Letter from Chile

Article excerpt

A few weeks ago, Latin American trade ministers met in Quito, Ecuador, for what was expected to be a decisive negotiating round for the Free Trade Area of the Americas (FTAA), a far-reaching economic integration agreement involving every country in the Western Hemisphere except Cuba. The FTAA, like the North American Free Trade Agreement (NAFTA), is aimed not just at lowering tariff and nontariff barriers to trade but also at enshrining rules on investment, services, government procurement and a host of other issues, locking into place many of the neoliberal market reforms. Now, with the election in Brazil of Luiz Inacio Lula da Silva, who has said the proposal amounts to the "annexation" of Brazil by the United States, the fate of the FTAA, due to be signed in January 2005, appears less than certain. Da Silva pledges to keep Brazil in the talks but has made it clear that his government will demand significant changes. A leftward shift in politics throughout much of the region, precipitated in part by the failed economic prescriptions of the IMF and its "Washington Consensus" in Latin American countries like Argentina, is putting further strains on the FTAA negotiations.

Despite a growing uneasiness in official thinking about the hemispheric trade accord, one area in which Latin American leaders continue to show no sign of challenging the United States is the environment. Many Latin American countries, including Brazil, still continue to argue against including any environmental constraints in trade accords, on the grounds that such commitments can be used as a form of protectionism. They also argue that they can't afford to boost environmental controls, or that economic growth and poverty reduction are more important than sustaining ecosystems.

To be sure, there is also growing opposition among Latin American nations to investment rules such as NAFTA's Chapter 11, which effectively gives transnationals the power to target and invalidate national environmental laws. Take Alicia Frohmann, one of Chile's chief trade negotiators, who told me in an interview that "to expose ourselves to the kind of demands by US investors like what has happened with NAFTA, where the investors say regulatory changes have been tantamount to indirect expropriation and have demanded huge compensation involving many millions of dollars--well, that would be very difficult for Chile." And most governments and environmentalists agree on one thing, a NAFTA-style environmental side agreement is not the answer to environmental concerns.

Still, it is not difficult to visualize the ecological future of Latin America in an FTAA-governed world: It is likely to look a lot like Chile, the recognized champion of neoliberalism in the hemisphere. Chile, which is expected to sign on to a bilateral free-trade agreement with the United States before the end of this year, boasts an economy heavily geared toward ever-increasing exports of natural resource commodities: More than 80 percent of its exports are unprocessed or slightly processed minerals, fruit, fish and wood. Meanwhile, taxes are set low to help attract investment, environmental enforcement is lax, government accountability to ordinary citizens a sham and the approval of environmental impact studies for any foreign investment project virtually guaranteed. The mix is attractive to the private sector, but obviously worrisome for citizens, the environment and public health.

"If I am an executive of a foreign mining company," said Marcel Claude, founder of the Santiago sustainable development think tank Terram Foundation, "and I don't have to pay taxes and they give me the copper like it's a gift, and I also have low worker salaries and don't have to comply with environmental regulations, I applaud this model. But if I am a typical Chilenito, and the investor comes here and pays low salaries, contaminates the water [and] destroys the environment, I don't feel any benefits from this investment. …