What of FTAA, Mr Obama?

Initial talks had been suspended by former US President, George W Bush, at a crucial moment when Port-of-Spain, with the full support of this country’s fellow Member States of the Caribbean Community of Nations (Caricom) and some Latin American countries had been the leading contender for the headquarters of the FTAA. Port-of-Spain had been comfortably ahead of all other cities in the race, including USA’s Miami and Atlanta, and appeared all set to be selected when the George W Bush Administration had discussions on the FTAA deferred.

While I stated earlier that Prime Minister Manning should raise the issue of resumption of FTAA negotiations with President Obama at the forthcoming Summit of the Americas, actually this process should have taken place somewhat in advance of Friday’s (April 17) scheduled opening of the Summit.

On another note, Prime Minister Manning should have sought and held discussions with Caricom and Latin American Heads of Government on the formal adopting of the US currency — dollarisation — as the currency of the Americas. There is a need — practical and sensible — to mobilise support in the Americas for this. Benjamin Cohen, an acknowledged authority on the “globalisation of finance” has noted in his chapter “Monetary Governance in a Globalised World” in the work “International Political Economy: State market Relations in a Changing Global Order” that “the idea of a formal dollarisation has aroused widespread interest, particularly in Latin America, since Argentina’s former President Carolos Menem, spoke out publicly in its favour in early 1999.” Today, despite a hiccup, Argentina remains interested. Already, two Latin American countries, as Cohen has pointed out —Ecuador and El Salvador — have “formally dollarised. In the meantime, Trinidad and Tobago’s currency is pegged to the US dollar. But I have strayed.

Admittedly, with discussions on the establishment of the FTAA there will be the need for limits to be placed on “free” access of defined products of, say, the USA which, because they are clear beneficiaries of subsidies from the US Government can be sold at far less than similar goods produced, for example, in Brazil or Uruguay or Caricom Member States.

This problem of subsidised products exists in the North American Free Trade Area (NAFTA) and the European Union (EU) and is dealt with in each of the two free trade areas by special provisions. What I am advancing is that President Obama, should the FTAA become a reality, should allow for special tariff protection for goods which are today negatively affected by US Government subsidies. Let us be realistic; small economies such as Trinidad and Tobago’s cannot compete, certainly not on equal terms, with heavily subsidised products of US owned corporations — manufactures or agricultural produce — whether these corporations are operating within or without the US. Bananas are an example.

Except there are built-in protective provisions in the rules and regulations of the FTAA it would be highly unreasonable for any member country, when the FTAA is created, to believe that it would enjoy equality of status with the US in the FTAA, beyond that of equality of voting on issues. In turn, although Trinidad and Tobago will have an increase in exports and, ipso facto, revenue with the creation of the FTAA it may, except there are built-in protective clauses, be exposed to an even greater than anticipated increase in imports.

Meanwhile, the Mexican economic crisis with the massive 40 percent devaluing of the Mexican peso, inter alia, on December 20, 1994, mere months after it joined together with the United States and Canada to form NAFTA, is a powerful argument for precautionary measures to be in place. Had it not been for former US President Bill Clinton’s timely international aid package for Mexico, introduced on January 31 of the following year, Mexico’s economic woes would have impacted heavily on even nations far beyond its borders.

An article published in the February 13, 1995 issue of the internationally respected Business Week would describe President Clinton’s international aid package for Mexico as “financial operation Desert Storm”. Understandably, the Mexican experience was an extreme situation, but one which can, nonetheless, recur.