Fences and Windows (8 page)

There is reason to pay attention. The
asambleas
are also talking about how to kick-start local industries and renationalize assets. And they could go even further. Argentina, as the obedient pupil for decades, miserably failed by its IMF professors, shouldn’t be begging for loans; it should be demanding reparations.

The IMF had its chance to run Argentina. Now it’s the people’s turn.

February 2001

Anyone still unclear about why the police are constructing a modern-day Bastille around Quebec City in preparation for the unveiling of the Free Trade Area of the Americas should take a look at a case being heard by the British Columbia Supreme Court. In 1991, Metalclad, a U.S. waste management company, bought a closed-down toxic treatment facility in Guadalcazar, Mexico. The company wanted to build a huge hazardous-waste dump and promised to clean up the mess left behind by the previous owners. But in the years that followed, they expanded operations without seeking local approval, earning little goodwill in Guadalcazar.

Residents lost trust that Metalclad was serious about cleaning up, feared continued groundwater contamination and eventually decided that the foreign company was not welcome. In 1995, when the landfill was ready to open, the town and state intervened with what legislative powers they had available: the city denied Metalclad a building permit, and the state declared that the area around the site was part of an ecological reserve.

By this point, the North American Free Trade Agreement—
including its controversial “Chapter 11” clause, which allows investors to sue governments—was in full effect. So Metalclad launched a Chapter 11 challenge, claiming Mexico was “expropriating” its investment. The complaint was heard last August in Washington, D.C., by a three-person arbitration panel. Metalclad asked for US$90 million, and was awarded $16.7 million. Using a rare third-party appeal mechanism, Mexico chose to challenge the ruling before the British Columbia Supreme Court.

The Metalclad case is a vivid illustration of what critics mean when they charge that free trade deals amount to a “bill of rights for multinational corporations.” Metalclad has successfully played the victim, oppressed by what NAFTA calls “intervention” and what used to be called “democracy.”

As the Metalclad case shows, sometimes democracy breaks out when you least expect it. Maybe it’s in a sleepy town or a complacent city, where residents suddenly decide that their politicians haven’t done their jobs and it’s time for citizens to step in. Community groups form, council meetings are stormed. And sometimes there is a victory: a hazardous mine never gets built, a plan to privatize the local water system is scuttled, a garbage dump is blocked.

Frequently, this community action happens late in the game and earlier decisions are reversed. These outbreaks of grassroots intervention are messy, inconvenient and difficult to predict—but democracy, despite the best-laid plans, sometimes bursts out of council meetings and closed-door committees.

It is precisely this kind of democracy that the Metalclad
panel deemed “arbitrary,” and it is why we should all pay attention. Under so-called free trade, governments are losing their ability to be responsive to constituents, to learn from mistakes and to correct them before it’s too late. Metalclad’s position is that the Mexican government should simply have ignored the local objections. And there’s no doubt that from an investor perspective, it’s always easier to negotiate with one level of government than with three.

The catch is that our democracies don’t work that way: issues such as waste disposal cut across levels of government, affecting not just trade but drinking water, health, ecology and tourism. Furthermore, it is in local communities that the real impacts of free trade policies are felt most acutely.

Cities are asked to absorb the people pushed off their land by industrial agriculture, or forced to leave their provinces due to cuts in federal employment programs. Cities and towns have to find shelter for those made homeless by deregulated rental markets, and municipalities have to deal with the mess of failed privatization experiments—all with an eroded tax base. The trade deals may be negotiated internationally, but it’s the locals who have to drink the water.

There is a move among many municipal politicians to demand increased powers in response to this off-loading. For instance, citing the Washington Metalclad ruling, Vancouver City Council passed a resolution last month petitioning “the federal government to refuse to sign any new trade and investment agreements, such as & the Free Trade Area of the Americas, that include investor-state provisions similar to the ones included in NAFTA.” And on Monday, the
mayors of Canada’s largest cities launched a campaign for greater constitutional powers. “[Cities] are listed in the constitution of the late 1800s between saloons and asylums and that’s where we get our power, so we can be offloaded [and] downloaded,” explained Joanne Monaghan, president of the Federation of Canadian Municipalities.

Cities and towns need decision-making powers commensurate with their increased responsibilities, or they will simply be turned into passive dumping grounds for the toxic fallout of free trade. Sometimes, as in Guadalcazar, the dumping is plain to see.

Most of the time it is better hidden.

[In May 2001, the British Columbia Supreme Court upheld the NAFTA tribunal’s findings, and Mexico paid Metalclad more than US$16 million in October 2001.]

January 2001

Marion Traub-Werner was in Toronto visiting her family when the call came: eight hundred garment workers had walked off the job at a factory in Mexico. She caught the next plane to Mexico City and was meeting with workers within hours.

For Traub-Werner, this wasn’t just any strike. “It was the one we’ve been waiting for,” she says. This factory was producing sweatshirts that bear the insignias of the universities of Michigan, Oregon, Arizona, Indiana and North Carolina. The factory’s biggest client is Nike, which has sports apparel contracts with these schools and many others.

For the past five years, Marion Traub-Werner has been one of the key organizers of the growing anti-sweatshop student movement in North America, helping to found United Students Against Sweatshops, now active on 175 campuses. The students have been locked in a bitter dispute with the companies that produce clothing for their schools, and their most public battles have been with sporting goods giant Nike.

At issue is who should be trusted to regulate and monitor the factories in the US$2.5 billion college apparel market.

Nike has consistently claimed it can solve the problem itself: it says it has a strong code of conduct and is part of the Fair Labor Association, set up by former U.S. president Bill Clinton. It also hires outside accounting firms to make sure the seven hundred factories that produce its goods are playing by the rules. [The
argument that accounting firms have an impartial relationship with the corporations they are paid to audit has become markedly less popular since the Enron/Andersen debacle.]

