Give up a little bit of our sovereignty to make the world work

Former Canadian Prime Minister, ‘give up a little bit of our sovereignty to make the world work’
Wise Up Journal
20.02.2008

www.youtube.com/watch?v=xDdlY3vqmzg

This short clip is from footage that aired on CPAC (Cable Public Affairs Channel), February 10th 2009. The CPAC overlay on the video is titled, “Ottawa, Global Governance and the Future of the G20“. Former Canadian Prime Minister (2003-2006), Paul Martin, said, “What is going to happen when a Chinese hedge fund goes under? And the results of that tsunami don’t stop at the Chinese or Indian border [….] Who is going to deal with that unless we are prepared to understand that in fact we are all going to give up a little bit of our sovereignty to make the world work. I hope that is also something that the G20 comes to deal with. So those are the issues I got to deal with. I think that we are really at the beginning of a very different era. 1944 the great minds of the world, Dexter White, John Maynard Keynes and a bunch, essential laid the foundations Bretton Woods institutions and the United Nations. And they built a system that functioned for over 50 to 60 years. I think that it’s time to renew that vision. [….] I think we’ve got to take it one step further.”

The video below shows the EU calling for a ‘New World Governance’. You can see Sarkozy (French President holding EU Presidency at the time) and Barroso (EU Commission President) coming out and calling for the setup of a “New World Governance”, “New Global Order”, “Global Governance” and that crises’ are the perfect time to lead the public into it, order out of chaos….

www.youtube.com/watch?v=a7D21rPpBrk

WeAreChangeIreland

Video shows Sarkozy and Barroso calling for a “New World Order”, “New World Governance”, “New Global Order”.

The EU and globalists are determined to use crisis’ to setup the final stages of what they call the “New World Order”.

CNN: “Barroso outlined no specific proposals but said a solution needed to be based on transparency, responsibility, cross-border supervision and global governance”

Least we forget with a crisis there is always a silver lining for the elite few historically against the general publics interests and rights. The current banking chaos lead the global banking elites profits being guaranteed by the tax payers and lends to global leaders calling for a restructuring and centralisation of the global financial system and currencies.

European Central Bank council member Ewald Nowotny said a tri-polar global currency system is developing between Asia, Europe and the U.S. and that hes skeptical the U.S. dollars centrality can be revived.

Watch End Of Nations
http://video.google.com/videoplay?doc…

Watch EndGame
http://video.google.com/videoplay?doc…

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“Never waste a good crisis” – Hillary Clinton

www.youtube.com/watch?v=B62igfNu-T0

US Secretary of State Hillary Clinton visits the European Parliament in Brussels for a “town hall” meeting with “young Europeans”. During the meeting Clinton answering a question on global warming Clinton explains how this relates to the financial crisis saying, “I’m actually excited by this opportunity. I’m very well aware we are not yet through this economic crisis. But you know, we have the chief of staff for president Obama was/is an old friend of mine and my husband’s and was in the white house when Bill was there and he said ‘do you know never waste a good crisis’. And when it comes to the economic crisis don’t waste it, when it can have a very positive impact on climate change and energy security. And that is what we are trying to do.”

The Telegraph
By Christopher Booker
07.03.2009

“How odd that, last Monday, none of our media global warming groupies should have bothered to report what was billed to be ‘the largest ever demonstration for civil disobedience over climate change’. There was talk of hundreds of thousands of protestors converging on Washington to hear Jim Hansen, the scientist who talks of coal-fired power stations as ‘factories of death’, call yet again for all coal plants to be closed. Perhaps the lack of coverage was due to the fact that, before Hansen arrived to address a forlorn group of several hundred hippies, Washington was blanketed in nearly a foot of snow.

“It was generally another bad week for the warmists. The Met Office, which has been one of the chief pushers of the global warming scare for 20 years, had to admit that this has been ‘Britain’s coldest winter for 13 years’, despite its prediction last September that the winter would be ‘milder than average’. This didn’t of course stop it predicting that 2009 will be one of ‘the top-five warmest years on record’. ”

“for whom the predictions of the UK Met Office have become a regular source of amusement, recalled its forecast that 2007 would be ‘the warmest year on record globally’, just before global temperatures dived by nearly a full degree Celsius, cancelling out the entire net warming of the past 100 years.”

Related:

1974 Time Magazine Article on Global Cooling and More *

Reuters: China Promotes Abortion To Reduce CO2 – People Are Enemy #1 *

74 Years Since Oct Snowfalls – Deprogramming Global Warming *

MP3: Alan Watt on RBN Radio: in-depth analysis of the freezing “warming” *

Former Canadian Prime Minister, ‘give up a little bit of our sovereignty to make the world work’ (Video)

EU Calls For ‘New World Governance’ (video) *

www.wiseupjournal.com

A Constitutional Guide to the Political Groups in the European Parliament

http://www.youtube.com/watch?v=C-qni6r2Q8o

Complete and Total Mind Control

How the Internet is Being Used to Control Your Mind
Chris | InformationLiberation

I was watching “Late Night with Jimmy Fallon” earlier and I saw the creators of “Digg.com” on the show. What struck me was that these people did not seem at all like programmers, but instead like actors.

If one studies the history of sites like Facebook, or DailyKos, they are riddled with CIA connections.

As I watched these characters on TV I couldn’t help but think perhaps the CIA ties which bind Facebook and DailyKos go much, much, deeper. You have to wonder, with a site like Digg, it used to be totally dominated by truthers, yet with their new secret admins now the site is one story about Obama and then another about some tape from Al-Queda and so on. The site is just as phony as the rest of the mass media.

Promotion is an extremely difficult thing to do, people pass things around but it has a limit, even the most viral of stories or videos eventually dies off. With massive financing it is a different story though, especially if you have TV media behind you. For example take Twitter, within the last few weeks it is all the sudden being talked about on every major news channel there is. A while ago when Myspace was bought by Rupert Murdoch the same occurred, it was practically the only thing which the news talked about, they would constantly prose about “is it scandalous” or “too sexual” etc. just to get the masses all talking about it and using it. When Myspace started to die out Facebook came to replace it with an even wider “more sophisticated” appeal. If you are aware of how heavily controlled something like the TV news is, it is foolish to assume there is not also extremely heavy control over many of the biggest sites on the internet.

The big danger becomes that unlike the television, these sites have the ability to watch YOU. Think of everything you enter into Google and Yahoo, they admittedly store that info for years, but then combine that with an even more invasive technology like Facebook or Myspace, where staff, or computers, can analyze everything you personally write about in private messages to your friends.

They do not need to actually read what you are writing word for word to understand you, all they need to do is scan your writings for key words, for example if you are all the sudden messaging people about “Twitter” they could pin you as highly suggestible. Same goes for any stories about celebrities in the news, if you are writing to your girlfriends about Jennifer Aniston or whoever it reveals how you think, combine that now with a database of over a million products, things like pharmaceuticals, electronics, illicit drugs, foods, websites or even something like using an obscure vernacular, all these things can reveal A LOT about you. We are talking about 1984 times a thousand.

