Trade Wars?

From the May 2001 Trumpet Print Edition

As 30,000 anti-free-trade demonstrators chanted their opposition, representatives of 34 countries within the Americas gathered for the third Summit of the Americas in Quebec last month to hear President George Bush declare his commitment to negotiating a free-trade zone for the region.

When the dust settled and both demonstrators and delegates to the conference had left this French-Canadian city, the nature of the seemingly impossible task the U.S. president had set for himself became clear. The obstacles are considerable.

Arrayed before the U.S. president are 34 disparate governments, including his own, each of which remains to be convinced of whether or not a free-trade zone will be to its own advantage. The U.S. has, up to now, enjoyed the advantage of its anti-dumping legislation to protect its home market from the import of cheaper products from other countries. This is a real bone of contention with such countries as Chile, whose agricultural and fishing industries have been hard hit by U.S. sanctions. On the other side of the coin, U.S. producers fear the loss of markets should these sanctions be lifted on such protected U.S. products as steel, sugar, fruits and peanuts.

The fact is that the U.S. must do something fast. Either it secures a free flow of trade throughout the hemisphere of the Americas, or it stands to lose out to increasing pressure from the European Union, which is aggressively penetrating Latin America. This is one reason why President Bush has set such a tight deadline, the year 2005, by which to conclude a Free Trade of the Americas pact.

The prospect of such a zone being created in South East Asia also looms on the horizon, with Japan, the world’s second-largest national economy, being a real wild card in this equation. Add to this the increasing alliance between the EU and Russia, and it becomes clear that unless the United States enters some sort of a cooperative deal with one of the world’s emerging trading blocs, it could soon be left out in the cold.

The success of the North America Free Trade Agreement, negotiated in the 1980s, to this point remains questionable, although it seems that the U.S. has been the real winner in this arrangement, to the detriment of many Latin American countries. The signatories to nafta will be out to drive a far harder bargain with the U.S. this time around. President Bush must also obtain approval from Congress to fast-track negotiations by setting up a negotiating authority to carve out heads of agreement with the fractious nations involved. The U.S. Congress must give approval to create such an authority before the president can proceed further with this project.

The deck seems to be stacked very high against this bold initiative of the new U.S. president. Should it succeed, it could become the feather in his cap, which he desperately needs in a log-jammed foreign-policy agenda; or it may yet, should it fail, prove to be his nemesis.