When President Obama leads the U.S. delegation to the April
17-19 Summit of the Americas in Trinidad and Tobago, the whole
neighborhood will be watching. The summit will be Obama's first
multilateral meeting with all 34 democratically elected Latin
American heads of state (excluding Cuba).
Confronted by serious economic problems domestically and
unprecedented foreign challenges to the U.S.'s historically
dominant role in Latin America, many people back home will be
wondering if the President will use the summit to increase domestic
prosperity and security.
The last Summit of the Americas was a disaster for the U.S. It
was disrupted by an alliance of anti-U.S., anti-free trade, and
anti-globalization groups and leaders, including Hugo Chavez, Evo
Morales, Néstor and Cristina Kirchner, and other
"21st-century socialists." These groups will doubtlessly attempt to
hijack the attention of the world media in Trinidad, too.
U.S. Economic Interests Sacrificed on
the Altar of Multilateralism
The creation of a Free Trade Area of the Americas (FTAA), which
would be the best way to bring peace and prosperity to the region,
was one of the original objectives of the quadrennial summit
meetings when they began in Miami in 1994. In the summits that
followed, however, the goal of a hemispheric free trade zone slowly
became lost in a jungle of ill-conceived and inefficient
The Organization of American States (OAS), leading a gaggle of
regional organizations and bureaucracies, gradually hijacked
control of the summits through their institutionalization of a
Summit Implementation Review Group (SIRG) "process" with repetitive
"Declarations of Principles" and ever-growing "Plans of
Instead of focusing on the FTAA, international bureaucrats fed
heads of state a steady diet of taxpayer-funded summit development
assistance "mandates" (of which there are now 812) that shifted the
focus away from advancing free trade as the principal means of
economic development and gave governments and international
organizations an ever-expanding role in implementation, which
generally amounted to the production of reports calling for more
How many--if any--of these mandates have actually been
fulfilled, let alone their full cost, remains unclear. Yet the
"Draft Declaration of Commitment" produced by the "SIRG process"
that heads of state will be asked to approve in Trinidad contains
an additional 66 "mandates" whose costs of implementation are unknown
(and perhaps unknowable).
Multilateral Development Bank Lending:
Another Dead End
Several of the SIRG-generated "mandates" direct more lending by
the Inter-American Development Bank (IDB) as well as other
international financial institutions (IFIs) "in order to increase
efficiency ... and optimize the use of resources." The IFIs would
bankroll everything from micro-enterprises and "safe, affordable
energy supplies for all" to a "Regional Strategy for the Management
of Climate Change Impacts."
The unfunded liabilities from these summit mandates would be in
addition to the $1 trillion in new lending that leaders of the G-20
demanded of their taxpayers to subsidize the International Monetary
Fund (IMF). Yet, as the Wall Street Journal's
Mary Anastasia O'Grady points out, "Latin America remains poor and
backward not despite multilateral 'assistance' but, in a large
part, because of it." She notes that although the region has
received billions in foreign aid in the last 50 years from the IDB,
the World Bank, the IMF, and other agencies, even a 2006 study by
the IDB itself criticized the aid's "ineffectiveness in achieving
economic growth or promoting democratic institutions."
For summit leaders to give their blessings to any new lending by
the IMF or IDB to countries such as Argentina and
Ecuador--countries that have defaulted and refused to honor their
prior debts--would be particularly galling. Last year Néstor
and Cristina Kirchner seized approximately $25 billion in private
pension funds (similar to 401(k) retirement savings accounts), yet
they refuse to repay sovereign debts and now want additional
President Obama Must Take the Lead
Unfortunately, the U.S. Senate has already passed a resolution
basically supporting the statist approach of the SIRG to solving
Latin America's problems that is laid out in the draft summit
declaration, and senior aides to Obama say the President
plans to arrive at the summit in a low-profile, "listening" mode. That
would be a mistake. If the interests of the United States are to be
best served at the summit, President Obama must take the lead.
With calls for protectionism on the rise throughout the
Americas, President Obama should meet before the summit begins with
the U.S.'s Pathways to Prosperity in the Americas (PPA) trading
partners and explore with them opportunities to merge existing FTAs
in the Americas to remove trade barriers among all U.S. free trade
partners--in essence creating a core hemispheric free trade area.
He should consider inviting Brazil, Uruguay, and the nations of the
Caribbean Community (CARICOM) to the meeting as observers.
The President should also take the lead in urging the OAS to
abolish its Summit of the Americas Secretariat office and call for
the next summit to be planned by OAS member country governments in
conjunction with private trade associations and pro-free-market
civil society groups. He should act to block any summit efforts to
approve new IFI lending to countries that have not demonstrated a
commitment to sound economic policies.
Finally, President Obama should announce to his counterparts at
the summit that he will return to Washington to urge Congress to
approve the pending free trade agreements with Colombia and Panama.
By withholding its approval, Congress is undermining U.S.
Scoring the Summit on Economic Issues
Will President Obama come to any agreements on steps the summit
countries can take together that advance U.S. interests in the
region while fueling U.S. economic growth and job creation? To
assist in making that assessment, observers can use the following
checklist to keep score:
- Did President Obama convene a meeting of PPA countries
(including Panama and Colombia) on the margins just in advance of
the first summit session in Trinidad to signal their elevated and
"insider" status as U.S. allies and preferred partners to the
broader group? Did he heartily endorse the continuation of the
"Pathways to Prosperity" initiative?
- Did President Obama explore opportunities to merge existing
FTAs the U.S. has in the Americas to remove trade barriers among
all U.S. free trade partners, in essence creating a core
hemispheric free trade area?
- Did the President meet with Brazil's President Lula at the
summit and encourage the two countries to begin negotiations on an
FTA, offer to push Congress to eliminate the U.S. tariff on
Brazilian cane-sugar ethanol as an incentive, and tell Congress to
make up the lost revenue by ending the federally mandated and
wasteful U.S. corn ethanol program?
- Did the President insist that the OAS abolish its Summit of the
Americas Secretariat office and SIRG process and, instead, turn
over planning for the next summit to the host country and OAS
member governments in conjunction with trade and commerce
associations in the private sector as well as with pro-free-market
civil society groups?
- Did President Obama insist that funding for all Summit of the
Americas activities that have lost focus on the key goal of
advancing free trade be ended?
- Did the President call for a review of all "mandated" programs
previously funded under past Summit of the Americas' Plans of
Action and seek to move these activities to a new framework that
actively promotes private-sector solutions to development
- Did President Obama assure his counterparts that he will press
Congress to approve the pending free trade agreements with Colombia
Consequences of a Low Score
If President Obama gets a low score on this checklist, it will
be the latest sign that his Administration is aligning itself with
the statist direction that the summits have taken. A low score will
also serve as a warning for U.S. taxpayers to expect another large
bill for programs that are unlikely to achieve their desired
Roberts is Research Fellow for Economic Freedom and Growth in
the Center for International Trade and Economics at The Heritage