TRADE-LATAM: FTAA Just One Piece in US Global Chess Game

By Estrella Gutiérrez Reprint | | Print |

Estrella Gutierrez

CARACAS, Aug 31 1998 (IPS) - For the United States, the creation of a Free Trade Area of the Americas (FTAA) is only one piece in its global chess game aimed at mowing down barriers to its exports.

While formal negotiations toward an FTAA kicked off Monday in Miami, the Latin American Economic System (SELA) released a study at its Caracas headquarters that calls the bluff on Washington’s rhetoric that the project constitutes the “cornerstone” of the new world order.

The report, “Outlooks for Latin American and Caribbean Nations in the FTAA”, maintains that the creation of a free trade zone stretching from Alaska to Tierra del Fuego is not only just one of Washington’s many strategies, but is also one of the touchiest ventures for U.S. citizens.

In the eyes of the U.S. population, the North American Free Trade Agreement (NAFTA) – through which barriers to trade with Canada and Mexico have been gradually lifted since 1994 – immediately brought a high trade deficit with Mexico.

The report’s author, U.S. academician Craig Van Grasstek, also points to a generalised hypersensitivity in the United States with respect to a perceived negative assymetry in trade relations with the area south of the Rio Grande.

It is against that backdrop that the complex negotiations among all nations of the Americas – with the exception of Cuba -got underway Monday in the U.S. city of Miami, Florida, after the talks were formally launched at the second Summit of the Americas held in April in Chile.

In its latest report SELA, which groups 27 of the 34 countries participating in the FTAA negotiations, knocks down several truisms regarding trade with Latin America nurtured by the U.S. government or other powers-that-be or lobbying groups.

The first argument is that commercial ties between North and South America have never been closer, when in fact trade between the United States and Latin America has only just rebounded to its 1970s levels, after plunging as a result of the 1980s debt crisis.

In 1950, the region bought 27.9 percent of U.S. exports and was the source of 34.1 percent of its imports. Today, Latin America absorbs 19.5 percent of U.S. exports and is the source of 15 percent of its imports – close to the 1970 level, when the region purchased 15.1 percent of all U.S. exports and provided 14.6 percent of its imports.

Nonetheless, U.S. citizens believe their country is being “invaded” by products from Latin America and the Caribbean. That is largely because the implementation of NAFTA coincided with a heavy recession in Mexico, which brought demand there crashing down. And when Mexico got back on its feet, it maintained a trade surplus with the United States.

The United States enjoyed a 5.4 billion dollar surplus with Mexico in 1992, which turned into a 15.8 billion dollar deficit in 1995, 17.5 billion in 1996 and 15.5 billion in 1997.

Although the U.S. trade deficit with Latin America and the Caribbean as a whole amounted to 16.2 billion dollars in 1997, that is due to oil imports from Mexico and Venezuela, the report points out. If it were not for that, Washington would enjoy a solid surplus, such as its 6.3 and 3.6 billion dollar trade surpluses with Brazil and Argentina, respectively.

Another false axiom fostered by the Bill Clinton administration is that it puts absolute top priority on the FTAA talks. The truth, says the report, is that Washington is engaged in or preparing for 12 major negotiation processes and a number of overlapping smaller initiatives.

Several Latin American and Caribbean nations are involved one way or another in six of those projects, while the region is totally absent from four.

Thus Washington sees the FTAA as one more dish on its “menu of viable political options.” And if U.S. negotiators conclude that they can work a certain problem out better on another bilateral or multilateral front, they will opt for that possibility, according to SELA.

When the talks were launched in April, it was decided that the FTAA would be agreed on by all 34 countries, all of which would be involved in each accord, even though the negotiations would be carried out by separate working groups.

But that “global package,” to go into effect seven years from now, is not something to which the United States will feel bound. And meanwhile, it will be working on fast, concrete accords on sectors of special interest, like electronics, argues SELA.

Moreover, although it failed in its bid to get them formally included in the talks, the United States will continue to insist on discussing issues like environmental and labour norms, a new form of U.S. protectionism.

Those aspects are part of a new U.S. strategy, which has transformed trade questions into a tool for purely political objectives this decade. Washington has used an array of sanctions and other formulas to impose its viewpoints on democracy, corruption, civil society, drug trafficking and even birth control.

In SELA’s view, this new commercial-political equation will also colour the FTAA negotiations.

But just how that will occur depends on Clinton’s difficulties in obtaining “fast-track” negotiating authority from Congress, which would grant him greater political weight on his numerous negotiating fronts.

SELA points out that Clinton is not likely to gain “fast- track” – which forces lawmakers to hand down a simple yes-or-no vote, with no amendments, within 90 days of submission of trade agreements negotiated by the executive branch – unless the Republican Party’s current hold on Congress is turned around in the November elections.