Free Trade Area of the Americas (FTAA)
Should countries in the Americas agree to the FTAA?
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Free trade is good for development. Free trade can increase income levels, growth and prosperity, th...
Free trade is good for development. Free trade can increase income levels, growth and prosperity, thus acting like foreign aid. Even Oxfam, originally opposed to free trade, has come out in favour of trade as growth-promoting. In developed countries, free trade is a catalyst for growth. It encourages competition, lowering labour costs and overhead. Both Canada and the U.S. have seen unprecedented levels of growth since agreeing to NAFTA.
Free trade can lead to lower labour and environmental standards. Free trade creates a 'race to the bottom', whereby developing countries lower their labour and environmental standards in an effort to attract foreign investment. In Mexico, free-trade zones are rife with labour and environmental abuses, many of them committed by American companies. Further, free trade can lead to unemployment and greater income disparity in developed countries. For example, many automakers have closed their Michigan and Ontario plants, and moved their business to Mexico.
The U.S. is a proponent of 'free trade plus'. It advocates open borders with its partners in the reg...
The U.S. is a proponent of 'free trade plus'. It advocates open borders with its partners in the region. Non-tariff barriers and farm subsidies are the result lobbying by U.S. manufacturers and opposition in Congress. With a blueprint for a free trade agreement, the White House can and will strong-arm its opponents into agreeing to reduce these barriers. Further, the George Bush White House has been a strong advocate of including limited labour and environmental measures in any free trade agreement. The U.S. is also the strongest proponent of the 'democracy clause'.
The U.S. is not really committed to 'free' trade. Venezuelan President Hugo Chavez opposes the FTAA unless the U.S. agrees to changes in the U.S.’s anti-dumping laws, a reduction of non-tariff barriers and an end to farm subsidies. At the WTO, the U.S. has vigorously protected its domestic industries while demanding 'free trade' from other countries. As long as the U.S. remains the region’s largest economy, it will carry diplomatic weight in any future negotiations. And, as such, an FTAA will benefit the U.S. at the expense of the rest of the Americas.
The economic gap between the U.S. and Mexico was similar in 1994. Since then, Mexico’s exports have ...
The economic gap between the U.S. and Mexico was similar in 1994. Since then, Mexico’s exports have boomed. Its GDP has risen and more and more American businesses are flocking to Mexico. Moreover, with economic prosperity, comes political stability. The election of Vincente Fox, and the end of authoritarian rule under the PRI, is proof that economic growth and democratization are connected. These same benefits will ascribe to countries in Latin America and South America with a free trade agreement.
The economic gap between the U.S. and its partners in the region is too great. Many Latin American and South American countries fear they cannot compete with the U.S. and, to a lesser extent, Canada. Further, there is the continuing fear of financial instability, most recently in Argentina and Venezuela. The U.S. rejected Mexico’s idea for a European-style 'social cohesion' fund. And Canada has stated that problems associated with free trade (i.e. rise in income inequality) are to be solved domestically, not through a free trade agreement.
The U.S. wants to use its influence in the region to create economic partnerships. In the 1980s, the...
The U.S. wants to use its influence in the region to create economic partnerships. In the 1980s, the U.S. was seen as a meddling superpower, involving itself in many domestic conflicts in South America and Latin America. Today, its goal is to stabilize the region and promote liberalism and good governance. The FTAA can aid those goals. As proof of American sincerity, the U.S. has backed international loans to Argentina and Paraguay.
The U.S. has a bad reputation in Latin America and South America. Its military bullying in the 1980s led to large-scale killings. Even if America has ended its reign of terror in Latin America and South America, it is not interested in economic assistance to the region. It was indifferent to Argentina’s economic collapse. Is has actually increased farms subsidies and tariff protection for steel-makers.
Today, Brazil’s economy needs free trade. It has a huge trade surplus (US$7 billion globally and US$...
Today, Brazil’s economy needs free trade. It has a huge trade surplus (US$7 billion globally and US$3.5 billion with the U.S.). To grow further, Brazil needs to grow its exports. Also, the FTAA might soothe trade disputes between the U.S. and Brazil. The U.S. is willing to discuss reducing non-tariff barriers and farm subsidies, but Brazil must show commitment to the FTAA process.
Brazil will never agree to the FTAA. President Lula da Silva campaigned against the agreement. Though he has softened his stance since being elected, many Brazilians are fearful of free trade. Liberalization in the 1990s led to job losses and massive unemployment. And Brazil and the U.S. are at odds at the WTO over orange juice, cotton and steel exports.
What do you think?