Research
Paper on US Economic Policy towards Latin America
Introduction
The economies of the Western Hemisphere were decided to be
united into a single free trade agreement at the Summit of the
Americas, held in December 1994 in Miami. The Heads of State and
Government of the 34 democracies in the region decided to build
a Free Trade Area of the Americas, or FTAA, in which the embargo
on trade and investment was decided to be progressively
eliminated, and complete negotiations for the agreement by 2005.
The leaders decided that the FTAA negotiating course is crystal
clear and take into account the differences in the levels of
growth and size of the economies in the Americas, in order to
ease full contribution by all countries. The fight against
terrorism, which has assumed global proportions, has of late
over shadowed the development. Latin American countries have not
been the exception to this trend in any sense, wooing the United
States with anti-terrorism compliance and taking benefit of the
state of affairs to suppress national opposition and reinforce
personal power. Further increase in arms and other changes were
incorporated in the region. (Simon Helweg-Larsen, 2002)
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Analysis of Economies of Latin America
The analysis of economies of Latin America countries, in the
light of recent developments can be described as under; This
year’s aid package to countries nearby Colombia will provide a
220 percent increase over 2000-2001 averages in military aid to
Panama, a 144 percent increase for Venezuela, 345 percent for
Brazil, and between 20 percent and 82 percent increases for
Bolivia, Ecuador and Peru. Security and intelligence gathering
will continue to increase this coming year, whether in the name
of the war on drugs, the war on terrorism, or just old-fashioned
military spending. (Economic Perspectives, 2002) In adding
together the military spending, the war on terrorism has
permitted the United States to add to role in Latin American and
to overturn human rights environment on military support. The
Bush administration’s new height of prejudice for security, for
Latin America would most likely interpret to a negative response
to let go military activities in the increasing conflicts of the
Andean area. The U.S.A has been supplying aid to support the
cause of human rights and also punishing the violators by
prohibiting the funding of individuals or organizations believed
to be involved in human rights violations. These” cuts backs” in
fact serve as an instrument to advance the long-term policy of
U.S.A. in the region.
Pros & Cons of Forming Free Trade Area
The Free Trade Area of the Americas provides opportunity and
holds an attraction for many businesspeople throughout the
Western Hemisphere. They believe that the FTAA's ultimate
objective of free movement of goods and services throughout the
region, combined with the highest standards for protecting
investment and intellectual property rights, presages a
much-improved hemispheric business climate. They are sure that
the FTAA, combined with continued regulatory and fiscal reform
and sound macroeconomic policies, can help promote economic
increase, capitalist chance, and job formation, and can widen
affluence among all 34 countries.
Free Trade Area
In November 2002, the United States and Brazil assumed the
co-chairmanship of the final phase of the Free Trade Area of the
Americas (FTAA) negotiations, to reach agreement on creating a
single free trade area stretching from Alaska to Argentina. The
economies of the Western Hemisphere were decided to be united
into a single free trade agreement at the Summit of the
Americas, held in December 1994 in Miami. The Heads of State and
Government of the 34 democracies in the region decided to build
a Free Trade Area of the Americas, or FTAA, in which the embargo
on trade and investment was decided to be progressively
eliminated, and complete negotiations for the agreement by 2005.
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• Features/Pros & Cons Following are few features of
establishing the FTAA;
All countries will have frequent inter action with each other,
decisions will be taken by consensus, and negotiations will be
conducted in a transparent manner;
The FTAA will have opportunities to not only go consistent with
WTO rules and disciplines, but also improve upon these rules and
disciplines and appropriately expand its business;
The FTAA can coexist with bilateral and sub-regional agreements
and countries may negotiate and accept the obligations of the
FTAA individually or as members of a sub-regional integration
group; and
Special attention will be given to the needs of the smaller
economies.
It stresses the importance of trade liberalization in the
Americas to boost economic growth and strengthen the ties that
unite the region's 34 democracies.
Policies via the Free Trade Area of the Americas (FTAA) can help
the countries of the region "finish the job" of becoming viably
competitive economies.
The FTAA can translate into even broader benefits, by making the
entire hemisphere available for sourcing inputs and selling
products without penalty, the region-wide trade area will help
make companies based in the Americas more competitive than ever
on a global scale.
