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Wednesday, November 09, 2005

In Support of Free Trade For Argentina

The Summit of the Americas has come to an end, Bush has gone back home, and things are getting back to normal here. The summit produced virtually no results, with Argentina, Brazil, Venezuela, and a few other countries refusing to set a date to resume discussions on the Free Trade Area of the Americas. Meanwhile, the FTAA is being championed by the USA, Mexico, Panama, and a number of other countries. In fact, Bush left the summit and went to visit Panama to discuss a bilateral free trade agreement afterwards, since the FTAA seems to be going nowhere.

Despite what everyone says about Bush, he's right on free trade. Free trade is not some "yanqui" imperialist plan to control the world. It's about creating jobs, growing economies, and making everybody more wealthy. Look at the two people at the summit that were most vocally opposing free trade -- Diego Maradona, the Argentine soccer star, and Hugo Chávez, the President of Venezuela.

Maradona became rich by exporting his services as a player to clubs in Spain and Italy. Imagine where the soccer world would be without the international movement of players. Venezuela is currently awash in money from selling its oil on the global market. The global oil market is financing Chávez' pursuit of his socialist agenda at home. Both of these men benefited from global trade, but somehow what's good for them can't be good for the rest of Latin America?

At the summit, Argentina threw away an opportunity to really press Bush on actual free trade. In the last few weeks, Bush made a bold proposal to cut Agricultural subsidies as a bid to restart WTO trade talks, which would have allowed farmers and ranchers in Argentina and throughout Latin America to compete in the world's largest market.

Even though Europe and Japan weren't so exited about dropping their own subsidies as part of the WTO talks, Argentina and Latin America should have pursued this further at the summit and made it a condition of going forward with the FTAA. The FTAA doesn't need to be a one-sided giveaway to the U.S. There's no reason why Latin America can't insist on getting a fair deal. However, if they aren't even willing to talk and they're only interested in chest-pounding, then progress will never be made.

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10 Comments:

Blogger maskow said...

I gotta go along with you on things getting back to normal here. I really hope they stay normal. I haven't experienced any anti-yanqui attitudes directed at me as a person but when I read accounts of some recent events in Australia I wonder if expats everywhere feel like keeping their voices/accents down.

While it's true that FTAA has Chilean interest and the interest of a lot of other American countries, I never got the feeling that it was going drum up the support it needs among the mercosur bloc: that common-market-of-the-southern-cone.

Mercosur already is a free trade agreement that includes the largest two economies in South America, Brazil and Argentina. Venezuela and her oil is definitely not interested in FTAA. When you add that together it's not surprising that nothing got done.

If you remember, nothing much got done last time, either. Clinton was hamstrung by the lack of fast-track and was, therefore, hard to take seriously. Bush is much weaker at this point than his predecessor and has engendered a lot of ill will for his international policies and was dodging a scandal while visiting. While there may have been hopeful South American presidents I don't think any of them thought Bush could pull it off back home with the US Senate no matter what happened.

I would have said that it wasn't surprising that it devolved into some good old fashioned yankee bashing except that it started from the first word.

Our Mr. Kirchner took Mr. Bush to the woodshed as the first speaker. The "man who beat the IMF" could hardly have done otherwise. Brazil's Lula has had a couple of scandals and needed to burnish his man of the people status. Chavez made his views known before during and after.

I'm not even sure about free trade being such a good idea. One of Kirchner's remarks was about how none of the US policies and initiatives implemented in South America have yet raised one person here out of poverty. Taking that perspective, you have to wonder if free trade might just be about making the wealthy wealthier. Given the Bush Administration's abject cynicism it wouldn't be surprising if that was the stated purpose of FTAA. Of course, I suppose it would be a net gain for any country to make their rich people even richer...as long as the poor didn't get poorer. However, that doesn't ever seem to work out that way and, besides, increasing inequality even among relatively afluent people has its own problems.

Historically, free trade doesn't have a very good reputation, either. The famous example is Great Britain that was firmly protectionist until she developed the capacity to out-compete the rest of the world in her chosen industries. Then GB became the great champion of free trade and the archenemy of tariffs and barriers.

All those guys at the summit are aware of that history and are either rightly suspicious or hoping to get in on some free trade vigorish or too small to worry about being dominated or, in the case of Chile, quite possibly able to out-compete anyone on the planet if given the right toehold.

Maradona is an idiot. Even his admirers here think this. I think he was sold to Spain and Italy, wasn't he? As far as the international non-movement of players goes, doesn't that resemble the World Cup?

Oil is a global market, true. But to Venezuela with the vast majority of its oil going to the US which was embarrasingly involved in removing Chavez from power, however temporarily and however small the involvement, the FTAA actually sounds like a very bad idea. Chavez's opinion is along the lines of varying his customer base and taking some of the proceeds from these peak-oil prices to help the rest of the continent become more able to compete with the colossus of the north.

