The Case for Free Trade

Panama Canal

While the United States has been dillydallying on free trade with Latin America, the rest of the world has not. The European Union has caught up with the United States when it comes to Colombia, Peru and Central America, undermining the U.S. advantage with those areas. Meanwhile, both Canada and the European Free Trade Association have signed FTAs with Colombia and Peru. Korea reached an FTA with Peru and is negotiating one with Colombia. And China — the second-largest trade partner for Latin America — now has FTAs with Chile, Costa Rica and Peru.
As Romaine Seguin, the president of the Americas division of U.S. logistics giant UPS, points out in this issue: Robust and open global trade drives the world’s economic engine.
“Free trade agreements between countries in Latin America, or any other region in the world … remove significant trade barriers and provide key economic opportunities for the businesses and citizens in each country,” she says.
Countries that have free trade agreements with the United States have generally increased their trade significantly upon entry into force of those agreements, experts at the Peterson Institute for International Economics point out.
The United States appears to finally be moving on the Colombia and Panama FTAs after a scandalous delay. The Colombia FTA, for example, was negotiated five years ago, but then suffered from U.S. domestic politics.
The good news for U.S. exporters is that with the implementation of the Colombia and Panama FTAs in the future, a majority of countries in Latin America will have free trade with the United States. Latin American countries with existing or pending FTAs with the United States account for 79 percent of U.S. trade with the region, according to a Latin Trade analysis of U.S. Census Bureau data for 2010. Although the Free Trade Area of the Americas agreed upon in Miami in 1994 appears to be dead, we will instead have an FTAA Light. And that’s worth celebrating, as we hope for a bilateral U.S. FTA with Brazil as the logical next step.

Photo Courtesy of mici.gov

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Mexico: Missing in Action

Mexico has a lot of great things going for it. Its economy is recovering strongly, its wage gap with China is quickly narrowing, and it’s still relatively safe for investors and tourists alike (see our special report on Mexico in this issue). Yet, the Mexican government has done an outrageously bad job at selling the latter point. When I prepared for a segment on “The O’Reilly Factor” recently, I could not find relevant and updated data from the Mexican government on the security situation. The Mexican embassy in the United States even posted a year-old fact sheet on the issue, and calls and e-mails to key media people went unanswered. Mexico should follow the lead of Colombia, which under former president Alvaro Uribe not only improved the security situation, but also made sure everyone remotely interested knew so as well. That effort included monthly updates on crime statistics on the president’s official web site.
Mexico’s image is only getting worse day by day, driven by the headlines of drug-related killings. It is therefore essential that Mexico’s government responds with the actual facts and figures on safety (chiefly that 90 percent of the victims are drug-gang members, and seven percent are law enforcement members). Join forces with the private sector (including hotel chains) to start a campaign that includes ads in newspapers and TV with the message that Mexico is safe and open for business and tourism.
Mexico now clearly needs to fight another war — one of information.

Joachim Bamrud
Executive Editor
jbamrud@latintrade.com