economic policy economy general international americas house supports creation

Latin American countries do not have the same interests to protect. There are high disparities within the region itself. It would be naïve to believe that Brazil, a country of nearly 200 million people who recently overtook the UK as the world’s 6th largest economy, and Haiti, that has 10 million people and one of the lowest GDPs in the world, have the same national interest to protect. Even among richer South American nations, there are differences. Brazil tries to protect its industry from American competition while Argentina is strongly against farming subsidies. A country like Brazil will not necessarily stand up for those most vulnerable in the region at the negotiating table.

Multilateralism is preferable to bilateralism.  It is preferable for Latin American countries to band together when negotiating trade deals with the US and Canada, to better protect their interests. After FTAA negotiations failed, the US focused on bilateral strategies and trade deals where the imbalance of power was much greater in favour of the US, and it therefore could more easily dictate terms of the agreement that were detrimental to the interests of the developing country. For example, El Salvador, who is a member of CAFTA (Central America Free Trade Agreement), together with only five other Central American countries, has found itself under legal attacks by foreign investors when it refused to lower its environmental standards in the gold mining industry [1] . Having an emerging global power, like Brazil, be part of the agreement, would counterbalance US influence over the terms.  [1] Gallager, Kevin. “Stop private firms exploiting poor states.” The Guardian. 5 February 2010.

The US has a long history of toppling unfriendly regimes in Latin America and propping up dictators who were agreeable to the US, from Panama to Nicaragua. This has made the people of Latin America very mistrustful of any American intervention in their politics and economy. In fact, many South American leaders see the FTAA as another attempt by the US at imperialist expansions in their continent. This would give them more reasons to rally around Chavez rather than isolate him.

Free trade is good for development and growth.  Free trade essentially removes barriers for companies to do business across countries and regions. This leads to competition between countries in those regions, and between companies and industries in those countries. It leads to the sharing of innovation, drives down the cost of production, and allows workers to move freely where their labour and skills are needed. This is good for all those involved in the transaction. It is good for companies, because they have more resources and markets at their disposal, good for consumers, because competition between companies drives down prices and drives the innovation that improves products, and it is good for workers, because they have greater opportunities to find employment for their labour and skills [1] .  [1] DanBen-David, Håkan Nordström, LAlanWinters. “Trade, Income Disparity and Poverty”. World Trade Organization. 1999.

Free trade does not benefit everyone equally. Rich corporations from developed countries are not interested in growth in developing nations; they are interested in making profits. They just view developing nations as sources for cheap labour and materials, that can be harnessed more easily, due to low levels of environmental and labour regulation. For example, the so-called Maquiladoras in Mexico, which were put in place by NAFTA were rife with labour and environmental violations [1] . Therefore, free trade agreements between rich and poor countries can trap developing nations in the economic cycle as raw material providers, thus preventing them from developing their own national industries.  [1] Human Rights Watch. ”Mexico’s Maquiladoras. Abuses Against Women Workers.” 16 August 1996.

Trade is good for democracy.  Venezuela’s Hugo Chavez has been making sustained efforts to boost his influence in Latin America, with regional tours and substantial investments in neighbouring economies, fuelled by Venezuela’s oil money [1] . He is staunchly anti-American and a supporter of Iran. Meanwhile, he has been restricting freedom of speech in his own country, has done away with presidential term limits, and has essentially proven himself as yet another Latin American dictator in the making. If the US hopes to counterbalance his influence, it needs to become more economically connected to Latin America. Showing that the United States is willing to trade fairly with Latin America would undermine his message. This would not only be the case for the United States as it would also allow Brazil and other successful democratic Latin American states to boost their influence.  [1] Carroll, Rory. “Chavez Opens His Wallet Wider to Boost Latin American Influence.” The Guardian. 9 August 2007.

A multinational trade agreement could equally raise environmental standards across the region. Under the status quo, nothing stops companies from moving to countries that have low environmental standards and few regulations. But if governments agreed, the US could push for higher standards across the entire continent. That way, it would ensure its business environment remained competitive in the American region.

