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Controlled Delay for FTAA

Daniel Barclay

The projected Free Trade Area of the Americas, or FTAA, holds great promise to increase the prosperity of our hemisphere by opening markets and removing trade barriers. First proposed nearly a decade ago in the aftermath of the Cold War, it is slated to create an economic zone encompassing 34 countries, 800 million people, and $13 trillion in GDP by January 2005. A recently concluded bilateral trade agreement with Chile has raised hopes for a timely implementation of the larger pact.

Problem is, it won’t happen. Not on time. Both Americas are currently unable to give FTAA negotiations the effort they deserve.

The United States has its mind on other matters. First September 11, then Afghanistan, then Iraq, and now the Mideast peace process have combined to divert attention from its own region. In the words of former Mexican foreign minister Jorge CastaÑeda, “Latin America finds itself consigned to the periphery: it is not a global power center, but nor are its difficulties so immense as to warrant immediate U. S. concern.” Diplomatic capital must be focused elsewhere -- and even that which is available may be of limited effectiveness because of domestic impediments. Much of the public registers either apathy or outright opposition to the FTAA. Partisan acrimony, which scuttled fast-track trade authority renewal in 1997 and almost did so in 2001, is at a recent high and will only grow worse with the upcoming election. And President Bush will be reluctant to push the FTAA during the campaign out of fear of antagonizing protectionist swing states.

But these circumstances seem positively rosy when compared to the Latin American side of the equation. Many disillusioned Latin Americans feel that the Washington Consensus of economic liberalization has failed to meet expectations, and hence are skeptical of the FTAA. While some countries will contravene negative public opinion in favor of long-term trade interests, recently elected leaders in the key states of Brazil and Argentina have shown little such inclination. Rather, they have flirted with the idea of expanding Mercosur to create a South American free trade zone before including northern neighbors. Vehement FTAA opponent Hugo Chavez of Venezuela would exclude the U.S. permanently.

In short, over the next 18 months FTAA negotiations face formidable obstacles. The prevailing attitude is one not of enthusiasm, but ambivalence. U.S. Trade Representative Robert Zoellick may be a miracle worker, but this could prove beyond even his capabilities.

So the deadline won't be met. What to do? The most straightforward option is simply to run out the clock and set a new deadline. But the indiscriminate breach of one deadline would inevitably lead observers to devalue the next. Latin American leaders could conclude that the U.S. is not truly serious about hemispheric free trade, and readjust their priorities accordingly. An uncontrolled delay could not help but sap momentum from the ensuing round of FTAA negotiations, undermine the credibility of the negotiation process, and generally decrease the likelihood of procuring a final agreement.

Another idea is to settle for a punctual partial accord, with the intention of hashing out the details later. While such a plan is feasible, and could very well be incorporated into a final strategy, it is fraught with risks as a strategy in and of itself. If not executed carefully, a face-saving deal could provide FTAA opponents with an excellent excuse to limit further progress by portraying the half-measure as a reasonable final compromise and casting further negotiations in a radical light. A partial agreement could all too easily become the only agreement.

Far better for the FTAA principals to frankly admit that they won’t make the January 2005 deadline. Instead, they should make a strong, genuine commitment to begin a vigorous pursuit of FTAA negotiations at a more expedient time -- coincidentally, January 2005. Latin America will have had nearly two extra years for wavering governments to rally the public support they crave. In the United States, a relatively uncrowded national agenda and the president's recent solid election victory would permit the designation of the FTAA as one of several minor priorities. And in both regions, an improved economy would render the public more receptive to a free-trade pact.

In essence, this strategy strives to get the best of both worlds. By making clear that FTAA negotiators planned ahead and are in control, it would forestall derision from protectionists intent on interpreting a delayed schedule as evidence of a sputtering outlook for success. Neither would it engender lasting fallout from disappointed free-traders, who could take solace in the process’ newfound credence. Meanwhile, any partial agreement would tend to be viewed as a sign of progress rather than desperation. A “controlled delay” in negotiations is not a perfect solution, but it may represent the best hope of salvaging the FTAA and the benefits to trade, prosperity, and U.S.-Latin American relations that it represents.

And it wouldn't require a miracle at all.

Daniel Barclay is a member of the class of 2007.