The bilateral bypass

A web of bilateral free trade and investment agreements – deals between two individual nations – is spreading quietly and quickly across the planet, with provisions that often go far beyond existing World Trade Organization (WTO) rules.

Even before the collapse of the 2003 WTO talks in Cancun, the US had aggressively advanced its plans to sign bilateral free-trade and investment agreements with countries in Central and Latin America, Asia, the Middle East, and Australasia.

Now – as the direction and pace of WTO talks remains uncertain – other governments committed to neoliberal policies are turning to bilateral trade and investment agreements that get faster, deeper, more comprehensive free trade and investment commitments than is possible in a divided WTO. As this is occurring, peoples’ movements in a number of countries are mobilizing to fight them.

Agricultural liberalization – a hot potato at the WTO – is a flashpoint in two recent bilateral trade deals in Asia. In February, after months of nationwide mobilizations of farmers, Korea’s National Assembly finally ratified a free trade agreement (FTA) with Chile. In waves of protests, farmers clashed with riot police over an agreement which they see would lead to their livelihoods being destroyed by a flood of cheaper Chilean produce benefiting only transnational agribusiness. Korean farmers’ organizations set up protest camps and held night vigils outside the National Assembly as pro-farmer members of the Assembly staged an occupation of the parliamentary speaker’s office. (The Korea-Chile FTA also covers investment, services, government procurement, intellectual property rights and competition policy.) Thailand’s Prime Minister, media and telecommunications multimillionaire Thaksin Shinawatra, is meanwhile pushing a trade policy with a strong emphasis on bilateral FTAs. Besides a proposed agreement with the US, Thailand has signed FTAs with Australia and Bahrain, and is negotiating several others. With the removal of many agricultural tariffs as the first phase of a comprehensive FTA with China took effect, a flood of cheap Chinese fruits and vegetables threatens to ruin many Thai farmers in the rural north, and has fuelled popular discontent about other bilateral agreements.

Opposition is also mounting against the New Zealand Government’s pursuit of bilateral trade and investment deals. A treaty with Singapore opened up New Zealand’s liberalized service sectors even further than its WTO services agreement (GATS) commitments had done. Critics noted that in the first year of the treaty, New Zealand/Aotearoa’s trade deficit with Singapore had ballooned from NZ $26 million to $215 million.

Several governments – mainly in the global South – are effectively being sued by corporations under obscure bilateral investment treaties. Pakistan currently faces three investor-state dispute claims totalling around one billion dollars, involving Swiss company SGS, Italian construction firm Impregilo, and Turkish company Bayinder. The definitions of ‘investment’ and other terms in the agreements that Pakistan signed are very broad and give corporations ample opportunity to claim against a frighteningly wide range of actions or omissions by the Government and its agencies. Ordinary people will shoulder these costs: costs that will increase their countries’ indebtedness to international financial institutions, while locking out their countries’ access to foreign aid and loans if they fail to comply.


New Internationalist issue 369 magazine cover This article is from the July 2004 issue of New Internationalist.
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