LATIN AMERICA: FREE TRADE IS NOT THE ANSWER
PCDForum Column #14 Release Date July 1, 1991
by Robin Broad, John Cavanagh, and Walden Bello
Washington is offering Latin American countries the carrot of increased access to North American markets if they continue repaying their debts and agree to a development strategy that emphasizes private enterprise, removal of trade barriers, and the opening of their economies to foreign investment. Essentially, the Bush administration is suggesting that Latin America can export its way to South Korea or Taiwan status through the export-led growth strategies--the same strategies that provided the framework for the structural adjustment policies the World Bank and IMF have imposed on dozens of countries in Africa, Asia and Latin America.
A decade of experience demonstrates that such policies damage environments, worsen structural inequities, bypass popular participation and fail even in the narrow goal of pulling economies forward. In the frenzy to increase exports, countries commonly resort to the easiest short term approach: unsustainable exploitation of their natural resource base. Thus, timber exports have denuded mountains, causing soil erosion and drying critical watersheds. Cotton, soybeans and other cash crops have typically depended on polluting pesticides and fertilizers. Large fishing boats have destroyed the coral reefs where fish breed and live. Tailings from mines have polluted rivers and bays and reduced the productivity of crop lands.
In Latin America, the major beneficiaries of such policies have been the large U.S. banks. Since 1983, Latin American nations have paid to creditor banks and institutions over $100 billion in debt service more than they have received in new loans and aid. This has left them precious little either for social programs or development projects. The resulting declines in spending on social programs have resulted in irreparable long-term damage to the health, nutrition and education of those who fall below the poverty line.
This is not to deny the need for substantial reforms, reduced government spending, and the appropriate use of markets. At the same time, the lessons of the 1980s teach that there are no shortcuts to development. Development strategies will not succeed and endure unless they also incorporate ecological sustainability, equity and participation as integral to their commitment to improved living standards. The generalized failure of development during the 1980s is a direct consequence of the neglect of this reality by most governments and official assistance agencies.
This reality is, however, a centerpiece concern of the new wave of democratic movements that are emerging in Latin America--as they are in Asia and Africa--through which millions of workers, farmers, women and environmentalists are demanding the right to define and control their own futures. These movements reject the heavy emphasis of free-market development on exports based on cheap Latin American resources and labor. They focus instead on the development of domestic markets and recognize that the creation of effective consumer demand depends on eliminating the severe inequalities that commonly depress the purchasing power of workers and peasants. This type of market development depends fundamentally on effective government action in such areas as land reform, progressive taxation and advancement of workers rights.
Building development dreams on cotton, timber, minerals and other ecologically damaging exports is not only unsustainable, it fails to ask the more fundamental question of whom development should benefit. If foreign exchange receipts are to benefit the common people they must come not from the sale of primary commodities, but rather from processed commodities, manufactures and environmentally sensitive tourism.
Why should citizens' movements pushing for a more equitable, sustainable and participatory development stand a chance in the 1990s? Much of the answer lies in the extraordinary possibilities of the current moment.
For four decades, the Cold War reduced most development discussions to ideological arguments over capitalism versus socialism, markets versus governments, and
diverted attention away from non-ideological global
concerns such as environment, health and economic decay.
The dramatic end of the Cold War provides an opportunity
to move beyond sharply drawn ideological categories to a
more pragmatic assessment of the proper roles of government and the market. Such an assessment might allow us to
see that if there is to be a more unified and sound Western
hemispheric market, the marginalized millions of the
hemisphere must first become effective consumers and,
more important, central participants in planning their future.
Robin Broad is Assistant Professor at The American University. John Cavanagh is a Fellow of the Institute for Policy Studies. Waldon Bello is Executive Director of the Institute for Food and Development Policy. Broad and Bello are also contributing editors of the People-Centered Development Forum. This column was prepared and distributed by the PCDForum based on an article by the authors in Food First News.