Free Trade Area of the Americas - FTAA


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March 9, 2004

Original: Spanish
Translation: FTAA Secretariat





The Bolivarian Republic of Venezuela and the FTAA1

Miami Ministerial Meeting

November 2003


As the date for the finalization of the negotiations for the Free Trade Area of the Americas approaches, it has become obvious that a comprehensive and conceptual political debate is required on the future model to which we aspire in the Hemisphere and on the most appropriate integration models to achieve these goals. We therefore feel that it is appropriate, on behalf of the Bolivarian Republic of Venezuela, to contribute to this necessary process of collective reflection by presenting an overall vision of the issues being negotiated in the FTAA and how they impact the building of a pluralistic, democratic, participative, equitable and environmentally sustainable society throughout the Hemisphere.

In this document, we have incorporated issues addressed in previous documents as well as others that we consider to be equally substantive.

1. The role of the State, cultural options for other ways of life, and liberalization policies.

One of the main challenges facing the countries of Latin America and the Caribbean is to overcome the poverty and the profound inequalities that make this region one of the most inequitable in the world. We must also assume the challenges and respond to the demands to recognize the multiplicity of the peoples, cultures and ways of life that characterize our diverse and heterogeneous region. Any program for Latin America and the Caribbean must, therefore, give priority to overcoming poverty and inequalities; cultural recovery and strengthening different ways of life; and establishing modalities for using resources that enable us to build an environmentally sustainable future, in light of the severe restrictions facing the world.

The region’s experience in recent decades suggests that the liberalization policies formulated by the Washington Consensus are not those that most favor growth. Nor is a market-oriented globalization model the best guarantee for preserving and boosting multiple cultural traditions or the biological and environmental diversity and wealth that make life possible. During the sixties and the seventies, when development and import substitution policies were being implemented, the region’s average annual economic growth far exceeded average growth levels, from the moment structural adjustment policies, liberalization initiatives and outward-oriented growth models became widespread.

The concept underlying the FTAA negotiations has been largely based on a strong and liberal cultural fundamentalism, as well as on an ideological bias which, above all else, gives preference to the market over any other type of social regulation or resource allocation criteria. This concept does not take into account the history and rich cultural diversity of our region, and ignores the ways in which the State has intervened in all the historic experiences of capitalist development that have been considered successful. State-market relations, as well as the other social regulation modalities, and the weaving of the fabric of society, which are all rooted in the diversity of cultural contexts, are not issues that can be resolved once and for all, for all future situations, on the basis of general theoretical or political assumptions. The relevance of greater or lesser levels of regulation or social intervention, and the diversity of responses emanating from the different peoples and cultures are open issues that must be decided upon in the context of constantly changing conditions. This has as much to do with the political alternatives the electorate votes for on the basis of its evaluation of the different programs proposed by the various candidates and parties, as with the cultural options that define the ways of life of the various peoples of the region. It would be difficult to speak of political or cultural democracy if this were not the case. Liberalization and structural adjustment policies cannot, therefore, be established as rigid, long-term commitments. They would end up producing an extraordinarily severe reduction in the future margins of democratic life.

The role of the State and public policies must therefore be re-introduced as conditions without which it would be impossible to achieve the desired goal of a pluralistic, equitable, democratic and environmentally sustainable society.

It is equally urgent and essential to recognize, protect and promote the multitude of forms of autonomous social organization and management that are found throughout the Americas and are based on the reciprocity, solidarity and autonomy.

Submitting all types of production to a one-dimensional market-oriented logic and to productivity criteria defined by international standards would irreversibly undermine the material bases for reproducing our region’s wealth of cultural diversity.

This unilateral vision (that underpins the FTAA) of the way of life that all the peoples of the Americas are supposed to aspire to and of how they have to proceed in order to achieve it, runs directly counter to the core guidelines of international human rights legislation, as contained in the most representative legal instruments on the subject, such as the International Covenant on Economic, Social and Cultural Rights of the United Nations, and Convention (No. 169) concerning Indigenous and Tribal Peoples in Independent Countries of the International Labour Organization.

