Washington Post
April 23, 2001
By Paul Blustein

QUEBEC CITY, April 22 -- Milling behind a high chain-link fence, and facing a phalanx of police in riot gear, a crowd demonstrating against the Summit of the Americas roused itself Friday with a chant: "We will win! We will win!"

The cries resounded with frustration, for the protesters were unable to penetrate the summit's security perimeter. Yet in some important respects, the activists who came here to rail against the proposed Free Trade Area of the Americas -- at least the less militant among them -- are winning.

Those who want to dismantle the global trading system are unlikely to prevail, and they may fail to prevent the FTAA from coming to fruition. But the protesters and their sympathizers, especially in the labor and environmental movements, are forcing the powers that be to confront some of the issues they are raising and change a number of the system's rules.

A striking illustration of the shifting politics of globalization came in the speech President Bush delivered to the summit Saturday morning. As expected, Bush sang the praises of the FTAA, which would level barriers to trade and investment among the countries stretching from the Canadian Arctic to the tip of South America. But he also said, "Our commitment to open trade must be matched by a strong commitment to protecting our environment and improving labor standards."

Those words came as a pleasant shock to Lori Wallach, of the Ralph Nader-affiliated group Global Trade Watch, who has long argued that trade agreements should require countries to maintain standards on workers' rights and the environment.

"You could have dialed 911 when I heard what Bush said -- I needed to be resuscitated," Wallach said. "When we started organizing and educating on trade in the early '90s, no one but a handful of progressive Democrats understood what we were talking about. And now comes Mister trade uber alles Bush, saying we need to respect labor and environmental concerns. It shows the political shift; now we've got to see the policy shift."

Behind the change is the evolving nature of global trade. Until 15 or 20 years ago, the overwhelming bulk of international trade and investment was among advanced economies in North America, Western Europe and Japan. Today, much more of the goods and capital crossing national borders involves the emerging markets of Latin America, Asia and Eastern Europe.

That development has evoked fears of a "race to the bottom" as multinationals decide where to build factories based on the weakness of local laws and regulations against polluting the air and water, or the lack of worker rights.

Such fears are regarded as unfounded by many mainstream economists, who view overseas investment in factories by multinationals as generally positive for economic growth, living standards and -- ultimately -- the ability of developing countries, as they grow richer, to foster sound labor and environmental policies.

But many American politicians, especially Democrats, and especially those in the House of Representatives, are unwilling to dismiss concerns about the problems that arise when competition intensifies between U.S.-based producers and those in poorer lands. They argue that countries joining trade deals with the United States should at the very least be prevented from lowering their labor and environmental standards to attract foreign investment.

So now, to obtain congressional approval of trade agreements and legislative authority to negotiate them, the White House must secure the backing of a few dozen moderate Democrats to offset Republicans leery of trade pacts in a closely divided House. One of the most influential of the Democratic moderates, Rep. Sander M. Levin (Mich.), who accompanied Bush here in his capacity as ranking minority member of the House Ways and Means subcommittee on trade, voiced concern that the violent confrontations had obscured legitimate concerns about unfettered global commerce.

"You can't stop globalization. You have to shape it. And those who come across as trying to stop globalization aren't winning," Levin said. "But for those -- and I'm among them -- who think you must shape it, there is some progress. The dividing line increasingly is between those who say globalization, expanded trade by itself, will take care of all problems, and those who think that as trade expands, you have to address the new labor and environmental issues that are involved in it."

But the leaders of most developing countries, including the Latin American nations at this summit, are adamantly opposed to having their labor and environmental policies dictated by the rich. They -- along with Republican free traders in Congress -- fear that if such clauses can be enforced by sanctions against the goods of countries that fail to maintain adequate labor and environmental policies, protectionists would have a new weapon to restrict imports.

"It would be an obvious mistake -- a very serious mistake, indeed -- to set given standards of social development as a prior condition for free trade," President Fernando Henrique Cardoso of Brazil declared in his speech to the summit. "This would be tantamount to making development a prior condition for development. . . . [It] would be putting the cart before the horse."

Bush, too, appears to be drawing a line against trade deals that would require the imposition of duties against imports from countries that fail to abide by labor and environmental standards. "We should not allow [labor and environmental] codicils to destroy the spirit of free trade," he said in response to a reporter's question Saturday.

All this leaves precious little maneuvering room for Bush's trade representative, Robert B. Zoellick, who is seeking both to start negotiating an FTAA in earnest and to obtain legislative approval of "fast track" trade promotion authority, under which Congress would vote future trade deals up or down with no amendments.

Zoellick maintains that a mutually satisfactory arrangement is possible. He has been exploring the idea of enforcing trade agreements by fining the governments of countries that break the rules instead of slapping import duties on their products. Another possibility is rewarding countries that improve labor and environmental standards.

"There's a range, there's a toolbox of things that one needs to develop here," he said. "But one of the most important parts for the United States is, if other countries resist this or see this as a new form of colonialism or imperialism, we're not going to be successful."

Lack of success at forging an FTAA is, of course, precisely what most of the protesters are hoping for. They note that the North American Free Trade Agreement contains side agreements on labor and the environment that, they contend, have proven too weak to improve conditions in Mexico. If a broader trade pact is struck, it will presumably have to include tougher measures.

Even though that wouldn't go far enough for most of the activists, some of the arguments they espouse are carrying the day -- in subtle but significant ways.

Consider the right that foreign investors enjoy under NAFTA to seek redress in closed tribunals when they believe governments have infringed upon their rights. This issue has become a rallying cry for free trade critics, who cite more than a dozen cases that corporations have brought, including one in which a Canadian company challenged California's restrictions on the use of a gasoline additive that state authorities consider hazardous to the water supply.

U.S. trade officials say the FTAA is likely to be significantly different from NAFTA on this score, although the current FTAA rough draft does not yet reflect Washington's concerns.

While the final result is unlikely to satisfy critics such as Wallach, she feels that momentum is on her side. "Every week, every trade negotiation, hundreds of thousands more people become aware of the problems that this model is causing in their lives, and they're educating and organizing themselves to fight," she said. "Each of these events gets bigger and bigger with less and less organizing."