At the Fourth Summit of the Americas in Mar del Plata in early November, the governments of 34 Western Hemisphere nations failed in their attempt to resuscitate the Free Trade Area of the Americas. The FTAA was a dream of the first President George Bush for uniting the continent in a market free of trade barriers. It would have been launched at the beginning of 2005. However, the American leaders were absorbed by domestic problems, and the FTAA did not appear to be one of their major concerns, according to political observers.
To begin with, Néstor Kirchner, President of Argentina and host of the gathering, showed his coolness and lack of interest in debating the topic. Meanwhile, Hugo Chávez, the Venezuelan leader, monopolized the attention of the media at his “anti-summit,” which brought together the main opponents of the FTAA. However, the Venezuelan leader paradoxically also participated in the official summit, and no one voiced any objection. For his part, Luis Inácio Lula Da Silva, President of Brazil, was more concerned about his domestic corruption scandals, and about reaching a bilateral agreement with the United States, than about being photographed with Kirchner. Ultimately, U.S. President George W. Bush, chief proponent of the FTAA, was forced to leave Argentina empty-handed because of strong opposition by the Mercosur nations (Argentina, Brazil, Uruguay and Paraguay) and Venezuela. Clearly, this final meeting of American presidents produced not even one important piece of news, say political observers and consultants, and it became a televised diplomatic pageant in which such important topics as creating and fighting poverty were not treated in any depth.
According to Pablo Mendelevich, director of the journalism faculty at the University of Palermo (Argentina), “The summit dramatized these conflicts, perhaps in an unusually inflammatory way, and television ate it all up, turning it into a series of violent incidents starring one hundred fanatics (whose goal was to meet) in a luxurious location. It didn’t help that many of the presidents were excessively dependent on how public opinion reacted [in their countries].”
It’s not surprising that Mendelevich would talk about the theatricality of the event given the declarations of Hugo Chávez. The Venezuelan president said that his country, along with the member-nations of Mercosur, were “the musketeers” of the Fourth Summit of the Americas. Chávez said, “I congratulated Néstor Kirchner the end of the debate. I told him there used to be three musketeers but now there are five: Néstor (Kirchner), Tabaré (Vázquez), Lula (Da Silva), Nicanor (Duarte Frutos) and Hugo (Chávez). Chávez called the Argentine president “D’Artagnan” because “his whip hits hard” whenever he takes a stand.
The Pros and Contras of the FTAA
Venezuela and the Mercosur countries resist the idea of integrating their economies with FTAA, the free-trade area that the United States has been promoting since 1994 in an effort to eliminate tariffs across the entire continent. The discussions have covered not only trade in agricultural, industrial and energy products but also deregulation of competition in services (telecommunications, banking and transportation) and protection for foreign investment.
Eduardo Becher, a consultant at BDO, the international accounting firm, is opposed to that sort of unification effort. “The FTAA clearly has a structure that, if it were implemented now, would create imbalances in trade among the member countries. That’s because each country is at a different level of development. The asymmetries mean that the FTAA would not work for everyone at this time.”
Mendelevich agrees. According to the plan laid out by the first President Bush, “the FTAA would be attractive for Mexico and the nations of the Caribbean. It would be essential for those countries that already have bilateral trade agreements with the United States, such as Chile. However, it is unacceptable for the countries of Mercosur. The chief differences stem from the initial inequality that is created by agricultural subsidies.”
Nevertheless, Gustavo Lázzari, an economist and dean at ESADE, the Argentine business school, says, “It would be good for the region to have the transparency, the trade, and the investments. The FTAA means all of those things. Clearly, it is a big opportunity for the region. It will take longer [to realize], but the process is inexorable. It is very hard for countries to try to shut out the sun by raising their hands. Globalization is a fact. The FTAA offers an important external framework for limiting the pressures of local groups. Without doubt, it is beneficial for the region.”
A Lack of Identity
Over the years, various U.S. administrations have managed to get 29 American countries to line up in support of the U.S. proposal. Leading the way is Mexico, which has important trade agreements with its [northern] neighbor. In recent months, Mexico has become one of the principal defenders of the FTAA. According to President Fox, the free trade agreement with the U.S. [NAFTA] has already boosted Mexico’s agricultural exports by 25% and has helped to quadruple employment.