2. Services, and economic, social and cultural rights. The public and the private sector.

One of the areas that would produce some of the more profound transformations in our societies is services, as described in the FTAA Chapter on Services. According to the logic of mercantilization, these negotiations seek to open vast areas to private investment, areas that until only recently were considered the province of public services.

Guided by the goal of achieving the highest level of deregulation and liberalization (read: privatization) possible of these services, the negotiations agenda is extremely ambitious. This represents a frontal attack on the economic and social rights the provision of such services responds to. The concept of services, which defines the scope of these agreements, is extremely broad. One of the versions of the FTAA Chapter on Services defines services as follows:

the term “services” includes any service of any sector, except services supplied in the exercise of governmental authority;

“A service supplied in the exercise of governmental authority” means any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.

This all-encompassing definition means that practically all public services would be subjected to the “disciplines” of the agreement, either now or in the future. At stake are core issues for both democracy and human rights. The gradual—and irreversible—privatization of public services would radically transform the public sector. Demands for access to health care, education, water, transportation, and social security services would cease to be viewed as social and economic rights in the public domain, and would instead be structured as private contractual relationships between commercial enterprises and paying customers. Once these services have been separated and privatized, they can no longer be viewed or claimed as rights.2

In Venezuela, social, economic, and cultural rights are not only international commitments; they are rights that are guaranteed by the Constitution. It is therefore impossible to "ensure that its laws, regulations, and administrative procedures are in conformity with the obligations assumed under the FTAA Agreement”, without making significant amendments to the 1999 Constitution.

3. Social and environmental issues

The Quito Ministerial Declaration reiterates that the “negotiation of the FTAA will take into account the broad social and economic agenda contained in the Miami, Santiago and Quebec City Declarations and Plans of Action with a view to contributing to raising living standards, increasing employment, improving the working conditions of all people in the Americas, improving the levels of health and education and better protecting the environment.” However, as indicated previously, a huge imbalance exists between the trade-related commitments and disciplines set forth in the text of the different chapters of the Agreement and the commitments assumed in the realm of human, labor, cultural and environmental rights. Similarly, there is a total imbalance between the rights of investors and the rights of States.

All of the countries participating in the FTAA are signatories to a vast array of international agreements and treaties, the express purpose of which is to protect human rights and the environment. As the experience of the North America Free Trade Agreement has already shown, the commitments assumed by a country in a new bilateral, multilateral or global treaty or agreement can occasionally conflict with, or contradict, previously signed and ratified treaties or agreements. The FTAA is not an agreement on human, labor, cultural or environmental rights. Nonetheless, a guarantee must be provided that the commitments assumed through the signing of this Agreement will not jeopardize any commitments previously undertaken by our countries under other treaties. This is particularly worrisome, considering that free trade agreements, such as NAFTA, have much more effective mechanisms in place to ensure compliance—based on strict sanctions— than those of the agreements and treaties on human, labor, cultural and environmental rights. This capacity to ensure compliance with norms is also characteristic of the World Trade Organization (WTO).

4. Agriculture: much more than a goods-producing sector

As reasserted at the WTO meeting in Cancun, international trade negotiations are proceeding under profoundly unequal conditions. While the main industrialized countries of the North demand the comprehensive liberalization of the economies of the countries of the South, the former have maintained strong protection policies in those sectors of their economies in which the countries of the South could have a greater capacity to compete in the international market. This is the case with textiles and, most particularly, with agriculture. In the context of the FTAA, many countries of the region have justifiably been stating that it is impossible to continue making significant progress in many areas of the negotiations if the United States is not willing to reconsider its domestic support policies for agricultural production.

Some countries spend tens of millions of dollars every year to prop up their agricultural production and exports and thereby cause significant price distortions in world agricultural products markets. These price distortions block or hinder effective access to the markets of these countries, even with the elimination of tariff barriers. It also means these countries compete unfairly in the markets for Latin America and the Caribbean’s produce by taking away markets in third countries for agricultural products which might otherwise be exported or exported with greater benefits. Our countries lack the financial resources of developed countries to support agriculture; what we have are policy tools to mitigate the adverse effects of international price distortions, tools that we have been asked to eliminate in the market access negotiations.

