As Reports Reveal Free Trade’s Empty Promise

from Weekly News Update on the Americas

Canadian Prime Minister Stephen Harper, Mexican President Felipe Calderon Hinojosa and US President George W. Bush met Aug. 20-21 in Montebello, in the west of the Canadian province of Quebec, for a third session on the Security and Prosperity Partnership (SPP, ASPAN in Spanish). The SPP is an agreement increasing military and police cooperation between the three countries and expanding the unpopular North American Free Trade Agreement (NAFTA), in effect since January 1994. Calderon had to leave early on Aug. 21 to return to Mexico, which was being hit by Dean, a major Atlantic hurricane.

About 5,000 protesters, some dressed as clowns and guerrilla fighters, chanted “Bush go home!” near the Chateau Montebello, where the three leaders were meeting. Riot police, using tear gas, pepper spray and clubs, blocked the protesters at the gates. During the protest David Coles, president of the Communications, Energy and Paperworkers Union of Canada, ordered three men dressed as “Black Bloc” anarchists and covering their faces with scarves to put down the large rocks they were carrying. As actual Black Bloc protesters shouted “policiers” (“police agents”), Coles pulled down one of the scarves. Riot police quickly whisked the three men away, after making a show of arresting them.

A video of the incident was widely viewed on YouTube on the Internet. Federal and provincial authorities initially denied that the three men were infiltrators, but on Aug. 23 Quebec Security (SQ) admitted that they were provincial police agents. SQ officials denied that the agents were acting as provocateurs. Coles disagreed. “They were there armed with boulders,” he told reporters. “I witnessed them trying to incite a riot. I saw it… They were there to provoke trouble.” Critics pointed out that security at the summit was under the control of the federal government’s Royal Canadian Mounted Police (RCMP), and asked how the RCMP could not have known what the SQ agents were doing. (Brisbane Times, Australia, Aug. 21 from AFP; Torotno Globe and Mail, Aug. 24)

President Calderon encountered another protest on Aug. 23 when he went to the central Mexican state of Hidalgo to inspect damage from heavy rains from Dean. Residents of Tulancingo’s Santa Cecilia neighborhood tried to block the convoy carrying Calderon and Hidalgo governor Miguel Angel Osorio Chong to complain about the lack of government assistance. “Stop, show your faces!” they shouted as the motorcade sped by. Calderon and Osorio came back later and listened to the protesters’ concerns. But when they left, two residents shouted: “Let the fake go!”β€”referring to the belief in some sectors that Calderon’s July 2006 election was fraudulent. (La Jornada, Mexico, Aug. 24)

World Bank Reports on Mexico, NAFTA

The North American Free Trade Agreement has failed to meet predictions that it would bring Mexico closer to the economic level of its partners, Canada and the US, according to a June study from the World Bank (WB). The study, “Mexico 2006-2012,” reports that Mexico’s Gross Domestic Product (GDP) per capita was 36% of that of Canada in 1994, when NAFTA took effect, and 28% of that of the US. In the 13 years since, it has fallen slightly, to 32% of Canada’s rate and 25% of the US rate.

The situation is especially bad in agriculture, where Mexico’s last tariff protections will be eliminated next year. “Mexico faces new competitors in the US,” the WB said, “and has achieved a small penetration of new markets.” The main advances have been in horticulture, in processed foods and drinks, and agriculture requiring irrigation; these sectors are a relatively small part of Mexican agriculture. (La Jornada, Aug. 20)

Growth in industry, which accounts for about a fourth of Mexico’s GDP, has virtually stopped in the last 12 months, according to the National Institute of Statistics, Geography and Information Systems (INEGI). The annual growth rate was 7.1% in June 2006; by June 2007 it had fallen to 0.1%. Mexico’s economy is now closely linked to the US economy, and on Aug. 17 the Banco de Mexico warned about possible effects from the mortgage crisis in the US, which may result in a downturn in the US. (LJ, Aug. 26)

At the beginning of August the US-based publications Fortune and The Wall Street Journal Americas reported that Mexican business leader Carlos Slim Helu was now the richest person in the world. According to Fortune, his assets had reached $59 billion, more than those of Microsoft founder Bill Gates, and more than 5% of Mexico’s GDP. Slim told reporters: “I don’t know if I’m the richest, or the 20th richest, or the 2,000th. It doesn’t matter to me.” (LJ, Aug. 7)

Maquilas Hit in CAFTA Partners

Growth in maquiladoras (tax-exempt assembly plants producing for export) in Central America and the Caribbean has fallen significantly in recent years because of competition from Asian manufacturers, according to the Intelligence Unit of the British weekly The Economist. This is happening despite trade preferences with the US, especially for textile and apparel production, in the Dominican Republic-Central America Free Trade Agreement (CAFTA), which was signed in 2004 and took effect in most of the region during 2006. Since 2005 the World Trade Organization (WTO) Agreement on Textiles and Clothing has reduced tariffs for Chinese textile and apparel products in the US. In 2006, China accounted for 30.4% of this market in the US, and other Asian countries, notably Bangladesh and Indonesia, accounted for another 25%.

The Dominican Republic is the main exporter to the US among the CAFTA countries, with $5.3 billion in exports in 2006. Employment has dropped sharply in the textile and apparel industry, which consists largely of maquiladoras; 147,959 Dominicans worked in the sector in 2006, down by 52,069 since 2004. About 40% of the employees in the maquiladoras were the principal support of their

The clothing and apparel industry has lost about 25,000 jobs in El Salvador over the last four years, according to the Chamber of Commerce and Industry of El Salvador. Exports fell by 16% in 2006. In Guatemala, the net value of exports in the industry fell by 6% in 2006, to $511 million a year, while employment fell by 6.3%, to 82,100 workers. About 89% of Guatemala’s exports go to the US.

Clothing exports continued to grow in Honduras until this year, when they fell by 5.9% in the first quarter, to about $746.5 million a year. But the assembly of electronic parts for automobiles grew dramatically in the same period, by 23.3%, to $137.5 million for the quarter. Only Nicaragua seems to have had no problem with apparel exports, because of a special agreement with the US which allows it to use textiles imported from countries outside CAFTA. (La Jornada, Aug. 14 from EIU)

From Weekly News Update on the Americas, Aug. 26


Weekly News Update on the Americas


YouTube video from Montebello protests:

See also:

from Weekly News Update on the Americas
WW4 REPORT, May 2007

From our weblog:

Energy, security top secretive NAFTA talks
WW4 REPORT, Aug. 27, 2007


Reprinted by WORLD WAR 4 REPORT, Sept. 1, 2007
Reprinting permissible with attribution