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Now is time for Latin free-trade deal

Andres Oppenheimer, Oct 11, 2001

While everyone's attention is on the war front in Afghanistan, a key U.S. congressional panel earlier this week approved a trade bill that -- if passed by the full House of Representatives -- could mark a turning point in U.S.-Latin American relations.

In approving "trade promotion authority'' for President Bush to sign new free trade agreements, the House Ways and Means Committee voted late Tuesday 26-13 for legislation that could head off the risk of a global recession, and redress the devastating  impact of the terrorist attacks on the U.S. and Latin American economies.


Unless it is defeated by small-minded politicians led by Democratic leader Richard Gephardt, a Democrat from Missouri, and  Ways and Means Committee ranking Democrat Charles Rangel of New York -- who are courting anti-free trade U.S. labor groups in hopes of bolstering their political careers -- it will give a green light to U.S. plans to launch a Free Trade Area of the Americas  (FTAA) and negotiate other world-wide free trade agreements.

The House is expected to vote on the bill -- previously known as "fast-track'' -- as early as next week. According to many  legislative aides interviewed this week, it will be a now-or-never chance to go ahead with U.S. plans to start a hemisphere-wide free trade agreement by 2005.

You may remember that, at the 34-country Summit of the Americas held earlier this year in Quebec, Canada, Bush promised to launch a political offensive to congressional approval for "trade promotion authority'' before the end of this year.

The timing is critical, because Congress is highly unlikely to vote for a fast-track bill during the 2002 congressional election season. Many U.S. legislators will fear becoming targets of negative propaganda by the AFL-CIO, other labor groups opposed to free trade and protectionist U.S. industry and agricultural lobbies.


And if the United States does not meet its promise to start serious free-trade talks soon, Latin American countries could conclude they have little to gain by staying close to the United States, as they have been for the past two decades.

What's more, if leftist presidential candidate Daniel Ortega wins the Nov. 4 elections in Nicaragua, and leftist Brazilian leader Luiz Inacio "Lula'' da Silva wins next year's elections in Brazil, they could join Venezuela's populist President Hugo Chávez and Cuba's President Fidel Castro in a new effort to turn the region against free-market economic policies.

In the aftermath of the terrorist attacks on the United States, the need to speed up a hemisphere-wide free trade deal is greater than ever. According to World Bank estimates, the slowdown in the U.S. economy has resulted in a drop in U.S. imports, investments and tourism that is crippling Latin American economies and U.S. states such as Florida, which depend heavily on Latin American trade and tourism.

Before the attacks, the World Bank estimated that Latin America's economy would grow by just 1.9 percent. Now, World Bank economists have lowered their previous estimate to an alarming 0.7 percent, meaning that the region's economy will grow at a much slower pace than its population.


"The real threat to our country are those millions of people who live in economic desperation with seemingly little to live for,'' said Virginia's Rep. Jim Moran, a supporter of the trade bill. "The key to winning the war against poverty and desperation is free and open fair trade, and that's what this legislation is all about.''

Gephardt and Rangel say they are opposed to the Bush administration-supported bill because they were not given enough time to study it, and they are concerned that developing countries will create unfair competition by resorting to lower labor and environmental standards.

Critics say that's baloney, because the bill -- introduced by Ways and Means Chairman Bill Thomas, a California Republican, and supported by two Democrats on his committee -- includes a compromise on these issues. What's happening is that Gephardt is preparing his 2004 presidential nomination, Rangel is trying to become House Democratic leader, and both are seeking AFL-CIO support.

As for the U.S. labor groups claims that free trade would produce a massive loss of U.S. jobs, they said that before the 1994 free trade agreement with Mexico, and history proved them wrong. In fact, there was no ``sucking sound'' of U.S. jobs moving to Mexico, bilateral trade has more than tripled since, and both countries have greatly benefited from the agreement.

What will happen next? Congressional sources say the bill is supported by nearly 200 members of the House -- including 12 Democrats -- of the 230 it needs to pass. If approved, it would face an easier passage in the Senate.

It will now depend on whether Bush will put his full political weight behind this bill, making it part of his efforts to create a long-term alliance against terrorism. The upcoming battle over free trade may be obscured by news from the war front, but its outcome will mark the future of U.S. ties with Latin America and much of the developing world for years to come.

November 12, 2001

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