When you think of this you realize so much of this power comes from the idea the Internet is private, certainly some sites are but with ISPs actively being involved with the spying any semblance of privacy is going completely out the window. The danger in this is that this information can be used to control you COMPLETELY. If you know someones deepest darkest secrets you have a lot of power over someone.

Certainly this is the perception they want people to have, they want them to be afraid and live in fear, just the other day someone “demanded” I remove their comment (which was calling for nothing more than Blair and gang to be put in jail) because “the first few digits of his IP were showing” and “that could be used to track him down.”

The man wanted freedom and justice but the mere possibility that he could be tracked down for expressing that feeling was too much to bear. If that is not complete and total mind control I do not know what is. We are talking about total mind control without even the use of high technologies like the sound of silence. The prospects are terrifying.

People must not let themselves be controlled by this perception. The reality is if you feel a certain way, chances are someone else does too, maybe even everybody else, it is just everyone is too afraid to express it. This is the political correctness which dominated life under the Soviet Union and in places like North Korea today, and it is done through the suppression of individuality and most of all self-honesty.

There is lots of talk of “taking back control” of the government, the federal reserve, etc. All these goals are perfectly fine and should be worked towards, but how much talk is there of taking back control of yourself, taking back control of your own mind which is being stolen from you in the most sophisticated and subtle of ways. To even communicate these days is difficult if everything you say is not politically correct, to express a feeling about some topic dealing with sexuality for example leads to endless misinterpreting and the creation of scandal from people who do not want to understand. The easiest way to deny a truth these days is to complicate it.

The most important thing that people need to understand is how they control themselves, external situations are not the root cause, it is the people themselves dodging responsibility which is at the core of the situation we are in today.

Simple things like admitting when your wrong are the keys to freedom. Simple things like being kind to other people and caring about the suffering of others will free you more than any deep philosophy.

So many people are searching for freedom but they are looking in the wrong places, it is like trying to find your glasses when they are on your head. Freedom is the wellspring of life, when you promote life and help others to live you become free, when you denigrate life and promote degeneracy we all become slaves. - IL

It is a bit embarrassing to have been concerned with the human problem all one’s life and find at the end that one has no more to offer by way of advice than ‘try to be a little kinder.’ – Aldous Huxley


informationliberation.com

SPP: Updating the Militarization and Annexation of North America

SPP: Updating the Militarization and Annexation of North America

by Stephen Lendman

Global Research, March 13, 2009

The title refers to the Security and Prosperity Partnership of North America (SPP), also known as the North American Union – formerly launched at a March 23, 2005 Waco, Texas meeting attended by George Bush, Mexico’s President Vincente Fox, and Canadian Prime Minister Paul Martin. It’s for a tri-national agreement, below the radar, for greater economic, political, and security integration with secret business and government working groups devising binding policies with no public knowledge or legislative debate.

In short, it’s a military-backed corporate coup d’etat against the sovereignty of three nations, their populations and legislative bodies. It’s a dagger through the heart of democratic freedom in all three, yet the public is largely unaware of what’s happening.

Last April, New Orleans hosted the last SPP summit. Ever since, progress may have stalled given the gravity of the global economic crisis and top priority need to address it. Nonetheless, what’s known to date is updated below plus some related information.

Last September, the Army Times reported that the 3rd Infantry’s 1st Brigade Combat Team in Iraq would be re-deployed at home (October 1) as “an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.”

“This marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.”

Then on December 1, the Washington Post reported that the Pentagon will deploy 20,000 troops nationwide by 2011 “to help state and local officials respond to a nuclear attack or other domestic catastrophe.” Three “rapid-reaction” combat units are planned. Two or more others may follow. They’ll be supplemented by 80 smaller National Guard units trained to respond to chemical, biological, radiological, nuclear, high-yield explosive, and other domestic “terror” attacks or disturbances. In other words, homeland militarization and occupation are planned using troops trained to kill.

The pretext is national security. In fact, they’ll be on-call against another major terrorist attack, real or contrived, as well as civil unrest given the gravity of the economic crisis, its affect on millions, and likelihood that sooner or later they’ll react. Armed combat troops will supplement militarized local police in case security crackdowns are ordered or martial law declared.

“Catastrophic Emergency” procedures are in place to react to situations, “natural or manmade,” according to DHS/FEMA’s March 2008 “Preparedness for the Next Catastrophic Disaster” policy paper. Should conditions warrant, initiatives to suspend the Constitution and declare martial law are in place, but militarizing America for business is also at issue.

Last October 1, the Canadian Action Party posted a “COUP IN USA ALERT” after the Bush administration announced the homeland deployment of troops with “$100 billion (bailout) dollars” to do it.

What’s Likely in Prospect

SPP efforts paused during the Bush to Obama transition, but “deep integration” plans remain. On January 19, Ottawa’s Carleton University’s Centre for Trade Policy and Law outlined an agenda for America and Canada going forward. It called for “early and sustained cooperation” at a time of continuing global crisis, to include security, defense, trade and competitiveness.

It said the “most pressing issue is the need to re-think the architecture for managing North America’s common economic space (including) trade liberalization.” It used language like “re-imagining (and) modernizing the border” that reads like erasing it and doing the same with Mexico. In a similar vein, it recommends “integrating national regulatory regimes into one that applies on both sides of the border.” It called the arrival of a new Washington administration “a golden opportunity” to forge a “mutually beneficial agenda (that) will define global and North American governance for years to come.”

It mentioned the specter of protectionism and need to avoid it given the current economic climate. It advocates a “more ambitious Canada-US Partnership” beyond NAFTA,” in co-partnership with Mexico.

Titled “North America Next,” a recent Arizona State University North American Center for Transborder Studies report called for “sustainable and security competitiveness” and deeper US-Canada-Mexico integration through “sustainable security and effective trade and transportation (to) make (the three nation) North America(n partnership) safer, more economically viable, and more prosperous.”

Both Carleton and Arizona State University project participants want SPP initiatives invigorated under a new Washington administration, especially in a climate of global economic crisis when addressing it takes precedence.

Other Issues in Play

“The Canadian’s” Mike Finch “North American Union (NAU) watch” reports that US and Canadian organizations want to end free flow Internet information. He cites an “net-neutrality activist group” discovery of “plans for the demise of the free Internet by 2010 in Canada,” and by 2012 globally.

Canada’s two largest ISPs, Bell Canada and TELUS, are behind a scheme to limit browsing, block out sites, and charge fees on most others as part of a 2012 “planned full (NAU) launching.” Web host I Power’s Reese Leysen called it “beyond censorship: it is killing the biggest (ever) ‘ecosystem’ of free expression and freedom of speech.” He cited big company inside sources providing information on “exclusivity deals between ISPs and big content providers (like TV studios and video game publishers) “to decide which sites will be in the standard package offered customers, leaving the rest of the Internet unreachable except for fees.”

