An Essay on NAFTA and Immigration

As part of the development of this site, from time to time I aim to post content written by people other than me.

In the 'Andean News & Opinion' section of 'Stories & Articles' I've just uploaded an excellent essay by Liza Wilcox called 'The Role of NAFTA in Undocumented Immigration to the United States', which was written as part of a Master's degree in International Relations at Victoria University of Welington.

Looking at the interrelated trends in economic globalisation and migration, Liza contrasts the increasing freedom of capital to move across borders with the security-state measures to restrict ordinary workers from doing the same. She argues that NAFTA has hardly been the panacea for economic development in Mexico that it was portrayed as at the time of its negotiation. In fact, the destabilising impacts of NAFTA may have actually stimulated increased migration to the US at the same time as border security has been stepped up in an environment of generalised paranoia about Mexican immigration. She concludes that the freedom to move has become the 'major stratifying factor' of our times, and that 'globalization for some means localisation for others'.

US Senate Passes Peru Free Trade Deal

After all kinds of delays and false starts , the US-Peru free trade agreement was passed on Tuesday 5 December by the US Senate with a vote of 77-18.

The Peruvians are pleased with the fact that this was an unprecedented vote in favour of a trade agreement. By comparison, the Chile agreement was passed by 65-32 while the Central American Free Trade Agreement (CAFTA) scraped through by 54-45 and is not counted as a 'treaty' by US law.

For Americans from both the main parties, the Peru deal has ended up being something of a no-brainer, for strategic rather than economic reasons. With Colombia unacceptable for the Democrats at the moment, and the rest of South America hostile or disinterested, the US was in danger of being left with no real friends between Costa Rica and Chile.

From Peru's perspective, there's not much doubt that the trade agreement will lead to further economic growth and more money flowing into the country. Whether that translates into material improvements for the majority of Peruvians depends greatly on the competence and commitment of the government. What is needed is the 'free trade agreement for the interior' promised by president Alan Garcia during the 2006 election campaign.

A good start would be to establish a system of compensation and assistance for the small agricultural producers who will be affected by competition from subsidised US imports. However, La Republica reports that the Peruvian government is still not sure of how such compensation will be provided, nor to whom. There is less than $40 million USD earmarked for this purpose, compared to a $4 billion fund in Mexico and $100 million in Chile. Minister of Argriculture Ismael Benavides said he couldn't explain the reasoning for this amount, since it was determined by the previous government. "I don't know who was the genius that came up with those figures", he said.

House to Vote Today on Peru Trade Deal

The United States House of Representatives, the lower chamber of Congress, is set to vote today (Wednesday 7 November) on the trade agreement with Peru. Peruvian representatives are hoping that the agreement will pass by a greater margin the US-Chile trade agreement, which was ratified in 2003 by a margin of 270 votes to 156.

The vote is expected to occur in the afternoon, after Congress receives the visiting president of France, Nicolas Sakorzy.

Update: the US House of Representatives eventually voted on the Peru trade agreement on the morning of Thursday 8 November. The vote passed 285--132. Breakdown by parties was:
Republicans: 176--16
Democrats: 109--116

There were eight abstensions from each party.

Categories: free trade, United Statess, Peru, FTA, trade agreement

The Inca and the Alpaca

In a small side room off the hot factory floor, women in blue smocks are intently picking apart bundles of brown fleece. Despite the cramped conditions it is, according to Incalpaca administator Adrian Corso, one of the preferred tasks for factory workers. The women are selecting the finest fibres from the coat of the vicuña, rare and beautiful animal that lives above 3,800 metres on the dramatic Peruvian altiplano.

Highly prized by the Incan nobility, the vicuña's wool is now worth about $500 USD per kilogram -- more valuable by weight than silver. Most of the best-quality fleece is concentrated in a small triangle on the animal's chest, which is shorn once every two years.

In the shop out front of Incalpaca's factory in Arequipa, a shawl made of the silkily fine vicuña fleece is housed in a glass case, like a precious jewel.

But if the vicuña brings the glamour, it's the chubbier, domesticated alpaca that provides most of the substance. Adrian takes us through the production process, as piles of alpaca wool are fed through Italian-made industrial machinery to be washed, heated, cooled and dried before being spun into fabric. From there it's turned into the coats, sweaters, scarfs, shawls and rugs that form the factory's output.

In the Peruvian sierra, zone of awe-inspiring scenery but also persistent poverty, Incalpaca is an economic success story. The South American camelids -- which include the llama and wild guanaco as well as the vicuña and alpaca -- have been interwoven with the Andes' human history for at least two thousand years, and still provide the main economic sustenance for many peasant communities living in the high mountains. Traditional Peruvian weaving in alpaca wool is renowned for its skill, colour and flair.

