As President Bush toured Latin America a little over a month ago he assured the region that this trip (the most extensive his Administration has taken to Latin America as of yet) signaled a new phase in the relationship between the U.S. and our neighbors to the South.  The President spoke of working with Brazil to develop new technologies aimed at making ethanol a viable fuel alternative…potentially reducing our dependence on foreign oil, further partnering with Colombia to battle the ongoing plague of narco-terrorism and the wider drug trade and collaborating with the new conservative government in Mexico to offer ways to break-up the corporatist and monopolistic structures…potentially enabling more Mexicans to envision an authentic and prosperous future in their native land.  

Even the most optimistic observer remains highly skeptical of this call for a renewed engagement as Washington tends to have the attention span of a 3 year old.  The U.S. has traditionally tended to limit involvement in the region to democracy promotion, drug eradication and free trade; but, now with a Democrat controlled Congress it appears that Latin America will not only not see renewed engagement as the rise of radical populists like Hugo Chavez threatens to plunge the region into a new “lost decade” but will now see a protectionist trade policy arise out of the U.S. based simply on domestic political pandering.  For months, Peru, Panama and Colombia have been begging the U.S. Congress to approve their repective free trade agreeements but Congress has balked and threatens to permanently stall based on what has been described as “labor and environmental concerns”. In reality, Democrats are posturing and pandering to the populists and protectionists (both domestic and international) that are demanding action to combat the effects of free trade.  In fact, here is what free trade has done for the U.S.-Latin American relationship so far.

According to the Oppenheimer Report in The Miami Herald:

The newly released U.S. Commerce Department trade figures for 2006 show that Latin American countries that have free-trade agreements with Washington have substantially increased their exports to the U.S. market. The United States, in turn, has increased its exports to most of its regional trade partners at a somewhat slower but respectable pace.

Consider the latest figure

–Since the United States signed a free-trade deal with Mexico, Mexican exports to the United States have risen from $40 billion in 1993 to $198 billion in 2006, a nearly 400 percent increase. Conversely, U.S. exports to Mexico over the same period have risen from $41.5 billion to $134.1 billion, a 223 percent increase.

–Since the United States signed a free-trade deal with Chile, Chile’s exports to the United States went up from $4.7 billion in 2004 to $9.5 billion in 2006, a 104 percent increase. Conversely, U.S. exports to Chile went up from $3.6 billion to $6.8 billion, an 88 percent increase.

–Since the United States signed a free-trade deal with five Central American countries and the Dominican Republic, overall exports from the so-called CAFTA-DR countries to the United States went up from $18.1 billion in 2005 to $18.6 billion in 2006, a 2.8 percent increase. Conversely, U.S. exports to CAFTA-DR countries went up from $16.9 billion to $19.6 billion, a 16.1 percent increase.  While it is too early to completely judge the effects of the newly signed free trade deal and that only 4 countries have ratified it…growth is still growth. 

The current threats and attempts to stall negotiated and agreed-upon free trade agreements with Peru, Colombia and Panama by Democrats Charlie Rangel (Chairman House Ways and Means) and Sander Levin ( Head of Ways and means Subcommittee on Trade) smacks of protectionism, domestic political maneuvering and pandering to the unions and the environmentalists. They want trade pacts to guarantee enforcement standards set by the U.N’s International labor Organization (ILO) which are currently in conflict with U.S. labor regulations.  Through attempting to enforce these ILO provisions Democrats are demanding that Latin Americans enforce laws that the U.S. will not agree to and appear to punishing these countries for the fact that U.S. law does not “live-up-to” the standards they call for. Thankfully these regulations would never fly here at home…even with a Democrat controlled House and Congress because many realize that it is the flexible U.S. labor laws that have kept the U.S. economy prosperous, innovative and with half the unemployment rate of the European Union for years.

Another miscalculation that Democrats have made by demanding that Latin American nations should be forced to follow ILO labor standards is the fact that much of Latin America’s economy is informal.  Large chunks of the economy produce and survive by evading governmental rules and taxes. According to Alvaro Vagas Llosa at the Independent Institute : 

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 United States 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 recent rise of radical populist figures like the authoritarian Marxist Hugo Chavez and his proteges Evo Morales in Bolivia and Rafael Correa in Ecuador show that Latin America is once again on the political and economic roller coaster ride that it seems to have been on for decades.  The extreme oscillation from left to right has left the region largely passed over by the gradual prosperity of most of the world and has failed to bring the regions 200 million-plus destitute out of the ranks of the poor. 

Peru, Panama and Colombia are attempting to reach out to the U.S. to get off the roller coaster and begin the process of building stable and lasting institutions.  They are attempting to stand up to Chavez and his ilk and are putting their faith in the knowledge that freedom will provide the greatest results.  If Congress attempts to include language about new labor standards or environmental protection–or worse yet– fails to ratify the pending free trade agreements with Colombia, Peru and Panama they threaten to send a dangerous message to the region:  That the U.S cannot be trusted as a reliable partner even in the one issue that it has been pressing in Latin America and around the world for years: free trade.   

Written by Matthew Willette