Leysen called his source “100% reliable” and cited similar information from a Dylan Pattyn Time magazine article, based on Bell Canada and TELUS sources. Plans are for “only the top 100 – 200 sites making the cut in the initial subscription package,” likely to include major news outlets at the expense of smaller, alternative ones. “The Internet would become a playground for billion-dollar content providers,” like cable TV providers, unless efforts are made to stop it.

Leysen thinks US and global ISPs have similar plans that include free speech restrictions and privacy invasions. The stakes are high if he’s right. Yet the profit potential is huge and friendly governments may oblige. Also involved are “deceptive marketing and fear tactics” (like citing child pornography threats) to gain public approval for subscription services masquerading as online safety. The time to stop it is now.

Earlier Plans to Rename SPP/NAU

Last March, Canada’s Fraser Institute proposed it in an article titled: “Saving the North American Security and Prosperity Partnership” at a time of mounting criticism. It recommended discarding NAU in favor of the “North American Standards and Regulatory Area (NASRA)” to disguise its real purpose. It called the “SPP brand” tarnished so changing it was essential to continue where NAFTA left off by combining security with quality of life issues like food safety, global warming, climate change, and pandemic diseases. It also wants better communications to sell it to the public. Their idea is to fool most people until it’s too late to matter.

Rumblings in America at the State Level

Running counter to “deep integration,” News with Views (NWV) writer Jim Kouri headlined on February 23: “Individual States Declaring Sovereignty.” He cites political strategist Mike Baker saying “Americans are becoming disenchanted with the federal government’s lack of perspective on” matters like: “illegal aliens, crime, (and) economic turmoil – while intruding into the private lives of citizens with gun-control laws and other intrusions,” issues our Founding Fathers “relegated to the individual states.” Bothersome also are unfunded mandates that states can’t handle given their over-stretched budgets and need to cut back. In addition, Washington’s intrusion into local law enforcement is a big issue.

So far, nine states have declared sovereignty and another dozen or more are considering it. Enacted or proposed legislation varies from all states’ rights to selective ones like gun control and abortion.

As of January 30, Washington State is one of the former under House and Senate bill HJM-4009 stating:

“The Tenth Amendment to the Constitution of the United States specifically provides that, ‘The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people;’ and The Tenth Amendment defines the total scope of federal power as being those powers specifically granted to it by the Constitution of the United States and no more.”

Earlier in January, New Hampshire enacted similar legislation (HCR-6) “affirming States’ rights based on Jeffersonian principles.” Other states doing it totally or in part include California, Arizona, Montana, Michigan, Missouri, Oklahoma, and Georgia. In addition, the following states are considering similar measures: Colorado, Pennsylvania, Illinois, Indiana, Kansas, Arkansas, Idaho, Alabama, Maine, Nevada, Hawaii and Alaska, and reportedly, Wyoming and Mississippi may as well.

Besides states rights issues, driving the current movement are:

– the grave and deteriorating economy;

– Wall Street’s harmful control over policy;

– its effects on checks and balances;

– excessive bailouts for an insolvent and corrupted banking system at the expense of local state budgets and rights; and

– reckless and unsustainable spending and national debt levels driving the nation to bankruptcy and placing untenable burdens on states.

Overall, concern is that Washington is complicit in driving the nation to ruin, and they want out or at least lean that way. If this movement gains strength, at the least it will slow “deep integration,” stall it for a considerable time, but won’t likely halt it. Corporate America wants it, and most often what it wants, it gets.

It may just take longer than planned, much longer given the gravity of the global crisis, how hard it will be to resolve, and how long doing it will take. Some experts predict another Great Depression as bad or worse than the first one and far worse than Japan’s “lost decades” – from 1990 to the present.

Top priority in world capitals and corporate boardrooms is preventing it if possible. Except for “national security,” other initiatives are secondary.

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Monday through Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.

http://www.globalresearch.ca/index.php?context=va&aid=12593
Stephen Lendman is a frequent contributor to Global Research. Global Research Articles by Stephen Lendman

http://www.globalresearch.ca/index.php?context=va&aid=12696

The Federal Reserve is Bankrupt – How Did It Happen and What are the Ugly Consequences?

