LIMA, Peru, Sep 5 (OneWorld) - The Bush administration has
announced it may revoke trade preferences from three large South American
countries in a move some experts believe is designed to pressure them to
consent to free trade agreements with the United States.
For over
30 years, trade preferences have enabled underdeveloped countries to
export products to developed countries without paying tariffs or customs
fees. The U.S. established its trade preferences program--called the
General System of Preferences (GSP)--in 1976, and has renewed it eight
times, most recently in 2002.
The three countries most likely to
lose trading preferences with the United States--Argentina, Brazil, and
Venezuela--have said U.S. proposals to open a giant free trade zone among
the countries of North and South America unfairly favor U.S. companies.
"As a strategy, the U.S. may not renew trade preferences...so as
to pressure countries in the region to sign free trade agreements," said
Romy Calderon, an economist at the non-profit Latin American Association
of Development Financial Institutions (ALIDE), in Lima, Peru.
Preferences will be reviewed because the Bush administration has
not had success promoting the Free Trade Agreement of the Americas (FTAA),
a program that would turn all of the Americas into a free trade zone,
Calderon told OneWorld. "The U.S. sees this as an alternative way to
advance the FTAA little by little," he said.
In mid-August, U.S.
trade representative Susan Schwab announced the administration-mandated
review of its trade preferences program. Schwab said the purpose of the
review was to determine which countries needed preferences most.
Countries with upper-middle-income economies based on the World
Bank's classifications--which in Latin America include only Argentina,
Brazil, and Venezuela--would be less likely to get renewals than poorer
countries, Schwab said.
Altogether, the 133 countries covered by
the GSP exported $26.7 billion worth of goods to the U.S. market duty free
in 2005, accounting for just over 1 percent of all goods and services
imported by the United States. Existing preferences are set to expire
January 1, 2007, unless Congress renews them first.
U.S. officials
have cast the review as an effort to ensure tariff preferences don't go to
rich countries while ignoring poor ones; but it also serves a more
strategic function in Latin America, according to Ariela Ruiz Caro, a
Peruvian economist and a regional trade analyst working with the
International Relations Center (IRC), a non-profit social justice group
based in New Mexico.
"The U.S. government's announcement that it
will review the possibility of limiting, suspending, or withdrawing trade
preferences under the General System of Preferences to three Latin
American countries--Argentina, Brazil, and Venezuela--is political
pressure to make these nations participate in the model of regional
integration proposed by the United States," said Caro.
If
countries agree to one-on-one talks with the United States, they are
likely to be forced to accept far less favorable trading conditions than
if they negotiate as a group, Caro added.
The announcement to
review trade preferences is also designed to punish developing countries
that collectively rejected the FTAA proposal earlier this year, as well as
those who stood against U.S. proposals at the presidential summit of the
Americas held in Mar del Plata, Argentina in November 2005, Caro said in a
recent paper on the IRC's Web site.
Latin American countries
largely opposed the Bush administration's free trade agenda at that
summit, according to the Washington, DC-based women's rights group MADRE,
because "the U.S.-driven economic processes of the past two decades [has]
worsened poverty, income inequality, displacement, and cultural and
environmental destruction."
Free trade agreements threaten food
security and public health, the group said, adding that they can often
undermine democracy, increase militarization, and lock countries into
supporting U.S. foreign policy like the war in Iraq.
At least one
U.S. legislator has said countries that opposed U.S. proposals in recent
World Trade Organization (WTO) talks, which were suspended in July, should
not receive the GSP trading privileges in the future.
"Countries
that don't want to give us access to their markets in the WTO
negotiations, why should we continue to give them preferential treatment?"
asked Senate Finance Committee Chairman Charles Grassley, an Iowa
Republican, after the WTO negotiations collapsed.
Grassley's
committee would have jurisdiction over any legislation to extend the GSP
program.
Leaders like Venezuela's Hugo Chavez and Argentina's
Nestor Kirchner, who have been pushing regional integration models like
the South American trading block known as Mercosur, are also upset about
the U.S. announcement that trade preferences may be revoked.
The
potential suspension of U.S. trade preferences is "reminiscent of the old
theories of the Roman Empire toward countries that didn't agree with its
policies," Kirchner said in August, while Chavez has repeatedly warned
other South American countries that signing deals with the U.S. would
threaten regional ties.
At least partially, it appears the U.S.
threat of removing trade preferences is accomplishing what economists like
Caro and Calderon say the Bush administration wants.
Both Colombia
and Panama have expressed eagerness to complete trade deals with the U.S.
before preferences lapse, and Peru and Chile are optimistic their free
trade agreements, which would also extend preferences, will be approved by
U.S. lawmakers before December 31.
If larger countries like Brazil
and Argentina sign bilateral deals with the United States, smaller nations
in the region would likely be pushed into similar agreements, according to
the IRC's Caro.
In Uruguay and Paraguay, trade negotiations with
the U.S. are ongoing. Talks between the U.S. and Ecuador stopped, however,
after the Ecuadorian government ended a contract with California-based
Occidental Petroleum to operate an oil field. |
