What is the Bolivarian Alternative for Latin America and the Caribbean?

How the Bolivarian Alternative for Latin America ALBA would be much more beneficial for Latin America than the Free Trade Area of the Americas FTAA.

By Venezuelan Bank of External Commerce (Bancoex)
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The Bolivarian Alternative for Latin America and the Caribbean (ALBA) is a proposal for a different integration. While the FTAA (Free Trade Area of the Americas) responds to the interests of transnational capital and pursues the absolute liberalization of trade in goods and services and investments, ALBA places the emphasis on the fight against the poverty and against social exclusion; it thus expresses the interests of the Latin American people.

ALBA is based on the creation of a Compensatory Fund that would correct the disparities that disadvantage economically weaker countries in the face of the main economic powers.

For this reason, the ALBA proposal prioritizes Latin American integration and the negotiation of sub-regional blocks, thereby opening the possibility of constructing strategic alliances and of developing common positions in the negotiation process.

What about endogenous development in ALBA?

The great agreements of continental integration would have to be subordinated to the objectives of endogenous development. The limited diversification of production in the region that exists today mean that the FTAA cannot become an opportunity for achieving a type of development in which economic growth is in harmony with an increasing quality of life and higher degree of well-being for our peoples.

The investments and the exports would be able to grow, but if these are based on industrial sweatshops and the intensive exploitation of the work force, which will doubtlessly not be able to generate the multiplier effect for sectorial links. Also, there will be no a multiplier effect in the agricultural and industrial sectors and even less will quality employment be generated, which are needed in order to overcome poverty and social exclusion.

An alternative proposal based on solidarity is urgent. The idea is to help the weakest countries to overcome the disadvantage that separates them from the most powerful countries of the hemisphere. This not only depends on changes in the prevailing conditions of competition, but also on solidarity between the people and the governments of the continent at the time of correcting these asymmetries. This is the only way an area of free commerce could be an opportunity for all (a win-win alliance).

Agriculture in ALBA: much more than a goods producing sector

The exigency to reduce the protectionistic and massive subsidy policies of the main industrialized countries cannot become a generalized exigency for the liberalization of trade in agricultural products. For many countries of Latin America and the Caribbean agricultural activity is fundamental for their survival.

The conditions of life of million farmers and indigenous peoples would be very affected if their markets are flooded with agricultural goods, even in cases in which there no longer are subsidies.

Agricultural production is much more than the production of merchandise. It is, rather, a way of life. It is the basic foundation for the preservation of a culture, a form of occupying territory, which defines a relationship with nature, and which directly has to do with the critical subjects of food security and sovereignty. Therefore, it can not be treated like any other type of economic activity or product.

Article 305 of the Constitution of the Bolivarian Republic of Venezuela states: "the State will promote sustainable agriculture as a strategic base for integral rural development, and consequently guarantees the food security of the population; this should be understood as the nationally sufficient and stable availability of foods and the opportune and permanent access to these on the part of the consumers. Food security will have to be reached by developing and privileging internal agricultural production, meaning that it originates with the activities of agricultural, cattle, or fishing. Food production is of fundamental national interest to the economic and social development of the Nation. As such, the State will elaborate financial, commercial, technological transfer, land ownership, infrastructure, qualification of manual labor, and other policies that are necessary for reaching strategic levels of food self-sufficiency.”

The food security which the developed countries of the hemisphere enjoy, which they refuse to us today when they limit the scope of action of our policies, is fruit of half a century of policies of systematic support for agriculture, with a consequent distortion of prices in world markets. Even if such supports were stopped today, the playground would still remain uneven: The infrastructure and the productive and technological apparatus established and which operates in good part thanks to the benefits of those policies still leave us in disadvantage.

An imbalance of such nature is not acceptable. It is unacceptable that the negotiation of agriculture is confined exclusively to the elimination of tariffs on the part of the developing countries, while the main powers refuse to eliminate the subsidies and internal aids.

As is known, the U.S.A. destines billions of dollars annually to maintain to their exports and the production of their agriculture, causing strong distortions in the prices of agricultural products in world markets. Even if tariff barriers for Latin American exports are eliminated, it is impossible to compete with those subsidized prices. In this way the effective access of the Latin American countries to the markets of the hemisphere is prevented or made difficult. The subsidized products compete very unfairly in our own internal markets and the advantages they already have become much greater when tariffs are eliminated. It is as if as markets in third countries are taken away for agricultural products that we could otherwise export.

