THE PEOPLE'S TRADE AGREEMENT: AN ALTERNATIVE MODEL?

UNCLAS LA PAZ 001100

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/AND LPETRONI
STATE PASS TO USTR FOR BHARMANN
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH

E.O. 12958: N/A
TAGS: ETRD EINV ECON PREL BL
SUBJECT: THE PEOPLE'S TRADE AGREEMENT: AN ALTERNATIVE MODEL?

REF: LA PAZ 726


1. (SBU) Summary: President Morales recently outlined his
proposed People's Trade Agreement (reftel) in a highly
ideological document that describes an alternative commercial
model whose objective is not market liberalization, but "just
trade" and protection of the people. Morales explains his
concept, lists its ten basic principles, and derides
traditional free trade agreements, declaring them a
continuation of an ongoing "commercial annexation" of less
developed countries by the world's rich nations. The
document's strident opposition to broadly accepted principles
of international trade calls into question Morales'
willingness to negotiate a trade pact of any sort. End
summary.


2. (U) In a document long on ideology but short on specifics,
President Evo Morales recently outlined his proposed People's
Trade Agreement (reftel),an alternative model of
international trade whose objective is not market
liberalization, but "just trade" and protection of the
people. He presents the concept as a response to the failure
of the neoliberal economic model to generate significant
economic growth and says it introduces "cooperation,
solidarity... and respect for countries' sovereignty" into
the debate over trade. He notes that unlike traditional
trade agreements, the proposed pact incorporates as
objectives "the preservation of indigenous communities...
(and) the strengthening of small producers, microenterprises,
and cooperatives." Ultimately, Morales presents the People's
Trade Agreement as "a new economic model destined to improve
the people's living standards... and promote sustainable,
egalitarian, and democratic development."


3. (U) Among the ten basic principles of the People's Trade
Agreement, Morales includes the following: the limitation and
regulation of foreign investors' rights; the encouragement of
domestic industrialization and the protection of vulnerable
markets; the pledge that basic services will be provided by
public, state-regulated enterprises; and the creation of a
new model of human relations founded on cooperation instead
of competition. The proposed pact treats trade and
investment "not as ends in themselves, but as a means of
sustainable economic development" that takes into account
differences in countries, peoples, and productive capacity.


4. (U) Morales goes on to deride traditional free trade
agreements, declaring them a continuation of an ongoing
"commercial annexation" of less developed countries by the
world's rich nations. He argues that agreements like NAFTA
destroy poor signatories' small and medium industries and
devastate rural areas, opening domestic markets to wealthy
countries' cheap exports and causing millions of people to
lose their jobs. Morales asserts that the elimination of
trade barriers benefits big business "but makes it impossible
for small producers to sell their products," depriving
individuals of their livelihoods and destroying traditional
ways of life. Finally, Morales decries traditional trade
agreements' protection of private investment and alleged
nullification of national laws and objects to demands for
broad intellectual property rights protection. Traditional
free trade agreements, he says, undermine nations'
sovereignty and provide "perverse profiles of the commercial
plans the United States has" for Latin America.


5. (SBU) Comment: The document's strident opposition to
broadly accepted principles of international trade calls into
question Morales' willingness to negotiate a trade pact of
any sort. In rejecting existing commercial models, Morales
appears to have espoused a "new" alternative that is long on
ideology and wishful thinking but short on specifics. His
proposed pact, for example, offers no plan for boosting
economic growth or generating the jobs Bolivia so desperately
needs. Many observers consider this yet another example of
Morales' populism - the tendency to promise everything no
matter how unrealistic. End comment.
GREENLEE