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An Agreement That Isn't Good for Anyone: The Panama Trade Promotion Agreement

Wednesday, May 20th, 2009

People and planet should come before profits, but the proposed Panama trade plan would mean greed rules. The Senate Finance committee is meeting tomorrow to discuss the proposed Panama Trade Promotion Agreement. Top trade negotiator Ron Kirk is trying to ram through this agreement by July 1, when the Panamanian head of state Martin Torrijos leaves office. But this is just another free trade agreement that is bad for the people of Panama, it’s bad for the planet, and it’s no good for people of the US. We should call upon Congress to stop it now.

There’s a rancher that I know who raises cattle in the San Blas mountains of Panama, who I’ll only call Uncle Rickie. I met Uncle Rickie when I traveled to Panama in November of 2008, and I remember him for being a jolly fellow with a big belly who proudly bounced his new granddaughter Antonia, his first grandchild, on his knee.

If the Panama agreement went forward, Uncle Rickie would have to contend with a host of difficulties. The first would be that US cattle ranchers, who enjoy hundreds of millions in subsidies from the US government (US livestock farmers got handouts of about $344 million in 2003, for example,) would suddenly be able to sell duty-free to Panamanians. At the same time, Uncle Rickie will have to compete with a dramatic influx of cheap pork products from the US. Pro-pork lobbyists think that increased sales to Panama will result in $20.6 million in increased revenue. Uncle Rickie will have a lot of trouble making a profit by selling his beef to the Panamanian market, and eventually he may have to sell his land.

Farmers should be allowed to sell to their local markets. Local, living economies are good for everyone. If officials pass the harmful agreement, farmers like Uncle Rickie will no longer be able to carry on farming. Who would be there to buy the land of farmers who are forced to sell? Companies from the US and other rich nations, and maybe some wealthy Panamanians who support this agreement. This leads to a consolidation of power and decision-making as fewer people own more and more of planet earth. But people have a right to self-determination and autonomy, and the Panamanian government should respect that right.

Another supporter of the Panama agreement is Caterpillar, maker of heavy machinery used for logging and constructions. They are frothing at the mouth thinking of all the Panamanian trees that they can cut down and the increased heavy machinery sales that will result.

By the time little Antonia is going on her first date, the forests of Panama will probably be decimated, the clean rivers and pristine stands of old growth trees a distant memory. Verdant ecosystems will be forever ruined for incredible species like the blue morpho butterfly, which I first saw shining iridescently as it soared through the rainforest in the Boquete region of Panama. Like all of us, Antonia has a right to intact ecosystems, which Caterpillar seeks to undermine through supporting this trade agreement.

Another group who will be thrown under the bus if this agreement passed would be the Kuna Indians, a Panamanian ethnic group who have preserved their cultural heritage. Traditional farmers and artisans, these indigenous peoples will also face steep competition and many may have to abandon the ecologically sustainable, culturally rich ways of life their ancestors have known for thousands of years.

Will Antonia benefit from a more productive national economy? Probably not. Even looking at the brute economic indicator of gross domestic product, this trade agreement does not promise positive effects.

A similar trade agreement offers foreshadowing of what could happen if the Panama agreement goes through. NAFTA, a 1994 trade agreement between Canada, the US and Mexico, has shown that increased unprotected trade with the US is not likely to promote self-government, support local, living economies, or benefit most people at all.

GDP growth has been unequal after NAFTA, with Canada growing an average of 3.6 percent per year, the US growing 3.3 percent and Mexico growing only 2.7 percent. The average Mexican did not benefit from this growth, as income inequality has risen. Wages of Mexican workers decreased by 18 percent in the first five years. The predominant occupation in Mexico prior to NAFTA was farming, but many farmers, mostly in Central Mexico, were forced to sell or abandon their land after subsidized corn from the US flooded into Mexican markets, leaving the Mexican farmer unable to compete. Corn is indigenous to Mexico, and was farmed mostly sustainably. But now what is left is forced to compete in an atmosphere of industrial agriculture.

After NAFTA, Mexico has maintained a trade deficit with the US, meaning they import more than they export. This leaves the country hemorrhaging money and exports, which isn’t good for anyone in Mexico.

