December 6, 2006 [LINK / comment]

Latin America & U.S. trade policy

One of the big questions in the wake of the November elections is whether the Democrats will pursue a more open U.S. trade policy, like Bill Clinton did, or will revert to protecting declining industries such as textiles. Ironically, most Latin American people have a friendlier disposition toward the Democrats, even though the Republicans are stronger on free trade issues, and therefore more likely to enact measures that would actually help Latin American economies. Resentment over U.S. political dominance in world affairs often counts for more than bread-and-butter considerations, even in very poor countries, or perhaps especially in very poor countries.

Two weeks ago the Washington Post had a background story that highlights the anxiety felt in Colombia and Peru, where free trade treaties are awaiting ratification in the U.S. Congress. Thousands of jobs are at stake, and at least one factory has already closed because of declining trade prospects. The article quoted Michael Shifter, of the Inter-American Dialogue in Washington:

"If you really look at the U.S. agenda in Latin America, trade is the only positive. 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."

Indeed, public impressions of Latin America in the United States -- and vice versa -- are usually not very good, as prejudice and distrust shapes opinions. The article emphasizes that President Uribe of Colombia could suffer a loss of prestige unless trade relations with the United States are quickly strengthened. Why does that matter to us? Because Colombia is in the grip of a nasty civil war, in which narco-terrorists intimidate local government officials and lure poor, destitute people to work in their criminal syndicate. The narco-terrorist threat in Colombia has a direct bearing on the United States, via drug corruption. Venezuela's Hugo Chavez is waiting for the opportunity to gain more influence in Colombia, and he is clearly hoping that the U.S. Congress rejects free trade with Latin America.

Rep. Charlie Rangel, the incoming Ways and Means Chairman, is demanding that the trade pacts with Colombia and Peru be modified to include higher labour standards. In other words, he would be willing to condemn thousands of export-industry workers in Latin America to unemployment just because industries in those countries can't meet U.S. standards. What will those workers do? Probably come to the United States and take jobs in sectors where the minimum wage laws or other regulations make it uneconomical for businesses to employ legitimate workers. In other words, it's the perfect, global-scale scam. That's not to say that all Democrats or leftists are being cynical on this policy issue, however. Indeed, it can also be seen as a classic case of perfectionist ethical standards backfiring, as naive do-gooders end up making things worse. Daniel Drezner wryly "applauds" Democrats for raising the U.S. standing in Latin America via the trade issue.

More seriously, perhaps, this is precisely the type of issue where an ad hoc, cross-party coalition will be formed to pass the necessary legislation. Most reasonable people know full well that encouraging more trade with the less developed countries of Latin America is clearly in our national interest. Members of Congress who happen to represent areas where adversely affected workers live cannot be counted upon, of course. Nevertheless, anyone who is serious about promoting economic opportunities here and in Latin America, and improving security in the Western Hemisphere, should strongly favor the trade bills with Peru and Colombia. It is a matter of vital national interest, and parochial influences must be overcome for the greater good.