July 24, 2006 | WebMemo on Latin America
Populist nationalism emanating from Venezuela seeks to counter U.S. influence in Latin America, while Chinese deal-making is undermining the region's slow evolution towards market-based economies. At the same time, congressional opponents of the Bush Administration are eager to block trade agreements to hand the President an election-year defeat. But failure to advance U.S.-Latin American trade relations would be an incredible blunder that jeopardizes one of America's best interests: preserving peace and safety at home. Worse, it would drive allies into the hands of adversaries anxious to build a new order of authoritarian governments and aid networks based on the models of Venezuelan president Hugo Chávez and Cuban dictator Fidel Castro. In contrast, approving the U.S.-Peru Trade Promotion Agreement (TPA) would mean big business for American and Peruvian enterprises and could dispel perceptions of U.S. withdrawal from the region and counteract growing anti-American sentiment.
Although Latin Americans generally see the United States favorably (61 percent), favorable perceptions of the U.S. have declined noticeably in 13 out of 18 countries surveyed since September 11, 2001. Poll respondents now give the United States low approval ratings on how it manages global conflicts (23 percent) and on Iraq (15 percent). Regarding U.S.-supported institutional reforms, only 31 percent of respondents believe that democracy works and 27 percent are satisfied with market economies, according to Latinobarómetro, a regional polling organization.
Throughout the hemisphere, Venezuelan president Hugo Chávez is purchasing influence with petrodollars. He says the aim of his Bolivarian revolution is to roll back U.S. "hegemony." Toward that end, he has given tacit aid to the Colombian Revolutionary Armed Forces (FARC) guerrillas and is forging anti-U.S. alliances with North Korea and Iran. Chávez allegedly financed the Movement Toward Socialism party (MAS) now in power in Bolivia and sent Venezuelan oil and fertilizer to leftist Sandinista party mayors in Nicaragua in May 2006, helping to propel Sandinista candidate Daniel Ortega to the lead in the November presidential elections. His oil concessions to Caribbean governments secured 15 votes for Venezuela in its bid to occupy a rotating seat on the United Nations Security Council.
Sensing an opportunity to feed its revving economic engine, China has stepped up contact with Latin America to acquire raw materials in exchange for Chinese manufactured goods. To obtain access to minerals, petroleum, and timber, China offers tempting investments in infrastructure. But these agreements tend to undermine Latin American progress toward private-sector reforms and industrialization in countries where powerful oligarchies or governments still control plantation economies.
As Venezuelan and Chinese influence has grown, the U.S. presence in Latin America is running in place, governed by bureaucratic rules of engagement and yearly Congressional budget battles.
How a U.S.-Peru Free Trade Agreement Serves U.S. Interests
Largely because of commitments elsewhere, the United States provides less and less foreign aid to Latin America than in the past. Nonetheless, it is the private sector that drives economic growth and creates jobs in free societies. The U.S.-Peru Trade Promotion Agreement will help sustain growth in this key country and maintain U.S. engagement with the region. The pact would serve America's interests in six ways:
The U.S.-Peru Trade Promotion Agreement is not the only pact needed in Latin America. Beyond it, the Bush Administration should conclude bilateral trade negotiations with Colombia, Panama, and Ecuador. U.S. interests would also be boosted by the U.S.-Uruguay Bilateral Investment Treaty-already ratified by the Uruguayan assembly-and the administration should sit down with Uruguayan negotiators again if their leaders wish to discuss a follow-on free trade agreement.
With U.S. influence in Latin America waning relative to the growing power of Venezuela and China in the region, fostering deeper ties and liberalism through strong trade agreements is a necessity. The U.S.-Peru TPA is a big step in the right direction.
Ana Isabel Eiras is Senior Policy Analyst for International Economics in the Center for International Trade and Economics, and Stephen Johnson is Senior Policy Analyst for Latin America in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation.