BY CHRONICLE EDITORS
Last week, President George W. Bush concluded a five-nation, week-long trip to Latin America. During the trip he emphasized that U.S. aid to Latin America now stood at $1.6 billion. This includes development, military and drug assistance. Venezuelan President Hugo Chavez — who decided to do his own parallel, five-nation tour as well — said last week that U.S. aid to Latin America was inferior to Venezuela's aid to the region, as measured by donations (including low-priced fuel), loans and bond purchases. The Associated Press estimates these add up to $5.5 billion since 2005 (including pledges not yet realized).
However, both Bush and Chavez are wrong to talk about U.S. government assistance as a benchmark for U.S. aid to Latin America. The best aid Latin America has received is access to the U.S. market. And last year, Latin America's exports to the United States totalled a record $332.0 billion. While we don't know what Latin America's exports to Venezuela were last year, they undoubtedly were considerably lower.
Exports to the United States have created thousands upon thousands of jobs in Latin America, as has the presence of U.S. companies in the region, as we documented in our special report The US in Latin America: An Overview recently.
It is this kind of aid - rather than government assistance - which is helping reduce poverty and boost wealth in Latin America in a sustainable, longterm way.
Bush deserves praise for having negotiated free trade agreements with Central America and the Dominican Republic (CAFTA) and Colombia, Panama and Peru. These are the kind of deals Latin America needs more of — along with free trade agreements with the European Union and Asia. CAFTA has already significantly helped boost exports from Nicaragua to the United States, helping the bottom line in Latin America's second-poorest nation.
The free trade agreements with Colombia, Panama and Peru — which are still pending U.S. congressional approval — are expected to also help those countries grow their exports as well as provide more U.S. and foreign investment.
As countries ranging from Chile to China have shown, free trade and economic liberalization are the best ways to reduce poverty. Governments following policies aimed at state control over the economy — as is increasingly the case in Venezuela, Ecuador and Bolivia — will only see more poverty and economic failures, as Cuba has experienced in the Americas and Eastern Europe and China experienced before turning to the markets.
Contrary to the prevailing view among pundits, President Bush's visit to Latin America was a success. His visit rejuvenated relations with Brazil and Mexico (the two top economies), Colombia, Uruguay and Guatemala (Central America's largest economy). Combined, these five countries account for 72 percent of all U.S. trade with Latin America.
The visit, coupled with the approval of the U.S. FTAs with Colombia, Panama and Peru, will help Latin America forge closer trade, business and investment ties with the United States. And that, rather than Chaveznomics, is the key to creating jobs and prosperity in Latin America.
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