Even though it seems to be happening against all odds, free trade pacts and policies in Latin America have made some small but important gains over the last months. As recently as November of last year, the Summit of the Americas utterly collapsed, after Hugo Chavez announced that he had come with a shovel so that he could bury the proposed free trade agreement. Since then though, important progress has been made.
On Feb. 27, the United States and Colombia announced a free trade pact, which is now up for ratification in each country's senate. This agreement would provide tariff-free access into Colombia for 80 percent of American consumer and industrial goods. Expanding on the substantial access that Colombia already has in the U.S., sugar quotas would be steadily raised in the coming years. The Colombian government released estimates saying that as a result of the trade deal, exports to the U.S. would grow by 50 percent over the next three years and increase its GDP by one percent per annum.
Less than a week later, on Mar. 1, a U.S.-El Salvador trade deal went into effect, as El Salvador became the first Central American nation to implement CAFTA. (So far, the other five signatories have been unable to fulfill U.S. requirements necessary for enacting the trade deal.)
Peru, Ecuador and Panama are involved in active and optimistic negotiations with the United States. Rob Portman, the U.S. Trade Representative, has expressed his confidence in these talks and is hoping to send the agreements with Colombia, Peru, and Panama to Congress as a joint package later this year.
Meanwhile, the Ecuadorian president, Alfredo Palacio, has told reporters that his country has a limited number of issues left to debate with the U.S. (most likely regarding rice and pharmaceuticals), and that he is optimistic. The next round of negations in scheduled for March 23. Bolivia has also participated in these trade talks as an observer, and may well join in the future.
Last week, the Costa Rican election tribunal announced that Oscar Arias, who ran on a pro-CAFTA platform, was the formal winner of the Feb. 5 presidential election, having been elected with slightly more than 40 percent of the vote. Despite his narrow victory, Arias has come out swinging: he has promised to make true his campaign promises and to ratify CAFTA and promote free trade with the U.S. (Of the six CAFTA signatories, Costa Rica is the only one to not have ratified the agreement.)
Even as all these talks have been happening, three important nations have chosen to remain on the sidelines: Argentina, Brazil and Venezuela, the clear economic "giants" of the region.
Argentina and Brazil are holding out, it seems, for two main reasons. U.S. farm subsidies continue to be scandalous - an undeniable fact of domestic American politics. Secondly, election year politics are at play.
Brazilians will be voting on Oct. 1, and President Lula da Silva allegedly remains undecided about his plans while the opposition is racing to muster up a viable candidate. Argentina's elections are a bit further on, but already electoral gossip is littering newspapers' front pages. Politicians seem to be mostly playing it safe by pandering votes in the easiest ways and maintaining a distance from any sort of globalization/free trade controversies.
Venezuela, meanwhile, remains just that: Venezuela. Hopefully though, if the price of oil ever falls, Chavez's influence will wane and his alternative model for economic development will be transformed into a thing of the past. In the short run, this will be a waiting game of sorts.
The United States must realize that no Latin American free trade agreement can reach its full potential if Brazil and Argentina are excluded. Da Silva has been trying to jump start the Doha Round and has encouraged world leaders, not trade negotiators, to resolve the more delicate points of the proposed free trade agreements. Hopefully, with a quieter political season rapidly approaching, Argentina and Brazil will be able to make some headway as well and follow the example of their smaller neighbors because sitting out will soon cease to be a viable option.
