But Lavandero thinks his country got a raw deal under the trade treaty, which was recently ratified by his colleagues in the Senate, and he wants the Chilean courts to nullify the accord as unconstitutional. Among his gripes, Lavandero says that Chile will not be free to change environmental laws under the terms of the deal, or to raise royalties on foreign mining companies, without subjecting itself to challenge from U.S. corporations or investors for “changing the rules of the game.” His critique of the deal echoes the slogans and rhetoric invoked by the anti-globalization crowd at last week’s protests. “This is not free trade, this is a political imposition,” says Lavandero. “We are practically giving up our sovereignty.”
Those bitter words were a far cry from the effusive congratulations that trade negotiators exchanged on the final day of the FTAA meetings in Miami. Foreign and trade ministers representing 34 countries approved a vaguely worded communique that formally identified the nine core issues that negotiators will tackle over the next year. Many of the principals in Miami also took part in the disastrous World Trade Organization summit in Cancun in September. Against that backdrop, the mere fact that dozens of government delegations managed to agree on a declaration was hailed as a breakthrough in some quarters–even if the text was mostly an exercise in face-saving public relations. “In Cancun… everyone was dancing to the beat of their own drummer,” said the beaming Brazilian Foreign Minister Celso Amorim. “Today we can be very happy that we have reached a [common] result.”
For all the backpatting, though, the latest round of FTAA talks may have the unintended result of refocusing trade negotiations on more limited bilateral and regional deals in the foreseeable future. The FTAA is supposed to create the world’s largest free-trade zone by January 2005. But the nine-year-old negotiations have been dogged by philosophical and practical differences between one very rich nation and 33 mostly poor ones. U.S. Trade Representative Robert Zoellick acknowledged the problems last week, calling Washington’s quest for an FTAA deal a “tremendous challenge.”
The stalemate between the United States and Brazil, the hemisphere’s two largest economies, is the first of many hurdles. The United States has thus far rejected any commitment to slash its massive subsidies to American farmers–a key Brazilian demand. And Brazil is resisting U.S. efforts to reach binding agreements on investment, intellectual-property protection, government-procurement guidelines and other politically sensitive issues. As a way of prodding the reluctant Brazilians in the FTAA forum, Washington is moving aggressively on other negotiating fronts, and on the second day of the Miami parley Zoellick announced the opening of free-trade talks with Panama, the Dominican Republic and four Andean countries. “The attitude is, ‘Hell, time’s a-wastin’,” says one U.S. official in Guatemala City. “We’re not going to let the naysayers dictate the pace of the free-trade agenda when there are bilateral agreements for the taking.”
The Bush administration’s renewed push for agreements with individual countries, or regional groupings, has reopened the debate over the alleged benefits of free trade. To make their case, Zoellick and other free-trade advocates tout Mexico’s experience since it signed the North American Free Trade Agreement (NAFTA) with the United States and Canada in 1994. Mexico has become America’s second largest trading partner, and its export growth accounts for half the 3.5 million new Mexican jobs created since NAFTA took effect.
But skeptics see the Mexican experience as a cautionary tale, and a study released by the Washington-based Carnegie Endowment for International Peace last week supports that view. Among other conclusions, the report found that free trade hasn’t enabled Mexico to keep pace with the growth of its work force, and has failed to stem the tide of Mexican immigration to El Norte. What’s more, say Mexican critics of NAFTA, a flood of U.S. corn and other crops has devastated Mexican agriculture, the sector in which nearly a fifth of all Mexicans work.
Pro-NAFTA analysts say the treaty should be judged on its own merits and not as a panacea for the Mexican economy. They note that the $11.7 billion in foreign investment that has poured into Mexico each year on average since 1994 is three times the amount of capital that entered the country during the decade prior to NAFTA. “Mexico’s problems have to do with deep-seated circumstances that exist in the rural area and rather poor macroeconomic policy,” says Sidney Weintraub of the Washington-based Center for Strategic and International Studies. “Trade can provide more jobs and improve a country’s balance of payments, but it doesn’t solve all problems.”
Chile’s NAFTA-style agreement with the United States takes effect in January, and its export-driven economy and excellent reputation among foreign investors make it the ideal country in Latin America to reap the fruits of free trade. But skeptics like Senator Lavandero are still deeply worried. Washington set aside 52 Chilean export products that may still be eligible for tariffs, whereas Chile was allowed to designate only 15 U.S. products for similar consideration. Many Chilean farmers fear they will be driven out of business when heavily subsidized U.S. wheat enters the country free of tariffs in 2008. “How can we call this a free market?” asks Manuel Riesco, president of a southern Chilean farmers’ association. “This is going to turn Chile into another Puerto Rico.”
Would Latin America be better off without free trade? Most governments in the region think not, judging from the presence of every country in the hemisphere save Cuba at the FTAA talks. But the compromises struck in Miami prompted many delegates to conclude that a comprehensive FTAA may not be realistic. With countries big and small trying to reconcile their differences, the only feasible, pan-regional deal may be one allowing individual nations to pick and choose which provisions they can live with. For all the complaints about hegemony and fairness, no country seems to want to turn its back completely on the trade-liberalization process.