The students have rejected this route, saying that corporations cannot be expected to monitor themselves. They have instead pressured their schools and universities to join the Workers’ Rights Consortium, a group that advocates truly independent monitoring, free of company control.

To outsiders, it has seemed an arcane battle between competing acronyms: the FLA v.the WRC. But at the Kuk-Dong garment factory in Atlixco, Mexico, the dispute has just taken on a human face. Kuk-Dong was one of Nike’s test factories, visited by Nike-hired monitors on several occasions.

Today, the students will go public with a damning videotaped interview with a Kuk-Dong worker, footage they say shows that Nike’s code of conduct is being violated. On the video, which I viewed yesterday, a young Mexican woman speaks of poverty wages, hunger, of getting sick on the job and not being allowed time off. When asked how old she is, she replies, “Fifteen.”

According to Nike’s code of conduct, the company will not employ garment workers younger than sixteen. Nike says she may have falsified documents to land the job.
Document fraud is, in fact, widespread in Mexico, but underage workers often claim that they were coached to lie by the local companies’ own recruiters.

There are other factors in the Kuk-Dong case that call Nike’s monitoring methods into question. Nike claims that the workers who produce its goods have the right to freedom of association, and when I spoke yesterday to Vada Manager, Nike’s director of Global Issues Management, he insisted, “We are not anti-union.”

But workers say that when they decided to throw out the “company union” that failed to represent their interests, five of their most outspoken representatives were fired. (So-called company unions, in bed with management, are commonplace in Mexico, where independent unions are treated as a barrier to foreign investment.)

Last Tuesday, the workers went on strike to protest the firing of their leaders: eight hundred people walked away from their sewing machines and occupied their factory. According to Josephina Hernandez, one of the fired organizers, “What we are asking for is an end to the corrupt union and for an independent union formed by workers.”

The results, once again, were disastrous. On Thursday, riot police, led by the leader of the company union, swept in and put an end to the protest, beating workers and sending fifteen to hospital. The attacks were so brutal that roughly two hundred workers have decided not to return to work at the factory, even though the strike is over, fearing management retribution. Freedom of association, a right according to Mexican law and Nike’s own code of
conduct, is clearly not a reality at the Kuk-Dong factory.

Vada Manager says the last order Nike placed with Kuk-Dong—for fleece sweatshirts—was filled in December. He says Nike will decide whether to place further orders based on the recommendations of its “mediator on the scene.”

The factory workers and university students, working together in Mexico, want something else. They don’t want Nike to flee an ugly scene to save face but to stay and prove that its code of conduct is more than empty words. “We want Nike to put pressure on Kuk-Dong to negotiate directly with the workers,” says Traub-Werner. “It’s a long-term approach, but we think a more lasting one.”

[The Kuk-Dong workers went on a hunger strike, and Nike eventually pressured the factory to allow the striking workers to return to their jobs. In September 2001 the workers won the right to form an independent union, which, according to the U.S. human rights group Global Exchange, “is a precedent-setting victory” that could lead to further worker organization and independent unions in Mexico’s factories]

April 2001

This piece was a response to an article written in
The Globe and Mail
by Canada’s former prime minister Brian Mulroney, the man who negotiated both the Free Trade Agreement between Canada and the U.S. and the North American Free Trade Agreement, which brought Mexico into the deal. In the article, he argued in favour of a further expansion of NAFTA, to include the entire hemisphere (the proposed Free Trade Area of the Americas). Mulroney’s position hinges on his belief that NAFTA has been an unqualified success for all three countries. At the time the debate was published, Quebec City was preparing to host the Summit of the Americas, the meeting of thirty-four heads of state to launch the FTAA. Activists from across the Americas were planning huge counter-demonstrations
.

Brian Mulroney thinks the numbers are his friends. He proudly points to the percentage of Canada’s gross domestic product now made up by exports to the United States—40 percent! The number of jobs created by trade— four in five! And Mexico’s status as an important U.S. trading partner—second only to Canada! These numbers are a vindication, our former prime minister believes, for the free trade
deals he negotiated first with the United States, then with Mexico.

He still doesn’t get it: those numbers aren’t his friends; they’re his worst enemy. Opposition to free trade has grown, and grown more vocal, precisely because private wealth has soared without translating into anything that can be clearly identified as the public good. It’s not that critics don’t know how much money is being made under free trade—it’s that we know all too well.

While there’s no shortage of numbers pointing to increases in exports and investment, the trickle-down effects promised as the political incentive for deregulation— a cleaner environment, higher wages, better working conditions, less poverty—have either been pitifully incremental or non-existent.

The labour and environmental side agreements tacked on the North American Free Trade Agreement have a spectacularly poor track record. Today, 75 percent of Mexico’s population lives in poverty, up from 49 percent in 1981.

Trade may be creating jobs in Canada but not enough of them to keep up with the number of jobs that have been eliminated—by 1997, there had been a net loss of 276,000 jobs, according to the Canadian Centre for Policy Alternatives.

Total pollution from manufacturing has doubled in Mexico since NAFTA was introduced, according to a Tufts University study. And the United States has become a climate-change renegade, chucking out its Kyoto commitments wholesale. It turns out that defiant unilateralism
is the ultimate luxury item in the free trade era, reserved for the ultra rich.

There is always a ready excuse for why the wealth liberated by free trade is stuck at the top: a recession, the deficit, the peso crisis, political corruption and now another looming recession. There is always a reason why it should be spent on another tax break instead of social or environmental programs.