The Hazel Motes Approach to International Trade
by Toni Solo
November 3, 2003
It takes one bizarre fiction to understand another. Flannery O'Connor's 1952 novel "Wise Blood" is full of insight into its not so distant relation, "Free Trade". Hazel Motes, O'Connor's would-be nihilist protagonist, preaches a "Church without Christ" with all the zealous fervor of US Trade Representative Robert Zoellick's devotion to "Free Trade" without free trade. Lurking in the novel is Zoellick's real doppelganger, Asa Hawkes, the fake-blind preacher who cons people into parting with their money, believing he blinded himself for his faith.
Like Hawkes, Zoellick is a superb and practiced faith-based con-man. Preaching free trade, he trails a long history of private business interests in predatory multinational corporations like Vivendi, Enron, Goldman Sachs, Alliance Capital and SAID Holdings, the Bermuda-based South African patent and copyright security specialists. His outlook melds seamlessly into the Bush regime's deliberate confusion of the wishes of their rule-bending plutocrat buddies with the interests of the United States people.
Never mind the evangelism, feel the Clausewitz
Zoellick's pronouncements deserve attention. Like the other mercenary fanatics surrounding George W. Bush, his evangelism is one of arrogant candor. A member of Bush's Cabinet with the rank of Ambassador, he assumed office as 13th U.S. Trade Representative on February 7, 2001, unanimously confirmed by the Senate. In fact, as Bush's principal trade policy adviser and chief trade negotiator, he puts big business first and the American people last.
In the early 1990s, Zoellick worked as an economics undersecretary for George Bush the Elder and led negotiations for the State Department in the North American Free Trade Agreement (NAFTA). During the 1997-1998 academic year, he was the Olin Professor of National Security at the U.S. Naval Academy. This interest in security is natural for a man who sees aggressive trade negotiation as the furtherance of war aims by other means.
The unvarying tenet in Zoellick's creed is the manifest US destiny to dominate world trade. A multilateral approach incorporating US pre-eminence seemed possible in the early 1990s during the Uruguay Round of trade talks when poorer developing countries were less able to defend their interests. The 2001 Doha meeting showed the limitations of that approach from the point of view of the US.
This year's failure of the Cancun talks has probably nailed down the coffin lid on any serious US commitment to making the World Trade Organization work, so long as the Bush regime occupies the White House. Ahead of the Cancun debacle, Zoellick was clear that the United States would go ahead with bilateral and regional free trade agreements regardless, if the WTO talks collapsed. Saying, "We're not stopping. We're moving with the countries that are willing to go," Zoellick committed to negotiating global preferential trade deals for the US on a bilateral or regional basis. 
Congressional approval for a Trade Promotion Authority (TPA) made that strategy possible. But the TPA was only secured at the price of concessions to domestic trade interests, like steel and agriculture, creating inherent contradictions for foreign free trade deals. Nonetheless, through other legislation like the Caribbean Basin Trade Partnership Act, the Andean Trade Preference Act and the African Growth and Opportunity Act (AGOA), Bush hopes to tie the US to foreign trade agreements that benefit his corporate power base.
Bilateral deals mean that the wider complications involved in multilateral negotiations through the WTO can be either sidelined and forgotten or else prioritized, as needs dictate. For example, environmental concerns can be entirely left out, while telecommunications and financial services can be brought center stage. Bilateral deals also allow the integration of political and security matters enabling the US to bully weaker countries into following its foreign policy needs for the sake of potentially beneficial trade.
In a widely reported speech in May this year to the Institute for International Economics, Zoellick said, "The U.S. seeks cooperation -- or better -- on foreign policy and security. . . Given that the U.S. has international interests beyond trade, why not try to urge people to support our overall policies? Negotiating a free-trade agreement with the U.S. is not something one has a right to -- it's a privilege." This callow brand of intimidation and bribery is nothing new. The Reagan administration used PL480 agricultural aid and other concessions to bribe and cajole Honduras into serving as a military base for illegal terrorist aggression against Nicaragua throughout the 1980s.
Zoellick tries to put a benevolent gloss on the strategy, alluding to the not so altruistic Marshall program in post-World War Two Europe, "American trade policies are connected to our broader economic, political and security aims. This intellectual integration may confound some trade scholars, but it follows in the footsteps of reconstruction after 1945."  But the consistent nitty-gritty of the US "free trade" message is "do what we want -- or else..."
