Bush seeks free trade from Argentina to Arctic

Just think of it. A new free-trade zone - the world's largest - coursing right through Florida. It's enough to make the Sunshine State explode in a supernova of enthusiasm.

And why not? Turning the entire Western Hemisphere into a toll-free highway for goods and services would directly benefit Florida. A stunning 40 percent of the nation's trade with the Caribbean and Latin America passes through the state - everything from Honduran furniture to US satellite equipment. Any increase in North-South trade, say state officials, would be immediately felt, and welcomed.

As President Bush arrives at the third Summit of the Americas today, he could point to Florida as an example of how the United States would benefit from a trading bloc stretching from the Arctic to Argentina. But as he tries to rebuild sagging momentum for the zone, and especially as he pushes trade issues in a skeptical Congress, observers say he can't sell the idea on its economic merits alone. Despite cases like Florida, the dollars-and-cents argument is simply too weak.

"Just the way Clinton sold China [trade] as in the strategic interests of the United States and supportive of democracy, so the Bush administration will have to sell this as the center of a strategic alliance with the Western Hemisphere," says Richard Feinberg, a trade expert at the University of California at San Diego.

Consider the fact that the United States already has a trade agreement with its two largest partners in the hemisphere, Mexico and Canada.

That agreement - NAFTA - accounts for the lion's share of US trade in the hemisphere, a whopping 83 percent. And while the US is selling more and more goods to Latin America and Canada, it still runs a sizable trade deficit with NAFTA - about $55 billion, according to Bruce Stokes, director of trade programs at the Council on Foreign Relations.

Meanwhile, Washington is working toward a trade deal with another South American powerhouse, Chile - which Mr. Bush hopes to conclude this year. And while US business leaders would love to see Brazil tear down its tariff barriers, they've found a way around them. Much of the Fortune 500 have simply jumped the fence and invested directly in that country.

Given all that, what is there to be gained from four more years of hard negotiations, just to embrace small players such as St. Kitts or Ecuador?

Mr. Feinberg speaks enthusiastically about the potential of 500 million Latin American consumers outside Mexico. But Mr. Stokes and others downplay the business significance of the rest of the region.

"The bottom-line impact of freer trade with Latin America is at best marginal," says Stokes.

Although certain US regions, like Florida, and certain business sectors, like the high-tech industry, would gain considerably from a hemispheric free-trade zone, "the economics are not overpowering," agrees Peter Hakim, president of the Inter-American Dialogue, a forum of officials and academics.

But that doesn't mean Washington shouldn't push hard for the Free Trade Area of the Americas (FTAA), says Mr. Hakim. In the long run, he explains, US interests are far broader than the business promise of the FTAA, which would cover a total of 800 million people with a combined income of more than $11 trillion.

"The fact is that huge numbers of immigrants come from South America. The fact is, our drugs come from South America," Hakim says. Washington is currently spending $1.3 billion on antidrug efforts in Colombia - nearly as much as it gives Egypt.

"A prosperous, politically stable, and democratic Latin America will create a lot less problems for the United States - and, in fact, will begin to serve US interests," he says.

The larger vision

Hakim sees the FTAA as an "anchor" for a long-term relationship that will ultimately mean more business and fewer problems for all parties. This larger vision - a hemisphere of economically connected and fully functioning democracies - is what will be emphasized at the three-day summit this weekend. The attending 34 heads of state are expected to agree to a controversial clause that only democracies be allowed to participate in the summits, which began in 1994.

"If our neighbors are democratic and law-abiding, open to trade, and willing to cooperate with us on improving the environment, fighting drugs, and stopping disease, we can make a vital difference in the life of every American," said Secretary of State Colin Powell this week.

Of course, this is the kind of lofty talk that often precedes these diplomatic events. It's designed to rekindle support for the entire integration process - a process that has so far failed to achieve its main goals. Chile, for example, is not yet part of NAFTA, as promised at the 1994 Miami summit. Education in Latin America has not taken off, either, as pledged at the 1998 Santiago summit.

Fast-track authority

And unless Mr. Bush is able to win "fast track" trading authority in Congress, the free-trade area itself may never materialize. Such authority would prevent Congress from niggling trade deals to death, and allow lawmakers to only vote "yes" or "no" on a deal. Both presidents Clinton and Bush have argued they need fast-track authority in order to negotiate with any credibility.

All of these issues - plus massive opposition from labor and environmental activists - are high hurdles in the effort to connect those who live in the Andes with those who live in the Rockies. But this administration appears determined to push ahead. The hope of summiteers is that this president - who hails from that other Latin country, Texas - can do it.

(c) Copyright 2001. The Christian Science Monitor