Week of

Apr. 29  to
May. 05, 2004

Features

Links

Suggested readings

Your letters

Bulletin Board

Please join us by subscribing to Progreso Weekly and Progreso Semanal. It's free and easy :       go

HOME               LISTEN              ABOUT US              SEARCH             TO EDITOR            TAKE ACTION             CONTRIBUTE

A correspondent's draft

‘If anyone dissents separately...’

An interview with José Ángel Pérez
 

By Manuel Alberto Ramy

ramy@progresosemanal.com

There are news reports that fly low because they're not important enough; in the world of information, they are simply routine. But there are others that are made to fly low, to slip by unnoticed, lost in the thick fabric of information, because it's not convenient to fly them very high even though they are rather important. I will deal with one of those. 

On April 5, the member countries of the South American Common Market (Mercosur) and the Andean Community of Nations (CAN) agreed to create a free-trade area in South America. The news report added that between April 26 and April 30 “a technical meeting will be held to incorporate the advances made in negotiations, product by product,” and that “on July 1 a Mercosur-CAN summit will be held in Quito, where the region's leaders will formally sign the confirmation of the South American Free Trade Area” (BBC, April 5, 2004.)

All of this – which is of great importance for Latin America as a whole and particularly for the continent's southern region – occurs as the final meetings of the Free Trade Area of the Americas (FTAA) have been suspended for lack of agreement on issues that are extremely sensitive for Latin Americans. Key countries in Latin America have held their positions with a firmness that has startled Washington's negotiators.

Is there a relationship between the controversy created by the FTAA and the announcement above? Could it mark the beginning of a genuinely regional road? Will it represent an organized form of putting greater pressure on the United States’ stance? 

With these and other concerns in mind, I interview José Ángel Pérez, Master's degree in Economic Sciences, and an academician at the Center for Research on World Economy (CIEM) of Havana. With the news report in hand, I comment on the news and begin our chat recalling that something akin to this announcement was hinted at some years ago when Brazil's then-President Henrique Cardoso called for an accord similar to the one about to be signed.

José Ángel Pérez (JAP): Yes, it's true that approximately four years ago Brazil promoted a South American Free Trade Area [SAFTA] that would provide an opening to stimulate and promote free trade within the region, as a way to strengthen [South America's] ability to negotiate, vis-à-vis the FTAA. No doubt, that initiative appeared to be – for awhile – a Brazilian diplomatic initiative, associated with its economic weight but without sufficient political backing from most of the South American governments.

Progreso Weekly (PW): Four years ago, those governments weren't warmly receptive. Why are they now?

JAP: We now seem to be witnessing the end of the political cycle of the most orthodox right wing in South America, as well as the blossoming of a political agent that oscillates between the center and the center-left. This reality has been favorable for Brazil's proposal of a South American Free Trade Area as a way to negotiate – under better conditions – the call for the FTAA.

PW: Do you believe that this proposal is strong enough to displace and replace the FTAA?

JAP: I believe that what it's strong enough to improve the negotiating ability of the South American countries, so they won't be exposed to a situation of extreme vulnerability during the negotiations.

PW So, are we in the presence of a response mechanism, rather than a positive affirmation made by a group of countries that wish to integrate?

JAP: I get the impression that right now it is a coherent and constructive response, and that, according to events and the results [the proposal] can create, it could become an integration proposal among Latin American nations, as a proposal for integration.

PW: Could it serve as a mechanism of response to the FTAA by augmenting [South America's] negotiating ability and could it also mean a way of independent affirmation?

JAP: It could be, but we have to see how events run their course. For the time being, I estimate that it has the potential to respond to the FTAA and pressure the U.S. to rethink its negotiating position. I also estimate that the Mercosur-CAN fusion has enough energy to advance toward an authentic and rational zone of integration.

PW: What do the CAN and Mercosur represent in economic terms?

JAP: Mercosur accounts for almost 42 percent of the Latin American market; the CAN represents 22 percent of that market. Although the percentages do not add up, one realizes that the two add up to more than 60 percent of that potential market, and we can also appreciate that eventually that association would make penetration by the U.S. more difficult. So, yes, there is some weight there. Let me add that Mercosur provides 58 percent of Latin America's gross domestic product and the CAN provides 38 percent, and that's not a trifle. Between the two, they bring together six countries that decide the economic behavior of the region.

PW: It might be worthwhile naming them.

JAP: In the first place: Brazil, Argentina, Venezuela and Colombia. At a lower but no less respectable level: Peru, although the first three – Brazil, Argentina and Venezuela – are decisive. So is Chile, but it already has signed a free-trade pact with the U.S. and although Chile is geographically part of South America and could join the South American alliance it would do so more from a diplomatic standpoint than a real standpoint.

