Latin America Summit Ends with No Free-Trade Zone

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Negotiators were unable to agree on a U.S.-favored free-trade zone covering most of North and South America at this week's Summit of the Americas in Mar Del Plata, Argentina. Twenty-nine of 34 nations, led by the U.S., Mexico and Canada, support the deal.

LIANE HANSEN, host:

Leaders of the 34 nations of the Western Hemisphere ended their fourth Summit of the Americas this weekend with no agreement to create a free trade zone for the region. The summit's closing formal communique walked a narrow line. It stated the two principal opposing positions regarding the US-inspired free trade zone that would stretch from Canada to Chili. NPR's Julie McCarthy has been following the summit in Mar Del Plata, Argentina. She's on the line.

Julie, how did the nations line up? Who supported this idea of uniting the continents into this huge trading bloc?

JULIE McCARTHY reporting:

Well, on one side you had 29 nations, led by the United States with the very public assistance of Mexico. In fact, President Vicente Fox emerged here as the leading spokesman for a hemispheric free trade zone. He and the Canadian prime minister, Paul Martin, said that this free trade area for the Americas is not, quote, "about making the hemisphere safe for capitalists," as some of the critics have said it is. Like President Bush, they maintain that a trading hemisphere is a prosperous one and that it's key to creating jobs and alleviating the poverty in a region where there's an estimated 100 million poor people.

The benefits of connecting the continents in a free trade pact are obvious for the United States. With no barriers to inhibit American goods and services coming in, American exports to the region would soar. And President Fox made the point that the hemisphere is nearly united already, what with NAFTA and CAFTA, a deal between Central America and the United States, another deal with the Us and three more Andean nations and a deal with the Chileans and the US. He says, `Do the math, and we're almost there.'

HANSEN: But there are some major opponents, most notably Brazil.

McCARTHY: That's right. And when you have the largest economy in South America rejecting the pact, you have no pact. Brazil is a US rival in terms of agriculture and says the subsidies that the US pays its farmers create an uneven playing field, and until that's solved, they can't join.

Now for its part, Argentina is still smarting from its economic meltdown in 2000. And it's opposition is complicated by this mistrust that its collapse generated four years ago about IMF policies, about US-led institutions, like the IMF. And it plays well politically here not to be seen to be dealing so closely with the Bush administration.

But even those two opponents, Argentina, Brazil, aren't ideologically opposed to the idea, as Venezuela's Hugo Chavez is. Chavez told tens of thousands of protesters here that he came to bury the agreement that he says only enslaves poor countries. But Brazil says, you know, it didn't come to bury anything. In fact, it supports the idea anyway in principle of economic integration. The disagreement is over how you get there.

HANSEN: So how might US and Brazil resolve that issue of US farm subsidies then?

McCARTHY: Brazil's concern could well be answered by a much larger trade negotiation going on, the world trade talks known as the `DOAROUND(ph).' Now on the table there is this issue bedeviling the Brazilians. There Washington is in a dispute with Europe over its farm subsidies, and if that disagreement gets resolved, the path is much clearer for a free trade zone for this hemisphere. And that trade zone would, in fact, rival the European Union in size.

You know, going into this summit, President Bush himself acknowledged that the world trade talks are going to trump any regional deal. What he was hoping for was a united front coming out of this summit, as they go into this world trade talks next month. He had to settle for 29 out of 34 summit countries backing the US.

HANSEN: What about the president? I mean, a lot has been made this past week of his popularity ratings hitting record lows. The United States was vilified by protesters outside the summit. To what extent did his standing influence the outcome inside the summit?

McCARTHY: It was interesting. The president kept a low profile here, and he left the sales pitch to Vicente Fox. But he also made some sort of self-effacing jokes about the demonstrations. He said, `It's difficult to be a host and perhaps more difficult hosting me.' He is enormously unpopular in this region for suspicions about free trade policies. The war in Iraq generates tremendous resentment here. The combination of those things is something that leaders, like Argentina's Nestor Kirchner, take on board, and may be something that discourages some Latin American leaders from climbing on board a US-backed agenda.

And then on the left you have Hugo Chavez with his fiery populism. Now he calls the free trade agreement an annexationist plan that would bury local industries and roll back protection of workers. `His harangue'--those are the words of President Vicente Fox--is that the US is looking to permanently extend economic dominion over the region. And that gets a very sympathetic hearing among people. So, of course, the president's beleaguered standard is a factor in all of this.

HANSEN: Are there any more negotiations planned?

McCARTHY: Well, no date's set, other than something vague next year at a meeting at a ministerial level. But they couldn't come soon enough, according to President Fox, who reminded this summit that China is their number-one competitor, and that it's taking jobs away from the region because it has such vibrant trade. And he urged everybody, his colleagues, to follow China's lead and replicate their success.

HANSEN: NPR's Julie McCarthy in Mar del Plata, Argentina. Julie, thanks a lot.

McCARTHY: Thank you, Liane.

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