The outside world has also long recognised the value of the remarkably strong, warm and soft alpaca fibre. Cloth from alpaca was first successfully manufactured in the English town of Bradford in the 1830s, the wool having made its way from Spain via Germany and France. In the 1950s, Incalpaca's parent company Grupo Inca and its main rival in Arequipa, Michell, began the local processing of the raw wool. But it's only in the last 25 years that export-quality garments and rugs have been produced on an industrial scale in Peru.

Now, Incalpaca's Arequipa factory employs 1200, and sends 90 percent of its products to the United States, Europe and Japan. It's one of the industries likely to benefit most from the free trade agreement with the United States set to be ratified by the US congress by the end of October. Between 2001 and 2005, the value of Peru's textile exports doubled, to more than $1 billion USD. Incalpaca and Michell together contribute about $50 million to this total. Incalpaca's general manager Germán Freyre has estimated that a trade agreement with the US could boost sales by 15 percent.

Critics of the trade agreement have raised concerns about its potential to cause environmental damage and exploitation of labour. But compared to mining, which still dominates Peru's exports, the alpaca industry gets a pass on both counts. While the factory floor is hot, it's clean, and numerous colourful warning signs place a premium on safety. The workers, who are paid production bonuses in addition to the basic wage, are certainly better off than their unemployed compatriots who have to eke out a living driving taxis or selling in the street.

And as animals adapted to the harsh conditions of the altiplano, alpacas have an inherently low environmental impact. Incalpaca still sources some of its wool from the small communities that raise alpacas in the remote highlands. It also has its own animals in open ranches near Arequipa's airport and on the Pampas Cañahuas plateau at 4,000 metres, where tourists come to watch the vicuñas. Alpacas are sensitive animals that need plenty of care and attention, and 40 more staff are employed to look after them.

Pass through the international airports in Lima or Santiago in Chile, and Incalpaca's 'Alpaca 111' shops stand out, with their shelves full of fine fleeces in earthy colours. While the garments make a fine advertisment for the Peruvian heartland, most are in very classic, conservative styles. You can't help wondering what opportunities there are for integrating the alpaca's qualities and image with more youth-oriented fashion or sportswear. Young designers in Arequipa agree, and talk eagerly about developing their own more cutting-edge lines, something that will become easier as the country's trade links are strengthened.

In the 16th century, indigenous Peruvians led the world in textile design and production. Today, Peru is gradually carving out a high value economic niche based on rediscovery of its unique crafts, traditions, and environment. Its one industry that could help the country thrive in the global economy on its own terms.

Categories: Incalpaca, alpaca, vicuña, Arequipa, Peru, trade

Bush Threatened Chile Over Iraq Vote

Spanish newspaper El Pais has published the transcript of a conversation between former Prime Minister Jose Maria Aznar, George Bush, and Condoleeza Rice at Bush's ranch in Crawford, Texas, four weeks before the invasion of Iraq in 2003. In the conversation Bush threatened to derail Chile's free trade agreement with the US if the Latin American nation did not back a planned second resolution in the United Nations Security Council authorizing the use of force against Iraq.

In the conversation, apparently recorded by then Spanish ambassador Javier Rupérez, Aznar asked Bush to help him secure domestic support for action against Iraq and stressed that "it's not the same to act without [the resolution] as with it". Bush assured him that "the text will be made as far as possible to help you. I'm pretty easy on the content". He told Aznar that: "Saddam Hussein is not disarming. We have to get him now...There's two weeks left. In two weeks we'll be militarily ready...We'll be in Baghdad by the end of March".

Discussing the level of Security Council support for a second resolution, Bush said that"countries like Mexico, Chile, Angola and Cameroon (temporary Council members at the time) should know that what's at stake is the security of the United States, and act with a sense of friendship towards us. [Chilean president Ricardo] Lagos should know that the free trade agreement with Chile is awaiting confirmation in the Senate and that a negative attitude in this matter could endanger its ratification".

Chilean newspaper La Nacion said that the story had been confirmed by current Chilean ambassador to the United Nations Heraldo Muñoz, who at the time was a government minister. Muñoz told a Chilean radio station that the account of threats to Chile suggested by the transcript "basically fit the truth". According to Muñoz, after "very serious discussion", the Chilean government concluded that its foreign policy of multilateralism and respecting international law could not be sacrificed.

Muñoz said that in the view of the Chilean government while there was “a certain risk for the TLC", it was decided to trust that "a lot had already been invested by the United States and ourselves in many rounds of negotiation and there weren't going to be backwards steps because if there wasn't a treaty with Chile, with which Latin American country would there be?".

