TCS Daily

Cry for Me Argentina

By Mario Villarreal, PhD, MA - November 10, 2005 12:00 AM

Last weekend, besides the official Summit of the Americas, another summit took place in Mar del Plata, Argentina. "La cumbre de los pueblos," the Summit of the People, was the main venue for protesters to manifest their opposition to President Bush, the United States, free trade, greedy corporations and all the things that encompass the "imperialist capitalism responsible for the suffering and poverty in the region."

In the parallel summit's final event, Venezuela's President Hugo Chavez, former soccer player Diego Maradona and the leading Bolivian presidential candidate, socialist Evo Morales, asked for a symbolic minute of silence for the "death" of a free trade agreement for the region.

Although the final declaration of the official summit was not a death certificate, the prognosis for the pact is not promising. Disagreement on the creation of a Free Trade Area of the Americas (FTAA) is evident.

Point 19 of the declaration states that, while some members maintain their commitment to achieve a balanced FTAA agreement, others argue that there are no conditions for a fair agreement free of subsidies that take into account significant economic differences among countries in the region.

The latter charge is led by Chavez and reflects a pattern that will not go away anytime soon. Despite mild optimism among American officials regarding other countries' favorable dispositions towards the FTAA, Chavez successfully continues to disparage the trade pact. Even countries that supported the US position insisted that the dissenting views should be included in the final declaration.

Opposing the FTAA is a strategy that makes total sense for Chavez and company. Although the globalization process entails more benefits than costs, potential for loss exists, mainly among those in a less favorable position to adapt during the transition.

The poor can fall into this category. Without easy access to new job skills, education, and affordable credit, and living in an economically and politically unstable environment that hinders entrepreneurship, the poor can be trapped in the transition.

Moreover, even though the answer is not to isolate them from the globalization process, political opportunists like Chavez will not miss the opportunity to profit from the misery of those he claims to protect.

Chavez finds it more advantageous to oppose free trade than to advocate more investment in education. After all, if the poor become educated, they may start to realize that they are being used and exploited for political purposes. Their votes could no longer be bought with a bag of beans and a free t-shirt.

And, of course, it is easier to demonize the US and its agenda than to promote an efficient financial system. The poor might prosper and become less dependent.

Opportunistic leaders would rather maintain an economic and political system that favors big bureaucracies and inefficiencies than to promote free markets and respect individual freedom. It is in their interest to do so.

And the developed world, including the US, has its own problems in being a congruent free trade advocate.

While President Bush is still making a case for the FTAA, looking to provide US manufacturers with increased access to new markets and better intellectual-property protection, Latin American farmers wonder how they can compete with a heavily subsidized US agricultural sector.

President Bush's good intentions in pushing for free trade are bounded by domestic politics and elections in 2006, making the deal harder to sell to skeptics in the region and making Chavez's free-trade derailing strategy easier to buy.

A minute of silence seems appropriate. But the grief is for another missed opportunity for prosperity in Latin America.

Mario Villarreal is a Doctoral Fellow at the American Enterprise Institute.


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