Panama FTA: Ecology Done Wrong

Global Justice for Animals and the Environment

http://freetradekillsanimals.org

by A. Reid Ross

sasha@freetradekillsanimals.org

28 August 2009

US – Panama FTA Spells Disaster for Climate

Signed on 28 June 2007 under the auspices of bilateral accord between the governments of Panama and the United States of America, the Panama Free Trade Agreement will come to Congress for ratification as soon as early June 2009. An extension of NAFTA and CAFTA, the Panama FTA will repeat the mistakes of a failed trade regime that perpetuates global cycles of debt, massive emigration, joblessness, and environmental destruction. Failure to act against this agreement will lead to further deprecation of the sovereign political economies of both Panama and the U.S. While both Panama and the U.S.A. incur large trade deficits every year, their manufacturing and agricultural sectors remain largely dependant on foreign trade. As per NAFTA and CAFTA, the removal of trade barriers and the furthering of investor protectionism under the Panama FTA will undercut the domestic economies of both nations involved, while at the same time allowing corporations to exploit natural resources and deplete the environment with impunity.

Environmental Protections Provide No Assurance

Although Panama has signed onto most of the important environmental treaties ratified by the international community (e.g. Kyoto Protocol, Desertification, Wetlands, etc.), when the country is taken to task, they have been found in violation of those treaties. Panama is classified as a Category Three nation, meeting only some of the requirements of the Convention on International Trade in Endangered Species (CITES), that protect certain endangered species from illegal trade.¹ Despite the USTR’s asseveration that “Given the legal protections for wildlife and endangered species in place in both the United States and Central America, it appears unlikely that the FTA will contribute to an increase in illegal trade of wildlife or endangered species,” provisions within the Panama FTA open the door for further wildlife trade.²

For example, historically, controversial plans to sell dolphins to United States marine parks have been defeated by vast public outcry in Panama; however, within the stipulated tariff eliminations of the Panama FTA, there lies the menacing addition of Tariff Schedule 0106000, facilitating trade of dolphins to U.S. aquatic parks in spite the Panamanian government’s previous promises. By legalizing a traditionally illegal wildlife trade, the FTAs are doing the opposite of protecting endangered species.

Meanwhile in Panama, soil erosion occurs at a rate of 2,000 tons per year. Only 79% of those who live in rural areas have access to potable drinking water due to pollution from pesticides, runoff from agriculture, sewage, and oil contamination. From 1990-1996, rampant deforestation annihilated over 2% of Panamanian forests per year, leaving 1,0178 of Panamanian plant species endangered, along with 17 of its mammals and 10 of its birds that share the distinction of being threatened by extinction.³ Yet in spite of Panama’s failure to enforce basic environmental protections, the FTA’s principle environmental assurance is that, in the words of the USTR Interim Environmental Report, it will call upon the U.S. to “seek an appropriate commitment by Panama to effectively enforce its environmental laws.”⁴ At the same time, the same report declares,

… local and regional levels of government face even greater institutional and fiscal constraints in terms of their ability to implement and enforce mandates and programs. ANAM’s regional directors often lack staff and physical resources to conduct enforcement monitoring… In addition, administrative regulations and procedures for the enforcement of general laws on the environment are in early stages of development.⁵

Given Panama’s history and the current nascence of their environmental laws, the FTA’s onus on Panama to consentaneously enforce environmental laws encourages little to no confidence. In the words of one article by reporter, Aziz Choudry,

Even free trade proponents are troubled by Washington’s laxity toward improving environmental and labor standards with its trading partners. Many saw DR-CAFTA and a U.S.-Panama FTA as opportunities to persuade these countries to enact reforms that would bring their domestic laws into compliance with International Labor Organization and environmental standards. While Washington has claimed it will ensure that Panama enforces its current environmental and labor laws, it has not made any effort to use the FTA’s potential to improve upon such existing laws.⁶

Acknowledging the reality of Panama’s current environmental situation, it is clear that the nation’s fragile, developing legal structure will not hold up against the influx of WTO-backed multinational industry concomitant with the implementation of a Free Trade Agreement with the United States of America.

Investor Protections Bring Risk of Economic and Environmental Catastrophe

Boasting a 50% share in Panamanian agriculture and a $25 billion stake in Panama’s finance, energy, and maritime industries, U.S. investors already have a large stake in Panamanian industry. Not only will the Panama FTA bolster environmentally hazardous corporate investment, but it may also create conditions of capital flight in the U.S. As the FTA pursues, “a comprehensive approach to market access, including any necessary improvements in access to the telecommunications, financial services, energy, express delivery and other sectors,” it threatens to create a situation not unlike Argentinean economic collapse of 2001 and the Mexican Peso Crisis, wherein market corrections led to capitol flight and eventually economic catastrophe.