The Chilean government thus agreed that "it was worth defending [our] longstanding foreign policy principles", said Muñoz.

The US-Chile free trade agreement was ratifed by the US Congress in the last week of July 2003.


Categories: Jose Maria Aznar, George Bush, Iraq, Chile, Security Council , second resolution

Trade Agreement in the Final Stretch

After many doubts and delays, there's now a better-than-even chance that Peru's free trade agreement with the United States will be ratified in the near future. According to statements made by US officials to the Peruvian media, the House Ways and Means Committee is set to hold a hearing on the 25 September, after which the agreement would be voted on sometime in October.

Of the four trade deals negotiated by the US government before President Bush's 'fast track' authority expired in June, Peru's will be the first to go to a vote, and the most likely to be approved (the others are with Panama, Colombia, and South Korea). But with some Democrats still unconvinced about the Peruvian government's commitments to enforcing labour standards, there may be yet be stumbles as the agreement goes through Congress.

When I last posted on the topic, Republicans and Democrat leaders had stuck a deal to allow the Peru and Panama agreements to be considered if their labour and environmental conditions were strengthened. Amendments were drafted, and swiftly accepted by Peru's congress. A deputation of US representatives was to visit Lima to offer 'technical assistance' to ensure that Peruvian labour and environmental standards were on the road to acceptability.

That visit in August -- where Democrat Charles Rangel met with president Alan Garcia, representatives of all political parties, and labour unions -- produced warm words and grand statements. Garcia said that the agreement could be the start of a 'new New Deal' in international commerce. Rangel opined that it could be a 'flagship' agreement, noting that 'for the first time, workers' rights will be a part of trade agreements -- to be enforced'.

But not everyone was convinced about the Peruvian commitment to improving labour standards. On the campaign trail in 2006, Garcia had promised the elimination of 'services', companies that provide outsourced labour to other businesses. But a year later Garcia had changed his tune, proposing that such companies merely be regulated rather than eliminated. In August the government announced a law would be prepared with the aim of reducing the number of employees contracted through 'services' from 20% to 10% of the workforce.

According to American magazine Inside US Trade, some Democrats are also unimpressed that their concerns about outsourcing and union rights are being addressed through a series of governmental Surpreme Decrees -- which can be modified later -- rather than through the unfinished General Labour Law. The latter is currently stalled after being negotiated over the last five years. The two largest Peruvian labor federations, CGTP and CUT, have sent an open letter to congressional Democrats asking them to vote 'no' to the trade agreement.

Nevertheless, a hearing of the Senate Finance committee on September 11 on the Peru deal met with few objections. The American labour federation AFL-CIO is agnostic about the deal and has decided to neither promote or actively oppose it, but to concentrate their efforts on opposing the Colombia and South Korea agreements. AFL-CIO policy director Thea Lee said that the new labour and environmental conditions "represent significant progress in crucial areas we have fought to achieve for many years".

Political analysts say that 60 to 120 congressional Democrats are likely to vote in favour of the Peru agreement, meaning that it would pass with a considerably more comfortable margin than the Central American FTA, which passed by 2 votes with just 15 Democrats in favour. But after all the twists and turns that have occurred so far, nothing is certain yet.

Categories: free trade, United Statess, Peru, FTA, trade agreement

Trick or Trade? Uncertainty Remains on US-Peru Trade Deal

With flak coming from all corners of the political spectrum, the Democrat-Republican deal to allow the US-Peru trade agreement to pass must have got something right. Or perhaps its most salient feature it that, for now, its details are unclear.

In a previous post I linked to an outline of the deal. A fuller summary can be seen here. To retirate, the key points are that:

• parties to trade agreements with the US will be required to adopt and enforce the five basic standards in the 1998 International Labour Organization declaration, and the labour sections will be subject to the the same dispute resolution mechanisms as the rest of the agreement
• parties must ratify and enforce seven key multilateral environmental agreements, and the environmental sections will be subject to the the same dispute resolution mechanisms as the rest of the agreement
• intellectual property requirements are softened to allow earlier availability of generic medicines to US trade partners
• Peru is specifically required to crack down on illegal logging of mahogany

In the Times Online, columnist Irwin Stelzer blustered that this represented "the end of free trade as we know it". He lamented that:

We can sue our trading partners if they violate the agreement, and they can sue us. For example, if some country such as Panama decides we are violating trade-union rights here at home, they can bring a suit to press Congress to change the law.

Stelzer failed to mention that , in requiring wholesale adoption and implementation of American trademark, copyright and patent laws, the original agreement cut across national sovereignty in far more significant ways.

