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Commentary

The Splitting of the Americas


     
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The recent Summit of the Americas, held in Mar del Plata, Argentina, has left a schism between two great blocs within our continent. On one side are the 29 countries that are trying to inject new life into the FTAA, the broad free-trade agreement that would extend from Alaska to Patagonia. On the other side are the four Mercosur (South American Common Market) countries and Venezuela that oppose the plan.

Mexico, Panama and the United States appear to lead the first group, while Brazil, as the most powerful partner in the southern market, is the nation leading the opposing camp.

But this split in the Americas in fact points to a continental split of a different nature. Bush's trip to Brazil and the conflict that has developed between Mexico and Venezuela in the aftermath of the Summit of the Americas indicate that we are looking at a more complex reality that involves not only trade disagreements but also -- and in a more decisive manner -- deep political and ideological rifts.

What Brazil desires, as the economic engine of the Mercosur, is to retain the privileged position it holds in that trading bloc, thanks to the big difference between its powerful economy and the much weaker economies of Argentina, Uruguay and Paraguay. The Mercosur is a very protective market that raises tall tariff barriers against countries outside the group; this provides Brazil with a fertile field for the development of its industries.

But behind this Brazilian toughness there is no ideological rejection of the principle of free trade. What Brazil really wants is for the United States to reduce the subsidies it grants its farmers, so Brazilian agricultural products can be sold in the broad and coveted U.S. market.

In effect, Brazil is hanging tough in the negotiations to obtain special benefits in a new continental common market. It is the old traditional protectionism, an economic nationalism that accepts the benefits of globalization and undoubtedly wishes to join it -- although with a bit of caution.

On the other hand, Venezuela's position is completely different. To Venezuelan president Hugo Chavez, the goal is to portray himself as the paladin of those who oppose free trade on principle, while simultaneously rising as an implacable foe of the United States.

That is why Chávez assumes the role of officious representative of Fidel Castro's Cuba. It is also the reason he has trained his guns on Vicente Fox, the Mexican president, who at Mar del Plata, again raised the question of the FTAA and voiced some criticism of Chávez's radical opinions. This gave Chávez the opportunity he sought to stay on the front page of the media.

However, Chávez went overboard and failed to gauge the consequences. By calling Fox "a puppy cowering before the Empire," the Venezuelan leader broke the basic rules of diplomatic courtesy, offended one of the world's most important nations and ended up creating an incident that almost led to a break in relations between the two countries.

Hugo Chávez utilized the weapons he is accustomed to wielding against the local opposition: insults, diatribes and threats intended to frighten the adversary. Sometimes, when he thinks it convenient to do so, the Venezuelan leader changes the tone and adopts an apparently conciliatory attitude vis-à-vis those governments he has previously attacked in order to negotiate from a position of strength. But this technique clearly has not served well him against Mexico, a country with a nationalist tradition where his style of behavior cannot be accepted.

What becomes clear is the actual number of nations, some with more and some with fewer reservations, that are trying to promote the well being of their people through expanded trade accords is not 29 but 33. Only Venezuela, in a very tight alliance with Cuba, is trying to create a different movement that will exclude the United States and move directly toward socialism.

The rest of the continent seeks integration. Once the Central American Free Trade Agreement is approved, Central America and the Dominican Republic will put it into effect early next year, so in practice they will join the free-trade zone of North America, which has so notably propelled Mexico's economy.

Chile already has a free trade agreement with the United States and enjoys one of the freest economies in the region, while Colombia, Peru and Ecuador are currently negotiating a treaty with the northern countries. In sum, only Brazil and the Mercosur are expressing some reticence, an attitude that the trade talks in progress at present could eliminate almost completely.

Unfortunately, Venezuela remains alone and it will be difficult for it to expand its small socialist club, currently backed only by the dean of the world's dictators.


Carlos Sabino is an adjunct fellow with The Independent Institute, and a visiting professor and researcher at the Universidad Francisco Marroquín Foundation in Guatemala.

This article was written for The Center on Global Prosperity at the Independent Institute.






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