Our countries lack the financial resources that developed countries have to support agriculture; what we have are policy instruments to palliate the perverse effects of the international price distortions; instruments which we are being asked to eliminate in the negotiations for access to our markets.

If developed countries do not want to eliminate the subsidies and similar measures and do not want to substantially diminish and to discipline the internal support for fear of losing their markets in the world, outside the American continent, and propose to go alone after negotiating multilaterally, it is not possible request from us that we now give greater access to them in the markets of this hemisphere. In order to be equitable there is no other way than also negotiating access to the markets of agricultural products in the same multilateral forum, and only as soon as we fully know the true reach which the agricultural powers of the globe have decided upon for the elimination of their subsidies and of similar measures and about the diminution and disciplining of their internal supports, can we responsibly determine up until what point we will be able to grant greater access to our markets.

Rights of intellectual property or rights of people to medicines and to good quality food?

ALBA is opposed to the protection regime of intellectual property which the countries of the North have managed to impose because it establishes very disadvantageous conditions for the countries of the South. This rights regime accentuates the existing asymmetries between countries, particularly in scientific areas, fields where indeed the developed countries have the greater advantage. The international regime of defining and protecting intellectual property protects those areas where the most powerful countries already have advantages, while at the same time, it leaves without protection those areas where the countries and people of the South have a doubtless advantage: in the genetic diversity of their territories and in the traditional knowledge of the farming and indigenous peoples.

The intellectual property agreements of the World Trade Organization force all the countries - after a grace period for the “less” developed countries - to establish patent regimes that guarantee the strict protection of intellectual property. This legal regime of patent protection end the possibility that the internal markets of developing countries can be provided with generic medicines at much lower prices than those offered by companies which own the patents. The comparison of medicine prices in India with countries in which the protection of pharmaceutical patents exists, indicates that in the latter the prices are up to 41 times higher. This situation means that large sectors of the population are excluded from access to commercial medicines.

At the present time, 80% of patents on genetically modified foods are in the hands of 13 transnational companies, and the 5 largest agro-chemical companies control almost the entire global seed market.

As a result of the establishment of patents on diverse forms of life, and of the appropriation/expropriation of peasant knowledge on the part of the great transnational seed and agro-chemical companies, the production patterns farmers are changing at an accelerated pace on a global scale.

Farmers become less and less independent, more and more dependent on the purchase of expensive inputs of transnational companies.

The "freedom of commerce" that is increasingly imposed by the interests of these transnational corporations on farmers worldwide, is leading towards a reduction of the genetic variety of many of the main nutritional cultures. This reduction of genetic diversity, associated with an engineering vision of agriculture, that is based in an extreme control of a type of manufacturing in each phase of the productive process – with seeds genetically manipulated and the intensive use of agro-chemicals – drastically reduces the self-adaptive and regenerative capacity of ecological systems.

A product of this global legal regime of bio-piracy is an immense range of patents - based on the expropriation of the unrecognized knowledge and/or resources of others. Many of these patents have been particularly scandalous, such as in the case of the active ingredients of the “neem” tree, which has been widely used for very diverse applications in India for over hundreds of years.

As has been stated, in the spectrum of critical issues for the present and future of humanity, which are affected by the intellectual property rights agreements, this is the most dynamic aspect of the process of concentration of power and of the accentuation of inequalities that characterize the present hegemonic tendencies of globalization.

How to face the liberalization, deregulation and privatization of the services

The Bolivarian Government of Venezuela is against the processes of liberalization, deregulation and privatization that limit the capacity of the State and the Government to design and to execute policies in defense of the right of our people to have access to essential services of good quality and at good prices. With the argument that subsidies distort market prices and that these should be the mechanisms of the market—that is to say, that the laws of supply and demand—set the level of prices, the FTAA proposal suggests the liberalization and privatization of public services. If this were to be approved, the public sector could not compete with a service offered by a private company and would be forced to increase the budget of public services in order to offer the competition the same subsidy; or to divide the budget and a proportional to private competitors; or to privatize public services. Anyone of these three cases would mean the exclusion of millions of people from benefiting from essential public services for human survival.