By removing protections on market access, the Panamanian government will expose its vulnerable economy to the fickle caprice of global finance. Already, Panama maintains delinquent status in the eyes of international financial accountability institutions, providing a safe-haven for corporations fleeing the tax policies of their domestic governments. An FTA would provide the perfect economic climate for corporations fleeing financial responsibility for the economic recession, as AIG has already proven by suing the U.S. government for taxes it claims to have unduly paid through its Panama subsidiary.

Thus, expanding access to the Panamanian markets would create a feeding frenzy for corporations in the service sector and to the construction industry during what many have deemed “the largest public works project since Three Gorges Dam:” the expansion of the Panama Canal. As stated in an article by Boston.com, “The pact guarantees Panama's construction firms at least 10 percent of the contracts in the $5.25 billion canal expansion, while providing U.S. companies preferred access to one of the largest building projects in the world.” The Panama Canal functions as one of the world’s largest maritime “chokepoints” for oil tankers carrying crude oil. In 2001, oil composed 16% of all shipments through the canal.⁷ The leaks from oil tankers have caused much environmental damage in the region, including siltation, deforestation, and habitat destruction. The Canal also provides an avenue of transit for radioactive material moving between oceans, which has created controversy as well.⁸ An expansion of the Panama Canal would increase the movement of oil, radioactive material, and other hazardous pollutants through a narrow “chokepoint,” creating a recipe for the worst sort of environmental calamity.

Furthermore, recalling the displacement of vast populations of indigenous people during the initial construction of the canal, many living in the area regard the expansion with suspicion. Further deforestation will be necessary, as will be the expense of fossil fuels, and the release of other pollutants into the air, water, and land. According to the CIA Factbook, siltation of the Panama Canal is among the worst of Panama’s environmental problems. The expansion of the canal will increase this problem while adding to it a host of others, including increased risk of spillage of oil or worse yet, nuclear material.

Dispute Resolution Process Gives Corporations Unfair Advantage

In Panama, where multinational corporations are often found in violation of environmental laws, the power of government to enforce those laws is paramount. In the year 2003, the Panamanian government found the multinational corporations Coca-Cola and AES in violation of environmental law, and sued those companies for damages. Coca-Cola had been found dumping enough toxic red dye into the Matasnillo river to turn half of the Rio Matasnillo, a tributary of the Bay of Panama, pink; meanwhile, AES was caught emptying one thousand gallons of diesel fuel into the Bay of Panama after a series of valves failed at a hydroelectric plant owned by the company.⁹ These egregious violations occurred just one year before the drafting of the USTR’s “Interim Environmental Report,” which pledges to “Provide procedures to resolve disputes between U.S. investors and the government of Panama that are in keeping with the trade promotion authority goals of being expeditious, fair and transparent.”¹⁰ The conflict of interest between protecting U.S. investors and protecting the Panamanian people and the environment suggests that more than Free Trade is needed to allow Democracy to thrive.

The Panama FTA affords corporations who pollute the right to take the government to court for enforcing environmental protection. Similar provisions have led to millions of dollars in pay-outs to multi-national corporations by North American governments under NAFTA. AES, the same corporation that was caught dumping 1,000 gallons of diesel fuel into the Bay of Panama, has been awarded the right to construct a hydroelectric dam in Bocas del Toro, situated in the Teribe-Canguinola Watershed, an area labeled “World Heritage Site” by the U.N. Containing the largest intact tropical rainforest in Central America, the Teribe-Changuinola Watershed provides a convergence point for 75% of the Western Hemisphere’s migratory birds as well as over a hundred species of fish. The “World Heritage Site” is also home to the Naso indigenous people, whose population of 3,500 represents one of only eight of Panama’s surviving indigenous peoples.

Regardless of the dangers inherent in building a dam that will increase deforestation and cause what the Center for Biological Diversity has deemed the “virtual disappearance of characteristic Mesoamerican river fauna,” the Panamanian government is allowing AES to pursue their contract, regardless of their poor environmental record.¹¹ An FTA with Panama would only give AES more impunity, allowing them the ability to collect damages from the Panamanian government if it finally decides to protect the Teribe-Changuinola Watershed – one of the world’s most precious environmental assets. This is only one example of the potential blunders of Free Trade, which continues to destroy the sustainable traditions and history of the world in exchange for premature economic exigency.