Brazil has had uneasy relations with the US ever since the end of WWII not counting some periods of military dictatorship (sometimes even including some periods of dictatorship.) They feel they have never gotten their due.

So what we're really talking about here is the question of whether or not free trade is in the interest of individual countries as opposed to protecting national industries.

It's become a given that free trade is good and protectionism is bad. We don't even think about challenging it. Another long time given is that government can't possibly provide services better and more efficiently than the private sector. Those are both interelated and both in need of some cold analysis. Coldly or not, South America is analizing these assumptions and wondering if continuing to play the US game is a suckers bet. I fear that my fellow Americans will be forced to re-evaluate this as well in the US very soon.

In the end, however, the main reason nothing got done was that the US president couldn't convince anybody that he could sell his own people on this vast project let alone Europe. Agreements like this are a lot of work for national leaders not including the political capital they will have to spend at home to go along with a US led plan...that includes both South America with the FTAA and Europe with their farm subsidies. We don't have the clout or the track record for the persuasion needed.

This is a 1950's idea, to me. Eisenhower should have done this. It would have worked out great for everyone. But we all know what the US did to the region during all these intervening years instead.

The idea now comes to us with all the greatness of postwar opportunities but too late in our empire.

11/10/2005 12:58:00 AM  
Blogger skeye777 said...

Great to see you posting again!

11/10/2005 11:30:00 AM  
Blogger Pepino said...

I am a Gringo married to an Argentine. I agree with you about all the "chest-pounding." Their knee-jerking is tedious; Maradona is a moron.

However, although I am no expert, much of the world is clearly tired of 15 years of relentless, agressive "free" trade capitalism shoved down the throat of developing nations. Within the first nano-second after the Soviet Union fell the vultures pounced (and now we have an oligarchy with millions of pensioners thrown into pverty.) Latin America has not benefitted from free trade.

Why on Earth would they be expected to trust a new F.T. pact, after years of fruitless IMF and World Bank nonsense which merely made these nations indebted to Western powers? And I am no longer sure if Fidel has any less credibility than George W.

I believe that capitalism is in some sort of Stalinist phase where dogma reigns. And Argentines cannot be expected to swallow yet more economic castor oil from "experts".

11/10/2005 07:31:00 PM  
Blogger Chris said...

Good comments about Free Trade. If the US does away or phases out in a meaningful and timely manner the agricultural subsidies then SA stands to do well, especially Brazil and Argentina. Otherwise, it would be too one-sided. Moreover, there's much more of a receptive buying population here in the states than in SA...thus smaller, less developed economies have that advantage too. But, alas, all of these pros and cons are quickly becoming moot. The truth of the matter is that the world's vast majority of capital (and population) have voted and the verdict is clear: RAW NAKED CAPITALISM! Afterall, it wasn't NATO, the Pope and Reagan that won the cold war; it was the simple truth that "capitalism" with it's "self" centered focus more truly reflects human nature. That's why when the top-to-bottom system imploded in the former USSR, none of the cultural diversity that had always existed in the separate Soviet states ever disappeared; neither did their religious beliefs-- this despite decades of top down repression and indoctrination. You can't change HUMAN NATURE! It's scarry in a way. It's capitalism pre-Roosevelt that I see in Shanghai. You can't even get through customs before everyone is making deals by way of their cell phones. Look for the most vicsious form of competition heating up as we write coming from India and China. The USA will look like Sweeden compared to these unstoppable, raw materials-starving populations. Half the world is knocking at the door wanting entrance to the Party...God help us all. Imagine a world where an additional 2.5 billion people want to run air conditioners and drive cars. We think its awful that 290 million yankees use so much of the planet's resources. Just wait! The point of all of this is you need ECONOMIES of SCALE and you need 'em big time if you even dream of surviving and not fast becoming a developing economy (much the way the EU will become if it doesn't get extremely productive and do so quickly). We don't have much choice but to lock arms (FTAA) and haul ass, economically. Even then, we're still probably doomed to becoming a developing country over the next 50 years...Our saving grace is in our deep infrastrucute which focuses on the "individual" and the creative/dynamic forces that this focus unpredictably lets loose. It's a big advantage, too, at a profound level. What SA is doing by romantically re-visiting Socialism couldn't be happening at the worse time. I'd like to see the USA compete with 2.5 billion workers (if you can call them that), working 24/7 for a dollar a day. Good luck to any socialist state-- you'll be lunch meat to the Chinese. This is no time for romanticism. Just get busy, loose the corruption and no more excuses for each person's failure to be accountable and productive. There's no choice so let's not pretend and loose what little precious time we have left to get it right-- with necessary economies of scales that may stand a chance of competing. By the way, insular and protectionist economies DO NOT develop! No intelligent global capital will assist you in developing the financial infrastructure required to truly grow and innovate. Get real and get to work!