Many components in these deals are damaging to the target countries. Investor-State and expropriation provisions allow US firms to sue a government for money they might potentially have made but for local law. The Harken Energy company recently tried that in the US against Costa Rica to the tune of US$57 billion, even without such a bilateral trade framework. For the moment, they have had to backtrack and negotiate a settlement directly with the Costa Rican government. Should Costa Rica sign up to the Central American Free Trade Agreement, the country will certainly lose such cases in the future.
Clauses on capital controls render a country helpless to regulate damaging large-scale speculative currency transactions. Other clauses force countries to treat giant international companies on exactly the same terms as small local ones. National economic and social planning is curtailed through clauses restricting performance criteria such as non-discriminatory employment codes or environmental protection and worker health and safety measures. 
When brow beating evangelism fails, Zoellick can call on his US government colleagues to elicit appropriate measures from the ever cooperative IMF and World Bank to help reluctant converts see the light and speak in "free trade" tongues. Under Bush, "free trade" has been carried the world over by Zoellick and his apostles. In 2000 Jordan became the first Arab country to sign a deal with the US. Similar agreements have been reached recently with Singapore and Chile. A deal with Morocco is in the offing. Bahrain is next in line. Occupied Iraq is another obvious candidate.
When things need spelling out, Zoellick is very clear. With China, he urges "to keep U.S. markets open, we need a two-way street to try to expand U.S. exports to China and operate in fair, transparent ways." His comments on patent and copyright are especially interesting, "You need some prosecutions and (to) put some people away...If it just becomes a fine or a cost of doing business, then you're not going to be able to stop intellectual property piracy." It is interesting to note these remarks on criminal prosecution come from one of fraudulent Enron's most influential former paid advisers. 
In Africa, Zoellick waves a threat for would-be beneficiaries of the African Growth and Opportunity Act (AGOA). This preferential deal allows some 6000 items from eligible African countries to enter the US duty free. Zoellick observes, "While that is a good start in terms of development it runs certain risks because when Congress passes a piece of preferential legislation like AGOA, it means Congress can also change it." Zoellick and his propagandists neglect to mention that most of those 6000 products will have to be manufactured using US supplied materials. AGOA expires in 2008. 
Free trade is a very blunt instrument in Zoellick's hands. In July this year his officials pulled the rug out from under visiting Egyptian trade delegates. Zoellick`s acolytes told them the US was suspending moves towards free trade talks with Egypt in response to Cairo's refusal to support the US against Europe on genetically modified foods. Earlier at a World Economic Forum meeting in Jordan on 23 June, Zoellick said: "We see glimmers of light [in Egypt] but I'm not going to sugar-coat it for people. Egypt has some work to do." Putting the boot in, he added, "We know Egypt is the traditional heart of the Arab world, but this isn't going to be handed to them just because it is a big and important country." 
The Zoellick doctrine of universal "free trade" without free trade brooks no heresy and has no time for genuine science. In March this year Zoellick announced he was building a "coalition" -- funny how they keep cropping up -- to force the EU to lift its moratorium on GM foods and biotech products. Zoellick told the Senate Finance Committee March 5. "I don't want this to be just the U.S. versus EU." 
At a May 13th press briefing on the matter he claimed the EU moratorium was stalling biotechnology development and blocking its "benefits", especially in developing countries. "In places where food is scarce or climates can be harsh, increased agricultural productivity through biotechnology can spell the difference between life and death, between health and disease, for millions of the world's poorest people." Through the crocodile tears and against available scientific evidence Zoellick argues that biotechnology increases crop yields but still miraculously benefits the environment. Unfortunately for him, results of scrupulously conducted recent British field trials tell a different story. 
In the US, writer Mark Schapiro has followed transgenic crops from their beginnings. He writes, "Monsanto alone poured at least a billion dollars into biotech research, according to NPR technology correspondent Daniel Charles in his book Lords of the Harvest, "before it had a single genetically engineered plant to sell." Other companies--DuPont, Dow, Aventis and Syngenta--spent billions more on research and on a seed-company buying spree that lasted well into the 1990s. The stakes for these companies are huge."  Zoellick works to benefit giant US agri-business biotech companies while ruthlessly pursuing policies that impoverish millions of African farmers.
