Most Recent Column, Opinion, Uncategorized, World — December 13, 2011 at 1:52 pm

Anyone remember the FTAA?

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Anyone remember the FTAA?  Probably not. The Free Trade Agreement of the Americas (FTAA) was supposed to be revolutionary. Lowering or eliminating tariffs on thousands of goods in every country between Canada and Argentina, the treaty was heralded as a breakthrough in Western relations when first announced at the 1994 Summit of the Americas. But today, the FTAA is dead in the water. Instead, as a result of domestic and international hand-wringing, multiple bilateral agreements have been negotiated and then subsequently postponed.

Why? As any first-year student of economics could tell you, the logic of free trade agreements is sound. Increased competition and access to resources, coupled with a decrease in job-killing tariffs and ‘protectionist’ policies lead to increased economic growth and employment. NAFTA  – the trilateral trade agreement between the United States, Canada, and Mexico – since its inception has resulted in a threefold increase in trade between the US and Canada and a quadrupling of trade between the US and Mexico. While environmental and human rights concerns are important and need to be addressed, it is undeniable that NAFTA and other free trade agreements are vital in an increasingly interconnected Western Hemisphere.

So why am I writing about this now? Quite simply, free trade with our neighbors is the fastest and surest way to ensure economic growth in the US. With the American Jobs Act and its financial stimulus politically untenable and with the Federal Reserve unwilling to put its legitimacy further on the line, new avenues for economic growth must be negotiated. Furthermore, free trade remains one the few issues where both American political parties find common ground, reducing the risk of political deadlock when passing legislation.

Beyond the obvious economic ramifications, free trade sends a strong signal to party countries that the US is open to cultural integration as well. It sends a message of “We see you as an equal partner, do business with us.” It is a lien that has been lacking in the politics of benign neglect that has characterized American foreign policy towards Latin America for the past 25 years. Free trade is a win-win. It represents a non-partisan approach towards increased economic and political exchange, and should be a key tool in a re-engagement with our southern neighbors. Free-trade agreements with Colombia and Panama, negotiated under George W. Bush, are expected to finally come affect next year. Today the FTAA is a far-off fantasy, thanks largely to the efforts of far-left iconoclasts (particularly, Hugo Chavez) to derail any sort of meaningful dialogue with the perceived “neo-imperialist” interests of the US or Canada. However, the pursuit of bilateral trade agreements with Latin American countries should continue to be a tool in American diplomacy, forging deeper cultural and economic ties in our hemisphere.

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One Comment

  1. The question seems to be, apart from the sociopolitical aversion in parts of the region to free trade agreements, if such an agreement would be favorable in instances of low existing economic integration. In Colombia and Panama, for example, somewhere between 35-40% of exports already go to the US. For the other major players in South America, excluding Venezuela, that percentage is much lower. In fact, most countries are moving in the opposite direction, looking to diversify their export markets in Europe and particularly in Asia. (When the crisis of 2008 hit, they were rewarded for doing so.)
    CAFTA and NAFTA were possible largely because they were incentivized by preexisting market interdependence, but in the absence of this condition free trade agreements are harder to justify. Furthermore, while free trade agreements may enhance productivity and market reach for some large US firms, it is unclear if these advances would result in large employment increases. And together with the fact that free trade agreement propositions from the US are not seen as signals of equal partnership, but rather more of the same unilateral politics from the north, the outlook is sure to be much trickier.

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