US Sees the FTAA Gasp For Air, Threatens to Revoke “Preferential” Status

In Culture of Corruption, Economic Justice, Election 2006, Election 2008, International politics, International Public Health, International Trade, Labor, Laws & Regulation, Misc., The War On Drugs, US Politics on September 7, 2006 at 11:50 pm

While some have reported that the Free Trade Area of the Americas “is dead,” I agree more with the stance that it will be watered down into smaller agreements with individual countries, which will then put pressure on countries abstaining. To push countries into these smaller agreements, the US Trade Representative, Susan Schwab (see our backgrounder on her here), threatened earlier this week to revoke preferential treatment for “left-leaning” countries, as some journalists have described it.

This article lays it out well, though. Excerpts:

For over 30 years, trade preferences have enabled underdeveloped countries to export products to developed countries without paying tariffs or customs fees. The U.S. established its trade preferences program–called the General System of Preferences (GSP)–in 1976, and has renewed it eight times, most recently in 2002.

The three countries most likely to lose trading preferences with the United States–Argentina, Brazil, and Venezuela–have said U.S. proposals to open a giant free trade zone among the countries of North and South America unfairly favor U.S. companies.


In mid-August, U.S. trade representative Susan Schwab announced the administration-mandated review of its trade preferences program. Schwab said the purpose of the review was to determine which countries needed preferences most.

Countries with upper-middle-income economies based on the World Bank’s classifications–which in Latin America include only Argentina, Brazil, and Venezuela–would be less likely to get renewals than poorer countries, Schwab said.


“The U.S. government’s announcement that it will review the possibility of limiting, suspending, or withdrawing trade preferences under the General System of Preferences to three Latin American countries–Argentina, Brazil, and Venezuela–is political pressure to make these nations participate in the model of regional integration proposed by the United States,” said Caro.

If countries agree to one-on-one talks with the United States, they are likely to be forced to accept far less favorable trading conditions than if they negotiate as a group, Caro added.


Leaders like Venezuela’s Hugo Chavez and Argentina’s Nestor Kirchner, who have been pushing regional integration models like the South American trading block known as Mercosur, are also upset about the U.S. announcement that trade preferences may be revoked.

The potential suspension of U.S. trade preferences is “reminiscent of the old theories of the Roman Empire toward countries that didn’t agree with its policies,” Kirchner said in August, while Chavez has repeatedly warned other South American countries that signing deals with the U.S. would threaten regional ties.


If larger countries like Brazil and Argentina sign bilateral deals with the United States, smaller nations in the region would likely be pushed into similar agreements, according to the IRC’s Caro.


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