Massive Ordnance Air Burst hypocrisy
Prior to the 2001 Doha trade summit, Zoellick said, "Given America's relative openness, we can only maintain domestic support for trade if we retain strong, effective laws against unfair practices. ... So we will continue to insist that any consideration of WTO rules focus on getting the practices of others up to U.S. standards so that American businesses and workers can compete on a level playing field."  This hypocrisy is so enormous it can only be meant to inspire shock and awe.
To take just one example, in 2001 the US subsidized its cotton producers by a total of around US$1bn more than the world market value of their crop. As Kevin Watkins of Oxfam has noted, African cotton producers "lost some $200m in 2001 as a direct consequence of American farm subsidies. To put this figure in context, it dwarfs the amount that governments in the region receive in the form of US aid or debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative."  And still in 2002 the US increased farm subsidies by 10% compared to 2001.
Watkins also notes that import taxes accruing to the US from impoverished Bangladesh are generally the same or greater than those collected from wealthy France because the US tariff regime favors its European trading partners over poorer developing countries. This puts much needed context around another of Zoellick's disingenuous claims, that average US tariffs are the lowest among the OECD rich country world elite. That is true only because the US can afford to club and mug defenseless poorer nations, but is forced to trade more fairly with the stronger economies of its major trading partners like the EU.
Costa Rica is the latest Latin American recipient of the Zoellick treatment. Telecommunications, electricity and insurance are all state monopolies in Costa Rica. They represent desirable acquisitions for Zoellick's friends in big multinational companies like Vivendi. But Costa Rica has a long tradition of defending the country's patrimony. President Pacheco, probably against his own inclinations but under relentless pressure from local political rivals, has held out against US pressure to privatize public companies.
Unable to pry open telecoms in Costa Rica, Zoellick shifted to rifling other targets, "I know it is a sensitive issue, but we are going to have to find a way to deal with the issue in some fashion."  Pacheco is insisting for now that Costa Rica will stay outside CAFTA rather than privatize its major public companies.
With substantial funding from US backed organizations like the US-Costa Rica Foundation, the pro-"free trade" Costa Rican elite, typified by Nobel Prize winner Oscar Arias, are doing their best to push for Costa Rica to sign the Central American Free Trade Agreement. But political opposition across the spectrum is strong. The main objections are to the secrecy of the negotiations under conditions imposed by the United States and Zoellick's team's insistence on a fixed timetable. Calling for a slow down and more transparent negotiations, one opposition group has the slogan, "Another Costa Rica is possible. Another world is possible."
Sick of being kept in the dark, Costa Rican legislators are demanding to review the negotiated texts before the talks are completed and they find themselves presented with a fait accompli. "We are the ones who are going to have to approve this treaty and we want to be responsible starting now by learning what the texts say. We still don't know what has been negotiated thus far." 
This gives the lie to Zoellick's claim that, "We value public input, which we will seek to take into consideration."  Like the rest of the Bush ideologues, Zoellick despises anyone who disagrees with him. But he can turn on the mechanical, cynical language of "transparency" almost as well as his EU counterpart Pascal Lamy. The US continues working relentlessly on completing a continent wide free trade agreement in Latin America by 2005.
Glib lies come easily to Zoellick and his team, whether they are blagging biotechnology or puffing privatized telecoms. They know very well phone charges for users in Nicaragua and El Salvador have soared since privatization. In Nicaragua, where half of the former state monopoly remains to be sold, controversy surrounds the holding company of the monopoly's residuary body, Uretel, in the run up to the final sell off.
Dodgy book keeping seems to have stripped out benefits that should have gone to the government. Mysterious losses have been alleged of up to US$9m. Equally mysteriously, the book value of the company's capital equipment seems to have fallen by US$16m. Telecom workers union leaders fear maneuvers to lower the value of the company prior to the sale so as to increase profits for the eventual buyers.
After the sale, the true value of the company will no doubt be revealed as a stupendous transformation thanks to the miracle-working free market. But union leaders reckon the company has made US$50m since privatization and about half of that is owed to the State. The company has yet to render accounts to the residuary body since the company was part-privatized in 2000. 
In El Salvador, people are further down the privatization road and regret the turn they took. El Salvador's Antel telecoms company and CAESS energy distribution company have already been privatized, with other state firms being made ready. Phone charges are up to three times those in Costa Rica.
