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Filling trade gaps in Latin America

Dan Grech Nov 21, 2006

KAI RYSSDAL: One of the surest signs of the coming power shift in Washington is the number of lobbyists heading up to Capitol Hill. Trying to get in good with the Democrats before the new Congress convenes in January. But some of the people looking for help are knocking on Republican doors. Trade ministers from Latin America and Africa to be specific. They’re looking to get deals sealed fast. Before the Democrats take over. Colombia’s set to sign a trade agreement with the U.S. tomorrow morning. It would be the biggest deal in the hemisphere since NAFTA. If Congress approves. Dan Grech reports from the Marketplace Americas Desk at WLRN that’s not a sure thing at all.

DAN GRECH: The U.S. can be a tough negotiator when it comes to free trade. In exchange for access to U.S. markets, trade officials demand investor safeguards, intellectual property protection and a host of other reforms.

When it came to Colombia, as well as neighboring Peru, the U.S. added a ticking clock: If the countries didn’t sign a free-trade agreement, the U.S. threatened to take away trade preferences that give them duty free access to the U.S. market. Those preferences expire January 1.

Stephanie Burgos is with the nonprofit Oxfam. She says leaders in Peru and Colombia put their political fortunes at stake, pushing these deals through despite widespread protests.

STEPHANIE BURGOS: Even though Peru and Colombia have conceded to U.S. demands, they will end up with nothing on January 1st unless the Congress acts soon to extend the Andean Trade Preferences Act.

Since the midterm election, the countries have been left scrambling.

BURGOS: The president of Colombia was in Washington last week and literally begging the members of the House and Senate to extend trade preferences.

Tomorrow U.S. and Colombian officials will sign a free-trade agreement. It will be little more than a show. The Cato Institute’s Dan Griswold says Congress is unlikely to ever write the deal into law.

DAN GRISWOLD: These two maturing democracies have put a lot of significant commitments in writing to open their economies. And yet Congress seems on the verge of saying, ‘No thanks.’ Now with Democrats controlling Congress, with organized labor feeling its oats, the atmosphere for these trade agreements has gotten chillier, and the hill has gotten steeper.

Democrats think the Bush Administration went too easy on environmental and labor concerns. Other critics say they kowtowed to U.S. pharmaceutical and farming interests. But Griswold says these trade skeptics miss the point. These deals are about more than spreading goods around the world. He says they’re about spreading democratic, free markets.

GRISWOLD: These agreements, modest as they are, are building blocks in this broader project. And by rejecting them, I think Congress not only will be making an economic mistake but also, I think, forfeiting American influence and, yes, our broader moral purpose in the world.

He says by abandoning these trade deals, the U.S. risks leaving a vacuum in Latin America. A vacuum that leftist leaders like Venezuela’s Hugo Chavez and Bolivia’s Evo Morales would be eager to fill.

I’m Dan Grech for Marketplace.

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