At the other end of the political spectrum, US netroots activists were furious with the secretive process that had been followed and bemoaned that drafting of the actual legislative language would be delegated to the Bush White House. They also cast doubt on how enforceable the labour and environmental conditions would be.

Blogger David Sirota lambasted the press for applauding the deal when they hadn't seen the all-important legislative language. He pointed to similar, unfulfilled claims about labour and environmental standards being made in relation to the North American Free Trade Agreement (NAFTA) more than ten years ago.

However, a blogger identifying himself as DemHillStaffer claimed that "we defeated the Bush trade agenda and got 100% of what Democrats have been demanding for years". He asserted that the labour and environmental standards will be "FULLY enforceable and subject to the same dispute settlement procedures as every other part of trade agreements, including investment, and intellectual property...EXACTLY what Democrats demanded before the election".

In a later update, Sirota reported the White House as saying that labor and environmental standards would not be written into the core text of trade agreements, "but instead will mean merely unenforceable NAFTA-esque 'side agreements' or even weaker 'letters' of understanding".

In fact, this is something Peruvian representatives were saying at least a week ago.

Somewhat missing in all this angst was what Peruvians might think about the deal. Alan Garcia's government has been presenting the trade deal as a sine qua non for the country's development, by supporting export-led growth and creating much-needed jobs.

But while Peru's televised media has repeated this line, it is far from a universal viewpoint. In La Republica, columnist Javier Diez Canseco launched a scathing attack on Garcia, whom he characterized as 'Toledo II' (previous president Alejandro Toledo, who was a cheerleader for the free trade deal, and who helped the outgoing Peruvian congress controversially push the agreement through on the eve of last year's election).

Diez Canseco pointed out that Garcia had raised significant concerns about the trade agreement during his election campaign and promised to "retire his signature [if Toledo signed the agreement] and review it line by line". But now in government, Garcia had allied himself with "the powerful business Right" and become a "yes man" for the agreement. To the Democrats proposal that Peru's trade preferences be unilaterally extended for two years while issues were sorted out, Garcia "remained mute".

With ratification looking imminent, the attention in Peru has turned back to the impact of the trade agreement on agriculture. The most prominent concern in Peru has been that the FTA will allow an influx of subsidised American products which will push out small farmers - who will then have the option of joining the influx to the already overburdened cities, or perhaps turning to growing coca.

The government has suggested that a system of compensation will be put in place for farmers affected by the trade deal - particularly producers of corn, wheat, and cotton. But La Republica reported that the agricultural subcommission charged with developing such a system had not yet determined which products would be significantly affected, let alone worked out how to implement such compensatory subsidies.

In any case, with specific regulatory change required of Peru at least in respect to mahogany logging, and many rank-and-file Democrats apparently wanting the new conditions to be written into the agreement itself, it's hard to see how only "process" remains for the agreement to enter into force. There may yet be an opportunity for Diez Canseco - and other Peruvians angered by the lack of transparency in trade negotations - to see "a national and congressional debate on the issue".

Categories: free trade, United Statess, Peru, FTA, trade agreement

Peru - US Trade Agreement Likely to be Ratified

The free trade agreement between the United States and Peru now looks certain to be approved by the US Congress before its August recess, after Democratic legislators and the Republican administration reached an agreement that will also set a framework for future US trade agreements, including those that have recently been negotiated with Panama and Colombia.

The Democrat-Republican accord that opens the way for ratification was announced last Friday 10 May by House Speaker Nancy Pelosi, who called it "a new day for our trade policy".

Pelosi stressed that "we have certain principles which we must accept as the foundation of how we talk about trade...labour standards form a core element of our agreements".

The stronger labour and environmental standards that Democrats had been arguing for are now likely to be included in annexed letters to the main agreement, meaning it will probably not have to be renegotiated, or re-ratified by Peru's congress. These new policies include requirements that US trade agreement partners adopt and enforce five core International Labour Organization labour standards and seven major multilateral environmental agreements. Intellectual property-based restrictions on generic medicines are also softened, and Peru is specifically required to act against illegal logging, particularly of mahogany. A summary of the key adjustments to US trade policy can be read here.

If ratified as expected, the agreement will come into force towards the end of 2007 or early in 2008. Until then, Peru's existing trade concessions under the Andean Trade Preferences and Drug Eradication Act (ATPDEA) will be automatically renewed.

Peruvian sources credited the recent visit of President Alan Garcia to Washington with helping convince US legislators of the importance of the trade agreement to Peru's development.

In a forthcoming post, I'll summarize the key issues and controversies of the US-Peru trade agreement.

Categories: free trade, Latin America, Peru, FTA, TLC