The San José Ministerial Declaration of 1998 clearly established that the objectives of the negotiations were, among others, “to eliminate agricultural export subsidies affecting trade in the Hemisphere” and “to identify other trade-distorting practices for agricultural products, including those that have an effect equivalent to agriculture export subsidies, and bring them under greater discipline.”

The FTAA Ministers also reached a consensus, on that same occasion, that negotiations would begin simultaneously in all issue areas. The commencement, holding and outcome of the FTAA negotiations would be treated as parts of a single undertaking that embodies the rights and obligations mutually agreed upon.

Since the launch of the negotiation of the texts for the draft Agreement, however, some countries expressed their reticence to eliminate agricultural export subsidies and domestic aid that distort trade and production of agricultural products, including measures that have an effect equivalent to export subsidies. This massive domestic aid further accentuates the profound imbalances characterizing economic relations throughout the region. At the Quito Ministerial Meeting, all of the countries recognized “the importance of agriculture for the economies of the region, the integral and non-discriminatory treatment of which in the FTAA negotiations will contribute to generating employment, reducing poverty and fostering social stability. We reaffirm the hemispheric commitment to the elimination of export subsidies affecting trade in agricultural products in the Hemisphere and to the development of disciplines to be adopted for the treatment of all the other practices that distort trade in agricultural products, including those which have an equivalent effect to agricultural export subsidies, and to make substantive progress in the market access negotiations.” Specifically, the countries indicated “that our respective evaluation by country or group of countries, of the results in the market access negotiations in agriculture in the FTAA will depend on the progress we can reach in other subjects that are part of the agriculture agenda.”

The poverty and marginalization of our peoples is, to a large extent, concentrated in rural areas whose populations subsist on agricultural or agriculture-related activities. Ultimately, this segment of the population is the hardest hit by the inherent imbalance in the agricultural negotiatons and would be even more so if the issues that are most harmful to them are not addressed in the negotiations.

The demand to reduce protectionism and the huge subsidies granted by the main industrialized countries cannot, however, translate into a generalized demand for the liberalization of trade in agricultural products. For many Latin American and Caribbean countries, agriculture is crucial to the survival of the nation itself. Living conditions for millions of campesinos and indigenous peoples would suffer catastrophically if imports of agricultural goods were to flood their markets, even if these were not subsidized. Agricultural production is more than the mere production of a good. Rather, it is a way of life. It is the material basis for preserving cultural options, it is a form of land occupation, it defines how society interacts with nature, and it is directly related to the critical issues of food security and sovereignty. Consequently, agriculture cannot be treated like any other economic activity or product.

5. Intellectual property rights

Access to and enjoyment of the fruits of scientific and technological endeavor are clearly recognized and codified as human rights. Article 27 of the Universal Declaration of Human Rights states:

Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits.

Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.

A balance is struck between society's right to have access to the results of "scientific advancement" and the right of the creator to benefit from his work. As an expression of the increasing prevalence of commercial law, due to multilateral, regional, and bilateral negotiations, this balance is entirely upset in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights and in the FTAA Chapter on Intellectual Property Rights. Appealing to what was referred to as "trade-related issues", a broad protection regime has been set up to protect intellectual property in each of its main areas. These negotiations were conducted between the countries of the North and the South under extremely asymmetrical conditions. Despite initial resistance from many countries of the South, the countries of the North managed to impose a mandatory regime and global protection for intellectual property in accordance with their own demands, and based on the proposals made by transnational pharmaceutical companies. The corresponding texts define the results of scientific-technological activity as merchandise, a good for whose use its owner is entitled to charge the rest of society. The modalities for the registration of authorship of knowledge that characterize the industrial model, i.e., patents, obtain full protection as private property. The other knowledge, collective, campesino, traditional, and indigenous modalities, etc., in failing to meet the specific authorship, novelty or industrial application criteria, lack this type of protection. The areas in which the countries of the North and their companies have solid advantages, their control of a very high proportion of all industrial patents, is rigorously protected. Conversely, the areas in which the countries of the South have advantages, the knowledge of their campesinos, as well as their traditional knowledge and biodiversity, is to all intents and purposes left unprotected.