For the Bolivarian Government of Venezuela, the public services are for satisfying the needs of people, not for commerce and economic profit. Therefore, its benefit cannot be governed by the criteria of profit but by social interest. In fact, these represent among the most significant social rights peoples have achieved throughout history and are indispensable to correct social inequality. Consequently, the provision of public services must be governed by the social necessities of the individual and not by their capacity of payment. From there they must neither be liberalized nor privatized. Venezuela does not accept any agreement that implies that all public services must open themselves to foreign competition. Also, it does not accept renouncing the use public policy instruments such as tariffs, subsidies, or public solidarity and responsibility to regulate prices and to assure access of the great majority to essential services.

The FTAA tries to impose general obligations for all signatory countries. Among these obligations, it is necessary to alert to the “most favored Nation" treatment. According to this, a country will not be able to grant to a foreign company treatment that is less favorable than it grants to another foreign company. In other words, the capacity of a sovereign country to making decisions about what it considers to be in its national interest is limited, such as for example the preference for a foreign company that is committed to increase the levels of employment, to take care of the street children or to protect the environment. The liberalization of services in the FTAA would bring catastrophic consequences if the application of "National Treatment" is required. This means that the same preferences are due to transnational companies that are granted to small companies and cooperatives. No measure can be pursued that gives preferences to local production or that discriminates against foreign companies. Another aspect to which much attention should be placed is to "Access to markets," because this commits countries not to place any type of barrier against the entry into the national market of any foreign supplier of services in the sectors that have been liberalized. Therefore, governments will not be able to implement measures that condition the commerce of services. Transnational companies want to make us to play on their own field so that, instead of reclaiming sovereignty and justice to the benefit of essential services for the population, we do not facilitate "access to markets" as if this were the clamor of our own people.

Compensatory funds for the correction of asymmetries in ALBA

For the construction of ALBA Venezuela proposes the creation of Compensatory Funds of Structural Convergence with the objective of significantly reducing the asymmetries in the levels of development between nations and productive sectors, assigning to this mechanism precise social and economic goals, with well defined terms and follow-up mechanisms.

This mechanism requires an initial definition that allows the measuring of existing asymmetries in the region. Venezuela proposes start of a debate beginning with the assumption that identifying a concrete definition for a "smaller economy" will facilitate the concretion of one or of several strategies overcome the obstacles generated with the existing asymmetries. It is for this reason that a group of economic and social variables have been identified that aim to distinguish in a non discretionary way the economies that require help in order to compete on favorable conditions with the countries in the free trade area.

In this way, in the construction of ALBA, the differences in the development levels and in the sizes of the participant economies, in addition to posing these for the reasons explained above, it should include:

  • The generation of instruments through which one not only pursues that countries "in development" can agree to ALBA, but that in addition mainly those countries can improve their productive and competitive condition.
  • A clear definition with respect to the economies that will be objects of special and differentiated treatment. Until now, the reference to "development levels and size" are based on the concept of "smaller Economies", which refers to the economic dimension of the participants, without defining the criteria that will be used in the matter. In ALBA, this dimension and the access to special and differentiated treatment would be determined by variables such as population, surface, global production, and endowment of resources. But also it will include other indicators that refer to the degree of development and the structural limitations of the economies: composition of exports and external vulnerability; level of industrial development; per capita income and variations with respect to that average; poverty and extreme poverty, etc.
  • An identification of special and differentiated treatment not only with respect to the totality of each of the economies, but also with respect to the interior of each, so that this treatment can go to the regions and sectors that most need it. This way the resources that are channeled to take care of disparities would tie directly with intra-national areas to which they would be directed, assuring greater levels of efficiency and transparency, as well as a reduction of the administrative ties associated with the use of these resources.

Unlike the FTAA, where a greater deepening of the differences that exist today is planned, the ALBA proposal includes concrete strategies and mechanisms to surpass the great disparities between the countries and within many of them. Attention to this problem occupies a predominant place in this alternative project of Latin American and Caribbean integration.

Translated by Gregory Wilpert