If the history of the North American Free Trade Agreement (Nafta) is anything to go by, the Southern African Customs Union (Sacu) countries are in for a torrid time if the United States succeeds in closing a similar agreement with them.
US NGOs in Washington have warned the Sacu countries about the huge implications of a free trade agreement for the region.
Larry Goodwin, of the Africa Faith & Justice Network, and Neil Sorensen, an independent development observer, say free trade has been devastating for Canada and Mexico, particularly their farming sectors.
Nafta has kept large-scale farming enterprises on the land with government subsidisation, but farmers in Mexico and Canada have been forced off the land or have suffered deflated commodity prices because of the subsidies.
Maize prices have fallen 45% in the past three years, says Lori Wallach, director of the Public Citizen Global Trade Watch, a US consumer-rights group Ralph Nader founded in 1971.
Food processing and other agricultural industries in Mexico and Canada are now dominated by US businesses. Cheap agricultural products are processed mainly for the US market by cheap labour under conditions far less onerous than demanded in the US.
Even US citizens suffer from this brand of free trade.
“US farmers, labour unions and a lot of other people have always been against the terms of Nafta,” Sorensen says. “The general result has been the loss of US jobs to Mexico with the development of ‘maquiadora’ industries, which are factories run by US-based multinational corporations located near the border in the middle of nowhere. The multi-nationals could then pay the workers a tiny fraction of what they had to pay US workers, neglect environment and human health safety issues, and provide none of the benefits like health insurance that a worker normally receives in the US.
“Many people think that the attempt to establish [a free trade agreement] with Southern Africa or other regions is not necessarily to benefit those regions, but because current [agreements] are not providing the benefit they once did. What might happen, then, would be that the maquiadora industries move to Southern Africa where wages and safety requirements would be even less stringent than in Mexico.”
The agreement has devastated primary agriculture in Canada.
In 1989 US business moved into Canada. The Canadian National Farmers’ Union (NFU) says that while agri-food exports tripled between 1988 and 2002, net farm income stayed flat and farm debt doubled. In 1988 four farmer-owned co-operatives handled the vast majority of western Canadian grain. Today those farmer-owned co-ops are gone. In 1988 farmer-owned co-ops processed about two-thirds of Canadian milk. Today co-ops process only one-third.
In 1988 Canadian flour mills and malt plants were largely Canadian-owned. Today, these plants are largely owned by US transnationals.
Canada has lost two-thirds of its pork producers since 1988. Prices paid to farmers are unchanged, yet grocery-store pork prices have risen significantly.
Free trade has failed to produce the jobs predicted. The number of Canadian food-processing jobs is down from 1988.
“Until we address the underlying issues of market power and corporate control, farmers and governments are just chasing their tails when they try to deal with the farm crisis,” says Stewart Wells, the NFU president.
The new year began in Mexico with thousands of machete-wielding government opponents rioting in the cities and peasants blocking border crossings to the US. The protests were in response to Nafta provisions that ended Mexican tariffs on imports of nearly 80 US agricultural goods. Tariffs will remain on maize, beans and powdered milk until 2008.
Mexican farmers’ groups have complained that they can’t compete with their heavily subsidised US counterparts without the tariffs.
Anti-Nafta protests have been a regular occurrence in Mexico. Farmers rode into the Congress building in Mexico City on horse-back and last month blocked roads leading south from the capital.
One Mexican tariff that ended on January 1 added 50% to the price of imported US chicken. The US fast food industry uses mostly white meat, so wings and drumsticks are often turned into animal feed.
Now those poultry products will be sold for pennies in Mexico. Many fear this move will wipe out poultry production in Mexico in a few months. Mexican farmers have already been hard hit by US food imports of staples like maize.
“It’s going from bad to worse,” says Peter Rosset, an agro-ecologist and director of FoodFirst-The Institute for Food and Development Policy, a non-profit group. “The US produces food cheaply thanks largely to $30-billion in subsidies every year. Those subsidies will increase dramatically this year under the new US Farm Bill.”
The US Department of Agriculture reports that farm exports to Mexico rose from $3,6-billion in 1993 to $7,4-billion in 2001. Meanwhile, Mexican farm exports to the US nearly doubled from $2,7-billion in 1993 to $5,2-billion in 2001.
Mexico now imports many foods it once produced itself such as soy, rice, wheat and meat, largely because of Nafta.
The big winners are large agri-businesses, many of which have had record profits, reports Public Citizen. Archer Daniels Midland’s profits nearly tripled from $110-million to $301-million since Nafta and Canadian grain producer ConAgra’s profits grew from $143-million to $413-million.