itself. The internationally recognized core labor rights include the freedom of association, right to organize and bargain collectively, a minimum age for the employment of children, and prohibitions on forced labor and employment discrimination. Commitment to observing these core labor rights, in addition to adequate enforcement of each country’s own labor laws, should be a condition of entry into the FTAA, and appropriate enforcement mechanisms must be established to ensure that countries continue to adhere to core labor standards and effectively enforce their own labor laws. Non-compliance must be remedied, with recourse to the withdrawal of trade benefits for serious and on-going violations, as would be the case for the violation of any other portion of the agreement.

Trade Remedy Laws: Recourse to effective and transparent domestic trade remedy laws is necessary to ensure that international trade is fair and balanced and to allow domestic industry and workers to adjust to international competition. Trade agreements such as the Uruguay Round which established the WTO have required the U.S. to make dozens of changes to weaken its domestic trade laws and have reduced the government’s ability to effectively implement these laws. The draft text of the FTAA contains even more provisions that would eviscerate U.S. trade laws by imposing tight restrictions, and even some outright prohibitions, on methodologies used to resolve antidumping and countervailing duty cases. These provisions - and any other provisions that could undermine U.S. trade laws - are completely unacceptable. The FTAA must not in any way infringe on the right of countries to protect their industries, workers and farmers from unfair trade practices.

Investment: NAFTA gives corporations the right to challenge our laws in secret tribunals and to demand compensation from governments. Companies have used NAFTA to challenge laws protecting the environment, public health, and consumers, arguing that these laws hurt their profits. For example, when a Mexican state did not allow the Metalclad Corp. to build on a local ecological preserve, Metalclad used NAFTA to successfully demand $16 million in compensation from the Mexican government. In another case, a company called Methanex is demanding almost one billion dollars from the United States because California passed a law banning a harmful fuel additive that Methanex produces. The draft FTAA contains bracketed language identical to NAFTA’s investment provisions, and the agreement would extend these rights to even more investors throughout the hemisphere.

FTAA investment rules should not grant investors any rights greater than those rights that investors already enjoy under U.S. law. The FTAA should contain a broad carve-out allowing governments to regulate corporate behavior to protect the economic, social, and health and safety interests of their citizens. The FTAA should rely on government-to-government rather than investor-to-state dispute resolution, and all dispute resolution mechanisms should be fully transparent and accessible to interested members of the public.

Services: NAFTA restricts the ability of governments to regulate services - even public services. Increased pressure to deregulate and privatize services could raise the cost and reduce the quality of such basic services as health care and education. A NAFTA dispute panel decided the United States will have to let Mexican truck companies provide their services throughout this country, even though we do not have enough inspectors to ensure that all of these trucks meet U.S. safety and labor standards. Enron is using an investment agreement with rules similar to those found in NAFTA to demand compensation from Argentina for a water service concession contract gone wrong. The government took a local water system back into public hands when, under Enron’s control, rates went through the roof, dirty water came from the taps, and the water was shut off. Enron is now challenging the government’s right to re-take control of the water system under the investment agreement.

The FTAA should not constrain the ability of governments to regulate services and to protect and promote public services. Services rules should be negotiated sector by sector and the FTAA should contain a broad, explicit carve-out for all public services. The FTAA should not include commitments on temporary work visas until these visa programs are revised to protect the rights of all workers.

Procurement: NAFTA does not allow governments to include social, environmental or workers’ rights criteria in their purchasing decisions. When President Clinton ordered the federal government to stop using taxpayer dollars to buy goods made with the worst forms of child labor in 1999, he had to exclude Mexico and Canada from the order because these kinds of protections are not allowed under NAFTA rules. If these rules are extended to state and local governments, as is now being proposed in the FTAA negotiations, responsible contracting requirements, project labor agreements and living wage laws could all be challenged. FTAA government procurement rules should allow federal, state and local preferences for domestic purchases to continue and should give governments scope to serve important public policy aims such as environmental protection, economic development and social justice, and respect for human rights and worker rights through their purchasing decisions.

Development: NAFTA has not created a healthy economy in Mexico. Mexico still has not recovered fully from the 1995 peso crisis, despite growing trade and investment under NAFTA. Wages are lower than they were before NAFTA came into effect, and poverty levels are higher. Regional and economic inequality persist, and many workers from rural areas have migrated to work in the maquiladora zones or in the United States, where their rights are not protected fully. Pollution levels have also risen in Mexico and the border region poses a severe environmental challenge. If the FTAA does not do more to help countries pursue sustainable and equitable development, instability and inequality in the region will only increase.

The FTAA should allow countries to regulate the flow of speculative capital in order to protect their economies from the kind of excessive volatility that has led to financial crises in Mexico and Argentina. In addition, the agreement must address the possibility of massive currency devaluations and the impact these devaluations have on fair competition in the hemisphere. The FTAA should include debt relief measures that will allow developing countries to adequately fund education, health care, and infrastructure needs, thereby contributing to closing the gap between rich and poor nations, reducing inequality within nations, and diminishing the financial instability caused by mounting debt burdens. The FTAA also must include equitable and transparent market access rules that allow for effective protection against import surges or other trade law violations, and end massive and unfair trade-distorting subsidies for agribusiness. The FTAA must also include enforceable protections for the environment.

Transparency and Participation: Negotiators should solicit public comments through public hearings, not just in writing through the CGR. This format will make the interaction between civil society groups and the negotiators more responsive, interactive, and satisfying than one limited to written comments. Even where only written comments are submitted, the CGR should provide a timely response to civil society participants, explaining whether and how their input has impacted the content of the negotiations.

All non-governmental input into the FTAA process, including that of the business community, should be subject to equivalent procedures. The AFL-CIO strongly objects to the Business Forum continuing to enjoy privileged and superior access to the negotiation process relative to groups representing other segments of civil society. We reiterate our request, made in concert with the Inter-American Regional Organization of Workers (ORIT-ICFTU), that the FTAA negotiators officially recognize the Labor Forum, and that the Labor Forum’s input be given the same weight and terms of access as that of the Business Forum. As currently constituted, the CGR is not an acceptable substitute for an official Labor Forum.

The FTAA negotiators made a significant step forward by releasing draft texts of the FTAA at 2000 Summit of the Americas in Quebec and the ministerial in Quito, Ecuador in 2002. Unfortunately, much more could be done to make FTAA negotiations truly open and transparent. Citizens in every country have a right to know not only what the draft FTAA proposals are, but which ones their government is supporting and opposing. In addition, all of the new market access proposals submitted this year should also be made public. Once the agreement is concluded, dispute resolution measures should also be open to the pubic. A transparent, inclusive, and democratic process, both for the negotiation of the FTAA and for its eventual implementation, is essential to ensure the legitimacy of the FTAA process.

Conclusion
The FTAA must not simply replicate the failed trade policies of the past. If the negotiations continue along their current path, they will yield an agreement that undermines workers’ rights and the environment, exacerbates inequality in the hemisphere, and constrains the ability of governments to regulate in the interest of public health and the environment. Such an agreement will face fierce opposition from groups in many countries, including from the AFL-CIO.

A different kind of hemispheric integration agreement is needed - one that upholds workers’ rights, protects the environment, and stimulates equitable development. The labor movement and other members of civil society have presented reasonable and coherent proposals for what such an agreement should look like. In our view, the success or failure of the FTAA will hinge on negotiators’ willingness carry these proposals forward in the FTAA process.