When he arrived in Mar del Plata, known as ‘La Feliz’ (The Happy Town), President Fox said that he had traveled to Argentina to revive negotiations for the FTAA. He warned that the treaty needed to make progress “with or without Mercosur.” President Kirchner lost no time in responding to his colleague. He warned Fox “to take care of Mexicans.” Foreign ministers were called in to quench the confrontation, a source of major concern. Argentine Commerce Secretary Alfredo Chiaradia, who was in Geneva to participate in World Trade Organization negotiations, clarified that the rift between Kirchner and Fox would not affect the broadening of a bilateral pact that the two countries plan to finish negotiating by the end of this year. The new agreement between Argentina and Mexico will eliminate tariffs on imports of some 3,000 products.
Although Argentina is not interested in making further progress in negotiating the FTAA, it is moving ahead with beneficial bilateral agreements with Mexico.
Brazil has pursued the same approach to negotiations. Its president is pursuing a more independent policy than the other member-states in Mercosur. Lula firmly intends to position his country as the strongest nation in the region. After the Summit was over, Lula did not hesitate to sign a “Pro-FTAA” document with Bush, a gesture that was viewed with some suspicion by the other trading partners of Mercosur.
Clearly, although the presidents presented a united front to the communications media, each leader pursues his own goals behind closed doors, observers say. “There is a major difference between Chávez and Kirchner and Lula,” notes Lázzari. Venezuela’s Chávez, he adds, “owns a wealth-producing resource – namely, oil. Kirchner and Lula have to co-participate in a revenue stream that they do not actually produce. They only derive revenues by collecting taxes on that revenue stream. This is significant. The surpluses of Kirchner and Lula depend on individual decisions that they do not control, such as the decision to sow soybeans or not sow them. In contrast, Chávez controls petroleum income through PDVSA, the state-owned oil enterprise.”
Mendelevich digs deeper into the differences with Venezuela. “That country is a special case, with a radicalized position based on billions of petrodollars that the other countries do not have. Its interests and the location from which it defends them are different. In addition, Venezuela is a major supplier of oil to the United States. That detail, along with the extravagant figure [cut by] its president [Chávez] serves to separate us from Caracas.”
Becher adds that an identity problem is another factor behind the lack of consensus. “Mexico is on one side and Chile is on the other, and the United States is obviously on another. As a result of circumstances, they could form a bloc, but the differences between the countries would mean that the blocs lack an identity. In contrast, the United States and Canada do have an identity.”
Success or Failure?
Was the Fourth Summit of the Americas a failure? According to Lázzari, “If we consider that there were two opposing strategies — on the one side, there were people who wanted to bury the FTAA and on the other hand, those who wanted to establish it — clearly the Mar del Plata Summit left no one happy. However, the FTAA is not dead and buried, contrary to what Chávez and some others in the region might hope. It ran into an important stumbling block in Mercosur. So the feeling you get is that the result was a draw.
Mendelevich prefers not to look at presidential summits in terms of success or failure. Terms like “success” and “failure” can be “too clear-cut for the dynamics of complex international negotiations, and the smooth ups and downs of diplomacy, he says. Only time will tell if this Summit had the important political impact that people are now attributing to it. I believe that things did not go well for Bush. However, that’s because he suffered a political setback at an inopportune moment for him; not because the FTAA was struck down by lightning. I don’t think that the summit itself has been a failure. It was not a success, but was there ever any chance for that to happen?”
Becher adds, “What you see are sparks — more fireworks than fundamental problems.” Meanwhile, Bush maintains that if Europe does not reduce its agricultural subsidies, the United States will also not pursue that approach. The fate of the World Trade Organization’s Doha Round is still up in the air. The next meeting will take place next month in Hong Kong, and analysts do not have high expectations.
This much is clear: The final document signed at Mar del Plata raises the issue that “conditions still do not exist” for resuming negotiation on agricultural questions that were interrupted at the beginning of last year. Nothing was said about poverty, the shortage of genuine employment, governance, democracy, or the social gap that increasingly affects the countries of Latin America. In fact, the media did not even bother to report what happened during the Meeting of the Peoples, a peaceful gathering of indigenous communities from around the world.
As for the city of Mar del Plata, it was obviously more beautiful than ever. The Argentine government invested more than $70 million on organization, defense, security, logistics and other improvements in the infrastructure of the city that hosted the Summit.