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Free
Trade and American Leadership in the
Western Hemisphere
Luisa
Angrisani
Despite the continued preoccupation of the
United
States
with the
Middle
East
, some attention is being turned back to
Latin
America
. In a somewhat surprising move, the Bush
Administration announced it will sign the U.S.-Chile
free trade agreement on June 6th, despite
previous statements to the contrary.
(Earlier, the
United
States
had declared it would not sign
the treaty as retribution for
Chile
’s
decision to not support the American war in
Iraq
.)
Though negotiations for the bilateral free-trade accord
were completed at the end of 2002, the
United
States
reneged on its promise to sign
the treaty when Chilean president Ricardo Lagos
announced his country was not in favor of a U.S.-led
intervention in
Iraq
.
Now after six months of delays and disparaging
comments, the
U.S.
has consented, and the agreement will be signed—but
not in
Washington
DC
and not by President Bush. Instead,
U.S.
trade representative Robert Zoellick will sign the
agreement in
Miami
,
with little fanfare.
So why go to the trouble of signing the agreement
at all if not to mend the damaged relationship with
Chile
?
Because the spirit of reconciliation has little
to do with the accord. Rather the
United
States
is coming to realize that its
absence has left a vacuum that others want to fill—and
unless some moves are made quickly,
America
's
leadership role in the region will be greatly
diminished.
A major step in cementing
U.S.
influence in
Latin America
was the decision to create a hemispheric free trade
area, building on the success of NAFTA. (1)
At the
Summit
of the
Americas
held in
Quebec
in 2001, 34 nations—spanning from
Canada
in the north to
Argentina
and
Chile
in the south—agreed to create the Free Trade Area of
the Americas (FTAA), setting January 2005 as the
deadline for finalizing negotiations.
Heralded as an unprecedented agreement, the FTAA
was to be the answer to the region’s economic woes and
was strongly pushed by the
United States
. The free
movement of goods, technology and labor was proposed as
the solution to the region’s increasing levels of
poverty, unemployment and economic stagnation. But in
the post September 11th climate,
U.S.
attention was diverted, and FTAA plans were left by the
wayside. The FTAA is now far from
becoming a reality and recent developments have
highlighted the deep divisions that exist within the
region on this front. In
separate attempts to carve out their spheres of
influence,
Mexico
and
Brazil
have negotiated or strengthened agreements with their
neighbors and have each secured a loyal following.
The most problematic of these, at least in the eyes of the
United States
,
is
Brazil
.
After a tense electoral period in December 2002,
Luiz Inácio Lula da Silva, a charismatic and popular
leader, set out on a regional trip to rally support for
increased economic integration.
His whistle-stop tour included visiting Mercosur
partners
Argentina
,
Uruguay
and
Paraguay
and several members of the Andean Community (made up of
Bolivia
,
Colombia
,
Ecuador
,
Peru
and
Venezuela
)
as well as dropping by for a chat with Mr. Lagos in
Chile
.
Lula’s oft-repeated mantra of a stronger,
united
South America
has sparked concern in
the north as he has, somewhat conveniently, left
Mexico
and the U.S out of the equation.
Most recently, Lula’s efforts to campaign for a free
trade area that doesn’t include
North America
have centered on convincing his neighbors of the
inequality inherent in
U.S.
trade policies. He
has on several occasions voiced his opposition to
U.S.
policies that are detrimental to
South America
;
namely,
US
farm subsidies and the early 2002 imposition of steel
tariffs. Despite
U.S.
promises that these issues will be addressed in the
context of the FTAA, Lula is not convinced and neither
are the presidents of
Argentina
,
Colombia
,
Ecuador
and
Venezuela
.
Instead, in a picture-perfect photo opportunity,
these presidents all announced their support for
stronger regional ties at the inauguration of Argentine
president, Néstor Kirchner, on May 25th.
Attended by such notorious personalities as Fidel
Castro of
Cuba
and Hugo Chávez of
Venezuela
,
the Argentine inauguration forced the
US
to take notice of the region once again.
In addition to signing the Chile-US trade agreement, Mr.
Zoellick traveled to
Brazil
for two days in late May to discuss
Brazil
’s
intentions with regard to the FTAA.
Mr. Zoellick left
Brazil
disillusioned—no commitments were made and Lula once
again stated his displeasure with
U.S.
agricultural policies.
The 2002 Farm Bill is the main sticking point
when it comes to U.S.-Brazil trade talks, yet it is
unlikely that Brazilian requests to dismantle the Farm
Bill, that provides approximately $2 billion in
subsidies to U.S. farmers, will be heard.
The agricultural lobby in the
United
States
is very strong, and the Bush
Administration will not likely limit subsidies that have
already been approved by Congress. (2)
In addition to
Brazil
,
Mexico
has emerged as another regional leader willing to take
the place of the
United
States
in negotiating trade
talks—however, in a much more limited scope.
Originally one of the main proponents of the FTAA,
Mexico
has been forced to build its own coalition after falling
out of favor with the
United
States
.
Turning to its much-neglected neighbors to the
south,
Mexico
is negotiating a free-trade agreement with
Central
America
. President
Vicente Fox has campaigned hard to gather a following
for the Plan Puebla-Panama, a free-trade area that would
unite the region from
Mexico
in the north to
Panama
in the south. However,
following Mr. Fox’s announcement that he would not
support a U.S.-led intervention in
Iraq
,
things have gotten harder for
Mexico
and—in terms of negotiating trade treaties—
Mexico
has lost some if its bargaining power. No longer viewed
as the bridge to the
U.S.
,
a trade agreement with
Mexico
is not as critical as it was just a few months ago. As a
result, the Central American nations—in an attempt to
hedge their bets—have also begun negotiations for a
free-trade agreement with the
United
States
.
Latin American leaders have accepted that the positive
effects of free trade outweigh the negative.
However, they are aware that they cannot depend
on the
U.S.
to take the lead in these matters.
As the possibility of non-U.S.-centered regional
trade areas become more of a reality, the
U.S.
will have to re-engage in talks or risk being left out
of the loop. These
initial steps will have to be followed by more concrete
movements if the
U.S.
is to revitalize talks for the FTAA.
Addressing regional concerns about
U.S.
subsidies and tariffs would be a step in the right
direction.
(1)
Ambassador
Abelardo Valdez discussed the FTAA for the
October 30, 2002
issue of In the National Interest (http://www.inthenationalinterest.com/Articles/Vol1Issue8/Vol1Issue8Valdez.html
)
(2)
C.
Ford Runge writes on the Farm Bill for the Summer 2003
issue of The National Interest (http://www.nationalinterest.org)
Luisa
Angrisani is the regional editor (
Americas
) for The Economist Intelligence Unit.
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