23. Brazil Holds Back in FTAA Talks, But Provides Little Comfort for the Poor

by Project Censored
Published: Last Updated on

Inter Press Service (http://www.ipsnews.net), November 15, 2003
Title: “Trade: US Moves to Squeeze FTAA Opponents”
Author: Emad Mekay

Left Turn, Mar/Apr, 2004
Title: “Lula’s First Year”
Author: Brian Campbell

Faculty Evaluators: Robert Girling Ph.D. LeiLani Nishime Ph.D.
Student Researchers: Hilton Jones, Chris Cox

The Free Trade Agreement of the America’s (FTAA) could become the biggest trading block in history, expanding NAFTA to 34 countries from Canada to the bottom of South America. This deal is unlikely to meet its January 2005 deadline, now that the second largest player in the negotiations, Brazil, is holding back. Brazil played an important part in the November, 2003, Cancun WTO meeting. Led by President Lula, a 20-country coalition that opposed the agenda of the northern countries caused the meeting to end abruptly and collapse.

The United States has reacted swiftly by making bilateral agreements with individual Central and South American countries and threatening to restrict their access to U.S. markets if they refuse to cooperate. In many cases, these poorer countries have no choice but to agree to the very strict and unfair agreements that the United States demands. Countries such as Peru, Panama, the Dominican Republic, Colombia, Ecuador, and many other Central American nations involved in the FTAA want access to U.S. markets, even if it means relaxing anti-trust laws and workers’ rights. This tactic of coerced bilateral agreements has, so far, been successful in hindering Brazil from building coalitions with neighboring countries. Brazil is the fifth largest nation in the world, both in size and population. Boasting a consumer market of 182 million people, the United States desperately wants in.

Luiz Inacio “Lula” da Silva, the President of Brazil, has taken a very anti-Washington stance in the recent talks on the FTAA. All 34 countries had demands put upon them in a two-tier system. Since the United States and Brazil both sit comfortably in the top tier, they are able to opt out of any negotiations not favorable to them. This has allowed the United States to keep its farm subsidies, which is the only way the U.S. sugar industry can compete with the largest sugar exporter in the world, Brazil. In return, Brazil is not obligated to open up any of its service industry and government contracts to foreign competition.

Since NAFTA did little to stop jobs in Mexico from going overseas, particularly to China, where wages and operating costs are even cheaper than Mexico, Brazilian politicians are very hesitant to sign up for Washington’s latest economic plan. A poll by the University of Miami indicated that 76 percent of Latin American business people, journalists, academics, and government officials believe that the FTAA plan would benefit the United States and not Brazil. This is one reason President Lula is staying away from the FTAA and bolstering talks abroad with India and China that focus on technology and natural resources.

UPDATE BY BRIAN M. CAMPBELL: The election of Luis Inacio “Lula” da Silva and the Workers Party in Brazil was heralded as a defeat for neo-liberalism and the beginning of a new era in Brazil, where people would be put before the dictates of international capital. The aim of this story was to look at what had happened to that promise during the first year of the Lula administration.

Latin America has been the guinea pig for neo-liberal policies. Free market theories were given the green light immediately after the military coup on September 11, 1973 that murdered the elected president of Chile, Salvador Allende. The result has been 30 years of escalating poverty and economic collapse across the region.

During the period 1980 to 2000, per capita income grew at a mere one-tenth of the rate of the previous decade, leaving the continent scarred by poverty and inequality. In Brazil, out of a population of 175 million, 53 million are poor, 23 million are homeless, and 8 million are unemployed. Meanwhile, three percent of the population own two-thirds of the land. Argentina has an unemployment rate of 21.5%-a country that used to feed the world can no longer feeds its own people. In Bolivia, 60% of the population is defined as poor. These figures are not unique to these countries, but sum up the experience of countries from Mexico to Chile: by the end of the 1990s, 11 million more people lived in poverty than at the beginning of the decade.

In 2003 the United Nations Economic Commission for Latin America, the body that coined the phrase “lost decade” to sum up the regions experience during the 1980s, issued another report that read in part: “Half the countries in the region have seen GDP per head fall in the past five years and the economies that grew rapidly during the 1990s have slowed down.” Perhaps the most extreme example of the failure of the neo-liberal model was the economic implosion and social uprising in Argentina in December 2001.

The desperation inflicted by the neo-liberal economic model has not gone unchallenged by the people of the region. Fights against International Monetary Fund-mandated privatization plans have raged in El Salvador, Colombia, Peru, Ecuador and Bolivia. Many have been successful but have at best delayed the neo-liberal juggernaut. It was under these conditions and in this atmosphere that the people of Brazil went to the polling booths. The result was an entire country saying no to the dictates of neo-liberalism.

During the election campaign, the mainstream media had spread various scare stories about the impact that a Workers Party administration would have on the health of the Brazilian economy-meaning the ability of foreign owned companies to take money out of the country. Such talk caused a crisis in the economy and forced Lula to agree to abide by IMF rules. After Lula was inaugurated, he followed the rules of the international banking institutions and subsequently was lauded by newspapers such as the Financial Times and the Wall Street Journal. Any failure to follow through on pre-election commitments to Brazil’s poor have not been covered.

The best source to follow the progress of the Lula administration can be found on the Brazilian Landless Laborers website at http://www.mstbrazil.org/

Another useful resource is the ZNET website, especially the pages on Latin America and Brazil,http://www.zmag.org/LAM/index.html