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Opinion and Analysis

ALBA: Bolivarian Alternative for Latin America and the Caribbean

This document is a summary of information on the ALBA published by the Banco the Comercio Exterior (Bancoex)

The ALBA (Alternativa Bolivariana para las Américas), as its Spanish initials indicate, is a proposed alternative to the U.S.-sponsored Free Trade Area of the Americas (FTAA, ALCA in its Spanish initials), differing from the latter in that it advocates a socially-oriented trade block rather than one strictly based on the logic of deregulated profit maximization. ALBA appeals to the egalitarian principles of justice and equality that are innate in human beings, the well-being of the most dispossessed sectors of society, and a reinvigorated sense of solidarity toward the underdeveloped countries of the western hemisphere, so that with the required assistance, they can enter into trade negotiations on more favorable terms than has been the case under the dictates of developed countries.

By employing more effective mechanisms to eradicate poverty, ALBA—as proposed by the Venezuelan government—provides a counterweight to the policies and goals of the FTAA. This alternative model also identifies the most crucial impediments to achieve a genuine regional integration that transcends the prerogatives of the transnational corporations. One of the obstacles to confront is the deep disparity that exists in development between the countries of the hemisphere, whereby poor countries such as Haiti or Bolivia are compelled to compete with the world’s leading economic power. In order to help overcome trade disadvantages, ALBA pushes for solidarity with the economically weakest countries, with the aim of achieving a free trade area in which all of its members benefit (a win-win alliance).

Venezuela has voiced the need for identifying the economies with the greatest deficiencies and their principle requirements, arguing for a transfer of resources to the most underdeveloped countries so that these may develop the economic infrastructure they require to compete on more favorable terms with more developed economies. In order to do this, the corner stone in the design of the ALBA is the proposal for a “Compensatory Fund for Structural Convergence,” which would manage and distribute financial aid to the most economically vulnerable countries.

The ALBA favors endogenous development and rejects the type of employment that the sweatshop (maquiladora) industry generates because it does not contribute to the upsurge of the agricultural and industrial sectors of the poor countries and does not contribute to the elimination of poverty.

While not operating as a mere export-oriented activity under ALBA statutes, agriculture instead would prioritize the food self-sufficiency of every country before focusing on profit-making processes. The agricultural sector cannot be deliberately subjected to market liberalization, while developed countries maintain policies based on multi-million dollar subsidies and high import tariffs to protect their own internal production, thus flagrantly contravening the principles of free trade. However, ALBA considers that even if these countries eliminate their protectionist policies, the agricultural output from the developing countries still would not be able to compete because farmers and the indigenous populations of agricultural areas would still be displaced from their sources of productive work, thereby increasing the pattern of social exclusion in countries with few resources.

The ALBA is also opposed to the intellectual property rights regimes on the grounds that they only protect the areas of scientific and technological knowledge that developed countries control, while at the same time leaving unprotected those areas in which the developing countries have considerable advantage: the genetic biodiversity of their territories and the traditional knowledge of peasant and aborigine peoples. This fact also contributes to deepening the asymmetries that exist between countries. ALBA is particularly concerned with the case of medicines, since patent protection eliminates the possibility of distributing generic medicines at reasonable prices to sectors of society that have few resources in developing countries. Also, it ends the possibility of setting up businesses that produce generic medication, which generate badly needed employment opportunities.

The Venezuelan government has vehemently denounced the processes of liberalization, deregulation, and privatization, which limit the ability of the state to design and execute policies in the defense of a people’s right to have access to essential and high quality services at fair prices. In contrast, the FTAA advocates the liberalization and privatization of public services, thus implying that millions of people in the continent would be deprived of basic services that are needed for human survival.

For the Venezuelan government the management of public services must be oriented toward fulfilling the people’s needs and not the interests of businesses and private profit. As such, public services are indispensable for correcting social inequality. As a result, Venezuela deems unacceptable any trade accord that implies the renunciation of the use of public policy instruments, such as the regulation of public utilities and the provision of subsidies to regulate domestic prices and to guarantee access to essential public services for the overwhelming majority of the population who cannot afford market-priced services.

The labels of “Most Favored Nation” and “National Treatment” proposed by the FTAA seriously threaten the sovereignty of those countries determined to pursue policies better adapted to their national interests. The first provision compels a country not to give a less favorable treatment to a foreign company than any of the other foreign companies operating in it; and the second provision demands that transnational corporations be given the same preferences that are provided to national businesses, including those which are provided to small businesses and cooperatives.