11/11/2005 03:06:00 AM  
Blogger Loli said...

Nothing is wrong with free trade.
As long as participants can take, each, an equal benefit.
But, if I have a pencil and you have a complete kiosk... how am I supposed to agree on free trade with you? Come on, let's not be naive... Free trade between those that have equal possibilities is something that, actually, is happening.

11/13/2005 11:20:00 PM  
Blogger Pelle said...

Free trade is very important for Latin America, the only problem is that it only happens on the unofficial level.

Argentina and most other LA countries may have attempted Globalizing their economies on paper, but with huge bureaucracies, trade unions, peronistas, conglomerates what have you holding it back you can not say that Argentina has even had a taste of free trade in the past 15 years or ever.

In Argentina's glory years when they were making money exporting meat to the world, they were doing well.

There are many products where Argentina could compete fabulously and not just on meat and wine. It just takes getting into a competitive mind set, which will never come when people are so busy blaming the US, Bush, IMF and everyone but themselves for their problems.

Argentinians should look at the Colombians, who have had an arguably much worse time than them. They have an entrepreneurial spirit that is second to none in Latin America. If it wasn't for the armed Chavez fan club they would be an example of well functioning free market country.

11/15/2005 11:27:00 AM  
Blogger David Richard Despain said...

Communism and free trade sometimes have one thing in common--that's idealism. Free trade is great, but in principle a third-world country trading with a first-world country can hurt too.

Within the first two years of NAFTA, Mexico lost 80% of small businesses. Why? They couldn't compete with American businesses. Now when you go to Mexico, you notice that every product has a US name on it. US bought many Mexican farms and mechanized them creating an artificial onslaught of Mexican immigration.

The FTAA is good for little countries and countries without resources (e.g. Chile, Costa Rica), but for Argentina and Brazil that have strong small business sectors, it would mean a flood of US products and businesses to compete with. Small businesses would sell-out and the US would own South America. Good for the US, bad for non-US.

I agree that Maradona and Chavez are morons. But I disagree that Argentines and Brazilians are not entrepreneurial. They are. But their kiosks can't compete with Walmart and they know it.

11/23/2005 07:20:00 PM  
Anonymous Anonymous said...

Good comments from everyone, though I have to say Mike, yours were the most articulate and well thought out. Every nation has the right to choose its own destiny, and you can't scare people into joining your vision of the future. The only way the U.S and China became economic power houses was through protectionism, remember United Steel anyone? JPMorgan Andrew Carnegie? How do you think they became the people that they did and how did they create such economic giants? by protectionism plain and simple . Integration , In my opinion, is the only ways, South America can truly compete with giants like the U.S and China. Remember, not so long ago Every South American country had trade pacts with the United States and none with each other, thats some twilight zone ish and those days are over. Oh by the way China owns about a third of the U.S anyways. Who do you think is paying most of the half a trillion dollars these Wars are costing? I'd really like to get into the economics of capitalism, in particular Keynesian economics, but that might give some staunch capitalists nightmares. The next big player isn't China alone, its the S.C.O , for those that dont know, google it. Economic blocks are the future. And for those that say capitalism is in every humans nature. Just remember before europeans came to American shores there was socialism allready here, so although that whole "capitalism is human nature" bit is a good talking point it is in no way true in absolute terms. So even though Capitalism is in no way the final stage in human development, and is flawed in too many ways for it to last much longer, it is here to stay for the near future. I believe The future lies in a socially conscious capitalism, one that doesn't forget the millions upon millions living in shanty towns, and who could ever argue against that? Mercosur is a path to greater South American cooperation and integration. I am not a Chavez basher, I think its admirable that a man becomes the president of one of the most strategically important countries in the world, as far as energy is concerned, and for once, does nothing to enrich himself, but give back to the people what is theirs to begin with. The threat of a good example is a very scary thing and demonizing him is the easiest thing to do, But trying to lift your people out of poverty is a noble thing, period. Just think, some countries send soldiers and bombs and some send doctors and teachers, I guess only time will tell which way is the right way.

Argentina rocks, been there twice and planning to move there completely in september, after my beloved California Summer. My work is on computers and the internet. For anyone moving to a foreign country, computer work rocks

Peace,
Alex

6/30/2006 11:17:00 PM  
Blogger Perpetual_Traveller said...

"The next big player isn't China alone, its the S.C.O , for those that dont know, google it."

What? the Southern College of Optometry is set to take over the world?

12/13/2006 01:47:00 AM  
Anonymous Anonymous said...

The Shanghai Cooperation Organization (SCO), also check out BRIC , I will make it easy for you ( Brazil, Russia India China )

PS, I live here now, Argentina does rock

3/13/2007 07:03:00 PM  

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