US-hemispheric-Caribbean trade developments

Wednesday, April 13, 2011

By Stabroek staff

In recent weeks developments have taken place that show a new United States interest in furthering liberalization of trade relations with hemispheric countries. Specifically, the United States has come to the point of finally resolving difficulties which it had with Colombia, and  after much hesitation, the US Congress will have been persuaded by the Obama administration to sign an amended US-Colombia Trade Promotion Agreement originally negotiated in 2006. There are signs too, that the President has succeeded in removing opposition to an FTA with Panama. And that he now seems close to having persuaded various opposition entitites, including members of his Democratic Party and the leadership of the state of Arizona, that an agreement to permit Mexican truckers to transmit goods across the US-Mexican border, in accordance with the NAFTA, should be implemented.

In some measure this reflects a resumption of a pattern of negotiating free trade systems on a bilateral rather than on the wider regional basis, first promised by President George HW Bush in his Enterprise for the Americas Initiative, and then consolidated by President Bill Clinton when he announced the Free Trade Area of the Americas at the Summit of the Americas held in Mexico in December 1994. With the persistent postponement of the conclusion of FTAA negotiations, the US pursued the bilateral path, of particular interest to us when the Central American States and the Dominican Republic, signatories with Caricom to the Caribbean Basin Initiative, signed a separate Free Trade Area agreement with the United States during President George W Bush’s tenure of office.

That US-DR-CAFTA agreement of 2004 itself signalled a recognition by some of the smaller countries of the hemisphere that the FTAA was now definitively out the question, this having been finalised following an American initiative to further temporarily consolidate the CBI as far as Caricom was concerned, through the Caribbean Basin Trade Partnership Act (May 2000). The United States saw this CBPTA as a kind of stage on the road to a full free trade agreement, for which we have now ourselves been in the process of preparing.

The speed with which that US-DR-CAFTA agreement was formalised by the Central American states – not without domestic difficulty on the part of some of them including the most democratic, Costa Rica – has given something of a jolt to us in Caricom, particularly after our Cariforum partner, the Dominican Republic was enjoined to it.  Very visibly, the DR, demonstrating much the same diplomatic agility that it had shown in ensuring membership of the EU-CARIFORUM system, hastened to induce the United States to accept itself as part of the CAFTA initiative. This showed a capacity to influence the United States in a positive direction, and with a speed which we had not been able to demonstrate in pursuing a separate FTA with the United States.

Various reasons are being given for this new movement in hemispheric trade relations. It is suggested that the United States has been becoming more concerned with the increasing openness of Latin American states to initiatives from outside the area, with Brazil in particular moving to pursue what it considers to be a balanced global liberalization process at the level of the WTO, rather than specifically with the United States. This reflects a wider administration concern that Congressional resistance is damaging US trade and investment interests worldwide, as indicated now in the possibility that Congress will also have been persuaded to approve an FTA with South Korea signed some time ago.  Brazil’s success, along with some African countries, in arriving at decisions in their favour at the WTO level on sugar and cotton, and the more recent interest of countries like China in doing bilateral commodity deals with Brazil, have certainly indicated to the US that a confident Brazilian government is no long willing to wait on the deliberations of a tortuous US government-Congress-trade lobby system to deliver acceptable results.

Some indications of a US concern with the possible wider negative effects for its trade and investment position of the intervention of China in the hemisphere have also been in evidence. It is suggested that not only the initiatives of China towards Brazil, but recent suggestions of a Chinese proposal to construct what is referred to as an “alternative dry canal” in Colombia across the Panama isthmus, have jolted recalcitrant Republicans in the Congress towards approving the trade agreement with Colombia. As a Texas Republican Congressman Kevin Brady recently  remarked,  “China is taking smart advantage of America’s inexcusable delay of nearly five years in approving its free trade agreement with Colombia.”

For us in the Caribbean, these developments suggest the urgency of taking advantage of this new atmosphere, and of finalizing without too much further delay FTAs with both the United States and Canada. We can hardly be satisfied to find ourselves circumscribed by a set of arrangements between the North American giants and the neigbouring countries and sub-regions surrounding us. As a recent editorial in the London Financial Times has observed, in response to both hemispheric and global trading rearrangements, the United States is beginning to “shake off its torpor on trade” negotiations, recognizing that “though partial deals remain a poor substitute for multilateral processes, they are the  only game in town.” As the American elections approach, both the President and Congressmen will be anxious to show themselves as positioning the United States favourably in the emerging global economic patterns, and this preoccupation will obviously take precedence over minor sub-regions such as our own.

Caricom will be aware too that immediately around us, geopolitical, and consequently economic relations, are being steadily reorganized. Too much hesitation on our part will certainly be felt by the US and Canada to be a function of our dilatoriness, rather than their own resistance, as they will certainly take the US-DR-CAFTA as their point of reference. They will incline to a Dominican Republic view of the reasons for long delays on our part in finalizing various kinds of negotiations and decisions.  In addition, it would appear to be the case that, in spite of the sometimes confusing behaviour in regional relations of President Chávez, there is an improvement in relations between Venezuela and Colombia with the emergence of President Santos in the latter country. It is argued that Colombia is concerned to negotiate a new trade agreement with Venezuela, complicated as this will undoubtedly be, following a decline in trade since 2007 from US$7 billion to US$1.2 billion presently, much of the decline to the disadvantage of Colombia.  Colombia is also anxious to conclude an agreement before Venezuela is scheduled to withdraw from the Andean Pact towards the end of this month, to join Mercosur.

All these are signs to us that the old Latin phrase, festina lente – hasten slowly – may not be good advice to us in this present era, as far as joining in emerging hemispheric trade relationships is concerned.

Original Article

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