ALCA Viewed from the U.S.

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).

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?

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.

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

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.

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