by Matthias Chang
Global Research, March 10, 2009

The Federal Reserve is bankrupt for all intents and purposes. The same goes for the Bank of England! This article will focus largely on the Fed, because the Fed is the “financial land-mine”. How long can someone who has stepped on a landmine, remain standing – hours, days? Eventually, when he is exhausted and his legs give way, the mine will just explode! The shadow banking system has not only stepped on the land-mine, it is carrying such a heavy load (trillions of toxic wastes) that sooner or later it will tilt, give way and trigger off the land-mine![1] In a recent article, I referred to the remarks of British Prime Minister Gordon Brown and President Obama calling for the shadow banking system to be outlawed. Even if the call was genuine, it is too late. The land-mine has been triggered and the explosion cannot be averted under any circumstances. The only issue is the extent of the damage to the global economy and how long it will take for the world to recover from this fiasco – a financial madness that has no precedent. The great depression is “Mary Poppins” in comparison! The idea of a central bank going bankrupt is not that outlandish. I am by no means the first author who has given this stark warning. What underlies this crisis (which I initially examined in an article in December 2006) is the potential collapse of the global banking system, specifically the Shadow Money-Lenders. Nouriel Roubini, the New York University professor said [2]: “The process of socialising the private losses from this crisis has moved many of the liabilities of the private sector onto the books of the sovereign. At some point a sovereign bank may crack, in which case, the ability of the government to credibly commit to act as a backstop for the financial system – including deposit guarantees – could come unglued.“ Please read the underlined words again. “Sovereign bank” means central bank. When a central bank “cracks” i.e. becomes insolvent, “all hell breaks lose”, because as the professor correctly pointed out, “any government guarantees will ring hollow and will be useless”. If a central bank goes belly up, it is as good as the government going bankrupt. Period! In another article, Roubini admitted that the pressure on “the financial land-mine” is totally unbearable. He wrote: “The US Financial system is effectively insolvent”. It follows that if the financial system is bankrupt, it is a matter of time before the “sovereign bank” goes belly up. This is a given! He stated further that: “Thus, the U.S. financial system is de facto nationalized, as the Federal Reserve has become the lender of first and only resort rather than the lender of last resort, and the U.S. Treasury is the spender and guarantor of first and only resort. The only issue is whether banks and financial institutions should also be nationalized de jure. “AIG which lost $62 billion in the fourth quarter and $99 billion in all of 2008 is already 80% government-owned. With such staggering losses, it should be formally 100% government-owned. And now the Fed and Treasury commitments of public resources to the bailout of the shareholders and creditors of AIG have gone from $80 billion to $162 billion. “Given that common shareholders of AIG are already effectively wiped out (the stock has become a penny stock), the bailout of AIG is a bailout of the creditors of AIG that would now be insolvent without such a bailout. AIG sold over $500 billion of toxic credit default swap protection, and the counter-parties of this toxic insurance are major U.S. broker-dealers and banks. “News and banks analysts’ reports suggested that Goldman Sachs got about $25 billion of the government bailout of AIG and that Merrill Lynch was the second largest benefactor of the government largesse. These are educated guesses, as the government is hiding the counter-party benefactors of the AIG bailout. (Maybe Bloomberg should sue the Fed and Treasury again to have them disclose this information.) “But some things are known: Goldman’s Lloyd Blankfein was the only CEO of a Wall Street firm who was present at the New York Fed meeting when the AIG bailout was discussed. So let us not kid each other: The $162 billion bailout of AIG is a nontransparent, opaque and shady bailout of the AIG counter-parties: Goldman Sachs, Merrill Lynch and other domestic and foreign financial institutions. “So for the Treasury to hide behind the “systemic risk” excuse to fork out another $30 billion to AIG is a polite way to say that without such a bailout (and another half-dozen government bailout programs such as TAF, TSLF, PDCF, TARP, TALF and a program that allowed $170 billion of additional debt borrowing by banks and other broker-dealers, with a full government guarantee), Goldman Sachs and every other broker-dealer and major U.S. bank would already be fully insolvent today. “And even with the $2 trillion of government support, most of these financial institutions are insolvent, as delinquency and charge-off rates are now rising at a rate – given the macro outlook -that means expected credit losses for U.S. financial firms will peak at $3.6 trillion. So, in simple words, the U.S. financial system is effectively insolvent.” McClatchy newspaper reported (03/08/2009) bad news affecting the banks: “America’s five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show. “Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank and J.P. Morgan Chase reported that their “current” net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31. Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days. “The disclosures underscore the challenges that the banks face as they struggle to navigate through a deepening recession in which all types of loan defaults are soaring. “The government has since committed $182 billion to rescue AIG and, indirectly, investors on the other end of the firm’s swap contracts. AIG posted a fourth quarter 2008 loss last week of more than $61 billion, the worst quarterly performance in U.S. corporate history. “The five major banks, which account for more than 95 percent of U.S. banks’ trading in this array of complex derivatives, declined to say how much of the AIG bailout money flowed to them to make good on these contracts. “The banks’ quarterly financial reports show that as of Dec. 31: — J.P. Morgan had potential current derivatives losses of $241.2 billion, outstripping its $144 billion in reserves, and future exposure of $299 billion. — Citibank had potential current losses of $140.3 billion, exceeding its $108 billion in reserves, and future losses of $161.2 billion. — Bank of America reported $80.4 billion in current exposure, below its $122.4 billion reserve, but $218 billion in total exposure. — HSBC Bank USA had current potential losses of $62 billion, more than triple its reserves, and potential total exposure of $95 billion. — San Francisco-based Wells Fargo, which agreed to take over Charlotte-based Wachovia in October, reported current potential losses totaling nearly $64 billion, below the banks’ combined reserves of $104 billion, but total future risks of about $109 billion. “Kopff, the bank shareholders’ expert, said that several of the big banks’ risks are so large that they are “dead men walking.” Berkshire Hathaway Chairman, Warren Buffett is so livid by the sheer magnitude of the financial mess that he said: “These instruments [derivatives] have made it almost impossible for investors to understand and analyze our largest commercial banks and investment banks . . . When I read the pages of ‘disclosure’ in (annual reports) of companies that are entangled with these instruments, all I end up knowing is that I don’t know what is going on in their portfolios. And then I reach for some aspirin.” The above bad news refers to the losses and potential losses that the big banks have suffered and will suffer in the near future. But what is overlooked by many financial analysts is that these very same derivative products have caused another financial organ failure. And there is no way that the said organ can be resuscitated to its former state of health. The Repo Market is gridlocked! There has been an incestuous relationship between the traditional banking system and the shadow banking system and the link that joined the two together is the Repo Market.[Repurchase Market] This is in fact the weakest link in the entire financial system. This is a very technical subject and I seek your indulgence and patience when reading the remaining part of this article. The gridlock of the repo market is the basis for my assertion that over and above the aforesaid dire financial facts, it is the major contributing factor to the bankruptcy of the Federal Reserve! I want to use a simple analogy. This will make the issue easier to understand. Picture a one-inch diameter thick rope. Such a rope is made up of a few strands of narrower ropes, say 1/10th inch which are twined together to make the thick one-inch diameter rope. Picture again that all the outer strands have been burnt away, and what remains is the middle strand, still lifting the weight. But this strand cannot on its own, lift such a weight and sooner or later, it will snap. When that happens, the weight will come crashing down! The middle strand is the repo market. Alternatively, you can use the analogy that the repo market is the heart that pumps the blood (the cash flow). The financial system is the body and it has suffered a massive heart attack! What is the repo market? The repo market is the market whereby all financial institutions (regulated and unregulated) invariably go to obtain financing to meet reserve requirements, bridging finance, to lend or purchase securities, to hedge and or to invest on short-term basis. It used to be that mainly US Treasuries (bear this in mind at all times) were used as security for Repo transactions, as it is considered as most secure i.e. as good as cash since it is backed by the credit of the US government! This requirement is no longer the case. More of this issue later. The Nature of Repo Transactions In repo transactions, securities are exchanged for cash with an agreement to repurchase the securities at a future date. The securities serve as collateral for what is effectively a cash loan. A distinguishing feature of repos is that they can be used either to obtain funds or to obtain securities. As repos are short-maturity collateralized instruments, repo markets have strong linkages with securities markets, derivative markets and other short term markets such as inter-bank and money markets. [3] Like other financial markets, repo markets are subject to credit risks, operational risks and liquidity risks. However, what distinguishes the credit risks on repos from that associated with uncollateralized instruments is that repos credit exposures arise from volatility (or market risk) in the value of collateral. Bear this in mind at all times. Repos allow institutions to use leverage to take larger positions in financial markets which could add to systemic risks. Bear this in mind at all times. And because of the close linkages between repo markets and securities markets, any shocks will be transmitted quickly, resulting in a gridlock. Bear this in mind at all times. Transactions covered by definition of repos are as follows: (A) Repurchase Agreement A repurchase agreement involves the sale of an asset under an agreement to repurchase the asset from the same counter-party. Interest is paid on the repurchase agreement by adjusting the sale and purchase price. A reverse repo is the purchase of an asset with an agreement to re-sell the same or a similar asset. A hold-in-custody repurchase agreement is a trade whereby the repoer (the borrower of cash) continues to hold the collateralizing securities in custody for the lender of cash. The risks are obvious! A deliver-out repurchase agreement is where securities are delivered to the cash lender for custody in exchange for cash. A tri-party repurchase agreement is similar to a deliver-out repurchase agreement, except that the security is placed in the custody of a third-party entity. The third-party ensures that the security meets the cash lender’s requirements and provides valuation and margining services. This is the primary form of repurchase agreement for securities dealers in the United States. Bank of New York and JP Morgan Chase are the two main custodians or clearing banks in the US and supervise the vast majority of the tri-party repos. Bear