Interview with Pablo Solón:

At the end of April, a People’s Trade Agreement (PTA) proposed by the Bolivian Government came into action when Presidents Evo Morales, Hugo Chavez and Fidel Castro signed an accord to begin the building  of the Bolivarian Alternative for the Peoples of the Americas (ALBA in Spanish).

In contrast with the Free Trade Agreements (FTAs) promoted by the powerful countries of the North, the People’s Trade Agreements signed with Venezuela and Cuba assure markets for all Bolivian products that would be harmed by FTAs and strengthen the role of the State as the lead actor in trade. It promotes the idea of “complementary production” by participating nations within a new framework that transcends commercial considerations as the basis for a new type of Latin American integration.

Pablo Solón, participant in the Bolivian Movement for Sovereignty and Integration of Solidarity of the Peoples, identifies at least four distinctive qualities of PTAs that are excluded from the entirely commercially-minded FTAs promoted by the United States and European Union:

•    the assurance of markets for Bolivian products;
•    the recognition of the State as the principle regulator of trade;
•    ‘complementary production’ of participating nations;
•    and the search for income for small producers.

Miguel Lora (ML): What is the difference between the FTA and PTA?

Pablo Solón (PS): The only thing that the FTAs look for is to reduce and/or eliminate tariffs [taxes on imports], but without assuring that those preferences guarantee a market. This enables them to foster competition between producers that are diametrically distinct in productive capacity. They arrange the preferences so that the little fish (small companies) compete amongst themselves and then face the sharks (large corporations).

In the PTA, there are not only tariff preferences, but a commitment to purchase. In this case, Venezuela commits not only to lower tariffs for all the goods upon which they are levied, but also to buy 200 tons of soy and other products that would be harmed by the signing of FTAs with the United States and European Union.

The first article of the agreement signed with Venezuela is typical of trade accords: the governments of both counties eliminate tariffs and any trade barriers. The difference is that in the FTA format, no country eliminates tariffs for all products. For example, the United States only proposes to cut tariffs on 6000-odd products, although there are more than 11,000 products upon which tariffs are imposed.

But this is not the central question; the most important is the commitment to buy agricultural and industrial products, quiñoa, poultry, wood, textiles and vegetable oil, among other products. Thus, the PTA not only opens markets, but assures them for developing countries.

ML: What is the meaning of ‘complementary production’ between countries signed on to the PTA?

PS: The signatory countries to a bilateral PTA not only reduce their tariffs, but propose to elaborate a strategic plan for complementary production, considering the needs of both. That is to say they plan trade thinking about each other’s markets, in state purchasing and the capacity of credit. The idea is to create transactions, projects and/or bi-national companies in the two countries.

This articulation of production does not exist in FTAs because the logic is the opposite. FTAs only level the playing field for competition between companies. The PTA promotes the active participation of the State in trade while the FTA perpetually seeks less participation by the State. The whole PTA agreement emphasizes State intervention, its role of bringing goods together and their commercialization, because complementary production cannot exist if the State does not recover its prime role in international trade.

ML: Does this mean that the PTA recognizes the autonomy of the State for sensitive themes, such as defining of rules for intellectual property or agriculture?

PS: The PTA is reduced in size because it leaves out all the topics the FTA tries to regulate, such as rules on intellectual property, services, competition policies, etc. In this sense, the PTA is a trade agreement of complementary production that leaves it to the State to regulate other areas without conditions. The PTA recognizes that the responsibility in these areas is the sovereign authority of the countries and that themes such as health, education, financial services and drinking water cannot and must not be governed by a trade agreement that forces them to liberalize and therefore to privatize.

ML: In this entire outline, where does the PTA’s cooperation and aid component enter?

PS: The PTA articulates trade and productive complementarity with cooperation and without conditions. To begin with, Venezuela is creating a fund of $100 million for productive activities and infrastructure, and is donating an additional $30 million to Bolivia. Venezuela is committed to further collaboration in the energy and mining sectors. This commitment of cooperation is accompanied by social programs, beginning with 5000 scholarships for Bolivian students, issuance of identity cards, and the Plan Milagro, Miracle Plan, which consists of eye care by Cuban specialists.

ML: Why can one say that the PTA favors small producers?

PS: An FTA arranges trade rules so that in theory they can be taken advantage of “by everyone,” but in reality, they are taken advantage of only by transnational corporations. Conversely, the PTA creates specific rules to benefit the smallest productive sectors. For example, in the case of vegetable oil, the State buys from the small soy producers and then markets it in Venezuela.

ML: At root is the PTA more of a political agreement than an economic one?

PS: No, because in the PTA, the larger country concedes privileges to the smallest nation. In this case, Venezuela opens its state purchasing to Bolivian suppliers while Bolivia does not; Venezuela lowers tariffs to zero, but we do not. If we are truly to talk about trade agreements to eliminate poverty as they are widely proclaimed, this is real asymmetrical treatment.

In the World Trade Organization, special and differential treatment for small economies consists solely of longer timeframes for implementation of the same measures that apply to the largest economies. After five, ten or fifteen years, all must compete under the same rules. This is not fundamentally true asymmetrical treatment.

ML: What is the relationship between the PTA and the ALBA [Bolivarian Alternative for the People of Our America]?

PS: Both have the same principles and are proposals of relationship and integration, but the PTA is viewed as an instrument of bilateral relations. One can sign a PTA with India, China or European countries, while the ALBA is for the peoples of the Americas. Like ALBA, PTA is under construction, but the ALBA will have a wider character. Bolivia would like PTAs with all nations, including the United States and Europe.

If these countries would arrive at an understanding that it is insufficient to lower tariffs, that they have to assure markets, that they must not include themes of services and intellectual property in the agreements, that the State needs to recover a primary role in trade, and that this must be accompanied by cooperation without conditions, then one can truly speak of trade agreements that promote the reduction of poverty.