There has been a huge expansion in what can be considered patentable, thereby blurring the previously-existing dividing line between an invention (patentable) and a discovery (non-patentable). Similarly, as a result of the transformations in the field of technology, particularly, new developments in biotechnology, and in response to the demands of this industry, a new and vast field has opened up for intellectual property: intellectual property of life forms.

These conceptual and doctrinal shifts in intellectual property have been accompanied by the creation of new, national and transnational, juridical and institutional instruments to protect it.

As a result of the monopolistic rights accorded by TRIPS, pharmaceutical companies can eliminate competition and charge prices that exceed the buying power of millions of people. According to various studies, not only will significant price increases occur as a result of the introduction of patents, but the level of consumption will also drop sharply. Broad swaths of the population will thus be unable to access commercial medications. In addition, medium- and small-sized pharmaceutical companies will tend towards bankruptcy and large transnationals will tend to increase their monopolistic control.

The establishment of patents on various life forms and the appropriation/expropriation of campesino and community knowledge by large transnationals producing seeds and agrochemicals are rapidly changing rural production patterns on a global scale. Campesinos are becoming increasingly less autonomous and more dependent on the purchase of costly inputs from transnationals.

The “free trade” increasingly imposed by transnationals on campesinos around the world in causing reduced genetic variety in many of the main food crops. This reduction in genetic diversity, associated with an engineering–oriented vision of agriculture, based on an extreme type of industrial control in each phase of the production process—with genetically manipulated seeds and the intensive use of agrochemicals—drastically reduces the self-adaptive and regenerative capacity of ecosystems. In few areas of international relations are the opposing interests of transnationals that hold the majority of patents and the basic human rights of the poor majorities in the South demonstrated so clearly.

Against this dramatic backdrop, Venezuela proposes that the new ways found for structuring and consolidating intellectual property agreements must not pose any threat to the standard of living of the majority of the world’s population, to the survival possibilities of peoples and communities who throughout the world defend the right to alternative cultural options other than total commercialization, or to the right of our peoples to have access to quality medicines and food at low prices.

6. The mandate for transparency in the negotiations and democratic participation

Time and again, presidential and ministerial declarations on the FTAA have established mandates and commitments regarding transparency in the negotiation process. Transparency in the negotiating process is a condition without which civil society participation in the follow-up to FTAA negotiations will be impossible. This transparency, nevertheless, has been extremely limited to date. Only after strong pressure by social organizations from all over the region was the first draft of the texts made public, in June 2001, after several years of negotiation. The second draft was made public in November 2002. These draft texts provide only limited material for any debate of what is happening in the FTAA negotiations. The abundance of bracketed text and the impossibility of determining the party that introduced the brackets, means that it is also impossible for the people of each country to discern their respective government’s negotiating positions. This endows the government representatives at the negotiating tables with broad discretionary powers and, in effect, means that their positions remain secret which, in turn, makes any possibility of an informed, democratic public debate impossible.

Only through a negotiation process that is in effect transparent as far as society as a whole, the business sector, workers, and indigenous, women, cultural, and environmental organizations, political parties, parliament, and the press are concerned, will we be able to claim that we are moving towards what could be termed a ‘democratic’ integration process. In the case of Venezuela, as provided for in Article 73 of its Constitution, Referendums on Bills and National Issues, the Government would have to carry out a referendum on the FTAA before approving or ratifying the corresponding Agreement.

Increased transparency, full access for societies to all the information, and public debate on the FTAA negotiations will necessarily require other timetables. These are the necessary costs of democracy. The accelerated process of the meetings currently under way and the pressure to conclude these negotiations by the end of 2004 at the latest, make it impossible to ensure transparency and the possibility of social sectors and society as a whole being consulted before making decisions of such profound consequences as those involved in the current FTAA draft Agreement.