this in mind at all times. (B) Sell/Buy-Back Agreement A sell buy-back is two distinct outright cash market trades, one for forward settlement. The forward price is set relative to the spot price to yield a market rate of return. (C) Securities Lending This is where the owner of the security lends them to another person in return for a fee. The borrower of the security is contractually obliged to redeliver a like quantity of the same securities, or return precisely the same securities. Repos can be of any duration but are most commonly over-night loans. Repos longer than over-night are called Term Repos. There are also Open Repos which are transactions which can be terminated by both parties on a day’s notice. The largest players of repos and reverses are the dealers in government securities. There are about 20 primary dealers recognised by the Fed which are authorised to bid for new-issued treasury securities for resale in the market. The dealers are highly leveraged, 50 to 100 times their own capital. To finance the purchase of treasury securities, the dealers need to have repo monies in large amounts on a continuing basis. The institutions that supply such huge funds in the repo market are money funds, large corporations, state and local governments and foreign central banks. The Repo Market and the Financial Crisis As stated earlier when the repo market first started, US treasuries were the preferred security. But when financial engineering exploded and many financial products (i.e. CDOs) were rated AAA by rating agencies, these securities were also traded as described above in the repo market. This was when problems started. According to Gary Gorton [4], the repo market before the crisis was estimated to be worth a whopping $12 trillion as compared to the total assets in the entire US banking system of $10 trillion. The former CEO of Federal Reserve Bank of New York (NYFRB) and now the US Treasury Secretary, Tim Geithner observed in 2008: “The structure of the financial system changed fundamentally during the boom, with dramatic growth in the share of assets outside the traditional banking system. This non-bank financial system grew to be very large, particularly in money and funding markets. “This parallel system financed some of these very assets on a very short term basis in the bilateral or tri-party repo markets. As the volume of activity in repo markets grew, the variety of assets financed in this manner expanded beyond the most highly liquid securities to include less liquid securities, as well. Nonetheless, these assets were assumed to be readily sellable at fair values, in part because assets with similar credit ratings had generally been tradable during past periods of financial stress. And the liquidity supporting them was assumed to be continuous and essentially frictionless, because it had been so for a long time. “The scale of long term risky and relatively illiquid assets financed by very short-term liabilities made many of the vehicles and institutions in this parallel financial system vulnerable to a classic type run, but without the protection such as deposit insurance that the banking system has in place to reduce such risks.” Economic historians will argue for another century as to the cause for the run on the repo market. The collapse of Bear Stearns is as good a starting point as any. When the market discovered that its securities were duds, pure junk, shock waves ripped through the system. Recall that I had mentioned earlier that Federal Bank of New York and JP Morgan Chase were the primary clearing banks for repos. The Fed’s rescue of Bear Stearns through JP Morgan was not so much to save the former but rather to shore up the “clearing system” of the repos for which JP Morgan Chase and the Bank of New York were the main pillars. One of the functions of a “clearing bank” for repos is to value and match securities tendered for cash borrowings. If Bear Stearns securities are now valued as junks, the integrity of JP Morgan and Federal Bank of New York as clearing banks in this market is as good as zero! And bearing in mind that the five major investment banks in the US rely heavily on the repo market for their funding, any gridlock in this part of the shadow banking system would tear wide open the entire banking system, including the traditional counter-part. Hence, the FED intervention by the creation of the Primary Dealer Credit Facility (PDCF) which was in effect the backstop for all investment banking using tri-party repos! This was what Bernanke said: “We have been working with market participants to develop a contingency plan should there ever occur a loss of confidence in either of the two clearing banks that facilitate the settlement of tri-party repos.” Louis Crandall, economist at Wrightson ICAP observed: “The vulnerability of the tri-party repo system has been a recurring theme among Federal Reserve and Treasury officials in recent weeks.” The inherent weakness of tri-party repos is that the counter-party risks of billions worth of funding agreements are shouldered by essentially two players – Federal Bank of New York and JP Morgan Chase. Yet, way back then, they were held up as rock solid. It is almost hilarious to read the then advert of the Federal Bank of New York as to their expertise and service: “Sophisticated collateral selection: enforce diversification and credit quality; control adequacy, volatility & liquidity. “Cutting edge infrastructure: economies of scale facilitate extensive data warehousing, access to more asset classes and markets, auto-substitution, auto-allocation & optimisation technology, same day reporting. “Introduction to new counterparts: A Global Collateral Clearing House.” Panic swept across the entire repo market. No securities were considered safe enough for repos except US treasuries. Fundings in the repo market grind to a halt. Market players withdrew funds and began hoarding treasuries. The rest who own structured products were slaughtered. I would like to quote Gary Gorton again: “Imagine a firm that is levered 30:1, by borrowing in the repo market. If the haircut [5] doubles, or goes from zero to a positive amount, the required deleveraging is massive! Most investment banks were levered 30:1, equivalent to about a 3 per cent haircut. If the haircut rises to 6 per cent, at least half the assets will have to be sold. “Another sign of trouble is a ‘repo fail’. A ‘repo fail’ occurs when one side of the agreement fails to abide by the contract. [Fail to deliver the security under the repurchase agreement.] “Dealer banks would not accept collateral because they rightly believed that if they had to seize the collateral should the counter-party fail, then there would be no market in which to sell it. This was due to the absence of buyers because of the deleveraging. This led to an absence of prices for these securities. If the value cannot be determined because there is no market – no liquidity or there is the concern that if the asset is seized by the lender, it will not be saleable at all, then the dealer will not engage in repo. Repo dealers report that there was uncertainty about whether to believe the ratings on these structured products, and in a very fast moving environment, the response was to pull back from accepting anything structured. If no one would accept structured products for repo, then these bonds could not be traded – and then no one would want to accept them in repo transactions.” This change led to a sharp increase in the demand for government securities for repo transactions, which was compounded by significantly higher safe-haven demand for US Treasuries and the increased unwillingness to lend such securities in repo transactions. As the crisis unfolded, this combination resulted in US government collateral becoming extremely scarce. [6] I will now turn to the issue of the FED’s solvency. As has been observed, the Fed intervened aggressively to check the run on the repo market. Various measures were taken, but in my view the most dangerous was the widening of the collaterals which the Fed was willing to accept to secure funding of the players in the repo market. The Fed also intervened by lending a huge chunk of its US treasuries in exchange for junks to facilitate credit expansion. In the result, what happened was that the Fed’s present balance sheet of approximately $2 trillion is made up mostly of junk securities. The Fed is no different from banks in that confidence in the quality of its assets is critical and that if and when the market recovers, there is in fact a market for the junk assets that it took on to unravel the gridlock in the financial markets. By way of analogy, if your high street bank’s balance sheet is made up of junk, what would you do? There are just not enough assets to meet its liabilities. But of course, one can argue that the Fed is not your high street bank. It is the central bank of the mighty USA. It will always be able to “print money” or “digitalise” money and keep the markets going. But beware that the Federal Reserve Note is mere paper, fiat money which cannot be redeemed for anything tangible such as gold. And although it is stated boldly in the notes issued – “In God we trust” – you and I are not actually placing our trust in God when accepting the Federal Reserve Notes as “money”. When Joe Six-Packs realises that the Federal Reserve Note is not even secured by US treasuries and or the FED has real tangible assets, but its balance sheet is littered with junks and toxic waste, there will be a run on the Fed i.e. when Americans and foreigners no longer have faith in the Federal Reserve Notes as “money”. If confidence could vaporise in a second and cause a stampede in what was once considered solid security, the triple A rated bonds in the repo and money markets, the same confidence that is now reposed in the Federal Reserve Notes can likewise disappear into the memory hole. All these years, the con was maintained by the Fed that it was solid because it has on its balance sheet over $800 billion of US treasuries i.e. its notes “were so-called backed by these treasuries”. It could sell its treasuries in the repo market for cash and thereby control the money flows in the economy and vice versa. In their subconscious mind, Americans and stupid foreign central banks and their executives (brain-washed by the Chicago School of Economics) somehow believe in the infallibility of the Fed. Now it has been exposed that the Fed’s “assets” comprise of junk bonds and toxic wastes. The Emperor has no clothes! Paul Volcker, former Chairman of the Federal Reserve may have given the ultimate epitaph: “The bright new financial system – for all its talented participants, for all its rich rewards – has failed the test of the market place.” And it is any wonder that Professor Nouriel Roubini declared: “The process of socialising the private losses from this crisis has already moved many liabilities of the private sector onto the books of the sovereign. At some point a sovereign bank may crack, in which case the ability of the government to credibly commit to act as a backstop for the financial system – including deposit guarantees – could come unglued.” In my opinion, the Fed has already become “unglued”. Whatever guarantees given to secure the indebtedness of CitiGroup and others to prevent a run on these banks are useless. It is bankrupt! End Notes [1] There are two banking systems in existence today. The Traditional Banking System – i.e. High Street banks and the Shadow Banking System. But the players in both the systems overlap because, the major banks of the traditional system helped spawn the shadow banking system. In fact they are the key players in the use of the so-called “new financial products, the CDOs, CLOs, MBS” etc and which have now turned toxic – worthless, junk to be exact. [2] See my website archives: Roubini Warns of Sovereign Bank Failure – February 20, 2009 www.theage.com.au [3] See: Implications of repo markets for central banks, CGFS Publications No 10, March 1999. [4] Gary Gorton, Information, Liquidity, and the (Ongoing) Panic of 2007 prepared for the Jackson Hole Conference 2008 [5] “haircut” here refers to the rate payable for the cash loan or the margin. [6] Peter Hordahl and Martin R King, Developments in repo markets during the financial turmoil BIS Quarterly Review, December 2008 Matthias Chang is a prominent barrister, author and analyst of the New World Order based in Malaysia. His website: www.FutureFastForward.com

