Obama, Romney and the Latin American Agenda

The outgoing president of the World Bank, Robert Zoellick, who is being mentioned as a possible candidate to the Treasury or as Secretary of State if the Republican Mitt Romney manages to win the elections in November, is trying to resurrect an ambitious idea: a hemispheric free trade bloc.

Speaking at times as if he were already working on the Republican campaign, although he said he will not talk about his political future until he leaves his position at the World Bank on June 30, Zoellick is calling for a “new agenda” to improve relations between the United States and Latin America.

In an interview I did this week, Zoellick discussed the proposals he raised on June 7 before the Inter-American Dialogue, a Washington research center, where he suggested reviving plans for a regional free trade area. It’s based on an idea that has been virtually dead since Latin American countries rejected the Free Trade Area of the Americas during the presidency of George W. Bush in 2005, in Mar del Plata, Argentina.

The United States should play “a role of catalyzing leadership, and it has not done any of that,” Zoellick told me, referring to the need to revive the inter-continental trade negotiations.

“Our trade agenda is at a standstill,” said Zoellick. “It will be strategic error [not to open negotiations with the region], because part of the resurrection of the United States depends on its specific integration with the world, including our own hemisphere.”

“But how will these negotiations be revived when few in Washington pay attention to Latin America, and many Latin American countries do not want to improve their relations with the United States?” I asked.

“We are entering a new phase, where the internationalists of the United States, who are traditionally centered on Europe and Asia, and to some degree in the Middle East, should also include Latin America in its evaluations,” said Zoellick. “It is a very promising area.”

With regard to the reluctance of many Latin American countries to improve their links with the United States, Zoellick said some of that resistance may already have been reduced; the U.S. has begun to lower farm and ethanol subsidies that Brazil and other Latin American countries have long criticized.

Zoellick said that Washington could start by creating commercial blocs with those countries that already have free commerce agreements with the United States, including Mexico, Canada, Colombia, Peru, Chile and others in Central America; later on, they can just extend it so that other countries can be included. In other words, it could start with a “FTAA of the willing.”

“I think that there is a possibility of integrating those individual agreements,” said Zoellick. He said free trade agreements between the U.S. and the countries of the hemisphere and represent 54 percent of gross domestic product of the Americas, excluding the United States.

When I asked him how all the agreements can be unified, he said it can be done by permitting members of the bloc the use of components in other member countries in their exports to the U.S. market.

At this moment, with few exceptions, the countries that have agreements of free commerce with the United States can only export products with preferential rates that are generated within their national boundaries. With time, the United States could start contacting members of the business community in Brazil. Over time, the U.S. could persuade Brazil to join as they are reducing U.S. restrictions on ethanol, added Zoellick.

My opinion: Zoellick’s proposal of reviving the plans for a creation of an agreement of free trade is interesting; it won’t surprise me if Romney’s campaign adopts it as part of its platform of its foreign policy platform. It won’t help Romney to win the Hispanic vote; a new Gallup poll reveals that 66 percent of Hispanics are planning on voting for President Obama and barely 25 percent for Romney, due to the fact that the Republican candidate has scared off many Latinos with his virulent discourses on undocumented immigrants.

But it would be good for the Republicans to introduce the subject of economic ties with Latin America in the presidential campaign; this will obligate the Obama campaign to propose their own plan to improve relations in that region. At a time when China is negotiating an agreement of free commerce with their Asian neighbors, the U.S. and Latin America will benefit by creating chains of regional production, so that their businesses can compete better with their Asian rivals. It’s a subject that the political leaders in Washington can no longer avoid.

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