The main reasons for requiring a democratic, transparent process, access to information, and the right to participate in the FTAA decision-making process is based fundamentally on the fact that the FTAA Agreement is much more than a narrow trade agreement. On the contrary, it encompasses a wide spectrum of collective life in all its institutional, political, social, and cultural dimensions. This broad coverage is defined in precise terms in one of the General Guidelines issued at the Fourth Trade Ministerial of the Americas.

All countries shall ensure that their laws, regulations, and administrative procedures conform to their obligations under the FTAA agreement.

In other words, what is being required is the politico-institutional redesign of State structure. In many instances, and Venezuela is one such case, substantial constitutional changes would be needed for this to take place. As this is the case, negotiations cannot continue as if these were solely trade negotiations involving only experts and specialists in the various areas of commercial and international law. Democratic negotiations need to include, in an effective manner, all sectors of the population continent-wide because every sector will be affected to some extent by the agreements currently under negotiation.

7. Legal inequalities and free movement of persons

Historically, according to liberal tradition, and in spite of the obvious differences that exist in the distribution of power and resources among the citizens of a representative democracy, everyone is equal within the political system (one person, one vote) and equal in the eyes of the law, which is supposed to be blind to economic, political, ethnic and cultural differences. The rules of the FTAA, however, establish distinct inequalities between the rights of different types of subjects. The first instance of inequality is the situation created in each country between national investors and investors from other countries that form part of the Agreement. Whereas public rules and regulations cannot establish conditions that are more advantageous for national investors than for foreign ones, the contrary is to be completely legitimate. Moreover, the Agreement establishes a fundamental difference that favors foreign investors by allowing them to use extranational dispute settlement mechanisms to question or request compensation rulings, for rules, laws or public policies of a country which, in their view, may affect their "expected profit." Investors from the country in question are, however, denied this possibility. Equally significant is the legal inequality established in the text between ordinary persons who, to cross borders, must abide by increasingly stringent regulations and limitations, and a special class of persons—business people—who will be fully entitled to enter countries where their businesses carry out economic activities.

When the mobility of enterprises or capital increases yet the movement of persons is restricted or repressed, workers’ negotiating capacity and their ability to demand better working and pay conditions are severely constrained. A company’s mere threat to move elsewhere could severely curtail wage earners’ ability to organize and make demands. Hence, a trade agreement that is truly beneficial to all countries and to all social sectors would require provisions for the free movement of persons, as is the case in the European Union.

8. Inequalities in the levels of development and Structural Convergence Funds

The negotiations for the Free Trade Area of the Americas began against a backdrop of abysmal differences not only in the size of the economies but also of extraordinary differences in the levels of development. One of the main objectives of a successful integration project—as seen in the experience of the European Union—should be to take concrete steps towards significantly reducing the vast inequalities that exist from the outset. Firm commitments, backed by enforcement procedures, must therefore be established for the Agreement to effectively reduce these inequalities.

The profound inequalities existing when the FTAA negotiations began have been repeatedly recognized in the documents of the Presidential Summits and Ministerial Meetings. The Quito Ministerial Declaration states:

We reaffirm our commitment to take into account in designing the FTAA, the differences in levels of development and size of economies in the Hemisphere, in order to ensure that these economies participate fully in the building of, and benefits resulting from, the Agreement.

The measures that have been discussed under preferential treatment or small economies fail to offer guidance on policies capable of effectively contributing to a significant reduction in those profound disparities. This involves not only small and large economies, but also very different economic structures.

