TRADE: U.S. Rolling Out Arguments for Americas Free Trade Talks

By Emad Mekay Reprint | | Print |

Analysis - By Emad Mekay

WASHINGTON, Oct 29 2002 (IPS) - When U.S. officials head to Quito on Friday to talk free trade with 34 trade ministers from the western hemisphere, they will face many obstacles. But Washington has already lined up an array of persuasive weapons.

When U.S. officials head to Quito on Friday to talk free trade with 34 trade ministers from the western hemisphere, they will face many obstacles. But Washington has already lined up an array of persuasive weapons.

Among the most important marketing pitches the trade-hungry Bush administration is using to peddle the proposed Free Trade Area of the Americas (FTAA) to mistrustful Latin Americans is that the deal could be the ultimate saviour for their stuttering economies. U.S. officials are not short of examples of how the FTAA’s parent, the controversial North American Free Trade Agreement (NAFTA) between the United States, Mexico and Canada, did wonders for the only developing economy in the treaty.

U.S. Trade Representative (USTR) Robert Zoellick has again and again said that Latin American countries should look at Mexico as a model of a nation harvesting the fruits of free trade.

U.S. officials say that because of NAFTA, Mexico was able to borrow again in international financial markets only seven months after the financial shock of 1994-95, when it had taken seven years to recover after the 1982 peso crisis.

They and Mexican officials say that more than one-half of the 3.5 million new jobs created in Mexico since 1995 have their roots in NAFTA, which they also describe as a major force in the political modernisation underway now in the country.

”For my part, I believe we should not rest until people from Bogota to Buenos Aries to Managua have come to experience the same opportunities that the citizens of Miami enjoy today,” Zoellick said during his most recent speech on the issue, in Miami on Oct. 14.

The Bush administration is going to the FTAA armed with the newly acquired Trade Promotion Authority, known as fast track, which could add momentum to the U.S. goals of completing the new World Trade Organization (WTO) global trade talks and the FTAA by 2005.

Under fast track, the U.S. congress will not be able to change or have a prolonged debate on trade agreements reached by executive officials.

Latin Americans also face a barrage of ”technical advice” to open up their economies to agriculture, manufactured goods, and services, coming from the International Monetary Fund, the World Bank, the Inter-American Development Bank, the U.S. Agency for International Development, and the U.S. Trade and Development Agency.

With China, the fourth largest trading nation in the world, now in the WTO, Latin America is being pressed to ally with the U.S. economy or ”face stronger global competition”.

To overcome misgivings about the United States’ own protectionist policies at home – among the main stumbling blocks to the talks – Washington is dangling a proposal to eliminate agricultural subsidies by billions of dollars and to cut tariffs by 75 percent, but only if others, like Japan and the European Union, do the same.

With so many tricks up his sleeve, Zoellick declared that he is ”confident” the Quito round will net ”the establishment of firm schedules for the negotiations to open markets in each of the 34” countries participating in the FTAA talks, over the ”next months, not years”.

The world’s only superpower says it will use the Quito meetings to formerly establish the nine negotiating groups and three related committees for the next step of the FTAA talks.

During the November meeting, U.S. officials will also propose that the next FTAA ministerial meeting, in 2003, be held in the United States.

Washington has been pushing for conclusion of the talks by the January 2005 target date despite strong opposition from civil society groups, some economists and some government leaders.

By reducing and then eliminating hemispheric trade barriers, the FTAA could provide substantial and growing foreign markets for U.S. goods and services.

With more than 800 million people throughout the Western Hemisphere, the FTAA will be the largest free-trade area in the world – a goldmine for major U.S. and Canadian corporations.

In the 1990s, U.S. exports to Latin America grew faster than exports to any other region, according to the USTR’s office.

But U.S. officials still worry that their companies are losing businesses because of market access barriers in the region, including import taxes that are often five times higher than U.S. taxes.

They say the FTAA would work to remove barriers in the fields of agriculture, industrial goods, services, investment and government procurement.

The Quito talks will include much more: intellectual property; subsidies, dumping and countervailing duties; competition policy and dispute settlement; e-commerce; smaller economies; and working with civil society.

But the United States, which will co-chair next month’s meeting with Brazil, faces many challenges that could jeopardise its FTAA timetable.

Deadlocks already exist over issues related to agricultural subsidies and trade remedies in ongoing WTO talks. Many Latin Americans protest that the FTAA does not address U.S. protectionism at all.

Even worse for the United States, Brazil, South America’s largest economy, has just elected a leftist president, Luiz Inacio Lula da Silva.

Lula, whose country’s exports were particularly stung by the U.S. farm bill and recent steel tariffs, has previously described the FTAA as an ”annexation” of Latin American economies to that of the United States

On Monday, though, Lula said his country will take part in the FTAA talks but his priority remained strengthening the Mercosur, a trade deal between the South American heavyweight and Argentina, Paraguay and Uruguay.

Zoellick has previously warned that other countries are waiting in the wings if Brazil does not want in on the FTAA.

”It’s Brazil’s decision,” he said, adding, ”the United States has no shortage of countries that want to do free trade with us.”

Venezuela’s President Hugo Chavez has also expressed cynicism and questioned the benefits of the U.S.-backed FTAA for Latin America’s cashed-strapped countries.

In a letter this month to the U.S. State Department Journal, Brazil’s ambassador in Washington, Rubens Barbosa, argued that the FTAA should first help reduce the ”disparities that now exist in and among our countries, as well as throughout our region”.

FTAA benefits ”will not emerge automatically or as an inevitable corollary of increased trade liberalisation, but will require a balanced and equitable process of give and take”, the Brazilian official wrote.

And though it is clear what the United States may take, it is not obvious what it could give.