Apostles of free trade insist privatization invariably increases efficiency and lowers costs. Generally, the opposite happens. Utility charges rise and efficiency falls as infrastructure investment declines, while shareholders get their dividend and corporate managers pull inflated salaries.
Currently in El Salvador a basic residential telephone costs 274% of the cost in Costa Rica. The cost per call by minute is 43% dearer in El Salvador for normal rate calls. In Costa Rica the state monopoly charges by the second whereas in El Salvador the charge is rounded up to the next minute. 
The thing to remember about most of these bilateral and regional "free trade" deals is that they are not primarily trade deals. They are primarily political deals using economic crow bars and hammers to break countries open for powerful US investment and political interests while apparently talking about trade. Zoellick's membership of the Precursor investment research group is a clue as to why the private investment emphasis is always pre-eminent in these deals, invariably to the detriment of the public interest. 
Breaking eggs for the globalized corporate omelet
The deals are not just bad for their foreign victims, they are bad for ordinary people in the US. They will encourage even further a low wage service economy in the US while the corporate elite make their fortunes even more vast than they are already by investing in weak economies overseas. In the past those investments were enforced and protected using US military muscle, as in Latin America throughout the last century.
In the new millennium, trying to extend and consolidate US global reach, Zoellick is using trade more intricately than ever to underpin US foreign strategy in a cost-effective way through bilateral and regional deals. The deals are characterized by secrecy, intense political pressure and fierce resistance to attempts at addressing local concerns that may limit the rewards for US corporate investors, especially in relation to health and safety and to the environment.
The zealot Hazel Motes may be the public negotiating persona of Robert Zoellick. But Zoellick is neither blind nor crazy. He simply has no interest in the massive human cost, whether in the United States or abroad, of his lucrative global evangelical mission on behalf of corporate monopoly capitalism.
Toni Solo is an activist based in Central America. He can be reached at: firstname.lastname@example.org.
1 “Zoellick wants WTO deal by 2005,” CNN.com, September 4, 2003.
2 “Unleashing the trade winds,” The Economist, December 5, 2002. Quoted in K. Subramanian, "Freeing trade or trading in trade?", Financial Daily (from THE HINDU publications group), Dec 24, 2002.
3 Gabriela Bocagrande, "Property (Rights) is Theft", Texas Observer, 8/17/2001.
4 Tim Johnson, "Trade official says U.S. needs `fair opportunity' to export to China," Knight-Ridder Newspapers, Oct 27, 2003.
5 Charles W. Corey, "USTR Zoellick Says Free Trade is About Freedom Holds Johannesburg Press Conference," Washington File, Thursday 21 February 2002 (www.usinfo.state.gov).
6 Al-Ahram On line [Egypt], 3-9 July 2003, Issue No. 645.
7 Berta Gomez, "U.S. Seeks Partners for WTO Challenge to EU Biotech Moratorium", Washington File, March 5, 2003, U.S. Department of State's Bureau of International Information Programs.
8 Paul Brown, "GM crops fail key trials amid environment fears. Two out of three strains 'should not be grown', The Guardian [UK], October 2, 2003.
9 Mark Shapiro, "Sowing disaster?", The Nation, October 2002.
10 "WTO-USTR Says Other Nations Must 'Compromise' Or WTO Meeting in Doha Could End in Failure", International Trade Daily, October 31, 2001.
11 Kevin Watkins, "Trade hypocrisy: the problem with Robert Zoellick", www.opendemocracy.net, 20-12-2002.
12 Tim Rogers and Fabián Borges, "Markets Must Open, U.S. Warns," Tico Times, October 7, 2003.
13 Congresswoman Aida Faingenzicht, of the ruling Social Christian Unity Party. Quoted in Tico Times San José, Costa Rica, October 31, 2003.
14 "U.S. To Pursue Number of Objectives at November FTAA Meeting in Quito," 15 October 2002 Washington File, Office of International Information Programs, U.S. Department of State.
15 El Nuevo Diario, Managua Nicaragua, 23 October 2003 & 28 October 2003.
16 Alonso Gómez Vargas, "Cuzcatlecos alertan a los ticos: Salvadoreños pagan hasta 300% más que en Costa Rica por servicios telefónicos," 22 October 2003, www.rebelion.org.
17 January 8th Press release. www.precursorgroup.com