Under an FTAA, virtually all of the tariffs will be eliminated
-- either immediately or over phase-out periods ranging up to 10
years from the agreement's projected entry into force in 2005.
The full potential of the FTAA however could not be realized.
The negotiators have still not addressed number of areas beyond
trade and investment, such as the need for dependable law
enforcement and independent judiciaries.
The FTAA negotiations have had a star-crossed history. Each
summit meeting has been followed by serious financial crises in
the region that have called into question the viability of the
FTAA talks.
Description: NAFTA
North American Free Trade Agreement: NAFTA was established on
January 1994 and now has an extensive real life record. NAFTA's
proponents promised that the pact would create new benefits and
gains in each of these areas that are engaged in the agreement.
The benefits ¬of 200,000 new U.S. jobs from NAFTA per year,
higher wages in Mexico and a growing U.S. trade surplus with
Mexico, environmental clean-up and improved health along the
border ¬have failed to be materialized as was earlier promised
at the time of inception of the set up. However, after eight
years, NAFTA seems to have failed to basic test of all: a simple
do-no-harm test, due to which conditions have deteriorated
instead of improving.
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Description: Recent / Current Efforts to Form Free Trade Area
In a recent development a number of key decisions were made
regarding the FTAA negotiations at the sixth Ministerial
meeting, held in Buenos Aires, and at the Third Summit of the
Americas held in Quebec City on 11 April 2001, where draft text
of the FTAA was presented for approval. The Ministers in the
conference in an unparalleled move designed to add to the
transparency of the course, recommended to their heads of State
and Government to make this text available to public.
Resultantly the draft FTAA agreement was made available to the
public in all four official languages on July 3, 2001. Ministers
underlined the need to promote conversation with Civil Society,
and the summaries of the second round of Civil Society
submissions in response to the open invitation were agreed to be
placed on the FTAA Website. Ministers highlighted the
significance of the provision of technical help to smaller
economies to ease their participation in the FTAA.
In a current development the deadlines were fixed for the
conclusion and execution of the FTAA Agreement. Talks are to be
completed no later than January 2005; entry into force will be
sought as soon as possible thereafter, no later than December
2005. (Second Draft FTAA Agreement, 2002)
Description: Effects of Current US Policy
The current US policy has varying effects on Latin Americas. The
attacks on the United States changed the course of world
politics at a time for Latin America when economic and political
crises were looming in many countries and had erupted into
disaster in others. Indeed, the prevailing attitude within Latin
American diplomatic circles prior to September 11 was one of
concern over looming crises and aggravation at U.S. breakdown to
pay notice to those countries in need. Argentina seemed to be
the clearest case: the country was in economic ruins with
serious political instability, but the dominant attitude from
financial institutions to the north was one of weathering out
the storm. It should come as no surprise, then, that the
immediate response from officials across Latin America to the
September 11 attacks was visible support for U.S. anti-terrorist
measures as countries jumped on the opportunity to win favor and
attention from the North. Approximately 6 million people of Arab
descent live in Latin America, and they immediately began to
feel the heat from Latin American countries as well as the U.S.
The “Triple Frontier” border area of Argentina, Brazil, and
Paraguay, home to one of the largest Arab concentrations in
Latin America has “come to resemble Casablanca during World War
II, with local intelligence and law-enforcement agencies being
joined by a number of U.S. counterparts, as well as Israel’s
Moss ad and the German and Spanish secret services.”(Scott
Otteman , 2002) In short freer trade has long been a centerpiece
of U.S. policy in the Americas, not only to boost economic
growth but also to strengthen the ties that unite the region's
34 democracies,
Conclusion
The Free Trade Area of the Americas provides opportunity and
holds an attraction for many businesspeople throughout the
Western Hemisphere. They believe that the FTAA's ultimate
objective of free movement of goods and services throughout the
region, combined with the highest standards for protecting
investment and intellectual property rights, presages a
much-improved hemispheric business climate. They are sure that
the FTAA, combined with continued regulatory and fiscal reform
and sound macroeconomic policies, can help promote economic
increase, capitalist chance, and job formation, and can widen
affluence among all the Latin American countries.
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