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Myths of the Free Trade Area of the Americas Agreement

Posted: June 28, 2001

Since 1994, the Free Trade Area of the Americas Agreement (FTAA) has been negotiated in secret. Only one group consults with trade ministers; America's Business Forum, which represents 500 corporations. U.S. trade officials admit that they see their job as primarily representing U.S. industry.

President Bush has proposed that Congress give him trade promotion authority (fast track) to negotiate this free trade agreement. If Congress grants trade promotion authority they would only have the power to vote yes or no for the final agreement without being able to express any concerns on the social, economic and environmental impact of the agreement.

Myths of Free Trade

Myth: Free trade will improve the lives of all people in the 34 participating nations.

Reality: In just the first 30 months after the North American Free Trade Agreement (NAFTA) was signed on January 1, 1994, the U.S. lost 600,000 jobs as companies set up more than 2,700 maquiladore export processing zone industries in Mexico alone. After eight years of NAFTA, Mexican wages are down almost 30% while the cost of living increased 247%; pushing 70% of Mexicans into poverty. In Canada NAFTA forced cutbacks in health, education, and welfare in much the same way as our social safety net was cut back in the U.S. The wage suppressing effect of NAFTA increased poverty in the U.S. during this period of unprecedented low unemployment. Many of the 600,000 U.S. workers who lost jobs to NAFTA earn just 70% of their former wages.

Myth: Free trade can end hunger if governments will just get out of the way.

Reality: Free market policies exacerbate hunger and poverty around the world. For example, Chile's free market experiment increased poverty from 17% to 45% from 1973 to 1990. In Mexico since NAFTA 8 million people dropped out the middle class into poverty. Government involvement is needed to allocate resources and distribute goods needed to ensure that the weakest citizens have the right to food and food producing resources.

Myth: Free Trade allows a country to export what it can produce cheaply and import what it cannot produce cheaply.

Reality: While soybean exports from Brazil to feed Japanese and European cattle boomed, hunger doubled in Brazil, increasing from 1/3 to 2/3 of the people. Free trade policies like NAFTA and the proposed FTAA pit workers in different countries against each other in a "race to the bottom" in a competition for who will work for less, without adequate health coverage, or minimum environmental standards. While food exports may boom, hunger worsens. For example, for every dollar you spend on melons from Central America, just 2 cents goes to the farmer with 91 cents going to U.S corporations for processing, marketing and shipping.

What You Can Do

This free trade agreement will affect all of our lives - with the potential to reduce our incomes and despoil our environment. Our electoral process becomes a sham if our elected representatives retain no power over the most important aspects of our economic lives. Tell your representative and senator that you want them to retain the right to debate the specifics of the Free Trade Area of the Americas Agreement to represent our concerns.