The steps to which the most attention has been paid focus on strengthening countries’ technical capacity to take part in the FTAA negations, but as of yet no decisions have been made on the urgent steps needed to reduce and eliminate the profound inequalities among our countries. The Consultative Group on Smaller Economies has conducted a systematic survey on the “Report of the Trade Negotiations Committee on the Results of the Progress Achieved in Relation to the Treatment of Differences in the Levels of Development and Size of Economies in Each of the Negotiating Groups”3 This meticulous report illustrates how little progress has been made in adequately responding to the demands for special and differential treatment for the smallest economies and for the least developed countries, regions, and activities. Most references to these matters limit “preferential treatment" to technical assistance for adjustment processes or to extending deadlines to comply with the disciplines set out in the Agreement. Nevertheless, to date, not even these modest responses have been agreed on. In each drafts, each one of these proposals is still bracketed.

If the actions needed to improve social and production conditions are not taken, highly unequal countries would be treated as equals and forced to compete under the same rules, despite their underdevelopment and weaknesses.

Equal treatment for profoundly unequal economies can only favor the strongest at the expense of the weakest. Neither technical assistance to allow countries to adapt nor periods of a few years can address these problems. This is all the more worrisome, since the definition of the "General Objectives and Principles"4 of the negotiations on the Agreement sets forth that the “rights and obligations of the FTAA shall be shared by all the countries.” This implies a reciprocity principle requirement among highly unequal economies and economic agents, which is in outright contradiction with longstanding norms of the inter-American system.5

To move toward reducing these profound inequalities, we must face this challenge and assume firm commitments, which will necessarily entail a significant transfer of resources from the wealthiest to the poorest countries. In our opinion, an integration project can be an opportunity for all, if and only if the leading powers of the Hemisphere share the political, economic, and financial costs of opening spaces for production in the weakest countries. Hence, the creation of Structural Convergence Funds intended to finance infrastructure and services projects in order to reduce the asymmetries and inequalities among countries is an essential condition for preventing a free trade area from becoming a space with some winners and many losers.

At the Puebla TNC, held 8-11 April 2003, Venezuela submitted a document calling for discussions on the viability and suitability of including the topic of Structural Convergence Funds. The purpose of such funds would be to significantly reduce asymmetries in the levels of development among nations and production sectors. To this end, this mechanism would have precise social and economic goals and monitoring mechanisms and would remain in effect for a specific length of time.

The FTAA's treatment of differences in the levels of development and size of the participating economies, in addition to being envisioned—for the reasons given above—as an issue of the highest priority, should include:

  1. The creation of instruments within the FTAA that will allow developing countries to become more competitive and improve the conditions under which they produce, while reducing the disparities that characterize their internal economic operation and the substantial gaps between them and the large, developed economies of the Hemisphere.

  2. A clear definition of the economies that will receive special and differential treatment.

  3. The identification of special and differential treatment not only toward all the economies but also within each one of them, so that this treatment may be aimed at the regions and sectors that most need it. The resources marshalled to address disparities would thus be directly linked to the intra-national spheres that they will target, thereby ensuring efficiency and transparency as well as a reduction in administrative obstacles associated with the use of these resources from the aforementioned mechanisms.

Although the creation of the Consultative Group on Smaller Economies (CGSE), in 1998, and the Hemispheric Cooperation Program (HCP)6, in 2002, stemmed from the existence of profound inequalities in the FTAA zone, these measures are clearly insufficient for properly addressing the problem, foremost because, to date, special and differential treatment has not been extended to economies which, although not among the "smallest,” are characterized by a low degree of average development or by the existence of regions or sectors that require special support in order to successfully compete with the Hemispheric free trade that will be created through the FTAA.

More than 24 countries of the Hemisphere recognize the limitations of these proposals and are demanding a change in the way assistance is provided to developing countries. A group of delegations has been raising this issue since the negotiations began and insists on the need for a Regional Integration Fund; other countries are requesting a fund to support the restructuring of businesses and the reorientation of production; and some have proposed the creation of a Compensation Fund.

Venezuela has suggested a series of possible financing sources for these Structural Convergence Funds, such as: foreign-debt forgiveness, withholding a percentage of outstanding foreign-debt payments for the funds, a tax on speculative foreign-exchange transactions, contributions from foreign investors and donations from international agencies--in a bid to trade debt for welfare and efficient and fair redistribution mechanisms.

