Pleading for Trade April 11, 2007 Alvaro Vargas Llosa WASHINGTON — There was a time when the United States seemed to bully Latin Americans into opening their doors to U.S. capitalism. The United Fruit Co., in the eyes of many Latin Americans, was the symbol of that era. What a colossal irony that, at the beginning of the 21st century, one of Latin America’s problems is persuading American politicians to ratify free trade agreements (FTAs) that would boost U.S. exports to the region. The simplest way of achieving free trade is to let people buy and sell. Because we live in a twisted world, we need to sign wordy FTAs that officials negotiate in the same way warring nations design peace treaties. And then we need to persuade the politicians to ratify them. For months, Peru, Colombia, and Panama have been pleading with the U.S. Congress to approve their respective FTAs with the United States. Two Democrats in particular, Rep. Charles Rangel, the chairman of the House Ways and Means Committee, and Rep. Sander Levin, the head of the Ways and Means trade subcommittee, are savoring their power to place conditions on such ratification. Max Baucus, who heads the Senate Finance Committee, which has jurisdiction over trade issues, tends to go along with whatever Rangel and Levin concoct. The politicians want stronger labor and environmental provisions written into the FTAs. But what they are actually asking for is absurd. They want trade pacts with Latin American countries to guarantee enforcement of standards set by the U.N.’s International Labor Organization (ILO) that are in conflict with U.S. labor regulations. There are only two possibilities here: either the Democrats are asking the U.S. government to make Latin Americans enforce laws that the United States thinks are bad and will not apply at home, or they are punishing Latin Americans for U.S. laws that they dislike and would like to change. If they want to change their own labor laws, U.S. lawmakers can easily introduce legislation to bring U.S. rules in line with ILO standards, the chief difference being over replacement of striking workers. Why don’t they? Because they know that even with Democratic majorities in both houses and many legislatures across the country, they stand little chance of getting their wish. It is precisely because the U.S. has had more flexible labor laws than, say, Europe, that its unemployment rate has been half that of the European Union for years. It gets weirder. Currently, most countries awaiting ratification of their respective FTAs are able to export most of their products to the U.S. tariff–free, thanks to preferential concessions that work in one direction. This means that American exports to Peru face an average tariff of 12 Percent, while Peruvian exports to the U.S. face no tariff. So what the Democrats, in effect, are saying to American exporters is this: we will continue to penalize you because we think Latin Americans should have labor standards that almost no one wants enforced in the U.S.! According to a recent report by Business Roundtable, one in five American jobs is related to exports and imports. If Rangel and Co. think their tactics will delay globalization, they are seriously deluded. In the 1970s, developing nations were the source of 15 percent of total imports into rich nations. The proportion today is 40 percent—and growing. You can either adapt, as ordinary Americans have done—the reason this economy continues to be strong and unemployment low—or move to another planet. One final point. Lawmakers who daydream about enforcing international labor standards in Latin America clearly don’t know that massive chunks of those economies are “informal,“ meaning that people survive by evading government rules. One way to help Latin Americans transit from the informal to the formal economy is to create incentives for legalization through free trade. Numerous Peruvian companies have become formal in recent years because export opportunities to the U.S. have made it profitable for them to legalize their activities. Opening trade is one way to ensure that the enforcement of rules one day becomes a reality. Making universal enforcement of ethereal laws a precondition for free trade in Latin America amounts to putting the cart before the horse. The saga of Latin Americans pleading for ratification in the U.S. Congress is one great reason why wordy and bureaucratic trade agreements are a less–than–convenient way to go about freeing trade. Estonia’s recipe from 1992—the unilateral elimination of commercial barriers—is a much quicker way. It’s also more dignified, since there is no pleading involved.
There are examples of developing countries making trade work for them. Here's what he was referring to with his Estonia example. Estonia has become a model of how to properly implement neo-liberal reforms like business privatization. " In central and eastern Europe, the countries that have come out strongest and proven most “adaptable” to competition are precisely the ones that worried least about transition periods. The country with the best economic performance continues to be Estonia, which 15 years ago unilaterally eliminated all its tariffs. Unlike central European countries, where trade reform was slower and GDP growth has hovered around 4 percent, Baltic countries, especially Estonia, have been consistently growing at a rate of 7 to 8 percent after eliminating tariffs, which means their standard of living is doubling every decade. Estonia's exports now total the equivalent of 80 percent of its GDP, which, contrary to the widely held view that countries should aim to export more and import less, means that removing barriers to imports is the best way to boost exports..." LINK
Eliminating all tariffs in the United States id say is a good idea. China seems to have achieved consistent high levels growth with the use of tariffs and other governmental redirections of their economy. However, much like in the US, it is ultimately coming with a price which is most noticeable in their public debt. Even if the improvement is only slight, the best way for long-term growth seems to be getting rid of trade barriers.
I think what it actually demonstrates is politicians don't wish to limit imports at all, but some restrictions were put in place before we could remove them. Holds true for democrats as much as republicans. American producers will always be held to a higher level of responsibility, until there are no longer any remaining. The fact that we have to pay tariffs to foreign countries says nothing about our country holding imports up to any standards it only speaks to our politicians selling out.
As a consumer I would ask what protections we have for products that are imported and sold to our consumers that prove to be a hazard to our health? Why isn't this ask more often? Will these countries and companies ever be put under sanctions or inspections?
good point gardner, though isnt that the reason for thes fta? an overview of laws and standars over imports? or was that your point?
