Buermann on CAFTA

Buermann has an excellent piece of analysis, at Flagrancy to Reason, of CAFTA as a neo-mercantilist framework for protecting the interests of corporate welfare queens. Behind all the phony "free markets" and "free trade" rhetoric, here's what the agreement--"another investor rights and corporate protectionist racket"--actually does:

# Member governments will be required to open bidding on government projects to transnational corporations, part of its various formalizations of gunboat privatization.

He links to this as an example of what he calls "gunboat privatization." I've written several times myself on the orgy of state-subsidized corporate looting that usually passes for "privatization": here, and here, and here, and here, and here, and here, and here.

Another good example of "gunboat privatization" is this bit of information I got from Bill Green, via the Democratic Freedom Caucus yahoogroup:

...the state of NH was threatened by a private water bottling company that if they did didn't grant them a permit to pull 400K gallons of water per day out of the aquifer and sell it to Europeans (btw - the state legislature has deemed all surface water over 20 acres and ALL groundwater is owned in common with the state acting as the public trustee) that they would make a WTO claim because the WTO has deemed water as a private commodity.

Back to Buermann's points:

# Strengthens enforcement of investor claims against foreign parties. For example Costa Rica will likely be forced to move Harken Energy's 57 billion dollar claim against Costa Rican environmental laws (something like twice CR's GDP) out of its national courts into an international tribunal in seeking damages for some unrealized potentiality. Someone will have to remind me where Adam Smith discussed the right to sue a contracting party to collect unrealized profits....

# Agricultural subsidies, and subsidization of export industries in general, are left completely out - apparently gross market distortions like US ag and transport subsidies are not considered a "non-tarriff barrier to trade" like, say, a union or public health inspector. While there are no restrictions on how the US subsidizes industry these Central American governments are under strict structural adjustment agreements that restrict how they subsidize their industry. They call this "levelling the playing field"....

# Existing ag tarriffs, meanwhile, will be dramatically reduced in Central America, driving small local growers out of business because of increased market pressure from said heavily subsidized American firms, sending them into the cities searching for work in US owned textile mills and factories, etc., driving wages down to "competitive" levels, putting further downward pressure on American wages and increasing rates of illegal immigration.

# Expands protectionist "intellectual property" laws to give big pharma a loophole through the petty concessions on generic drug use that were eventually made to developing nations under TRIPS.

He adds:

It's impossible - and I'm ignoring the last minute pork slabbed to big sugar, et. al. - to see how anybody remotely interested in free markets could possibly support an agreement whose every provision, or lack thereof, is explicitly designed to protect some entrenched special interest against competition. About the only significant competition opened by this agreement is between independent producers in Central Asia against US state-backed monoliths and US workers against low wage competition in Central America: not so much a competition as a class slaughter. In this it's no different from past "free trade" agreements, and does little to alter existing trade relations so much as it does property relations.