9. The FTAA: A Threat to States’ Legal Sovereignty?

Potential conflicts between the FTAA’s juridical-regulatory guidelines and the doctrine of the sovereignty of States needs to be discussed thoroughly. The notion of the FTAA as an instrument for the legal-political transformation of each country is clearly defined in one of the guiding principles of the entire negotiating process.

All countries shall ensure that their laws, regulations and administrative procedures conform to their obligations under the FTAA agreement.7

The text repeatedly sets forth that the enforcement of a country’s laws or rules may not be used to justify a failure to comply with the Agreement's obligations or disciplines. Among the many examples in the FTAA drafts, we can cite the following from the Chapter on Investment regarding the commitments to be assumed by the countries:

This Chapter applies to the entire territory of the Parties and to any level or order of government regardless of any inconsistent measure that may exist in legislation at those levels or orders of government. (Article 1.7. Scope of Application).

The text continues:

The provisions of paragraphs . . . shall not be construed to prevent any Party from adopting or maintaining measures, including environmental measures that are . . . necessary to ensure compliance with laws and regulations that are not inconsistent with the provisions of this Agreement. (Article 7.4. Performance Requirements).

That is, a government may take steps to enforce its domestic laws and regulations only when such laws and regulations are compatible with the commitments agreed on in the FTAA text.

Of equally profound consequences for the legal order of each of the countries of the Hemisphere is the manner in which foreign investors are granted the right to use the Agreement's dispute-resolution mechanisms to challenge rules, laws, regulations or public policies that may in some way affect their "expected profit." The experience of the North America Free Trade Agreement shows that this right might put severe constraints on governments’ capacity to establish or enforce environmental or public-health rules or regulations and thus limit their ability to implement sovereign public policies in those areas.

These profound restrictions on the exercise of national sovereignty would affect every country of the continent, and they would directly contradict the basic legal tenets on which the 1999 Constitution of the Bolivarian Republic of Venezuela rests.


Caracas, November 2003


1 Official document of the Bolivarian Republic of Venezuela presented at the Miami Ministerial Meeting, November 2003.

2 The World Bank, together with the International Monetary Fund, has been one of the main forces behind the privatization of public services throughout South America. Its most recent report on world development, however, notes that services are a social responsibility, that the privatization thereof does not guarantee that the poor will have access to these services and that these cannot be abandoned by the public sector. World Bank, World Development Report 2004, Washington, 2003.

3 FTAA.TNC/27, 21 November 2003.

4 Summit of the Americas, Fourth Ministerial Trade Meeting, Joint Declaration, San José, Costa Rica, 19 March 1998, Annex 1.

5 The Buenos Aires Protocol is one of the main instruments of the human rights regime in the Americas. There is a stark contradiction between this manner of conceiving reciprocity and the commitments currently included in this agreement. “Article 37. The Member States, recognizing the close interdependence between foreign trade and economic and social development, should make individual and united efforts to bring about the following: a) Reduction or elimination, by importing countries, of tariff and non-tariff barriers that affect the exports of the Members of the Organization, except when such barriers are applied in order to diversify the economic structure, to speed up the development of the less-developed Member States or to intensify their process of economic integration, or when they are related to national security or to the needs for economic balance.” “Article 38. The Member States reaffirm the principle that when the more-developed countries grant concessions in international trade agreements that lower or eliminate tariffs or other barriers to foreign trade so that they benefit the less-developed countries, they should not expect reciprocal concessions from those countries that are incompatible with their economic development, financial, and trade needs.”

6 This group was created at the Fourth Trade Ministerial Meeting, in San José, Costa Rica, 19 March 1998. As set forth in paragraph 13 of the Declaration, its functions are to: a) follow the FTAA process, keeping under review the concerns and interests of the smaller economies; b) bring to the attention of the TNC the issues of concern to the smaller economies and make recommendations to address these issues.

7 "Joint Declaration of San Jose,” Costa Rica, Summit of the Americas, Fourth Ministerial Trade Meeting, 19 March 1998 [ ]

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