Free Trade and American Leadership in the
Western Hemisphere
June 4, 2003
By 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.
|