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Robert Zoellick's Free Trade Evangelism

by Toni SoloSpecial to CorpWatch
November 17th, 2003

 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

According to Cyril Mychalejko at the Florida Fair Trade Coalition, the FTAA has been unexpectedly criticized by the World Bank, which usually supports free trade. Mychalejko writes:

"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."

Toni Solo is an activist based in Central America. He can be reached at: tonisolo52@yahoo.com