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US poised for CAFTA setback
Faced with entrenched opposition to CAFTA, the free trade policies that are essential to the Bush administration's emerging geostrategy are poised to suffer a setback, threatening an erosion of US power in Latin America
By Dr. Michael A. Weinstein for PINR (27/05/05)
Having lost the battle to name the secretary general of the Organization of American States (OAS) to the Brasilia-Caracas combine, Washington now faces the prospects of a further erosion of power in Latin America over trade issues. Although Washington has abandoned the geostrategic aim of being the arbiter of the globalizing world economy, its vital interests demand even more that it maintain, entrench and, perhaps, expand its hemispheric influence so that the
United States can be a strong regional power. The shift in Washington's strategic perspective was made explicit by US Commerce Secretary Carlos Gutierrez, when he said in an interview with the BBC that in a world of "regional trading blocs where everyone trades with everyone else," the US must fortify its position in its own region. Gutierrez was defending the proposed Central American Free Trade Area (CAFTA) that would tie the US to the major Central American states - Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, with Panama an associate - and to the Dominican Republic in the Caribbean in a pact formalizing export advantages that the parties to the treaty already possess, extending those advantages, and opening up export and investment opportunities for US businesses.
Prelude to FTAA
Gutierrez ducked a question about whether Washington sees CAFTA as a to its long-desired Free Trade Area of the Americas (FTAA) that would link all the Latin American states in a similar deal; instead, he focused exclusively on Central America. His silence on the FTAA was an acknowledgment that it is off the table for the foreseeable future because of the determined opposition of Brasilia and Caracas, along with Buenos Aires and Montevideo, all of which have left or left-center governments that have pledged to create an independent regional trade area.
CAFTA in trouble
CAFTA takes on special importance for Washington in the present conditions in world politics of a drift towards multipolarity. Historically an undisputed part of the US' sphere of influence, Central America seems to be a natural place for Washington to consolidate and fill out the scope of its regional leadership. Failure to consummate CAFTA would result in a loss of US credibility,
decreasing its influence in trade negotiations elsewhere and signaling that it cannot make good on its commitments. Already embroiled in disputes over immigration policy with Washington, Mexico City would be encouraged in its present southward turn, and the Central American states would be more open to economic and strategic penetration by other power centers, particularly the Brasilia-Caracas combine. The prospects for CAFTA are bolstered by the support for it from the right and right-center governments of the Central American states and the
Dominican Republic - El Salvador, Guatemala, and Honduras have already ratified the agreement and the other three Latin American partners are expected to do so.
Competition from China
Under pressure from publics threatened by economic competition from China, particularly in the textile sector, the administrations of the Central American states are counting on CAFTA to stem job loss and bring in fresh investment, averting a recession that might bring them down and usher in left-populist governments. Strong left oppositions are waiting in the wings in El Salvador and Nicaragua, which has recently seen unruly street protests over economic concerns and which has been politically deadlocked by a confrontation between a left-right alliance of convenience in its parliament and President Enrique Bolanos. Washington's greatest hemispheric threat is that Central America will follow the pattern of much of South America and
join a leftward turn that might take Mexico along with it. Yet CAFTA is in trouble in the US due to opposition to it by a varied coalition of interests, notably sugar growers, some segments of the textile sector, labor unions, environmentalists, and human rights organizations. The coalition has made serious inroads in the US Congress, where enough resistance to the trade pact has emerged on both the Democratic and Republican sides of the aisle to force the Bush administration to hold back on asking for a vote on ratification. According to the original time frame, US ratification was to have been completed by 31 May 2005, but that deadline will not be met and no ratification vote has been scheduled.
The fate of CAFTA
The Bush administration has become so concerned about the fate of CAFTA that it mounted in the past two weeks a major public relations and lobbying effort in support of the treaty; this effort involved bringing all six presidents of the Latin American partners to the US to try to sway congressional sentiment. In addition to Gutierrez, Defense Secretary Donald Rumsfeld, Agriculture Secretary Mike Johans, and Deputy Secretary of State Robert Zoellick were mobilized to sell the benefits of CAFTA to the constituencies of their departments. Due to other more highly visible issues - Iraq, Afghanistan, and judicial appointments - the lobbying blitz occurred beneath the major media's radar screen and ended without substantially improving the chances for
CAFTA's ratification.
The bottom line
Faced with entrenched opposition to CAFTA, the free trade policies that are essential to the Bush administration's emerging geostrategy are poised to suffer a setback, threatening an erosion of US power in Latin America and the possible advent of regimes in Central America that would be unfavorable to Washington's interests.
This article originally appeared in Power and Interest News Report, PINR, at (www.pinr.com). All comments should be directed to content@pinr.com.
http://www.isn.ethz.ch/news/sw/details.cfm?ID=11368
Editor's note: Now, the Bush administration wants to enact the North American Union with its accompanying Amero currency. Will we allow this to happen?
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