The fleeting charm of free trade
The Star, Canada, Sep. 12, 2005
The fleeting charm of free trade
CAROL GOAR
The signs are scattered and tentative. But it’s beginning to look as if American-style free trade is going out of style.
No one is about to boycott the United States or stop selling into its massive market.
But the appeal of bilateral and regional trade pacts - like the one Canada signed with the U.S. in 1988 and the North American Free Trade Agreement of 1993 - is definitely fading.
America’s current trading partners are openly questioning the value of their agreements with Washington. Prospective partners are walking away from the table.
Early this year, a decade-long drive to reach a hemispheric trade deal (Free Trade Area of the Americas) ran aground. The initiative, launched with great fanfare by former president Bill Clinton in 1994, was designed to bring 850 million people in 34 countries into a single barrier-free market. The deadline was Jan. 1, 2005.
The talks broke down when it became clear that Brazil, Argentina and Venezuela weren’t about to accept Washington’s terms of trade.
The U.S. is hoping to get the plan back on track at this fall’s Summit of the Americas in Argentina (Nov. 4-5). But the prospects don’t look favourable. Venezuelan President Hugo Chavez is adamantly opposed to it and other Latin American leaders are rethinking their positions.
Meanwhile, Ottawa - Washington’s oldest and largest free trade partner - is close to giving up hope of reaching a fair settlement of its softwood lumber dispute with the U.S.
Canadian negotiators are refusing to return to the bargaining table. This is not so much an act of defiance as a testament to the pointlessness of making deals with the United States.
Three times, since entering its free trade partnership with the U.S., Canada has followed the rules laid out in the agreement to adjudicate American claims that its lumber exports are unfairly subsidized. Three times, an impartial panel has ruled in Canada’s favour. Yet the U.S. continues to impose punitive duties on Canadian softwood.
The latest flare-up occurred last month, when a final-appeal panel under the North American Free Trade Agreement ruled that the U.S. had no right to impose a 27 per cent levy on Canadian lumber imports. U.S. Trade Representative Rob Portman said his government disagreed with the decision and would disregard it.
"The American position is absolutely untenable," said Prime Minister Paul Martin. "We’ve got to step up with retaliation, in my view," said Industry Minister David Emerson.
That led to a paternalistic lecture from U.S. Ambassador David Wilkins, who advised Canadian politicians to stop their "emotional tirades" and seek a negotiated settlement with their American counterparts.
Canadians shook their heads in disbelief. The rest of the world - Latin America in particular - got a vicarious taste of free trade with the U.S.
There is one final factor to add to the mix: the Bolivarian Alternative.
Venezuela’s socialist president seeks to do more than scuttle the American-led effort to create the world’s largest free trade zone. Chavez’s aim is to unify Latin Americans around a different vision, one he says is inspired by Simon Bolivar, who liberated the continent from Spain in the 19th century.
Initially, his ambition seemed overblown. But lately, with oil wealth pouring into Venezuela’s coffers, he has begun to build regional linkages. He has signed deals with several Caribbean nations - Jamaica, the Dominican Republic, Antigua, Suriname, St. Kitts and Nevis - providing them with oil on credit or offering to take bananas, rice or sugar in exchange.
He has bought some of Argentina’s public debt and forged a strategic alliance with Brazil. He has agreed to swap cheap oil for doctors with Cuba, setting up free eye clinics in Venezuela for Latin Americans who can’t afford cataract surgery. He hopes to establish a continent-wide literacy program and a South American energy co-operative.
How successful Chavez’s integration program will be remains to be seen. But he has given his neighbours a glimpse of a kind of solidarity unlike anything the U.S. is proposing.
It is too early to write off Washington’s scenario of a bloc of market democracies led by the United States. President George Bush succeeded, this summer, in getting congressional approval for his year-old Central American Free Trade Agreement. He could still breathe life into the hemispheric initiative by offering to reduce his country’s massive farm subsides.
But a privileged trading relationship with the world’s reigning superpower is no longer the coveted prize that it once was. A growing number of countries regard it as dubious asset.