Matthias Chang is a frequent contributor to Global Research. Global Research Articles by Matthias Chang

http://www.globalresearch.ca/index.php?context=va&aid=12648

Ten Principles of Education for Slavery

1. A slave’s education is coercive
2. The slave is not told why he is being forced to be educated
3. A slave’s education keeps the slave dependent on the thoughts of others
4. A slave’s education keeps the slave weak
5. A Slave’s education prepares him to work for others instead of preparing him to work for himself
6. A slave’s education neglects the slave’s unique strengths and contributions, developing only what some other institution or group needs him for
7. A slave’s education is not oriented toward the honor of the slave but the glory of his master
8. A slave’s education is not under natural authority but is under the arbitrary authority of the self-appointed and self-validating
9. A slave’s education does not develop the higher virtues of wisdom and justice (for rather obvious reasons)
10. A slave’s education does not cultivate the qualities of a free person (virtue and honor and all that arises from them)

source: quidditycirce.wordpress.com

Colonisation redux: new agreements, old games

bilaterals.org and GRAIN
September 2007

“Colonial leopards rarely change their spots. They just stalk their prey in different ways.”
- Moana Jackson, Ngati Porou/Ngati Kahungunu, Maori lawyer, 1995

“FTAs and farmers cannot live under the same sky.”
- Choi Jae-Kwan, Korean Peasants League, July 2006

The comprehensiveness and range of many of today’s bilateral free trade and investment agreements (FTAs) is striking. Typically, they cover an expansive – and worrying – array of areas and issues, which multiply their impacts across societies and sectors and provoke wide-ranging resistance to them in many countries. The US signed its first bilateral FTA with Israel in 1985. The European Union (EU) has been forging soft “trade cooperation” deals since the formal end of its colonial rule at the turn of the 1960s, moving gradually into stronger FTAs since the 1990s, often following the footprints of the US. The same goes for Western European countries that are not part of the EU and which have been steadily harvesting their own FTAs since a first deal with Turkey in 1991. (1) Australia, Japan and other industrialised countries have been a bit slower to jump on the FTA train, although the 1983 Australia-New Zealand Closer Economic Relations Trade Agreement is an early example of a comprehensive FTA. But governments of the South have historically given more emphasis to forming regional blocs, (2) though in the 1980s several Latin American states penned a rash of small preferential trade deals among themselves. Bilateral investment treaties (BITs) started in 1959, but emerge from an even longer history of “commerce and amity” agreements going back to the 19th century.

For the Korean people’s movements, the introduction of IMF policies in South Korea in 1987, the nation’s entry into the OECD and WTO in the mid-1990s and the pressure for FTAs in the 2000s form one continuum of neoliberalisation wrecking havoc in their country, especially on farmers and workers. (Photo: Chamsaesang)

Roots of FTA pressure

While some may see the bewildering proliferation of bilateral FTAs and BITs throughout the world as a relatively new phenomenon, it has deep roots. These can be traced back to long before the creation of the World Bank and International Monetary Fund (IMF), not to mention international trade bodies like the World Trade Organisation (WTO) or its predecessor, the General Agreement on Tariffs and Trade (GATT). The origins of today’s FTA mania lie in a long history of colonial exploitation, capitalism and imperialism – just as many of today’s people’s movements against FTAs trace their own histories to previous generations of anti-colonial, anti-imperialist resistance and struggles for self-determination.

The predecessors of the first transnational corporations (TNCs) that now dominate national and global economies – and sharply influence the spread, scope and priorities of FTAs – brought together state and private capitalist interests, like the relationship between the British East India Company and the British Parliament and Crown, and the agreements stitched up by colonial powers and their companies with newly independent countries of the South.

