Behind the mobilization against the Free Trade Area of the Americas (FTAA) in April is a growing popular awareness that free trade is not really about trade. It’s about expanding the rights of corporations and placing corporate profits before the interests of working people. That much is clear. It’s also clear that the only real freedom under free trade is the freedom of corporations, especially transnational corporations. If there was ever any doubt about this, then the experience of working people under the WTO and NAFTA over the past six to seven years has hammered the point home.

There’s also little doubt about what this kind of freedom means for global inequalities between the North and South. The decision by the WTO to award the Canadian government the ‘right’ to impose $2 billion in trade sanctions on Brazil illustrates this perfectly. Here we see an extension of the corporate freedom that underlies free trade: the freedom of developed countries in the North to threaten and punish poorer nations in the South with sanctions. Despite all the talk of ‘opening up’ and ‘level-playing fields’, the logic of free trade regimes like the WTO is that certain members are given the right to impose economic sanctions on others. What this suggests is that when governments in the South change their policies and laws to fit these global free trade rules, they’re not simply doing it because they support the free market ideology, but because they fear the consequences. It’s coercion not cooperation that underpins free trade regimes like the WTO, NAFTA and the proposed FTAA.

The effectiveness of this coercion shouldn’t be underestimated. Unlike the US and EU, countries in the South can’t simply shrug off the threat of trade sanctions. For more than two decades they’ve been locked into export-oriented growth by the World Bank and IMF’s structural adjustment programs, as well as the burden of debt repayment. Added to this is the fact that increased dependence on TNCs has devastated local alternatives to export-driven growth. The result is that countries in the South are compelled to be part of the WTO, only to remain vulnerable to the constant threat of sanctions by the WTO’s wealthier members. It’s precisely this kind of global inequality that the Canadian government’s WTO ‘victory’ perpetuates.

What began four years ago as a WTO dispute over aircraft subsidies, ended in December last year with the Canadian government winning the right to impose sanctions on Brazilian imports amounting to $344.2 million every year for the next six years. This was the largest compensation package ever granted by the WTO, and is equal to almost half the value of Brazilian exports to Canada. It was bad enough that the Canadian government took the fight to the WTO and requested the right to impose these sanctions. It’s even more damning that the government originally requested the right to impose a much higher level of sanctions, at $700 million a year for the next seven years.

Canada’s shameful victory in this WTO dispute reveals two other problems that are critical to understanding the logic of free trade regimes. First, despite the fact that the Canadian government used subsidies to actively build a domestic aerospace industry, and continues to subsides it today, it requested that the WTO ban the Brazilian government’s attempts to pursue a similar national development strategy.

This double-standard is embodied in WTO agreements themselves, where governments of less developed countries are denied the right to implement the very same national industrial policies that developed countries used in the past, or are still using. In other words, now that a few wealthier countries are at the top of the development hierarchy, the WTO regime prevents other countries from using similar industrial and trade policies, effectively locking them into underdevelopment.

The second problem this case reveals is the way in which the WTO links different products in a trade dispute. Although this began as a dispute over the aircraft industry, the Canadian government now has the right to impose higher tariffs on Brazilian sugar, clothing, footwear or any other import. Even before the WTO granted the Canadian government the right to impose sanctions, the Department of Foreign Affairs and International Trade issued a “notice of intention to retaliate