Time to listen to our neighbors
By Kevin P. Gallagher
Article re-printed from The Miami
eyes of the globalization world will be watching Miami
this November when Western Hemisphere trade ministers
revisit negotiations for what could be the largest
regional trading bloc in the world: the Free Trade
Area of the Americas. The big question is whether
Miami will be a repeat of recent world-trade talks
For U.S. Trade Representative Robert Zoellick, this
is no small concern, as 12 of the 21 developing countries
that opposed U.S. trade policy in Cancun are part
of the FTAA negotiations. If the United States wants
to see progress on trade, it will have to listen to
the concerns of its southern neighbors.
During the 1990s, Latin America and the Caribbean
listened to the United States. In response to major
economic crises in the 1980s, a ''Washington Consensus''
preached trade and investment liberalization, mass
privatization of state-owned enterprises and a general
reduction of the role of the state in economic affairs.
Latin America and the Caribbean dutifully followed
Unfortunately, according to a definitive assessment
of the 1990s reforms conducted by the Economic Commission
for Latin America and the Caribbean, only two countries
had a faster economic growth rates in the 1990s than
between the years 1950 and 1980: Argentina and Chile.
Chile is the last standing.
For the rest of the hemisphere, exports increased
significantly, but because imports grew faster, many
nations have more worrisome trade deficits; investment
and productivity recovered relative to the 1980s,
but no large gains occurred; employment generation
was poor and the quality of the jobs that were created
presents ''serious problems;'' and inequality and
poverty increased throughout the region.
Mexico is the paradigmatic case. Indeed, no country
in the hemisphere followed the U.S. prescription more
fully. Since 1985, Mexico has transformed itself from
one of the most closed economies of the world to one
of the most open.
Again, the numbers speak for themselves. According
to official statistics, while exports and investment
have soared since 1985, the Mexican economy has grown
very slowly -- less than 1 percent annually in per-capita
terms. Slow growth has translated into levels of employment
that have not been able to absorb the new entrants
into the workforce each year. Those who have been
lucky enough to get jobs have earned low-quality jobs.
Real manufacturing wages have declined in Mexico
by 12 percent since the North American Free Trade
Agreement, and 45 percent of all new jobs do not have
even those benefits mandated by Mexican law.
Environmental conditions, too, have deteriorated.
The Mexican government estimates that the economic
costs of environmental degradation have amounted to
10 percent of annual GDP, or $36 billion per year.
Many South American countries -- and their civil
societies -- are ready to go head-to-head again in
Miami. Building on the momentum gained at Cancun,
South American nations have decided to negotiate a
merger between the Mercosur and Andean Pact trading
blocs to form a united South American market that
will encourage intra-South American trade and square
off against the United States in the FTAA negotiations.
As for civil society, many South American groups have
held plebiscites on the FTAA and are going to Miami
in full force.
The most contentious issues that plagued the Cancun
talks are on the FTAA table -- agriculture, investment,
government procurement, competition policy and subsidies.
Our southern neighbors will come with an agenda that
includes demands for reductions in agricultural support
in the United States and an insistence that any new
trade rules give nations in the hemisphere the space
to install national policies to spur development.
The rest of the hemisphere listened to the United
States during the 1990s. Now it's time for the United
States to listen to the hemisphere.
Kevin P. Gallagher is a research associate
at Tufts University's Global Development
and Environment Institute.