Free Trade Area of the Americas - FTAA

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June 3, 2003

Original: Spanish
Translation: FTAA Secretariat



Name(s): Claudio Lara, Beatriz García Buitrago 
Organization(s): Consumers International, Regional Office for Latin America and the Caribbean
Country: CHILE

Consumers and the FTAA negotiations

Consumers and consumer organizations have always expressed support for regional integration. However, they do not favor just any type of integration, but an integration based on meeting the basic needs of consumers and all of the people living in the countries involved. , Democracy, participation, and transparency are essential. Steps must be taken to promote, at both the national and international levels, the implementation of effective mechanisms able to address all social demands, which is the only way of representing the interests of all of the sectors involved in integration. No one can be left out.

I.- Without democratic participation, real integration cannot exist: Thus far, it has been very difficult to find the appropriate mechanisms for incorporating our rights and concerns into the formal instruments our governments have agreed to under the various integration arrangements, including the FTAA.
Members of the consumer movement have explained in various international fora that the FTAA negotiating process must put an end to secrecy and address the opinions of consumers throughout the Hemisphere, given that the outcome of the negotiations will directly affect them. The regional consumer movement and the Office for Latin America and the Caribbean are profoundly concerned that no heed is paid to consumer interests and that, apparently, consumers are denied rights. As a result, they will not be able to support a partial integration agreement such as the FTAA, which lacks direct mechanisms for participation and fails to address consumer protection. All agreements must consider:

  • Creating a working group that seeks to guarantee, as its main objective, that the interests of consumers are considered and that the benefits of the integration process extend to all consumers;
  • Advancing towards the establishment of juridical and institutional coverage, at the national and hemispheric levels, that promotes and protects the rights of consumers,
  • Promoting and guaranteeing consumer protection in all of the areas of the Agreement under negotiation.

Unfortunately, in the regional sphere, only the FTAA Business Forum has been created; a Worker’s Forum, Consultative Socioeconomic Forum, or Consumer Forum has yet to be established.

The type of integration that consumers are seeking: True integration entails reestablishing political control over the market and the economy. The sole purpose of such control is to ensure that the basic needs of consumers and the entire population are met. True integration should help reduce the external vulnerability of countries, through the design of suitable instruments and institutions for governing not only financial and monetary flows, but also for financing development. Under the new integration, there must be a recognition of the asymmetries between countries and an assurance that authentic special and differential treatment will be accorded. Full integration can not take place if national and regional approaches are not democratic and transparent.

II.- Specific proposals
The dilemma faced by small countries: All integration agreements must give priority to granting nonreciprocal concessions to small and less-developed countries. In this association of unevenly matched players in the FTAA, the agreements may be tilted in favor of countries with greater economic capacity, unless provisions are included to compensate for inequalities, not because they are expected to disappear under integration, but rather because inequalities open the door to varying degrees of satisfaction and levels of benefits.
Liberalization of agriculture and food safety: For consumer organizations, any integration agreement must give priority to ensuring that the population of a given region or country is fed, and not to exaggerated exports or imports. Food safety must be guaranteed by the States, and governments must have the right to protect, or exclude from trade agreements, food products that constitute part of the basic diet of the peoples of many countries. Governments must also ensure that small producers are not excluded from financing or attacked for unfair competition. Sanitary and phytosanitary standards must guarantee the high quality and safety of food for consumers.

The importance of competition policies: Effective competition laws and policies, rooted in local conditions, must be in place if countries and consumers are to benefit from market integration and trade liberalization. Es necesario: Steps must be taken towards adopting pertinent laws in countries that are behind in this regard, and this legislation must consider the interests not only of companies but also of consumers and national development. These steps should be accompanied by the creation of independent entities that possess the authority and credibility needed to implement the laws effectively and harmonize competition practices and jurisprudence within the framework of the agreement in question.

Services and consumers: Any integration agreement must take into account that most basic services have the characteristics of natural monopolies or of public goods. Consequently, the rules that should regulate the provision of services cannot be the same rules that apply to goods. For their part, countries must assume responsibility for ensuring that the entire population receives basic services and public utilities and, thus, must undertake to meet legitimate regulatory goals in the area of public policy, such as setting fair prices, protecting consumers, and providing universal access to essential services.

Financial crisis and regulation: New measures must be found to minimize the risk of recurrent crises that are costly to consumers. The fundamental challenge of managing external vulnerability is to design appropriate instruments and institutions for governing financial and monetary flows in the national, regional, and global spheres. Any hemispheric effort to step up regulation of financial and monetary flows that fails to take into account development financing and is restricted to tackling capital volatility is, a priori, inefficient.

Dispute settlement and its limits: The FTAA must establish a mechanism for settling trade disputes between its members. One goal of an authentic integration agreement should be to review the rules that serve as alternatives to unilateral action by the United States, due to the fact that United States laws on trade relief and reciprocity have been a constant source of friction in inter-American trade relations. One alternative is to establish an unconditional exemption; another is to create a review process conducted by panels, which could be set up in accordance with criteria for fairness and transparency. But it should remain clear that these problems are between companies. The questions that arise are: What happens when disputes arise between companies and consumers? Who resolves these disputes? This is why consumer protection policies and laws are so important.

III.- Issues not being addressed and new challenges: Given the market- and free-trade-oriented nature of the current FTAA proposal, in addition to consumer issues, we should not be surprised by the absence of other topics of similar importance in the development of the national community, such as labor, the environment, human rights, and gender issues. In the draft FTAA Agreement, it would seem that these considerations are seen as trade barriers and obstacles to private investment. With such an approach, there is a risk that basic human values and certain rights will be treated as mere variables to be avoided in the costs of production. In this manner, the agreement would finally mortgage, and is now mortgaging, the governability of society and could quickly lead to competitive free-for-all that would dehumanize social relationships.

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