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FTA Delays Affect Latin Business

The delays in approving U.S.-Latin American FTA's are negatively affecting Latin economies, a new survey says. Meanwhile, Clinton Democrats push for FTA's.


U.S. companies in Latin America view the lack of U.S. support for free trade agreements as the biggest threat to their business the next four years, according to a new survey. Nearly one-third of respondents - 32 percent - said that political stalling of trade liberalization was the biggest threat, while another 31 percent pointed to the spread of populism and anti-Americanism as the biggest threat, according to the poll.

The survey was conducted among 564 respondents in 22 Latin American countries in August and September. The respondents are members of the Association of American Chambers of Commerce in Latin America (AACCLA), which represents more than 80 percent U.S. investment in Latin America.

"Seizing the opportunities of growth through expanded trade is a top priority in Latin America and the Caribbean today," John Murphy, executive vice president of AACCLA, said in a statement last week. "There is a clear recognition by our neighbors that opening markets not only makes economic sense, but political sense as well."

The survey comes as the Bush Administration last week aggressively pushed for congressional passage of the FTA's and prominent former Clinton administration officials have sent an open letter to congressional Democrats urging the prompt passage of the pending free trade agreements with Colombia, Panama and Peru.

"We'll work hard to get all four trade agreements through," President George W. Bush said during a press conference at The White House Thursday. "And if they don't get through, it is a sign that the protectionists are beginning to be on the ascendancy here in Washington, D.C., and that would be a mistake. And for people who are deeply concerned about poverty around the world like I am, the best way to help lift people out of poverty is through free trade agreements."

That followed speeches by U.S. Commerce Secretary Carlos Gutierrez and Deputy U.S. State Secretary John Negroponte urging Congress to pass the Latin American FTA's.

"Our vision for the Western Hemisphere is one of open political systems, open trade and investment, and economic opportunity for all," Gutierrez said at a meeting organized by the Heritage Foundation last week. "That is why we are actively pursuing trade agreements with Peru, Colombia and Panama. The economic case for free trade agreements is clear. Our exports to Latin American FTA countries are up by nearly 60 percent since 2001, outpacing the growth in exports to the rest of Latin America and the world."

He also made an indirect jab at Charles Rangel, the chairman of the US House Ways and Means committee who has been critical of the Latin American FTA's but favors easing sanctions against Cuba. "It is ironic that some voices denounce the labor standards of pending FTA countries, while simultaneously calling for the U.S. to engage with Cuba—the Hemisphere’s greatest violator of labor rights, and also the right of all of its citizens," Gutierrez said.

Negroponte put it even stronger. "Failing to pass the FTAs with Peru, Panama, and especially Colombia would be a win for Hugo Chavez and a defeat for the forces of democracy in the hemisphere," he said. (See FTA Failure, Chavez' Gain).


Meanwhile, after months of silence on free trade issues, key aides of President Bill Clinton (1992-2000) have come out strongly in favor of the pending agreements with Latin America.

"It is time to get behind pending agreements with Colombia, Panama, and Peru," said the open letter. "Far from being “job killing,” these trade agreements would open markets wider to U.S. goods and services and therefore support jobs in the United States."

That argument is backed up by a study from the Conference Board earlier this year, which showed that trade provides net job gains throughout the United States.  "Every U.S. state has realized net employment gains directly attributable to trade," the Conference Board said. In 1992, a year prior to the implementation of a long string of multilateral and bilateral trade liberalizing agreements, only one in ten U.S. workers were employed in trade-related jobs. In 2004 that had grown to one of every five workers, according to the Conference Board.

The letter was signed by former Clinton chiefs of staff Leon Panetta and Thomas McLarty; former Clinton cabinet members Bruce Babbitt, Henry Cisneros and Donna Shalala and former prominent Democratic senators Bob Graham and Sam Nunn. Also prominent officials involved in shaping Latin America policy signed the letter, including Alexander Watson (former Assistant Secretary of State for Inter-American Affairs), Richard Feinberg (Latin America advisor to President Clinton) and Robert Pastor (Latin America advisor to President Jimmy Carter).  (See Open Letter to Congressional Democrats).


The United States concluded free trade agreements with Peru in December 2005, with Colombia in February 2006 and with Panama in December 2006, but they have yet to be ratified by the U.S. Congress. The U.S.-Peru FTA is likely to be approved next month after the US Senate's Finance Committee approved it on Friday. Panama will likely be next, but key Democrats have said they won't approve the Colombia FTA until violence against union leaders has been reduced more.

That argument is criticized by the former Clinton officials. "The level of violence in Colombia—though still too high—has steadily and significantly declined under President Uribe," they say in their open letter. "Rather than hiding the scandals or minimizing them, Colombia is taking steps to root them out and cleanse the political system, even while recognizing that more must be done, including bringing to justice those who have committed crimes against unionists."


The AACCLA survey showed that infrastructure and high taxes were seen as the biggest obstacles to higher profitability ahead of other challenges like corruption and rigid labor laws. Infrastructure was also the sector that will likely see the most in new investments, 47 percent of respondents said. Another 22 percent believe technology and telecom will get most investments, while 13 believe manufacturing will the key recipient.  

However, corruption was cited as the top priority for next-generation reform by 32 percent, while education was cited by 27 percent.  And in contrast to a recent Latinobarometro poll showing 42 percent of Latin Americans accept non-democratic governments, more than 90 percent of the AACCLA respondents said that any potential democratic setbacks in their country would have a negative or very negative impact on their business.


Asked who would do the most for Latin America among the leading U.S. presidential candidates, nearly half - 47 percent - responded Hillary Clinton. By comparison, Rudy Giuliani only got 20 percent, while free traders like John McCain and Mitt Romney only got a mere 4.0 percent and 3.0 percent, respectively.

The answers stand in contrast to the candidates' voting record and statements, which show that Clinton and Giuliani have mixed records. Clinton even voted against CAFTA and has criticized NAFTA. (See U.S. Candidates and Latin America).

All in all, half - 50 percent - of the respondents are optimistic about the future of Latin America and the Caribbean, while only 12 percent are pessimistic (the other 38 percent were neutral). Most of the respondents predict that Latin America's economy will grow between 4.5 percent and 5.0 percent this year.

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