Free Trade Treaty: Beneficial or Destructive?
Juan Marin
Colombia
ENG 1430
Throughout history, economic systems have been evolving, beginning with the direct trade of objects within individuals, all the way through the current global economy, in which one of the most important aspects might be international commerce. With the rise of new economic powers such as China, countries are constantly trying to reach agreements with their neighbors and, in the case of countries with underdeveloped economies, also with stronger countries that can help them boost their local economies. Such is the case of most Central and Latin American countries, which in the last years have been negotiating free trade treaties with the United States. This has led to some conflicts between the countries that are in the negotiation, such as Colombia and Ecuador, and those who oppose to it, such as Venezuela and Bolivia, causing the breaking of minor agreements and diplomatic relationships among these countries. Free trade treaties with the United States are beneficial for Latin American countries as long as they do not affect the political and economical relationships with their neighboring countries.
The United States, being one of the biggest economical powers of the world, is undeniably a good ally to improve Latin American markets. A clear example of the benefits of free trade agreements is analyzed in Mary O’Grady’s article “One year after CAFTA”, which explores the effects of the Central American Free Trade Agreement after one year of being signed. It states how the countries who signed the treaty (El Salvador, Guatemala, Nicaragua, Honduras and United States) have all gained benefit from it, and studies it in regard to historical perspectives since the beginning of the twentieth century. It also makes a brief analysis of the improvements that the addition of Costa Rica and Dominican Republic will bring to the CAFTA.
Latin American countries could benefit if they strengthen and keep their economies united in order to compete in the world market in a similar level as the European Union. Currently, a political project named “South American Community of Nations” is in effect. Its main objective is to unify the currency, passport and parliament of all Latin American countries, which would make the region the fifth ranked economical power, and the fourth ranked in population. It would also have 27% of all freshwater resources, the biggest forested area in the world and hydrocarbon stocks that would last for the next hundred years, as informed by the organization in its official website. This whole unification would be completed by 2019. Even without this humongous alliance, neighboring Latin American countries such as Colombia and Venezuela maintain important economical agreements that link the whole region, which provides countries with profit from exports, plus a strengthened link against stronger incoming, disrupting economies. In this order of ideas, it could be thought that Latin American countries must give preference to the agreements they reach among them, in order to become an economic power, but the differences in the economies of these countries make this regional alliance difficult to make; Latin America has a couple of rich countries as well as some of the poorest ones.
In some cases, some countries have already suspended diplomatic relationships with neighboring countries. The most recent and important case was the withdrawal of Venezuela from the Andean Community of Nations, one of the most important treaties of northern South America. As BBC News reports in its website, “Venezuela's President Hugo Chavez says his country is withdrawing from the South American trade bloc, the Andean Community of Nations. He told a summit in Paraguay that Venezuela was leaving because recent trade deals between Peru, Colombia and the US had killed off the community.” This was an important decision for the continent, as it affected negatively not only Venezuela, but also Colombia, Ecuador, Peru and Bolivia, the other countries of the Community, not to mention that it threatened the current Free Trade Treaty negotiations with the United States.
Another important issue that Latin American countries have to deal with is drug production in the international borders. This has also caused diplomatic problems and the rupture of economical agreements. To mention a case, at the end of last year the newly elected president of Ecuador, Rafael Correa, withdrew his Ambassador from Bogota after Colombian President Alvaro Uribe’s refusal to suspend the aerial fumigations in the border that, Correa argued, had affected the crops and health of some Ecuadorians. Luckily enough for these two countries, they reached an agreement, but this whole problem must be taken as a warning to maintain good neighboring relationships but still have control over the internal situation of each country.
To this subject someone could argue that since the United States is a bigger, economically stronger country, Latin American nations should try to make agreements with the United States whenever possible, without taking into account the minor inconvenience they could have with their neighbors. This could work out for them, but would not be completely safe, especially when such a big alliance as the South American Community of Nations is becoming a reality. Now more than ever the countries of Latin America must do whatever is possible to maintain good diplomatic relationships among themselves, and to strengthen their economies until the grouping is complete, even if it implies to cancel the negotiations with the United States. This may imply some sacrifices from both sides, but at the end will bring an improvement to the economies of the most needed countries.
All governments’ ultimate goal is to do what is best for their countries, and in these times where growing markets menace local economies they must do whatever is possible to ensure this goal. In the specific case of Latin American countries they must find balance between protecting their local economy and improving the style of life of their citizens by reaching economical agreements with strong countries such as United States, yet avoiding political, unnecessary issues with their neighbors.
References
O’Grady, M. A. Americas: One year after CAFTA. The Wall Street Journal. Retrieved 26 Feb. 2007 via ProQuest.
South American Community of Nations (20 Mar 2007). Andean Community - CAN. Retrieved from http://www.comunidadandina.org/ingles/sudamerican.htm.
Venezuela quits Andean trade block. (20 Apr 2006). BBC News. Retrieved 20 Mar 2007 from http://news.bbc.co.uk/2/hi/business/4925056.stm.