Robert Zoellick's
Free Trade Evangelism
By Toni Solo
Photo:
Cartoonist: Khalil Bendib
Free trade advocates and multinational corporations
are pinning their hopes on Robert Zoellick, the
United States trade representative, as negotiators
from around the two continents gather in Miami this
week for the Free Trade of the Americas talks.
At the meeting scheduled for November 20th and 21st,
the trade ministers are expected to seek agreement
on guidelines for a new stage of negotiations for an
inter-hemispheric trade accord.
As an economics undersecretary for former president
George Bush who led negotiations for the U.S. state
department in the North American Free Trade
Agreement (NAFTA), Zoellick will attempt to use that
experience at the table in Miami to cut new trade
deals.
"We're not stopping. We're moving with the
countries that are willing to go," he recently
told reporters, referring to the creation of
bilateral and regional free trade agreements.
Yet critics say that the free trade deal will simply
enrich big corporations that Zoellick has worked for
in the past -- for example, he was a paid consultant
on the Enron advisory board before joining the US
administration, earning $50,000 in fees from the
company.
But his negotiating skills failed just this past
September when the G-21, a newly emerging and united
front of developing nations who were determined to
come to the table as equals, walked away from United
States bullying tactics at the Cancun ministerial of
the World Trade Organization in September causing
the global free trade talks to collapse.
Bullying Costa Rica
Here in Central America there are mixed feelings
about Zoellick who moved aggressively to target the
countries that joined the G-21: Costa Rica and
Guatemala, by threatening their membership in a
proposed Central American Free Trade Agreement (CAFTA).
"I told them that the emergence of the G-21
might pose a big problem to this agreement since our
Congress resents the fact that members of CAFTA are
also in the G-21," he said. "If we want to
construct a common future with them, resistance and
protest do not constitute an effective strategy. In
my talks with some of these countries, I sense that
they are drawing the right conclusions."
In addition Zoellick warned Costa Rica in early
October that it must open its services market and
privatize its telecommunications, electricity and
insurance industries if it wants to join CAFTA.
Costa Rica has drawn the greatest anger from the
U.S. government because it cancelled the license of
Harken, a Texas-based company, for oil exploration
for an estimated 2.3 billion barrels of oil and 6
trillion cubic feet of natural gas, off Costa Rica's
Caribbean coastal port of Moin. News of the
company's plans helped rally a massive international
campaign against oil drilling in Costa Rica, whose
economy is heavily dependent on tourism.
The company, which once counted George Bush, the
current U.S. president, among its board members,
demanded that Costa Rica enter arbitration before
the International Center for Settlement of
Investment Disputes (ICSID), a branch of the World
Bank, this past September. The company asked for $57
billion in claimed investment and damages, a figure
that represents about four times the country's
annual gross domestic product.
Environment minister Carlos Manuel Rodriguez insists
that because SETEN, the ministry's technical
secretariat, rejected the company's environmental
impact study - necessary for the project to move
forward - the contract is no longer valid.
Costa Rican president Pacheco also flatly refused
arbitration, saying the company had not exhausted
local administrative and judicial settlement methods
called for by the company's contract.
"Privileges" of Free Trade
Indeed the philosophy of the U.S. bilateral and
regional trade negotiating positions were revealed
in a recent speech this May to the Institute for
International Economics in Washington DC, by
Zoellick, who said: "The U.S. seeks
cooperation--or better--on foreign policy and
security.
Given that the U.S. has international interests
beyond trade, why not try to urge people to support
our overall policies? Negotiating a free-trade
agreement with the U.S. is not something one has a
right to--it's a privilege, he added.
Examples of those trading privileges are easy to
come by here in Central America: agricultural aid
and other concessions were used by the Reagan
administration to bribe and cajole Honduras into
serving as a military base for illegal aggression
against Nicaragua throughout the 1980s.
Telecoms Tall Tales
Meanwhile ordinary citizens in Central America,
whose governments have failed to hold firm against
privatization like Costa Rica, are now paying for
the failure of their governments.
For example in El Salvador, Antel telecoms company
and CAESS energy distribution company were
privatized while other state firms are being made
prepared for sale.
Advocates of free trade insisted privatization would
increase efficiency and lowers costs but the
opposite happened. Currently in El Salvador a basic
residential telephone costs 274% of the cost in
Costa Rica. The cost per call by minute is 43%
dearer in El Salvador for normal rate calls. In
Costa Rica the state monopoly charges by the second
whereas in El Salvador the charge is rounded up to
the next minute.
Meanwhile in Nicaragua, where half of the former
state monopoly remains to be sold, controversy
surrounds the holding company of the monopoly's
residuary body, Uretel, in the run up to the final
sell off.
Dodgy book keeping seems to have stripped out
benefits that should have gone to the government.
Mysterious losses have been alleged of up to
US$9million. Equally mysteriously, the book value of
the company's capital equipment seems to have fallen
by US$16million.
Telecom workers' union leaders fear maneuvers to
lower the value of the company prior to the sale so
as to increase profits for the eventual buyers. The
company has yet to render accounts to the residuary
body since the company was partially privatized in
2000.
Unexpected Criticism
And as the preparations for the Miami meeting get
underway, criticism of the FTAA has come from an
unexpected quarter recently: the World Bank,
normally a staunch support of free trade.
A new World Bank study, published in October,
suggests that unless rules for the proposed Free
Trade Area of the Americas are radically changed,
Latin America and the Caribbean will continue to
suffer from the growing poverty and inequality that
plague the region.
''Inequality in Latin America and the Caribbean:
Breaking with History?'', the World Banks annual
report on the region released last month, states
that the poor and ethnic minorities lack of access
to public services and decision-making on political,
economic and social policies are responsible for
Latin Americas problems.
''This inequality slows the pace of poverty
reduction, and undermines the development process
itself,'' said David de Ferranti, World Bank vice
president for Latin America and the Caribbean.
The report suggests that to reverse this trend, the
regions political and social institutions need to be
more inclusive and that the poor need more access to
high-quality public services, which include
education, health, water and electricity
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