Last year, former U.S. Trade Representative Robert Zoellick warned the world that 2004 was in danger of becoming a "lost year," in terms of advancing the trade agenda. He turned out to be right. WTO negotiations barely progressed and the FTAA negotiators could not even agree on a common agenda. NAFTA was more in the news because of its problems (softwood lumber and BSE), than its 10th anniversary. This year, however, promises to be fertile in trade developments.

Another WTO ministerial

In December 2005, the trade ministers from the WTO’s 148 member countries will meet in Hong Kong. After the dramatic failure in Cancun, Mexico in 2003, proponents of free trade are multiplying the now notorious mini-ministerial meetings to avoid another debacle. Once again, agriculture will be at the heart of negotiations. Other issues to watch out for are NAMA and GATS negotiations.

In 2001, in order to get a deal, rich countries launched the Doha Development Round, supposedly aimed at helping poorer countries benefit from trade. Trade analysts now agree that most if not all of the Doha promises have been broken.

De-industrializing with NAMA

NAMA negotiations are all about industrial tariffs and represent another example of the disingenuousness of the so-called Doha Development Round. The current negotiations are based on the "Derbez text"; a document soundly rejected in Cancun, but later imposed in the July 2004 framework. Developing countries are mainly opposed to the Derbez text because it calls for a non-linear or "Swiss" formula for tariff reduction. Since their industries are still in the early stages of development, poor countries usually have higher tariff barriers to protect them. The non-linear formula would slash developing countries’ higher tariffs and force only small cuts to rich country tariffs. In all likelihood, this would lead to a rapid de-industrialization of the South in favour of the major industries in the North. Hardly a development measure!

The "business" of agriculture

Since the Doha ministerial of 2001, rich countries have continued to subsidize the production and export of their agricultural products, which they then "dump" on world markets. The main culprits, the European Union and the United States, promised to "reduce with a view to phasing-out" their subsidies. But four years after Doha, they have actually increased them. This is destroying the livelihoods of small farmers by flooding world markets with cheap products that don’t allow local producers to compete. Even in a rich country like Canada, net farm income is down 24 per cent, farm debt has doubled, and small farmers are being forced into bankruptcy.

Last July, WTO countries signed a framework deal to structure further negotiations. The U.S. used the document to mount an attack on state trading enterprises like the Canadian Wheat Board. Canadian Trade Minister Peterson said that there was little he could do to protect this institution, which has served Canadian farmers well in the past. The framework deal also reiterated the empty promise to reduce agricultural subsidies.

Strange bedfellows: the FTAA and the WTO

Since the last Ministerial meeting in November of 2003, the FTAA negotiations have been on life support. Brazil and other countries had resisted the "NAFTA Plus" version pushed by Canada and the U.S. and forced a watered-down free trade proposal. The FTAA was to be "NAFTA on Steroids" but has become a 90-pound weakling. Some analysts have taken the initiative and declared the FTAA dead while others believe this might be a bit premature. The 34 governments taking part in the FTAA negotiations still aren’t speaking of failure – with the exception of President Hugo Chávez in Venezuela – and Brazil and the U.S. are trying to get things back on track. Many suspect that if an agreement were to be signed at the WTO, this could give the FTAA the spark it needs to continue. Indeed, the key areas of disagreement are practically the same at the FTAA and WTO negotiations with agriculture and services at the heart of the negotiations.

The privatization of our Public Services

On services, Annex C of the WTO July document reaffirmed prior language for members who "shall aim to achieve progressively higher levels of liberalization with no exclusion of any service sector or mode of supply." The threat to our public services, including health care, water and education, remains ever-present. The WTO set a deadline of May 25th, 2005 for new offers to be made in service sectors that have not yet been privatized by individual countries. This framework deal is therefore intensifying the pressure on all countries to achieve a "substantive outcome."

The NAFTA contradictions

When Canada first entered into free trade negotiations with the U.S. our leaders told us that we had two objectives: a secure access to the U.S. market and an efficient dispute settlement mechanism. As BSE and softwood lumber demonstrate, we didn’t achieve those goals. We are still at the whim and mercy of U.S. politics and laws. Our government points to trade numbers to call NAFTA a success, but ignores troubling economic and social indicators - not the least of which are falling standards of living, stagnant wages and growing poverty in Canada. In our continuing efforts to point out NAFTA's failures, the Council of Canadians and the Canadian Union of Postal Workers (CUPW) went before the Ontario Superior Court of Justice in January of this year to have a part of NAFTA declared unconstitutional. The investor-state dispute settlement mechanism of chapter 11 allows corporations to sue governments directly, in order to challenge public interest laws and regulations that might harm their profit margins. The judge’s decision is expected in May 2005. Information is available on our website. Along with our partners at Common Frontiers, we have taken advantage of the minority government situation to lobby for a review of NAFTA. The Sub-Parliamentary Committee on Trade agreed and recommended a review of NAFTA chapters 11 and 19. We will keep you updated!

Glossary of Acronyms Used

WTO (World Trade Organization): A multilateral trade institution made-up of 148 member countries.

FTAA (Free Trade Area of the Americas): A proposed deal that would include all the countries of the Americas except Cuba.

NAFTA (North American Free Trade Agreement): A free trade agreement signed in 1994 by Canada, the United States and Mexico.

NAMA (Non-Agricultural Market Access): Negotiations aimed at reducing industrial tariffs.

GATS (General Agreement on Trade in Services): An agreement to push for greater privatization of all service sectors including public services.

AoA (Agreement on Agriculture): A key area of negotiations at both the WTO and the FTAA. Market access and elimination of subsidies are in dispute.

Ministerial meetings: Trade Ministers periodically meet for FTAA and WTO negotiations. This represents the top-level decision making body of the two organizations.