Bypassing Brazil on Free Trade

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But then, there's Brazil.

A leftist nationalist named Luiz Inacio Lula da Silva appears set to win Brazil's presidential election on Sunday. Among other protectionist measures, the head of the Workers Party claims that a proposed Free Trade Area of the Americas (FTAA) would be just a US "annexation" of its southern neighbors.

An FTAA would extend to all of Latin America (except Cuba) the benefits now enjoyed by the US, Canada, and Mexico under NAFTA. International talks to form a Western Hemisphere trade pact by 2005 start on Nov. 1, with, oddly enough, Brazil and the US as cochairs. To make it work, however, Washington will have to show some politically painful flexibility, especially if Mr. da Silva wins.

For instance, Brazil would like to sell more sugar and orange juice concentrate to the US, but the tariffs and other duties on those products are steep. And agricultural interests in the US – notably in Florida – are well-organized to keep them that way. On the other side, Brazil doesn't want US firms to go into some of its larger sectors, such as the automotive industry.

In fact, every country in the region is likely to have its key sector that needs special consideration. Sorting out the issues could be a Herculean task.

With Brazil likely to be a stumbling block, the US plans to finish up trade- pact talks with Chile soon, and is initiating talks with five Central American nations. This sort of cherry-picking of free-trade allies by the US may eventually show Brazil that more open trade can uplift that large nation.

If the focus is kept on long-term economic possibilities for the whole hemisphere, then all 34 countries should have new opportunities to sell their goods and services and to attract fresh investments. FTAA is a project well worth sustaining.