Free Trade Area of the Americas - FTAA

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June 10, 2002

Original: English



Name (s) Steven Beckman
Organization (s) International Union, UAW
Country United States

Statement of the
International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America (UAW)
to the
Committee of Governmental Representatives
on Civil Society Participation
Free Trade Area of the Americas (FTAA)

April 2002

The International Union, UAW is pleased to submit its third statement to the Committee of Government Representatives on the Participation of Civil Society (Committee) to further clarify our interests and concerns regarding the conduct and progress of the negotiations to create a Free Trade Area of the Americas (FTAA). The UAW is an active participant in the discussion and debate within the United States on trade policy and we are deeply concerned by the continuing failure of the FTAA negotiations to respond effectively to the comments we and others have previously submitted.

The UAW represents 1.3 million active and retired workers in the automobile, aerospace, agricultural implement and various other industries in the United States. Our headquarters is located at 8000 East Jefferson, Detroit, Michigan, USA 48214. We maintain an office at 1757 N Street, NW, Washington, DC 20036, which is the location of the UAW Governmental and International Affairs Department.

The request for comments indicates that the release of the draft text demonstrates a willingness to engage civil society in increased participation in the FTAA process. It also indicates that this round of submissions will be distributed to relevant negotiating groups, rather than simply summarized for the Trade Negotiating Committee (TNC). These steps represent only minor improvements in the transparency of the FTAA negotiating process. The Committee still only forwards information without comment or instruction and the draft text reveals how little attention has been paid to the concerns of the UAW and other civil society representatives that have taken advantage of the Committee’s procedure for comments.

The search for legitimacy for these negotiations by the governments of the Hemisphere will not be satisfied by the release of draft language or requests for further comments. The test used by the UAW and other worker organizations in the region will be the responsiveness of the negotiators to the views we have expressed. The UAW has met with unions of metalworkers in the region and we have developed common approaches to many issues. In our discussions, we found that the approaches taken in the FTAA negotiations are inimical to the interests of working people in the region. These inconsistencies are found in the negotiating groups on market access, investment and government procurement, among others. We have yet to see any evidence of our concerns being reflected in the negotiating text or in the positions of the U.S. government.

The serious economic crisis in Argentina highlights concerns raised in previous submissions by the UAW in three areas: debt relief, exchange rates and investment. Argentina’s crisis has shown the inadequacy of the FTAA negotiators’ agenda in addressing the real problems that face countries in the region. The UAW has advocated the inclusion of the issues of debt relief and exchange rates in the FTAA negotiations, but they are not covered by the current agenda. Reducing the mountain of foreign debt would free up resources for needed investments in health, education and infrastructure that would promote sustainable development. Exchange rate fluctuations and crises often overwhelm any impact of negotiated changes in tariffs and non-tariff measures, creating unanticipated dislocation for workers and industries. These issues must be included in any comprehensive regional integration discussions.

The Investment group has ignored many issues that are of great significance to workers in the region. The need for some controls on capital flows has been given little attention or credence, leaving the serious problems caused by the outflow of capital from Argentina and other situations like it unaddressed by the negotiations. The distribution of the impact of severe economic disruption of Argentina has been grossly unfair, with an excessive share of the burden placed on Argentina’s working people. Another investment-related issue is the damage to living standards caused by the push for privatization that has been led by the International Monetary Fund. The consideration of protection for investors against any negative financial impact of completely justifiable government action, on the basis of its being “tantamount” to expropriation, and access to a special, non-transparent dispute resolution procedure that circumvents the normal judicial path are offensive to our sense of justice. We also believe that greater attention to the rights of workers and the critical role of workers in developing equitable responses to national economic emergencies would improve the effectiveness of responses to crises like the one faced by Argentina. Achieving this role for workers would go beyond investment issues, but the absence of any negotiating group or negotiating agenda covering worker rights and the interests of workers in trade and investment rules is a fatal flaw in the FTAA process.