The tight interweaving of state power, geopolitics and corporate capitalist exploitation is therefore nothing new. Opponents of the US-Dominican Republic-Central America Free Trade Agreement (CAFTA), for instance, remind us to look back in history to understand fully Washington’s economic and geopolitical interests in pushing FTAs on the countries of the Americas. In the 1823 Monroe Doctrine, the US declared the western hemisphere to be its sphere of influence. Any attempt on the part of European powers “to extend their system to any portion of this hemisphere” was deemed “dangerous to our peace and safety”. This was reinforced in 1904 with the Roosevelt Corollary, which held that the US had the right as a “civilised nation” to intervene in its southern neighbours’ affairs as “an international police power”. George W. Bush’s trade agenda, and Washington’s military aid to Colombia and Mexico to support US geopolitical and corporate interests, continue this imperialist tradition.

“We don’t want this annexation

No to CAFTA!”,

from the streets of

Costa Rica in 2007

The classic colonial state was structured for the exploitation and extraction of resources. More recently, neoliberal globalisation has forced countries into becoming sources of plunder for TNCs and facilitates the volatile and unencumbered flow of finance capital in various forms. At the heart of the strategy and tactics of FTA “negotiations” – especially North-South ones – lies a ruthless divide-and-rule game plan, struggles among powerful states and corporations (including those in rising powers such as South Africa, China, Brazil and India) over their “spheres of influence”, and a world view that commodifies nature, people and human relations for commercial exploitation and monopoly control. Alongside this we can see struggles and contradictions between contrasting forms of capitalist organisation, and new resource wars over energy, minerals and water, among other things. Over the last few years these processes have intensified a thousandfold.

Argentine political scientist Atilio Boron describes the current era as one “characterised, now even more than in the past, by the concentration of capital, the overwhelming predominance of monopolies, the increasingly important role played by financial capital, the export of capital and the division of the world into different spheres of influence. The acceleration of globalisation that took place in the final quarter of the last century, instead of weakening or dissolving the imperialist structures of the world economy, magnified the structural asymmetries that define the insertion of the different countries in it. While a handful of developed capitalist nations increased their capacity to control, at least partially, the productive processes at a global level, the financialisation of the international economy and the growing circulation of goods and services, the great majority of countries witnessed the growth of their external dependency and the widening of the gap that separated them from the centre.” (3)

Activists denounce the reality of free trade at the APEC Summit in Sydney, September 2007. The city was under intense security lockdown so that the business of FTA negotiations among the official delegates could carry on undisturbed. (Photo: Selwyn Manning)

Since the end of the Cold War, people around the world have been sold the idea that neoliberal capitalist models of “development” are the only game in town. Yet despite the seeming ascendancy of TNCs and the “triumph” of capitalism, all has not been plain sailing for those promoting neoliberalism. Internal tensions among and within political and economic elites, as well as external pressure from diverse and growing mass popular struggles against different faces of neoliberal globalisation, have forced its promoters on to the defensive. At the same time, there have been tensions between different forms of regionalism and globalism. During the often uncertain days of the Uruguay Round of GATT negotiations (1986-94) at the multilateral level, many governments pursued on the side regional initiatives such as the North American Free Trade Agreement (NAFTA) and Asia-Pacific Economic Cooperation (APEC). At that time, they were seen as the fall-back option, in case the Uruguay Round failed.

Attempts by proponents of neoliberal globalisation to downplay or deny the links between the devastating financial crisis that swept through Asia in 1997-98 and the imposition of economic liberalisation were met with growing scepticism. But, as a remedy, major financial institutions and governments prescribed to the countries most affected more of the same bitter medicine. In the context of growing resistance to neoliberalism, former WTO Director General Supachai Panitchpakdi even claimed that 9/11 was “a blessing in disguise” for the globalisers. (4) Indeed, it has been cynically used ever since as a cudgel with which to bully countries in the South and to impel the push of neoliberalism. As the WTO has lurched from one crisis of legitimacy and credibility to another, and with multilateral trade negotiations fast going nowhere, international summits have become breeding grounds for bilateral FTAs. The WTO’s official stance on the explosive growth of FTAs has changed from one of smug confidence and dismissal to pathetic desperation. The current Director General of the WTO, Pascal Lamy, insists: “I consider that a bit of bilateral pepper in multilateral sauce makes it more tasty. But as we all know, a plate of pepper is not that great a meal.” (5)

Patrick Cronin, senior vice-president of the Washington-based Center for Strategic and International Studies, picked a better analogy in 2004: “With the setback to WTO reform at Cancún, the (Bush) administration is now focused like a laser beam on regional and especially bilateral trade accords.” (6) Laser-guided liberalisation – i.e. bilateralism, through FTAs – allows global powers like the US and the EU to rein in selected countries and restrict the potential for allies to stand up to Western bullying and double standards at fora like the WTO. Through bilateral deals, these blocs have been able to target more precisely those policies or other government measures which they dislike, severely restricting the rights and capacities of governments to maintain sovereign economic, social and environmental policy frameworks.

Locking in and ratcheting up neoliberalism

FTAs are today a tool of choice to lock in and expand the discredited, socially and ecologically destructive model imposed on much of the world in the name of “development” by the World Bank, IMF and regional financial institutions. Structural adjustment programmes, meant to get countries on the right track, include privatising state-owned enterprises and services, slashing public spending, orienting economies towards export, increasing interest rates and taxes, and slashing subsidies on basic consumer items such as food, medicines and fuel. While this model has worked extremely well for transnational capital, it has been an abject failure for the majority of the world’s peoples. The so-called free-market model has led to increased inequalities between and within countries. The World Bank, IMF, Inter-American Development Bank and Asian Development Bank have for decades pushed “technical assistance” and loans to debtor countries in order to adjust them to full trade and investment liberalisation, with the World Bank dramatically increasing its funds to trade-related activities, particularly targeting least-developed countries, transition economies and those in the process of WTO accession. In reality it is aid for trade liberalisation.

(Image: corpwatch.org)

Similarly, bilateral official development assistance policies work towards the same goals. Trade and aid linkages have been used by donor governments as leverage to advance the general spread of neoliberalism and specific policy reforms via multilateral, regional and bilateral trade and investment agreements. For example, USAID is a key promoter of biotechnology in the Third World – its work goes hand in hand with US corporate agendas and Washington’s international trade priorities. It offers “technical assistance” to countries engaged in FTAs with the US. Legislative changes to Vietnam’s intellectual property rights (IPR) laws were made under the USAID-funded STAR-VIETNAM technical assistance project, which is supporting implementation of the bilateral trade agreement with the US. (7) Other governments have similar programmes for “trade capacity building assistance”, such as the Canadian International Development Agency’s trade-related technical assistance, and similar programmes of the Australian, European and New Zealand governments. Japan’s Ministry of Economy, Trade and Industry has also created FTA-related aid agreements relating to technical cooperation and personnel development in auto and steel sectors in Malaysia and Thailand.