Furthermore, trade agreements like this one are bad for US workers, as we lose jobs here in the US. In just the first seven years, NAFTA had caused the loss of 766,030 jobs in the US. And it will cost us tax dollars, too. By 2002, the US Department of Labor had qualified 408,000 workers extensions on their unemployment benefits because their jobs had moved to Mexico.

Trade between the US and Panama totaled $2.1 billion in 2002 according to the office of the US Trade Representative. US exports account for about $1.8 billion of that amount. This means that for every $10 worth of goods that the US sells to Panama, Panama sells only $1 worth of goods to the US. The exports Panama sells to the US account for a tiny fraction, only 1.4 percent, of its GDP of $21 billion. Yet it is willing to sell its people down the river for this pittance.

The farmers who’ll be forced to sell their land and migrate may be forced to relocate to the city of Colon, where there are jobs in the Colon Free Trade Zone, or Zono Libre. When you picture a free trade zone, picture “Pleasure Island” from the Disney cartoon Pinocchio. For rich companies, a free trade zone represents a lawless area free from tariffs, taxes, or pesky labor or environmental laws. It usually looks like a collection of warehouse-like buildings on the edge of a port city that is protected by barbed wire. Working people (such as ex-farmers) travel into these zones each morning to do the most tedious grunt labor in return for low wages. Corporations like the low wages, while the workers are usually just desperate for any work they can get. Ships pull up to the buildings, unload raw materials like T-shirt fabric or radio parts, workers assemble them, and the finished goods get shipped to rich countries where people can afford them.

In his 2008 State of the Union address, Bush asked Congress to approve the Panama trade agreement, gleefully stating that the agreement “will support good jobs for the finest workers in the world: those whose products say ‘Made in the USA.’” That sentiment is perplexing to anyone familiar to Zono Libre, where low-paid workers work in unsafe work conditions to sew together textiles bound for the US valued at $400 million per year for companies like Orotex, with offices in Farmington Hills, Michigan. Textiles and clothing account for about 24 percent of the work done in Zono Libre. This happens as US workers lose more and more textiles jobs (stat), yet purchase more and more clothing (stat).

For all the celebrated freedom that free trade measures like the Colon Free Trade Zone has received, you would think that Panamanians would be better off, however the average Panamanian is not better off. Income inequality has risen, placing Panama among some of the most unequal countries in Latin America. Panama’s index for income inequality is 60, according to a World Bank report. As the report says, “[Inequality] is more obvious in urban areas like Colon, where the close, physical juxtaposition of the modern, dynamic wealthy sector with poor city slums accentuates the perceived gap between rich and poor.”

I have never seen Colon since my Panamanian friends have insisted that if I were to travel there I would become a certain victim of a mugging or kidnapping. But the real Panamanian danger isn’t really frustrated urban poor who see wealth all around them but can’t touch it. The real danger is the Panama trade agreement.

Some are arguing that this trade agreement is needed to rescue the US economy. But Panama’s entire economy is 0.15 percent the size of the US economy. The US has one hundred times more people than Panama. That’s right, I’m saying the country is tiny. For US officials to undermine people’s basic rights in order to do business with this small country in the hopes that its tiny economy will deliver us from certain economic death is a mistake.

If passed, this agreement will harm Panamanians like Uncle Rickie. It will negatively impact little Antonia and make her economic future less certain. It will not benefit the average Panamanian but is likely to lead to a decrease in self-government and a spike in income inequality, as NAFTA did. And it will not benefit people in the US. Our Congress should vote an emphatic “no” on the Panama Trade Promotion Agreement.

About the Author: Lacy MacAuley is a global justice activist, antiwar activist, and environmentalist with a passion for amplifying the voices of those who otherwise would not be heard. With a BA in International Relations specializing in World Development Studies, she is committed to promoting local, living economies that place people, planet, and principle before profit. She ignited a creative fire while working as news editor for her college newspaper, and has kept the flame burning through intensive grassroots organizing and  Lacy has done media relations work with groups such as Project Vote and ACORN, Global Justice Action, United for Peace and Justice, Jubilee USA, Mountain Justice Summer, and Working America (community affiliate of the AFL-CIO). Lacy is currently working on the Global Justice Media Project, and doing progressive communications work with Massey Media LLC.

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