Protectionism cannot create a healthy national industry. Only by competing openly against each other on the global market, companies become truly efficient and effective. And small, local companies and industries can often have the advantage in such a confrontation. They can be more flexible and innovative than large multinational corporations, and they are better adapted to the local climate and culture.

The FTAA is bad for South American Agriculture.  During the FTAA negotiations, the US has consistently refused to eliminate subsidies for American farmers [1] . Because of subsidies, great agricultural surpluses are produced that are then sold on developing markets at prices lower than the cost of production. Farmers in places like Brazil or Argentina, who are much more efficient in their process of production but do not benefit from subsidies, could not compete with these low priced imports, either locally or on the American market. Farmers would soon go out of business.  [1] Marquis, Christopher. “Panama Challenges Miami as Free Trade Headquarters.” New York Times. 11 November 2003. www.nytimes.com/2003/11/11/world/panama-challenges-miami-as-free-trade-h...

FTAA is bad for labour in developed countries.  Liberalizing the labour market across the entirety of the Americas would be a severe blow to workers in the US and Canada. It would put them in direct competition with workers from countries where the average salary is much lower than in the US, who would be willing to work for a fraction of what a US or Canadian worker currently makes. In order to stay competitive in such a market, they would have to accept lower salaries and a cut in benefits. This would reverse decades of progress in the direction of better protections for workers and workers’ rights, as well as lead to higher unemployment levels in developed countries [1] . This has occurred as a result of previous free trade agreements in the Americas for example the North American Free Trade Area (NAFTA) after it was implemented resulted in the displacement of 682,000 US jobs [2] this then gives employers a chance to reduce working conditions as there is surplus labor.  [1] Suroweicki, James. “The Free-Trade Paradox.” The New Yorker. 26 May 2008.   [2] Scott, Robert E., “Heading South: U.S.-Mexico trade and job displacement after NAFTA”, Economic Policy Institute, 3 May 2011,

FTAA is bad for the environment.  Free trade creates a "race to the bottom", whereby developing countries lower their labor and environmental standards in an effort to attract foreign investment. Developed countries, which may have higher standards, are then forced to lower them as well in order to make sure companies don’t relocate or outsource their jobs abroad [1] .  [1] Hassoun, Nicole. “Free Trade and the Environment”. Environmental Ethics, Vol. 31.

The FTAA is bad for industries in developing nations.  This agreement would put farmers and workers in some of the world’s most impoverished nations in direct competition with some of the richest companies in the developed world. FTAA would have small, domestic industries in countries like Bolivia or Haiti compete with massive American corporations, and prevent their governments from aiding them in any way. The disparity of power and resources would be so great in the case of such a collision, that it would mean these small industries could easily be wiped out and never develop to a level where they can sustain a healthy national economy and become competitive against giant multinational corporations. This would be disastrous for development and poverty reduction in South America [1] .  [1] Robinson, Mary. “Free Trade Area of the Americas: Latin America Deserves Better.” New York Times. 18 November 2003. www.nytimes.com/2003/11/18/opinion/18iht-edrob_ed3_.html?scp=1&amp;sq=

Employers will always pay a premium for workers who have the necessary education, technical and language skills that are needed to do the jobs that insure the companies’ financial success. Such workers would be primarily sourced from developed countries, which have the education systems required to educate them. Meanwhile, there are numerous low skill, menial jobs that find no takers, even during high unemployment. Bringing in workers from abroad that would be willing to do those jobs and pay taxes would be mutually beneficial for everyone involved in the exchange.

Subsidies for farming and agriculture mean cheaper food. If Americans were forced to pay the price of production for the food they consume, poverty rates in the US would be much higher. Conversely, in developing South American countries, which have high levels of poverty and wealth disparity, driving down the price of food would actually be of great benefit to those who live below the poverty line.