Trade agreement stalled

MAR DEL PLATA, Argentina: A two-day summit meeting of leaders of 34 Western Hemisphere nations attended by US president George W Bush was drawing to a close here yesterday without a clear agreement on when and how to resume stalled negotiations aimed at achieving a hemispherewide free trade agreement. Bush had hoped to persuade his counterparts from Latin America and the Caribbean to deliver a resounding endorsement of the plan, known as the Free Trade Area of the Americas (FTAA). But suspicions of American intentions prevailed in the end, and the final communiqu? seemed likely to fall short of that ambitious goal.

American presidents of each party have long pushed for a hemispheric free trade zone. Ronald Reagan talked of a single market extending from Alaska to Tierra del Fuego; Bill Clinton formally broached the idea at the First Summit of the Americas in Miami in 1994. A FTAA would be a bloc even larger than the European Union, though without its free flow of labour and political integration. Benefits for the United States as the dominant economic power in the hemisphere are obvious: with the removal of tariffs and other barriers that inhibit entry of American goods and services, exports to the region would boom. But momentum has stalled, partly because the United States and Latin America are awaiting the outcome of trade talks at the Doha Round of the World Trade Organisation, which will establish certain global rules any regional accord must respect.

So the Bush administration has turned to smaller bilateral and regional agreements, like the Central American Free Trade Area, but came to the summit hoping to get a commitment to resuming negotiations early next year. “The reason why trade is so vital is because, particularly when addressing poverty, grants and loans pale in comparison to the amount of good that can be done as commerce develops at all levels of government, at all levels of society,” Bush told a group of reporters from Latin American publications this week. But Latin America has never spoken with one voice on free trade. Many layers of doubt and dissent are on display here, and some may have been worsened by Washington’s insistence on an agreement. On the left are those, led by Venezuela’s fiery, populist president, Hugo Ch?vez, who oppose free trade in any form. Ch?vez calls the FTAA “an annexationist plan” that would stifle or destroy local industry, roll back social safety nets and labour protections, and permanently extend American political domination of the region to the economic realm.”

“We have to bury FTAA” because it is the latest manifestation of “an old project of the imperial eagle that from the beginning has wanted to sink its claws” into Latin America, Ch?vez said Friday at a rally in Argentina of 25,000 people, who chanted anti-Bush and anti-FTAA. “It is part of the capitalist model, directed from Washington, that has beaten down our peoples for so long.” In contrast, Brazil and Argentina, the leaders of the Mercosur bloc, the third-largest trading group in the world, do not oppose the concept of free trade, only Washington’s version. The Mercosur group, which includes Paraguay and Uruguay, was founded in 1991 to eliminate trade barriers among its members, but also aims to achieve political integration. It covers an area with a population of nearly 250 million and produces more than $1 trillion annually in goods and services,  As large exporters of foodstuffs as diverse as soybeans, meat, sugar and honey, Mercosur, sometimes called the South American Common Market, wants the Bush administration to end billions in subsidies to American agriculture, in return for Latin American concessions on intellectual property rights, financial regulation and market access.

“We are here neither to bury FTAA nor to resuscitate it,” but to see “what are the advantages,” Brazil’s foreign minister, Celso Amorim, said. “We have no prejudice against trade integration, but we don’t want to put something on paper just because it looks nice.” Some other countries with dynamic economies that already have free trade pacts with the United States, like Mexico and Chile, have been trying to ease their neighbours’ worries, by emphasising the favourable effects of liberalised trade on exports, investment and employment. On Friday, president Vicente Fox of Mexico criticised Argentina’s president, N?stor Kirchner, the host of the gathering, saying that he “must do more to save this conference,” and went so far as suggest creation of a regional trade accord with 29 members instead of 34, leaving out Mercosur and Venezuela.

“Anyone who blocks an accord like this is certainly looking out for their own interests and not the interests of others,” Fox said. “The majority of countries are advancing toward a good, just and beneficial FTAA.” But president Ricardo Lagos of Chile suggested that the United States needed to be more flexible. “It is very difficult to promote free trade accords when you have this kind of problem, in which the asymmetry favours those who have more and not those who have less,” he said. Brazil, which shares the presidency of the Free Trade Area of the Americas negotiations with the United States, maintains that no hemispheric trade agreement can possibly be meaningful without the participation of its fellow Mercosur partners.

“If other countries want to make an FTAA among themselves, that’s their problem,” Amorim, the Brazilian foreign minister, said. But “to talk of an FTAA without Mercosur reminds me of that phrase of the English politician who said there is a fog over the English Channel, so the Continent is isolated.” Argentina’s position is complicated by the resentment and mistrust left from the collapse of the economy four years ago next month. Argentina contends that after being the International Monetary Fund’s star pupil in the 1990’s, it was abandoned by the United States in its time of crisis, and that sentiment has coloured Kirchner’s dealings with the fund and the Bush administration.