Wednesday, November 22, 2006

previous entry | main | next entry | TrackBack (4)

I'm sure glad the Democrats are improving our standing in Latin America

The Nelson Report has been assuring me repeatedly that the Democratic takeover of Congress will not mean the end of U.S. trade policy. Here's one example from a report from last week:

It’s our contention that even if the Democrats had not swept the House and Senate elections, the US would still face increasing difficulty as the political arena wrestles over the challenges of adjustment to globalization, especially dealing with a downside which includes mitigating pain at home, and enforcing better behavior by trading partners.
Nelson is correct to point out that trade integration was not exactly going gangbusters prior to the midterms -- but then again, this FT story by Eoin Callan points out that it's possible for integration to slow even further:
The US Congress will reject two trade deals agreed with Colombia and Peru, leading Democrats said, in a significant blow to President George W. Bush’s agenda for his final two years in office.

Democratic lawmakers drafted a letter to Mr Bush on Tuesday night signalling their opposition to the pacts because they lacked tougher labour standards, while a senior congressman rebuked the president for pressing ahead with today’s signing of the Colombian deal.

The fissure worsens the outlook for the administration’s bilateral trade agenda in the wake of the Democrats’ mid-term election sweep and will disrupt economic integration with the Latin American countries.

Sander Levin, a leading Democratic voice on trade issues, said the letter would send a clear signal that “the agreement would not receive the support of the vast majority of Democrats, as presently put together”....

The congressman said labour standards were at the “core” of Democrats’ objections - a sign that the influence of the labour movement within the party has been strengthened by the election result, which saw a notable rise in economic populism among voters.

UPDATE: The Washington Post's Sibylla Brodzinsky and Peter S. Goodman summarize how this kind of thing is going to be perceived south of the border:
"We watch the news and we're nervous about what might happen with what we send to the United States," said Janeth Palacio Ramirez, 35, who supports her 15-year-old daughter and her elderly parents by punching zipper stops onto 7,000 pairs of jeans a day, earning about $200 a month. "Everything we make here goes there, so if there are problems with exports, we'll all lose our jobs."....

The fortunes of Colombia and Peru -- home to more than 72 million people -- may hang in the balance. So, too, might the nature of American engagement with Latin America, regional experts say. The rejection of trade pacts with these countries would humiliate their leaders at a time when they stand as bulwarks against the anti-American populism pressed by Venezuela's president, Hugo Chavez.

Latin America was already recoiling at the prospect of the United States fencing its southern border against illegal immigration. Now, some see the nation walling off its huge marketplace, rescinding the promise of trade, long proffered by the Bush and Clinton administrations as a means of furthering development.

"If you really look at the U.S. agenda in Latin America, trade is the only positive," said Michael Shifter, vice president for policy at the Inter-American Dialogue in Washington. "The rest is immigration, anti-narcotics. It's all negatives." Latin Americans, he said, may well start to question "how serious Americans are about having a constructive relationship."

Hat tip: Pienso

posted by Dan on 11.22.06 at 05:28 PM



Outside of the elites, thse trade deals are not particularly popular in Latin America. Issues of fairness abound and they inevitably impact the nations in Latin America far worse than they do the US.

The Bush administration has still not complied in eliminating cotton subsidies despite the decision against the US two years ago.

Think NAFTA was good for Mexican corn farmers? Think again:

The United States and Canada have been selling tons of corn in Mexico for over a decade, thanks to NAFTA — the North American Free Trade Agreement. It eliminated tariffs on most agricultural trade and was supposed to be a win-win for the United States and Mexico.

For Alvares Correa, NAFTA has been a disaster. While the trade agreement opened up U.S. markets to Mexican corn farmers, they haven't been able to sell any corn in America.

Meanwhile, American farmers have flooded Mexico with cheap corn thanks to generous U.S. government subsidies — subsidies left unchecked by NAFTA. A U.S. corn grower receives an average annual subsidy of $20,000 a year. The Mexican government gives their farmers just $100.

Farmers said that entire towns are emptying because thousands of small farms have gone out of business. As many as 2 million farm workers have lost their jobs — the vast majority headed north across the U.S. border looking for better pay.

Guess where these entire towns have gone?

In fairness, this is a bipartisan problem. Senator Durbin wants to maintain the heavy levy on Brazilian ethanol to protect the much less efficient corn ethanol market.

Somehow, I don't think too many Latin Americans are going to be upset if these deals fall through.

posted by: Randy Paul on 11.22.06 at 05:28 PM [permalink]

Outside of the elites, thse trade deals are not particularly popular in Latin America.

From the article:

In Peru, between 55 and 70 percent of the population supports a trade deal, recent polls say.

Hmm. Especially considering that in Peru the pro-deal candidate did win the election. You may not consider them "particularly popular," but certainly the deals at least are not "particularly unpopular," either.

posted by: John Thacker on 11.22.06 at 05:28 PM [permalink]

One letter objecting to specific portions of the Peru deal (not the deal as a whole, and the problematic portions are very problematic indeed from the equity standpoint) does not equal a wholesale rejection of the free trade agenda. The FT would do well to bear this in mind.

posted by: temoc94 on 11.22.06 at 05:28 PM [permalink]

Peru may very well be an exception, but they are not popular in Argentina, Mexico and Brazil.

posted by: Randy Paul on 11.22.06 at 05:28 PM [permalink]

Peru may very well be an exception, but they are not popular in Argentina, Mexico and Brazil.

First off, my comment addressed the question of whether trade liberalization agreements are DOA in the U.S. Congress, not in Latin America. My point is that merely because some congressmen signed a letter objecting to specific portions of the Peru agreement does not signal Congress' rejection of the agreement as a whole, or of other trade liberalization agreement.

Second, while I would agree that trade agreements are less popular in Latin America than they were, say, five years ago, the defeat of Lopez-Obrador in Mexico suggests that they may still have life left in them.

Third, we should not be prioritizing so many trade agreements with poor Latin American countries anyway. We should be signing them with our major trading partners.

posted by: temoc94 on 11.22.06 at 05:28 PM [permalink]


I was actually responding to John Thacker.

With regard to Lopez Obrador, as I have mentioned before in comments on this blog, Mexico is one of only two countries in Latin America that I am aware of (Argentina being the other) that has no plurality threshhold to reach to allow someone to be elected president without having a runoff. Lopez Obrador lost, but lost by the thinnest of pluralities and Calderon hardly has a mandate.

I wouldn't read too much into Calderon's victory.

posted by: Randy Paul on 11.22.06 at 05:28 PM [permalink]

I'm not following this: are you complaining about getting what you asked for? Most of us with real jobs outgrew that about age 16.

posted by: y81 on 11.22.06 at 05:28 PM [permalink]

I'm joining this thread a little late, but I really must point out something about Mexican corn farmers. Hundreds of new factories have been built in Mexico to take advantage of lower wages. Lower-skilled Americans lost their jobs as a result. On the other hand, Mexican markets are full of corn and many other agricultural products from more the productive US farms. Mexican farmers have suffered for this. But the end result is net increase in jobs on both sides of the border and lower prices for consumers. It's called comparative advantage, and sometimes it actually works.

Maybe Randy Paul would have us go back to a pre-NAFTA economy, but there are lots of people who would complain about that too. You can pretend the global eceonomy doesn't exist, or you can try to make it work better.

posted by: OpenBorderMan on 11.22.06 at 05:28 PM [permalink]


I'm all for that. One way to do it would be to eliminate ag subsidies.

posted by: Randy Paul on 11.22.06 at 05:28 PM [permalink]

Post a Comment:


Email Address:



Remember your info?