Green Left Weekly | 1 February 2008
Peru: Free trade deal an Andean tragedy
David T. Rowlands
On December 4, US President George Bush was delighted to announce that the US-Peru Trade Promotion Agreement (dubbed “PeruFTA”) had finally cleared the Congress. Since late 2005, when PeruFTA was approved by Peru, the Bush administration has campaigned relentlessly to secure the free trade deal’s endorsement by the Democrat-controlled House of Representatives.
The Democrats negotiated a few cosmetic changes to some aspects of PeruFTA, but have now washed their hands of the matter. Throughout the negotiating process, the Democrats framed their objections almost exclusively in terms of the US job losses that might result from the trade deal. Concern for the millions of Peruvian workers and peasants who would be adversely affected by such a deal was virtually non-existent.
After nearly two years of debate, the deal was approved by the house in November, followed by an overwhelming majority in favour in the Senate, with just 18 votes against. Bush commended the Senate, claiming that the deal “will level the playing field for American exporters and investors and will expand an important market in this hemisphere for US goods and services”.
In Lima, Peru’s President Alan Garcia - beholden to Washington by virtue of the financial support his 2006 campaign received from the US government - remarked that the “approval of the FTA with the United States is good news for the increase of jobs and wages and should boost foreign investment”.
These hypocritical euphemisms belie the real intent of PeruFTA, which is to strike a blow against the growing movement toward the creation of a regional trading block in Latin America.
According to the influential Heritage Foundation - a neo-conservative think tank - PeruFTA is a vital opportunity to shore up support for the ailing “Washington Consensus”: “With US influence in Latin America waning relative to the growing power of Venezuela and China in the region, fostering deeper ties and liberalism through strong trade agreements is a necessity. The US-Peru FTA is a big step in the right direction”.
Pursuing a latter-day divide and rule imperial strategy, the US is aggressively seeking to conclude bilateral free trade deals with a number of Latin American countries. The ratification of PeruFTA paves the way for tabled free trade deals with Colombia, Panama, Ecuador and Uruguay.
US plans
Extending the North American Free Trade Agreement (NAFTA) to include the entire Western Hemisphere has long been viewed as the best means of safeguarding US hegemony. The ultimate goal is the creation of a US-dominated “Free Trade Area of the Americas”, leaving no room for alternative development models in Latin American countries. By dealing with these weaker economies on an exclusively one-to-one basis, the US will inevitably have the whip hand, a point that is well understood by policy planners in Washington.
Eventually, if all goes to plan, Cuba, Bolivia and Venezuela will be deprived of allies and brought to heel.
The rhetoric that accompanies free trade places emphasis on the mutual benefits that supposedly flow from such deals. Peru, it has been suggested, will achieve greater prosperity and become more democratic in the process. Proponents of PeruFTA point to the US-Chile free trade deal, which has led to a surge in exports and a corresponding growth in Chilean gross national product.
Yet, as organised labour and environmental groups in Latin America and the US have consistently pointed out, the negative effects of so-called free trade far outweigh any gains. Mexico is a well-documented example.
Since 1994, when NAFTA was implemented, the removal of tariff barriers permitted the systematic dumping of heavily subsidised US agricultural products in Mexico. As a result, more than a million small farmers were forced out of business, leading to a massive exodus of the desperate rural labour force to the cities. The increased urban labour pool led to a collapse in wages and social disaster.
For the impoverished majority in countries affected by free trade deals with the US, increased gross national product is a meaningless statistical phenomenon. Take Chile, where increased mineral exports have further enriched the country’s mining elite, but left the general population worse off than before. Indeed, the gap between rich and poor in Chile is now wider than at any time since the reign of US-backed dictator General Augusto Pinochet.
Social disaster
Peruvian workers, farmers and indigenous groups have repeatedly expressed the fear that free trade with the US will lead to a social disaster akin to the Mexican experience. “By fully opening Peru’s markets to US agricultural products, this trade agreement will destroy our domestic agriculture, threaten our food security and increase social problems”, according to Luis Zuniga, president of the National Convention of Peruvian Agriculture. In July, popular resistance to neoliberal reform and PeruFTA led to a general strike movement that was brutally suppressed by state security forces.
A centrepiece of PeruFTA is the removal of tariff barriers, allowing, in the words of the Office of the United States Trade Representative, “new opportunities for US farmers and ranchers. More than two-thirds of current US farm exports will become duty-free immediately.”
The unrestricted domination of US capital will be formalised by PeruFTA: “US investors will enjoy in almost all circumstances the right to establish, acquire and operate investments in Peru on an equal footing with local investors”. In other words, indigenous groups have now been deprived of the legal right to challenge the exploitation of their land by US-based oil and mineral corporations.
Nor will US companies have to employ Peruvian citizens or purchase local products: “Peru has agreed to eliminate measures that require US firms to hire national rather than US professionals and measures requiring the purchase of local goods”.
These are just some of the concessions won by intransigent US negotiators and foisted on the Peruvian populace by the manifestly corrupt Garcia government.
Now that the tragic free trade deal has gone through, Peru stands on the brink of a new era of conquest and despoliation. For millions of Peruvians, the only choice will be to offer further resistance to the New World Order.