Sanitary and Phytosanitary Measures

In recent years, the U.S. Department of Agriculture has failed to detect the emergence of diseases such as Mad Cow in its food exports, causing widespread damage to importing nations. These regulatory disasters have led many countries to exact more stringent regulatory protocol, and often to ban U.S. products altogether for fear of contamination. The Panama FTA will loosen Panama’s strict phytosanitary and sanitary measures, eliciting more risk of cross-cultural epidemics. According to the FDA’s website, in signing the FTA, “Panama recognized the equivalence of the U.S. food safety inspection system for meat and poultry, and the U.S. regulatory system for processed foods, including dairy products, ending its requirements for plant-by-plant and/or shipment-by-shipment inspections.”¹² Relaxing sanitary measures in lieu of recent contamination is antithetical to public health and national security. According to Chowdry, “they (FTAs) threaten the rights of consumers to know what is in our food. They threaten the livelihoods and futures of farmers who are struggling for the right to food sovereignty.”¹³

Lack of food sovereignty is especially important today as highlighted by the recent outbreak of Swine Flu. Infecting hundreds around the world, and expanding at epidemic proportions, this disease has arisen out of the effluent wasteland of modern hog farms to infect humans with deathly consequences. Even as sanitary and phytosanitary measures are ‘harmonized’, and Panama is forced to drop its ban against U.S. Poultry, which it passed as a result of the recent Avian Flu epidemic, FTAs will increase the cost of healthcare, and through Intellectual Property rights, make pandemics even more potent. As Mike Davis exclaims in a recent article, “The swine flu virus lays bare the meat industry’s monsterous power, “what matters… is the WHO's (World Health Organization’s) failed pandemic strategy, the further decline of world public health, the stranglehold of big pharma over lifeline medicines, and the planetary catastrophe of industrialised and ecologically unhinged livestock production.”¹⁴ Free Trade only continues the regime of globalized medical bungling and the capitalization of corporations on health crises.

Factory Farming

That Panama’s agricultural minister resigned last year “in protest of market-opening agricultural concessions Panama would have to make to the deal” should be an indication of the depth of disorder that the FTA has created, yet somehow the deal is being pushed further.¹⁵ The USTR states that, through the FTA, it will “seek to eliminate government practices that adversely affect U.S. exports of perishable or cyclical agricultural products.” Hence, all “protectionist” barriers to trade pertaining to agricultural products erected by the Panamanian government will be neutralized. The removal of tariffs from the agricultural sector is perhaps the most controversial aspect of the FTA between the U.S.A. and Panama.

Although the agricultural sector composes only 7% of Panama’s GDP, it employs 12% of Panama’s population.¹⁶ This statistic exposes the large number of small or subsistence farmers in the region who do not affect the GDP, because they work for their families and communities, not for shareholders or boards of directors or even capital. An FTA with the U.S.A. would denude Panama of import tariffs that protect these small farmers, exposing them to competition from subsidized U.S. agribusiness heavyweights that will drive them out of business. As a result of NAFTA, over a million jobs in the Mexican agricultural sector were lost, leaving a tremendous number of people unemployed, and sparking a flood of immigrants to the U.S. CAFTA has already shown signs of the same pattern; emigration has risen to incredible rates in countries like El Salvador, which is losing thousands of people per week to emigration.

According to the USTR website, the Panamanian agricultural sector will not be diminished as a result of an FTA, although “shifts may occur.”¹⁷ In other words, the hopes are that small farmers will be replaced by factory farmers and then absorbed into the expanding service industry. The service industry will be responsible for increased imports U.S.A. Factory farms, made possible by, among other things, the FTA’s aforementioned subversion of phytosanitary and sanitary restrictions that protect against outbreaks. These dangerous diseases are facilitated and often exacerbated by factory farms like those found in the U.S., which keep animals penned in unhealthy enclosures where they dwell in their own feces and are exposed to close contact with other animals at unsanitary lengths of time.

The U.S. factory farms that have facilitated infections also account for some of the worst environmental problems today. According to a Congressional study by the CRS, “The negative effects of pollution, environmental degradation, and endangering wildlife would come mostly from increased agricultural trade and production.”¹⁸ The CRS report is referring to the increase in factory farming, specifically, and the increase in ruminant animals that it entails. According to the UN Food and Agriculture Organization, the animal industry creates the highest levels of greenhouse gasses on the planet due to the mass production of ruminant animals like cows and sheep. Accounting for 18% of total greenhouse gasses, ruminant animals produce toxins much more hazardous than carbon dioxide such as nitrous oxide and methane. Factory farms also threaten water supplies with fertilizers, pesticides, and farm chemicals while depleting aquifers at the same time.

