Wednesday, November 16, 2005

Free Trade for the Willing

From the Investor's Business Daily:

If you heeded the hype from gloomy hand wringers or news photos of shop-trashing anti-American thugs, you'd think President Bush left the Argentina summit in failure. It's nothing but rubbish.

Seldom has news been so distorted against facts. Most of the U.S. media claim that because the 34 states were obstructed from full agreement on a declaration to kick-start free trade by a few holdouts, it's some sort of victory for the chief obstructor, U.S. antagonist Hugo Chavez of Venezuela.

Just by the numbers, it's a false impression. Only five states at the Organization of American States summit in Mar del Plata withheld signing a statement to restart talks for a Free Trade of the Americas pact, and four of those — Brazil, Argentina, Paraguay and Uruguay — did so temporarily on valid concerns about farm subsidies.

The U.S. sympathizes with them, but is hamstrung by its larger trade relations with heavily subsidized Europe. That's why the U.S. is going to bat for those four at the World Trade Organization's 148-nation Doha Round of trade talks in Hong Kong this December.

That leaves just Venezuela obstructing free trade, and on ideological grounds. The real story is that 29 very different states — making up 90% of the hemisphere's GDP — endorsed free trade.

Free trade opponents try to cloak themselves in anti-Americanism, but it just doesn't work:

Even more encouraging, the summit's most articulate advocates for free trade spontaneously came from Latin American leaders whose nations have already experienced free trade. Among them, Mexico's President Vicente Fox emerged as a star, bluntly warning anti-trade factions they are "out of touch with reality."

Fox should know. Mexico's GDP has nearly doubled and its exports to the U.S. have tripled since the 1994 passage of NAFTA, expanding Mexico's economy to just a hair's breadth below that of Brazil, a country with almost twice Mexico's population.

Central American states south of Mexico aren't stupid, either, and NAFTA's success encouraged them to seek their own free trade pact with the U.S. — CAFTA. They know how it draws permanent investment and increases business activity across the board, even in industries like coffee not subject to tariffs.

In the absence of a FTAA, states are reaching separate agreements:

If anything, it's Chavez who is isolated. No one has taken him up on his counterfree trade proposals, which are not based on market mechanisms but pork-barrel spending.

In the end Bush won because free trade is moving along anyway, summit or no summit. Panama is close to signing its own trade pact with the U.S. The Andean states — Colombia, Ecuador and Peru — are in the last stages of a swift, 18-month effort to hammer out a pact. Besides these smaller, separate deals, the World Trade Organization talks will overtake anything that went on at this summit.

Fox of Mexico called it right when he said that free trade would just move on with the willing who want it.

It might be nice to have a free trade zone for the whole Western Hemisphere, but we should not let a handful of countries (or fewer) stand in the way. As with so many other areas of international relations, we must remember that a broad international agreement is not an end in itself. A 29-nation agreement is infinitely better than hoping for the slightest possibility of reaching a watered-down and meaningless version after years of negotiations.
(AP) Bush's first stop in Panama represents what has been his multitrack strategy for opening up world markets. Even as the FTAA is stalled and worldwide trade talks are embroiled in thorny issues of farm subsidies, the president has set his sights on individual countries that are eager to do business with the United States, the world's largest economic power.
The FTAA without Venezuela isn't such a shabby goal either - it already wasn't going to include Cuba.

[Cross-Posted at Just Barely Inside the Beltway]

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