BUENOS AIRES - The conclusion of the fourth Summit of the Americas was marred by the lack of a trade agreement between the 34 nations that visited Mar del Plata, Argentina. For the first time ever, I agree with Hugo Chavez: this may be a good thing. Though I would hardly call the Free Trade Area of the Americas (FTAA) an "annexationist plan," as did Chavez, I do not believe that it is the right plan for Latin America at this juncture.
Rushing a free trade agreement in an area that is larger than the European Union is risky and could have negative results. The FTAA plan calls for the tearing down of trade barriers, which could have dangerous repercussions for industries that provide countless jobs throughout the region.
Though it's hard to justify Chavez's claims that the United States supported FTAA is an "annexationist plan," I believe the pragmatism displayed by Argentina, Brazil, Uruguay and Paraguay is commendable. It isn't always easy to say no to the "big brother in the north," especially when 29 other countries have already expressed support for the United States.
Brazil and Argentina refused to sign a joint communique indorsing the FTAA and instead advocated waiting for the conclusion of the Doha round of the World Trade Organization's negotiations. The Doha round has the potential to have a far better impact on Latin America as it is focused on expanding free trade in a way that doesn't hurt developing countries.
It is also important, however, to not succumb to a false notion of liberal economic theories. Because economic extremism currently threatens Latin American economic policies, many Latin American citizens tend to think that free trade is either a tool of American imperialism or a solution to all of their problems; the middle ground is becoming increasingly lonely.
In terms of the recent international economic agreements, this sort of extremism is exemplified by the polarization of the debate concerning the FTAA and the Chavez-endorsed ALBA (the Bolivarian Alternative for Latin America and the Caribbean).
Rushing into a trade accord that is not suitably designed for the region could bankrupt small businesses, increase unemployment, and, given the region's history, lead to political turmoil. Still, the ALBA, with all its populism, is so far fetched that it does not offer a viable alternative. It takes advantage of Venezuela's oil and today's high prices, though neither factor is bound to last forever. It is also extremely anti-business (for example, it is does not support "intellectual property right regimes") and would undoubtedly stifle growth.
The Doha round presents a worthwhile alternative that strives to find middle ground. It acknowledges the intense pressures that developing countries often confront when bargaining with more developed countries, and it limits the emphasis that previously has been placed on private wealth.
But before any real progress is made during the Doha round, or any other sort of free trade talks for that matter, political leaders will have to come to terms with the fact that their hypocrisy and appeasement of interest groups must come to an end.
In the United States and the European Union, agricultural subsidies will have to be seriously reduced. Here, President Bush has made considerable progress and can legitimately criticize the French for dragging their feet. Bush has backed the idea set forth by the Group of 20 developing nations (G-20) that only one percent of a nation's agricultural product should receive protection. The European Union wanted to protect eight percent.
In addition, subsidies will have to become far more transparent. Oxfam, for example, has accused the United States and the European Union of an Enronesque cooking of the books in order to make agricultural subsidies appear smaller. Whether this claim is true or not, it obviously has a detrimental effect on all negotiations.
Meanwhile, in Latin America it must be understood that local industries cannot be so heavily protected. Markets have to be opened and developed so that they can become more competitive and efficient. All sorts of politically driven market interventions (price freezes in Argentina or government-run supermarkets in Venezuela) have to be limited, despite potential political backlashes.
For the time being, all parties will be best served by the lack of an agreement in Mar del Plata. Hopefully though, the diplomatic chaos will be used to propel negotiations and help developing and developed nations find common ground in Doha negotiations. Until that happens, the most important thing we will hear from the trade summits will be about Central American caudillos and burnt-out soccer stars. Personally, I would rather wait for news from the diplomats.
Martin Kielmanowicz is a junior majoring in international relations. He is currently studying abroad in Buenos Aires, Argentina.