Despite the deplorable sanitation standards and environmental effects of factory farms, the American Farm Bureau Federation “expects export gains in excess of $151 million per year by 2027 in items such as wheat, rice, corn, cotton, soybean products and livestock products.”¹⁹ The USTR agrees that the profits estimated by the Farm Bureau outweigh care for the environment and the living conditions of animals, yet they have not garnered support outside of the business community. Apart from Minister Laurentino Cortizo’s resignation, Panama has seen waves of protest against FTA measures. Panamanian farmers in particular have protested throughout the nation, insisting upon protection of their domestic dairy, meat, and poultry sector. Meanwhile, dissent has arisen in the U.S.A., as sugar producers wary of an influx of cheap Panamanian sugar. Still, the makers of the FTA persist in ignoring the popular outcry for the sake of profit.

Shrimping Threatens to Destroy the Mangrove Forests

Panama shares with only a select group of nations the privilege of being home to coastal Mangrove forests, which provide awe-inspiring scenic beauty as well as shelter for some of the most precious species alive on earth. Of the 836 migratory birds protected under the U.S. Migratory Bird Treaty Act (MBTA), 350 direct their path through Panama. The IUCN Red List of threatened species includes 33 species endemic to Panama, 16 of which are either endangered or vulnerable. 77 bird species listed as endangered and 15 bird species listed as threatened by the U.S. Endangered Species Act are found in Panama.²⁰ The mangrove forests play an integral role in the protection of these species. The birds find shelter in the canopy of the mangroves, thriving in their distinctly lively ecosystems.

The elimination of tariffs and the ‘opening of markets’ to U.S. investors consequent to the implementation of the Panama FTA will lead to industrial shrimping. Like factory farming, industrial shrimping uses a vast amount of resources and space, and the environmental effects of its introduction to Panama will consist primarily of the devastation of the mangrove forest. Just as has occurred already in Thailand and China, industrial shrimping will uproot the mangrove forests, replacing them with industrial shrimp farms that generate vast amounts of waste and pollutants, effectively blighting a once prosperous ecosystem. As the USTR Interim Environmental Review states, “Shrimp production… often destroys mangrove forests that are valuable habitats for a variety of wildlife including shorebirds and other migratory species… increased investment in sectors such as agricultural activities may contribute to loss of migratory bird habitat.”²¹ The FTA will rent untold, irreversible environmental damage on Panama, not only through hydroelectric plants, the expansion of the canal, and the introduction of factory farming, but also through shrimping and the destruction of the valuable mangrove forests.

TRIPS Arrogates Livelihood of Indigenous Peoples

The Panama FTA emphatically pursues the strengthening of Intellectual Property rights for patented products. Mandating compliance with WTO agreements on Trade Related aspects of Intellectual Property Rights (TRIPS), the agreement, according to the USTR, seeks “to have Panama apply levels of protection and practices more in line with U.S. law and practices, including appropriate flexibility.”²² For indigenous peoples who cultivate their own breeds of plants and medicines, this treaty appropriates proprietary rights to the first scientist who can identify unique genetic material, and implement it in a GMO. Giving the patent rights of traditional medicines and crops to big business creates a scenario in which traditional agricultural and medicinal products are commoditized and made unaffordable to indigenous communities who are prohibited from sustaining vital parts of their cultural tradition and heritage by ‘Bio-Piracy Laws.’

As Aziz Chaudry explains, “Millions of rural and indigenous peoples have communally used and cultivated resources for subsistence rather than profit. These practices are seen as threats to be eliminated, and knowledge and resources to be privatized and controlled for profit by industry.”²³ Thus, with the Panama FTA the USTR aggressively arrogates the domestic agricultural sector from the Panamanian people not only by undercutting the farmers with subsidized exports, but even with the appropriation of their traditional medicines and plants.

Conclusion

The Panama Free Trade Agreement should not pass. Without substantial changes to the core language of the text, the FTA lacks basic necessities for sanitary and humane animal treatment, democratic rights, and economic fairness. Politicians need to reconsider the popular mandate for trade practices that benefit people and the planet over unsustainable corporate greed, and go with the trade templates that make the most sense.

It is obvious that Free Trade Agreements are not realistic, because basic tenets of Free Trade are not met in the first place. The economic incentive plans issued by President Obama and other world leaders flout free trade's government procurement rules in favor of Buy Local contracts. Furthermore, government subsides, the bane of free trade's existence, are considered run of the mill in the U.S.A. We need an honest economic system that meets urgent ecological needs. Alternatives to Free Trade Agreements would privilege a balanced ecology and economy over top-heavy corporations, providing for the safety and wellbeing of generations to come.