Meanwhile, in many countries in the North, domestic economic reforms have often broadly mirrored the same neoliberal trends, with waves of privatisation, deregulation and liberalisation in the name of economic growth and competitiveness. For example, New Zealand, Australia and Canada, whose governments are all active players in FTAs, have promoted aggressive free trade policies internationally, while all, to differing degrees, have moved their own economies towards corporatised, privatised and deregulated models. As elsewhere, embracing “free trade” means deploying a package of reforms: minimal controls on big business; unrestricted foreign investment; unlimited export of profits; privatisation of state assets, utilities and services; full exposure of domestic markets to cheap imports; privately funded and owned infrastructure operating through deregulated markets; market-driven service sectors, including social services such as education, transport and healthcare; competitive (i.e. low cost, deunionised) and flexible (temporary, part-time and contract-based) labour markets; and free movement for foreign investors (while retaining strict controls on foreign workers and refugees). The ultimate goal is a hyper-extended neoliberal regime, on a global scale, locked in for ever, with full enforcement machinery.

Shopping around

Behind every FTA we can find the hands of corporate capitalists. As TNCs and other domestic companies in the process of transnationalisation (often with the support of national governments) have consolidated, restructured, diversified and looked for new markets and areas of profit over the past 50 years, their national lobbying and political leverage have grown, as have their demands for expanded and enforceable freedoms from any regulations that they object to. They – and their financially rewarded political allies – have been forum shopping. When unable to get what they have sought in one venue, they have moved on. Corporations have pushed for the acceptance of binding disciplines that redefine and/or drag areas of what have hitherto been seen as sovereign domestic policy areas – such as agriculture, services and intellectual property – into international trade rule-making through global agreements such as those administered by the WTO. Two examples – investment and intellectual property – illustrate how TNCs have gone from forum to forum in recent decades trying to get what they want, and how FTAs have become their latest weapon of choice.

Investment: In the 1960s, the Organisation for Economic Cooperation and Development (OECD) adopted two non-binding codes on investment liberalisation: the Code of Liberalisation of Capital Movements and the Code of Liberalisation of Current Invisible Operations. It relied on peer pressure for compliance. Then, during the GATT Uruguay Round, the US, the EU and Japan tried to go a step further, pushing for an enforceable investment agreement. But this met with opposition. Between 1995 and 1998 there were yet further attempts to create a binding Multilateral Agreement on Investment (MAI) at the OECD, which included measures similar to NAFTA’s Chapter 11. After the MAI proposal failed in 1998, due to both external opposition and internal disagreements among governments, renewed attempts to get an investment agreement at the WTO went nowhere. Many states – especially from the South – firmly opposed any resurrection of the MAI at the WTO. But industrial countries have been expanding investment liberalisation through bilateral FTAs and BITs. Bilaterals provide a step-by-step approach which can form a launch pad for more comprehensive multilateral agreements. Once countries are enmeshed in webs of bilateral investment treaties, it will be harder to resist an MAI-type agreement at the multilateral level if negotiations ever start there again in earnest.

FTA means death under patent for people with HIV/AIDS and other diseases said protestors at the XVI International AIDS Conference in Toronto in 2006 (Photo: ACT UP Paris)

Intellectual property: Ditto with IPR. In the 1970s, governments of the North got frustrated trying to push stronger intellectual property rules through the UN’s World Intellectual Property Organisation. Southern countries were alert to the dangers of strong monopoly regimes, thanks especially to policy guidance coming out of the UN Conference on Trade and Development (UNCTAD), and they used the one-country one-vote mechanism of the UN to block pressure from the North, which was seeking stronger rents from intellectual property due to the changing nature of corporate assets in their countries. In the 1980s, they went to the GATT and put intellectual property on the agenda of the Uruguay Round. The proposed agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was presented as a tool to help TNCs by stopping the cross-border flow of counterfeit brand-name clothing, music and videos. (8) But it set the stage for aggressively broadening patent rights on microorganisms, crop seeds and life-saving medicines. At that time, most nations did not allow patents on food, pharmaceuticals or other products considered as basic to human needs. The US Intellectual Property Committee – a coalition of 13 large US corporations, including DuPont, Pfizer, Bristol-Myers, and Merck – worked with US trade representatives to draft language that would standardise global IPR laws along US lines, and make them enforceable under what would become the WTO. Such corporate activism greatly shaped TRIPS: a full 96 of the 111-strong US delegation negotiating the text during the Uruguay Round came from the private sector. (9)

TRIPS thus became the first binding international agreement to permit corporate monopolies on life forms. But in a compromise with the EU, the US did not get all it wanted. Instead of requiring patents over plant varieties – the seeds farmers sow – the agreement left it open for countries to opt for patents or some other form of plant variety ownership. Since then, the US, the EU and Japan have been working hard to raise this new “minimum standard” up the next notch through their bilateral FTAs. The US imposes patents on plants and animals in its FTAs, while the EU and Japan, for the benefit of their biotech companies, push the UPOV Convention, a set of patent-like rules to prevent farmers from saving seeds.

With drugs, a similar and even more sinister scenario has been playing out. At the WTO, the pharmaceutical lobby got only so much; it has been especially irked by a battle over the interpretation of the conditions attached to compulsory licensing and parallel importation of patented drugs. They have thus aggressively turned to bilateral FTAs as a tool to impose far stricter rules preventing the manufacture and trade of generics. Whether in seeds or in medicines, the idea is to stop competition and rake in more profits from longer and stricter monopolies – no matter that we’re talking of food and health. FTAs are the easiest and most effective way for corporations to get what they want right now.

(1) We’re referring to the European Free Trade Association (EFTA): Switzerland, Liechtenstein, Norway and Iceland.

(2) Many people might recognise something in the alphabet soup: Mercosur, ASEAN, CAN, SADC, COMESA, SAARC, UEMOA, GCC and so on.

(3) Atilio Boron, “Empire and imperialism: A critical reading of Michael Hardt and Antonio Negri”, Zed Books, London, pp. 3-4

(4) “Supachai: Tragedy a blessing in disguise”, Bangkok Post, 22 November 2001

(5) WTO etraining session, 29 March 2007, https://etraining.wto.org/chat/archive/29mar2007.htm

(6) Daily Yomiuri, Tokyo, 1 January 2004

(7) See US-Vietnam Trade Council website. http://www.usvtc.org/trade/ipr/STAR_IPR_28apr05.pdf

(8) TRIPS also covers copyrights and related performance rights, layouts of integrated circuits, geographical indicators (as for wines and cheeses), trademarks and industrial designs.

(9) Rob Weissman, “Patent Plunder: TRIPping the Third World”, Multinational Monitor, November 1990; see also Aziz Choudry, “Biotechnology, Intellectual Property Rights and the WTO” in Brian Tokar (ed.), Gene Traders: Biotechnology, World Trade and the Globalization of Hunger, Toward Freedom, Burlington, VT, 2004.

www.fightingftas.org