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15 September 2006
Free Trade Vital to Latin American Economies, Says U.S. Official
USTR's Eissenstat cites need for free-trade pacts, renewed Doha trade talks
Washington -- Free-trade agreements and a strong commitment to regional economic integration will help Latin America compete successfully in the global market, says Everett Eissenstat, assistant U.S. trade representative for the Americas.
In his September 15 remarks to the 10th annual Miami Herald Conference, which examined "How Will Latin America Compete in a Global Economy," Eissenstat cited trends that point to the benefits of a free-market approach. Although "there isn't a simple, straightforward answer" that will guarantee success, the removal of trade barriers is a prerequisite for sustained economic growth, he said.
"[O]ne thing that is clear from recent years is that countries [that] have been willing to undertake free-market reforms and pursue regional integration, particularly through ambitious trade agreements with the United States, have emerged as strong competitors both at the regional level and in the global marketplace," he said. "Trade agreements such as NAFTA [the North American Free Trade Agreement] and the U.S.-Chile [free-trade pact] are compelling examples of trade's power to build ties, revitalize economies, diversify exports, and attract higher-paying jobs."
Eissenstat also pointed to the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA) -- which links the economies of the United States, the Dominican Republic, El Salvador, Nicaragua, Honduras, Guatemala and Costa Rica -- as proof that trade pacts are effective engines for growth. "In the relatively short amount of time CAFTA has been in force, we have already begun to hear positive stories from U.S. companies conducting business in the region," he observed. "We expect [U.S. trade pacts with] Peru and Colombia, once passed by Congress and fully implemented, to follow in the same successes of our trading partners in the region."
The drive toward regional economic integration began with NAFTA, which entered into force in 1994, he recalled. By inaugurating free trade among Mexico, Canada and the United States, "the agreement has contributed to economic growth in North America," said Eissenstat. "For goods, our total trade with Canada and Mexico has more than doubled from pre-NAFTA levels."
Moreover, "by establishing a framework to promote a secure and predictable [business] environment, investment too has blossomed under the NAFTA," he said. "Today, the NAFTA partners are investing more in each other's economies, and the rest of the world is also investing more in our economies."
The enactment of the U.S.-Chile Free Trade Agreement is showing promise as well, he reported. "Though relatively new, early results from our bilateral trade agreement [with Chile] tell a similar story," said Eissenstat. "In the first two years, bilateral trade between the U.S. and Chile increased 85 percent.” (See related article.)
In short, "these agreements work," he said. "They provide real opportunities to workers throughout the region and enhance the economic competitiveness of our hemisphere."
Because free-trade pacts now have a proven track record, "other nations in the hemisphere are seeking to follow a similar path as their regional neighbors" by negotiating their own trade agreements with the United States, he added. "In December 2005, Peru was the first Andean country to close and sign a free-trade deal with the United States," said Eissentat. "This was a significant accomplishment for both Peru and the United States." (See related article.)
Although legislative approval of the U.S.-Peru trade deal is still pending, "we are hopeful that the agreement can be submitted to the Congress in time for consideration this year and we are working hard toward that goal," he said.
Also, "the United States and Colombia concluded a similar comprehensive agreement in February 2006," said Eissenstat. "In addition to transforming a preferential trade relationship [that favored Colombia] ... into a reciprocal, permanent, and comprehensive one, the United States-Colombia Trade Promotion Agreement will advance the strategic agenda of economic progress, stability and security in the Andean region" as a whole. (See related article.)
"Like the Peruvian agreement, the U.S.-Colombia [trade pact] will eliminate tariffs and other barriers to goods and services, promote economic growth, and expand trade" between the two signatory parties, he said. Eissenstat predicted that the U.S.-Colombia pact, now awaiting congressional action, will "likely ... be considered early next year."
Finally, Eissenstat urged renewed action on the stalled Doha round of World Trade Organization talks. Reviving these negotiations should be a priority for Latin America, he said. "Developing countries could potentially be the largest beneficiaries of an ambitious outcome to Doha [talks]," he said. "Many of the Latin American economies have competitive agriculture sectors, so ... improving market access in agriculture could produce significant benefits for them globally." (See related article.)
Eissenstat also reiterated his belief in the importance of regional economic integration, which he described as a critical element in building the hemisphere's future. "As measured by the amount of intraregional exports relative to its exports to the rest of the world, currently Latin America is among the least integrated regions of the world -- just ahead of the Middle East and Africa, but significantly below the developing economies of Asia and Europe. By making significant commitments to open its markets in the Doha negotiations, Latin America can accelerate intraregional growth and potentially become a major competitor on a global scale."
“The United States stands committed to this process, and we will continue reaching out to our trading partners and exploring ways to put the negotiations on a track toward a strong outcome,” he said.
For more information on U.S. policy, see Trade and Economics and Regional Trade.
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
