ALCA Viewed from the U.S.

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In conversations and interviews with U.S. businesspeople and bankers on Wall Street, financial editors and government officials in Washington, as well as from a reading of business journals and public documents, it is clear that there is near unanimous and enthusiastic support for ALCA (Area de Libre Comercio de las Americas: Free Trade Area of the Americas).

The trade union confederation, the AFL-CIO, which is virtually impotent in any case, seeks to impose tariffs on Latin American exports to protect U.S. workers. Apart from some Christian church groups and Latin American solidarity organizations that oppose ALCA, the rest of the U.S. public is ignorant of the existence of the trade agreement. Several important questions arise from these facts:

(1) Why is there such solid support for ALCA given the failure of the free market policies of the past two decades in Latin America and rising poverty in Mexico under NAFTA?

(2) Why is ALCA necessary if U.S. and European multinational corporations have prospered under the current neo-liberal framework?

(3) How does ALCA fit into Bush’s global war strategy?

From 1990 to 2002, the “golden age of neo-liberalism,” U.S. banks and multinational corporations (MNCs) remitted $1 trillion dollars in profits, interest payments, and royalties from Latin America. In addition, close to $900 billion dollars in “dirty money”—or illegally gained funds —was sent by the Latin American elite overseas via U.S. and European banks. In the same period U.S. and European banks bought over 4,000 lucrative, previously publicly-owned banks, telecommunications, transportation, oil and mining, retail, and other companies throughout Latin America, but principally in Argentina, Mexico, and Brazil.

U.S. trade surpluses with Latin America covered over 25 percent of its deficit with Asia or over 50 percent with Europe. Rates of profit and interest of U.S. owned MNCs and banks in Latin America were two to three times the rates of return within the U.S. U.S. enterprises that relocated to Latin America were able to reduce labor costs by 70 to 80 percent; U.S. shares of Latin American retail markets via banking and local subsidiaries increased geometrically especially in fast food, shopping malls, and real estate. The poverty and stagnation of Latin America is a product of the concentration and centralization of wealth and expansion of the U.S.

From the point of view of U.S. bankers, the “neo-liberal” regimes were a success and their understanding of ALCA is that it will deepen and extend the “golden” years of 1990-2002. The massive transfers of wealth “north” has undermined local accumulation and growth; privatization has led to increased profits and higher unemployment. Deregulation of banks has led to the U.S. banks’ capture of local savings and the illegal transfer of billions of illegal funds from Latin America to the U.S. (including Citibank’s transfer of $100 million of Raul Salinas’s illicit funds), and high interest rates and scarce credit for local producers. Asymmetrical “free trade and protection” has led to the capture of retail trade, telecommunications, and real estate by U.S. firms and quotas and restrictions on Latin American exports of agricultural goods (citrus, sugar, cotton, shrimps, etc.), transport, textiles, and other products. If we exclude petroleum and foreign-owned low value-added assembly plant products, Latin America’s exports as a percentage of U.S. exports have shrunk considerably. If this immense transfer of wealth to the U.S. had been invested in Latin America over the past decade, living standards would have risen by 40 percent and national health and educational systems would have been vastly improved.

ALCA is a necessary continuation of the “free market” because it establishes a legal and formal institutional basis for the total absorption of Latin American resources, savings, markets, trade, and enterprises. Neo-liberalism has been a tremendous success for Wall Street, but there still remain pockets of local control, some enfeebled restrictive national and social legislation, and, in some cases, weak regimes unable to fully implement Washington’s policies because of popular pressure. With ALCA these impediments to total imperial plunder will be abolished. As it is conceived, ALCA’s economic policies will be dictated by a commission dominated by the U.S.—as it dominated the OEA, BID, and other regional organizations. ALCA rules will be enforced by U.S.-controlled administrative personnel and military alliances. ALCA emerges from the previous neo-liberal shell, but it is also an attempt to make the regressive policies and structures “irreversible.” By eliminating local legislative and executive bodies subject to popular influence, ALCA will substitute non-elected commissioners under the direction of the U.S. Department of Treasury and Commerce Department, who will oversee and formulate policies to further U.S. penetration and protect uncompetitive U.S. enterprises.

Finally U.S. MNC’s see ALCA as a means of restricting European competitor MNC’s from grabbing lucrative Latin resources and market shares. Given the ballooning U.S. trade deficit with the rest of the world, ALCA will permit further trade surpluses and ease the northward transfer of “dirty money.”

While U.S. economic functionaries are preparing the groundwork for the ALCA pact in 2005, top officials of the Bush admin- istration are on a different but parallel track: the pursuit of military conquest and the monopolization of strategic petroleum resources via a war and occupation of Iraq—and most likely future wars and colonization of other oil-producing countries. The convergence of the oil-directed military conquest and Latin America is found in Washington’s intense efforts to foment a military coup in Venezuela and to promote total war in Colombia.

The ascendancy of ultra-right militarists in the Bush regime (Wolfowitz, Perle, Cheney, Rice, and Rumsfeld) means that at least temporarily war and repressive policies have a higher priority than economic policies—including ALCA. Washington is assuming that its Latin American client regimes and political assets among the servile foreign ministers will “carry the ball” in pushing ALCA. In a strategic sense the U.S. warlords are counting on their increasing ties with the Latin American military and secret police (so-called “intelligence” and security forces) to impose ALCA, if necessary.

Objectively speaking, the Bush regime’s emphasis on military conquest is premised on the present economic deficits and future monopoly profits from direct control over Middle East and Venezuelan oil. In the period of “transition,” between current deficits and future gains, Washington is intent on squeezing Latin America to make up for the difference. Washington and Wall Street’s calculations, however, underestimate the scope and depth of the emerging tide of mass popular movements against ALCA and its military component. As Washington proceeds in its empire-building projects, people are growing restless and client regimes are becoming a footnote of history. There remains a question of timing: Will popular movements create nationalist and socialist regimes before Washington can impose the iron cage of ALCA? I am betting on the popular movements.

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James Petras teaches sociology at SUNY Binghamton and is an author and a regular contributor to Z.