In our first submission to this Committee, in 1999, the UAW identified numerous deficiencies in the approach of the negotiating groups on investment and market access. We remain sharply critical of the failure of the negotiators on Investment to recognize the need to balance the rights of foreign investors with obligations to contribute to fair and equitable development. Democratically elected governments must retain the ability to regulate their economies in the interest of satisfying social and economic objectives. The experience of workers with the results of rules that facilitate deregulation of labor markets, social safety nets, environmental requirements, health and safety standards and other policies in response to pressure from multinational corporations has been that such deregulation does not promote prosperity and higher living standards. Instead, it increases poverty, downward pressure on workers’ incomes and economic and social insecurity.

There have been attempts to identify meaningful responsibilities for foreign investors. The International Labor Organization (ILO) and the Organization for Economic Cooperation and Development (OECD) have developed guidelines for multinational corporations that establish minimum conditions they should meet. But those guidelines are voluntary, with no enforcement mechanism to compel compliance. As a result, they have not provided an effective instrument to ensure responsible behavior.

The UAW believes that one way to ensure that investors make a positive contribution to the living standards of their workers and to the life of their communities is to require that they respect the rights of their workers to form their own unions and bargain collectively and other core labor standards, such as those included in the ILO’s 1998 Declaration on Fundamental Principles and Rights at Work and in the U.S. worker rights reviews under the Generalized System of Preferences (GSP). Respect for these rights must be binding and enforceable, which requires their inclusion in any FTAA investment provisions. Lowering these standards to attract investment must be prohibited.

The only way to ensure that negotiations on regional economic integration give adequate attention to concerns about worker rights is to establish a separate negotiating group on this issue and insist that each negotiating group take worker rights into account. Provisions on worker rights must be included in the text of an agreement, subject to the same enforcement process as other provisions. Experience with NAFTA has shown that addressing worker rights in a “side agreement” is completely ineffective. The standards set for enforcement of worker rights protections must be adequate and appropriate. The ILO’s 1998 Declaration and the U.S. GSP law set the floor for core labor rights and standards; any regional agreement must aim to raise standards from that level for each and every country covered. National laws would have to be changed accordingly, effectively enforced and not lowered as an inducement to investment or trade. Countries must also recognize that that World Trade Organization (WTO) rules along these lines are necessary, so a commitment by each country to support the creation of a WTO working group on trade and worker rights must be reached.

We also remain concerned about the Market Access group’s consideration of safeguards. The imbalance between the large and small economies of the region is a major concern of workers in the smaller economies and the UAW has found that the safeguard measures of the North American Free Trade Agreement (NAFTA) are ineffective. For all workers in the region, a surge of imports from large multinational corporations can overwhelm domestic producers very quickly, causing job losses and economic dislocation that can be devastating to workers and their communities. For many workers in the U.S., the company that employs the workers losing their jobs may be the very same one that is responsible for the surge of imports. In such a case, the usual remedy of restoration of the previous tariff on the imports will not be enough to reverse the company’s decision to move production abroad. FTAA negotiators should be considering much faster, stronger safeguard remedies.

The UAW is concerned with many other elements of the FTAA negotiations - the treatment of performance requirements, pressure to expand privatization, rules affecting government procurement, forced technology transfers. We would be willing to engage the FTAA negotiators in detailed discussions of all these issues if we were convinced that our views would be given serious consideration. Instead, we see the continuing close relationship between the negotiators and business forums and the distance placed between negotiators and workers’ forums. Along with the path being taken in the negotiating groups, that imbalance in treatment undermines our confidence in the openness of the FTAA process.

In each submission, the UAW has recognized our support for the primary objective of the San Jose Ministerial declaration, to raise living standards and promote prosperity for all people in the Americas and to better protect the environment. We believe that regional discussions can play a role in reaching that objective and we have identified the kinds of provisions that should be the focus of those discussions. But we must conclude from the process that has been put in place by the governments, the negotiating agenda that has been adopted and the draft text that is now available that the FTAA negotiations are not headed in the direction that will achieve the San Jose declaration’s objectives. Instead, we see a process that is headed toward greatly expanded rights for corporations and far more restrictions on the ability of governments to establish and implement policies and regulations to promote equitable, sustainable economic development. We have no choice but to criticize and oppose that process.

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