The Colombia & Panama Free Trade Deals

This post is also available in: Español 

Some six years after they were formally signed, the US Congress has finally ratified the Colombia and Panama free trade agreements (FTAs) with the United States. Given the political animosity and distrust between Republicans and Democrats, it was touch and go until the last minute, but the accord between the White House and the congressional leadership held fast and the agreements passed by large majorities in both the Senate and the House. This is good news for the US, Panama and Colombia--all of which will see an expansion of exports and cheaper imports, and probably a range of new investments. It is also worth noting that the approval of the Colombia FTA was made possible by significant advances in public security and human rights, and that the pact demands needed additional reforms in the country.

It is remarkable that these free trade deals, which have bitterly divided Republicans and Democrats for years, secured substantial bipartisan support at a time the two parties are more polarized and mistrustful than ever. Indeed, Congress has been unable to find common ground on much else. Even more striking perhaps, ratification is occurring while the US is confronting one of its worst ever economic reversals and highest rates of joblessness. This is generally when protectionist, anti-trade sentiments are at their peak, and free trade is highly unpopular.

There are two fundamental reasons that the Latin American FTAs are being approved now. Neither has much to do with US policy in the hemisphere, however. First, the Colombia and Panama FTAs are being considered together with a Korean pact, which has strong (although not universal) trade union support (unusual for an FTA), and is expected to stimulate US exports to the tune of $11 billion (out of an estimated $13 billion for all 3 agreements). Second the FTAs, which are a high priority item for Republicans, are being presented in tandem with a measure of urgency for Democratic lawmakers-- the renewal of Trade Adjustment Assistance (TAA) legislation, which, since 1974 has compensated American workers who suffer trade-related job losses.

But what might the approval of the FTAs mean for the future of US relations with Latin America? Will the ratification of these long delayed pacts help to reanimate the currently lethargic state of US-Latin American ties? The approval of the FTAs clearly removes an irritant from the relationship, but will it open the way to renewed efforts toward hemispheric integration or economic cooperation? Does it set the stage for a more effective US challenge to Chinese advances in the region? Regrettably, it doesn’t look that way. It may be too late.

First, a few lines of history. Following the end of the Cold War in the late 1980s, the thrust of US policy in Latin America shifted away from an overwhelming concern with security. US policy began to refocus attention toward the forging of a more integrated, cooperative hemisphere--one that would be more competitive with Asia and Europe. This was a goal shared by most nations in the region, and some real headway was achieved. The US, Mexico, and Canada concluded the NAFTA free trade pact in 1993. The following year the hemisphere's heads of state gathered at the Summit of Americas in Miami and announced their intention to complete, by 2005, negotiations for a hemisphere-wide free trade arrangement (the FTAA). At their third summit meeting seven years later in 2001, the assembled leaders agreed to draft the Inter-American Democratic Charter to codify the hemisphere's governing principles and commit to the collective defense of democracy in the America. But by then, Washington's integrationist strategy for the Americas had already largely unraveled. FTAA negotiations had lost their momentum. No one was particularly surprised when they were finally suspended in 2004 and never resumed. The Bush Administration continued to negotiate bilateral FTAs with willing countries (and succeeded in reaching agreements with Chile, five Central American nations, the Dominican Republic, Peru, Colombia and Panama). But there were broader trends at work.

Latin American governments became more and more independent and assertive in their foreign policies. They diversified in their international relations, and with increasing frequency, challenged US leadership and initiative. Brazil emerged as an alternative pole of power, with a steadily rising regional and global profile. Latin America reached out to a wider selection of investment and trade partners. China, particularly, gained a large and steadily growing role in the region's economies, displacing the US as the number one trading partner for many countries. Latin American nations showed increasing ambivalence about the role they wanted the United States to play. Although only a few countries are today openly hostile to Washington, many advocate new hemispheric arrangements that would further diminish Washington's influence in the region. Already, disputes among the region's countries are routinely addressed by the countries themselves. These are all natural trends for a region of middle income countries that is expanding economically, more confident of its ability to resolve its own problems, and developing a significant global reach.

For its part, Washington has retreated from efforts to formulate a genuine hemispheric policy. The US now assigns diminishing attention to Latin America as a whole while it focuses mainly on Mexico and Brazil—and there are continuing tensions in US relations with both nations . To be sure, the US maintains active and friendly ties, economic and political, with most other countries of the region. But, beyond Mexico and Brazil, sustained, high-level attention in Washington is reserved for those countries facing severe hardships or crises.

It is early to discount the prospect of a resurgence of Inter-American cooperation at some time in the future. Surely the US shares enough common interests and values with Latin America and the Caribbean so that cooperation and integration could benefit all countries. But for now, the trend is toward a Latin America increasingly independent of and distant from the US. And more and more, the US is dealing with Latin America as it does most other regions of the world. Bilateral relationships are increasingly dominant while regional perspectives are diminishing.

Washington, however, is not yet ready to abandon its regional or neighborhood conception of its relations with Latin America. The approach is deeply grounded in history, reinforced by entrenched, if not always effective, institutions, and underpinned by the intensity of US ties with most nations in the hemisphere. Secretary of State Hillary Clinton continues to talk about a community of nations when discussing the Americas. But tradition and habit, even long-standing institutional arrangements, may not be enough to sustain an approach that appears to have less and less grounding in reality. Centrifugal forces are gaining strength year by year. The United States is becoming more and more focused on its own problems, while increasingly middle class, globalized Latin American nations are finding new partners, and determinedly pursuing their own course. The long awaited ratification of two free trade agreement, no matter how welcome, is probably not enough to slow or reverse these trends.