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Passing clouds over FTAA?

The Free Trade Area of the Americas (FTAA), promoted by the U.S. and Canada and intended to cover as many as 34 democracies in Latin America and the Caribbean, has been pronounced "dead" by its opponent, President Hugo Chavez of Venezuela, but this could well turn out to be a hasty conclusion. No doubt Mr. Chavez drew the support and admiration of leftists and radicals in the region during U.S. President George Bush's visit to Argentina to participate in the fourth Summit of the Americas, where Mr. Bush failed in his attempt to revive negotiations on the FTAA. Though Mr. Bush portrayed the initiative for economic integration of an area that stretched from Canada to the southern tip of South America as the harbinger of "democracy and prosperity", the failure of U.S. objective was to some extent predictable, given the overwhelming popular disapproval of the war on Iraq, besides the history of U.S. cloak-and-dagger politics and support to dictatorial and corrupt regimes of the past in Latin America. The political environment and personal unpopularity of Mr. Bush in the region only strengthened popular enthusiasm over Mr. Chavez's denunciation of the FTAA.

It is true that only five nations out of the 34 potential members of the FTAA opposed the summit endorsing resumption of negotiations. But these five — Brazil, Argentina, Paraguay and Uruguay (which comprise the Mercosur common market), and Venezuela — together account for the largest chunk of the economy and population of Latin America and the Caribbean. (Cuba was excluded from the summit on the ground that it is not a democracy) However, one has to weigh this against the fact that the four members of Mercosur indicated that they were not opposed to an FTAA in principle but resisted it because the terms sought to be imposed on them, especially in relation to agricultural products, by the U.S. were inequitable. Also, the four expressed their preference to wait for the outcome of the Hong Kong Ministerial meeting of the World Trade Organisation (WTO) in December before considering resumption of talks on the FTAA. Thus, the future is likely to show that Mr. Chavez might not be reflecting fully the balance of forces on the issue. Also, Venezuela's oil wealth, whose use in the cause of the poor has expanded the support base of Mr. Chavez, might not be a lasting phenomenon. The last Trade Policy Review of Venezuela, undertaken by the WTO in 2002, cautioned that excessive dependence on oil exports and absence of a diversified economic base would hurt Venezuela in the long term. This indicates that Venezuela might ultimately be forced to reconsider its approach to the FTAA on the basis of whether such an agreement would help it diversify and strengthen its economy and employment situation, instead of continuing to make wide sections of the people believe that it is a second Cuba in the making and a new outpost of a socialist alternative.

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