Free Trade Discord Looms for Americas

Walter Lippmann walterlx at earthlink.net
Fri Jan 3 05:41:44 MST 2003


(Another way to see the pressures building
up against the blockade with US politics.
I've been saying the blockade is slipping
and cracking, which it obviously is. No
big overnight change will take place, but
it may simply wither on the vine while
the existing blockade legislation remains
on the books - there to be used by the
US government selectively, as it has,
against businesses who trade and people
to visit the island.

Walter Lippmann, Moderator, CubaNews)
==================================

December 31, 2002
POLITICS AND POLICY

Free-Trade Discord
Looms for Americas

Bush Talks with Brazil, Other Nations
Could Jeopardize Allegiances at Home
By MICHAEL M. PHILLIPS
Staff Reporter of THE WALL STREET JOURNAL


WASHINGTON -- With elections and trade-talk deadlines
approaching, President Bush may soon have to choose between
making friends in Latin America and keeping friends in
political battlegrounds such as Florida and West Virginia.

The administration is counting on a hemisphere-wide
free-trade accord to regain the initiative in crisis-plagued
Latin America, which Mr. Bush promised during his campaign
would be a top priority. But Latin Americans -- especially
Brazil's leftist president-elect -- are likely to demand
U.S. trade concessions in citrus, sugar, steel, apparel and
other industries centered in states that will be crucial to
Mr. Bush and his fellow Republicans in the 2004 election.

Placating Brazil will pose "a big political hurdle in the
U.S.," says Gary Hufbauer, senior fellow at the Institute
for International Economics think tank in Washington. "I
don't say it's an impossible hurdle, but it would [require]
a major commitment by the administration."

Brazilian President-elect Luiz Inacio Lula da Silva, who
takes office Wednesday, campaigned as a populist skeptical
that the proposed 34-nation Free Trade Area of the Americas
would benefit Brazil's working class. Now that Brazil is
joining the U.S. as co-leader of the free-trade
negotiations, Mr. da Silva says he intends to complete the
talks by their January 2005 target. At the same time, he is
signaling that Mr. Bush and his trade representative, Robert
Zoellick, will have to cut subsidies, tariffs and quotas on
sensitive items -- especially farm products -- if they want
his cooperation.

"I told President Bush we will be very tough in the
negotiations," Mr. da Silva said after a meeting with Mr.
Bush at the White House this month. "But when we come to an
agreement, we will be faithful to our commitments."

Mr. Bush, eager to court the new leader of Latin America's
dominant economy, proposed they draw up a "road map" of
important bilateral issues and schedule a summit in the
spring, according to an official at the closed-door meeting.
Trade is likely to top the agenda.

Brazil, however, seems to be one of only a few Latin
American countries to which the Bush administration is
paying close attention. Important Latin America-related
positions at the State and Treasury departments are
unfilled. Mexicans, who initially placed great hope in Mr.
Bush, are angry that he hasn't made progress in gaining
amnesty for illegal immigrants in the U.S. Argentines,
sinking fast into poverty, think the administration has fed
them to sharks at the International Monetary Fund, which
continues to demand tough budget and banking reforms in
exchange for assistance.

The picture of disarray doesn't include trade, however.
Trade Representative Zoellick "is their Latin America
policy," says Bernard Aronson, assistant secretary of state
for inter-American affairs during the first Bush
administration.

Since securing enhanced negotiating authority from Congress
in July, Mr. Bush has expanded trade benefits for the Andean
nations, prepared to launch free-trade talks with Central
America and completed a long-awaited trade pact with Chile.

After the Chile deal was sealed this month, Chilean
President Ricardo Lagos told Mr. Bush that several other
Latin American leaders had called to emphasize how important
a signal the deal is for the region, according to a person
familiar with the conversation. "The emphasis put on [the
Chile agreement] by the administration is very much evidence
of the priority of Latin America," one senior U.S. trade
official says.

But the big win for Mr. Bush would be a deal for the
hemisphere-wide free-trade area. That would require
appeasing Mr. da Silva and Brazil during the very heart of
U.S. election season.

Any concessions on U.S. steel tariffs or antidumping laws,
which are loathed abroad, would set off alarms in West
Virginia, a normally Democratic state that favored Mr. Bush
in 2000. But U.S. trade officials believe the highest
hurdles they will face involve citrus, sugar and Florida --
the state that ultimately gave the Republicans the White
House by the slimmest of margins.

Farm interests will actively protect their subsidies and
trade barriers. Agribusiness donors gave $38 million to
political candidates in the 2002 election cycle, and $59
million during the presidential-election year of 2000,
according to data assembled by the nonpartisan Center for
Responsive Politics. About 70% of that money went to
Republicans.

The administration got a taste of how quickly those
political allegiances can shift during the recent runoff for
a Senate seat in Louisiana. With her campaign shaky as the
Dec. 7 vote approached, incumbent Democrat Mary Landrieu
warned voters that the administration was cutting a secret
deal to allow more sugar imports from Mexico. She wound up
winning.

Mexico and the U.S. have been negotiating for years over an
update to the North American Free Trade Agreement that would
allow more Mexican sugar into the U.S. and more U.S.
high-fructose corn syrup into Mexico. U.S. trade officials
insist no deal has been struck yet.

Meanwhile, U.S. sugar producers are fighting to protect
tariffs, subsidies and quotas that shield them from foreign
competition. "Our guys are rightfully very reluctant to open
our markets essentially for Mexican government-produced
sugar," says Jack Roney, director of economics and policy
analysis for the American Sugar Alliance, which represents
cane, sugar-beet and corn-sweetener producers.

Sen. Landrieu promises to fight any effort to loosen
restrictions on sugar imports. "We cannot have this industry
devastated by this kind of political deal-making," she says.

Sugar- and citrus-industry lobbyists are plotting a joint
strategy for protecting their interests in the Free Trade
Area of the Americas. Brazil and Florida are the world's two
biggest producers of orange juice, and Brazil is awaiting a
final ruling on a World Trade Organization complaint it
filed over Florida's state tax on imported juice.

Florida Citrus Mutual, which represents 11,500 growers in
the state, is planning to boost campaign contributions,
rally congressional allies and pressure Mr. Zoellick not to
surrender to Brazilian demands that the U.S. reduce the
28.9-cent-per-pound import tariff on frozen orange-juice
concentrate, roughly a 29% tariff at current prices. The
group's chief executive, Andy LaVigne, harnesses the
persuasive power of a $9.1 billion-a-year industry that
employs 90,000 people in Florida. "It seems these days we're
becoming one of the key states to deal with politically," he
says.

The U.S. trade team thinks it will be able to secure
necessary negotiating room by telling Americans that they
stand to gain more than they would lose from a Latin
American trade deal.

But Mr. Hufbauer, of the Institute for International
Economics, thinks that will be a tough sell during election
season because "political advisers to President Bush, no
matter what his poll ratings are, will have so much in mind
what happened in the 2000 election and how close it was."

Write to Michael M. Phillips at michael.phillips at wsj.com1






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