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Last Updated: Monday, 16 February, 2004, 13:49 GMT
Storm brews over US trade policies

In the fourth of a six-part series entitled Age of Empire, the BBC's Jonathan Marcus looks at how global anger is growing over aggressive US trade policies.

Mike Haverty has the sort of job most small boys dream of.

He is president of his own railway.

Seated behind a huge mahogany desk, surrounded by models and other memorabilia, Mr Haverty comes across as a professional railwayman of the old school.

He has managed to turn the Kansas City Southern railroad from a failing regional line with limited horizons into a major transcontinental route.

The secret has been his expansion into Mexico.

In 1995 the US, Canada and Mexico signed the Nafta, or North American Free Trade Agreement.

This swept away many trade barrier and tariffs between the three countries.

'Nafta Rail'

Mr Haverty knew that US manufacturing jobs would move south towards Mexico.

The bottom line is that there is no US commitment to free trade
Joseph Stiglitz, Economist
So he bought into TFM - the railway running from Laredo on Mexico's border with Texas to Mexico City.

Kansas City Southern has benefited significantly from the increased trade that resulted from Nafta.

Now, Mike Haverty wants to bring Kansas City Southern, TFM, and the small railroad that links them into a single holding company dubbed "Nafta Rail".

Already, one of Kansas City Southern's giant freight locomotives has "Nafta" painted in large red letters on its side.

Paper-recycling plant, Mexico
This paper recycling plant has benefited from Nafta

Nafta may have been good for Kansas City Southern but, following the rail lines south, we found a much more mixed picture.

At Smurfit Carton and Paper - a US-owned company which manufactures recycled packaging materials - Nafta had provided some limited benefits, although managers told me that they hoped for much more growth in their business in the longer term.

However, in the Mexican countryside, Nafta appears to have created a disaster, a "true harvest of poverty" as Enrique Krauze, commentator and editor of the review Lettres Libres, told me.

He saw some benefits - Nafta had helped to open up the economy which, in turn, helped with the liberalisation of Mexican politics.

In terms of Mexican democracy, he says, Nafta was a plus.

Mexico's crisis

But it came at a terrible price.

That was made clear when I travelled out of Mexico City to a small farm at San Miguel del Pignone.

The setting was idyllic; crisp air, bright sunshine and snow-capped mountains in the distance.

Mexican farmer
Farmers have been hit hard

But all around was grinding poverty.

Local farmer Francisco Castro Rodriguez told me that Mexican agriculture was in deep crisis.

"The Nafta agreement was made behind our backs", he told me.

"We knew very little about it".

All of Mexican agriculture's problems cannot be put at Nafta's door.

But the promotion of free trade has been the centre-piece of the trading policy of successive US administrations.

No 'equal terms'?

Many of the people I spoke to argued that, not only does the US have too great a hand in framing international trading rules, it also ensures that its own producers are somehow insulated from the tough "free trade medicine" that it recommends for others.

Big US agro-business is intent on spreading its products around the world, with the simple mantra of 'what is good for the US consumer is good for the rest of us'
Nobel-prize wining economist Joseph Stiglitz characterised this as "the prevailing hypocrisy" in Washington.

He told me that the US " talked the free trade rhetoric" but what they were really saying, even under the Clinton administration, was that "trade was good but imports were bad".

Joseph Stiglitz was one of President Clinton's chief economic advisers.

"The bottom line," he says, "is that there is no US commitment to free trade."

"It is really a commitment to getting other countries to give access to American producers to their markets and the US reciprocates when it is convenient."

Mexican farmers complained about the greater resources and technology available to their US counterparts.

Their view is that they could not compete on equal terms - certainly not against the effective subsidies that US farmers still obtain, despite Nafta.

EU battle

The US is clearly seen by many as the villain of the piece.

The trading rules, they say, are unfair.

Big US agro-business is intent on spreading its products around the world, with the simple mantra of "what is good for the US consumer is good for the rest of us as well."

Field of corn
The EU distrusts GM crops

But when I met Bill Wylie on his small farm in Kansas, he did not look much like a villain.

He grows genetically-modified, or GM, soya. It is much more cost-effective to produce, requiring much less work per acre.

Soya prices depend upon exports.

But the European Union is sceptical about GM crops and is trying to keep such products out of the EU as far as it can.

A major trade row between Europe and the US is brewing.

To the European consumer, it is a battle against the giant US bio-technology companies.

But Bill Wylie is just a small producer trying to make a living.

The Kansas Soya Bean farmers' spokesman, Kenlon Johannes, told me that in his view it was simply a matter of education - Europeans needed to understand that GM products were safe.

Yes, says Bill Wylie, he would be prepared to go back to more traditional crops.

But farmers would need some help - financial help - to do this.


The Age of Empire series is broadcast on Mondays at 09:05GMT on BBC World Service Radio.

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