PW: As to exports, what is the behavior of Mercosur and the CAN?

JAP: Mercosur accounts for 32.6 percent of all of Latin America's exports and the CAN for 17 percent. The two together account for more than 50 percent of all exports. What the U.S. is after is finding a market for its products, revenue to raise its GDP, which is no trifle: it's $10 billion. Among the megablocs, that's not enough, because the Asian-Pacific Cooperation Forum is scratching $13 billion. The European Union is nearing $9 billion. Therefore, the U.S. needs Latin America's GDP, which is about $2 billion, and these two blocs [Mercosur and the CAN] together produce very nearly 80 percent of that GDP. What remains is Mexico, Chile, Central America and the Caribbean, which actually would be 20-some percent of the GDP.

PW: The South American alliance also represents the integration of zones with countless strategic resources, whose control is the main target of countries and consortiums. I'm thinking of water supplies, which could create major conflicts in this 21st century.

JAP: Yes, there is plenty of water [in the region] and the U.S. needs it. There is oil and the U.S. also needs it to break its dependence on the Middle East and the other countries from which it imports oil. There are also genes and biodiversity in large amounts, to the degree that this bloc of integration about to be created includes six of the 17 countries richest in biodiversity, worldwide. With this potential in mind, a CAN-Mercosur association that could become a project of integration with Latin American dimensions could be a serious obstacle to the enactment of the FTAA in 2005.

Besides, even if [the SAFTA] doesn't become a proposal for integration as such, the fact that the CAN and Mercosur (even with the weak governments some of the member countries have) can improve the negotiating ability of that zone vis-à-vis the FTAA is a serious obstacle to the FTAA's enactment in 2005, because we know that the United States' farm-subsidy policy (which it refuses to change) is a very serious obstacle that has halted all negotiations on the FTAA. 

PW: Are you referring to the latest call to approximate positions with an eye to the FTAA?

JAP: Yes. February's summit in Puebla failed, among other reasons, precisely because of the dissidence, particularly in regard to the subsidies. The issue of farm subsidies is so sensitive and important for the U.S. that [Washington] proposed spending a few more months talking and lobbying and then calling for another Puebla summit. It should have been held some days ago, yet they had to call it off. Why? When Bush administration negotiators surveyed the positions they would encounter, they realized they had not changed. 

PW: Curiously, a few days after this last call for a Puebla summit, the announcement is made of a Mercosur-CAN union. Is this a message?

JAP: At the very least, I don't think it's happenstance. There is evidently a response, in which the roles of presidents Lula [of Brazil], Chávez [of Venezuela] and Kirschner [of Argentina] are important. These are precisely the three countries that have most to lose in the kind of FTAA the United States wants to impose – even in an FTAA “light.” Those countries would lose a lot, because of the complex issue of farm subsidies.

PW: Let me go to a more delicate subject. Within the CAN and Mercosur there are governments, like Colombia, that belong to the CAN yet are signing free-trade accords with the U.S. How can you be a member of the free-trade accord with the U.S. and at the same time take part in this South American association? Aren't they mutually exclusive? What problems would that duality cause within an integrated Mercosur-CAN? 

JAP: This is a really complicated topic and it seems to me that pragmatism could alleviate it a bit. It's referring to the specific cases of Colombia and Venezuela. Notice that they are the two extremes: Venezuela is one of the biggest detractors of the FTAA, and Colombia represents one of the major expressions of unconditional subordination to the FTAA. However, within the CAN, the axis of Colombian-Venezuelan trade is so huge that it rules the commercial and economic behavior of that community. Obviously, there is an economic fabric between both bourgeoisies – Venezuela's and Colombia's – that President Uribe cannot ignore, because if he did he would affect his own economic base. 

Here, they will have to play with what is called political will about this subject. Either that, or make a suicidal decision. If President Uribe chooses to prioritize the FTAA and turn his back on a sizeable sector of the Colombian bourgeoisie that traditionally trades with Venezuela, he will play his best card – and at the same time he'll burn one of his own sails. This duality, this ambiguity, represents the challenge of the grand association being created, where at least three regional governments – Colombia, Uruguay and Peru – are willing to join the FTAA unconditionally. These could be corrosive factors.

PW: Within these institutions, or market blocs, decisions are made by consensus. Would you dare make a prediction?

JAP: Yes, they are made by consensus and at that moment one can be more daring or more prudent. In the case of the three governments we mentioned – Colombia, Peru and Uruguay – I think they will maintain the most reserved attitude possible, so they won't run into problems with the Bush administration.

PW: Among the controversial issues involved in the negotiations for the FTAA, the issue of the subsidies received by U.S. farmers is very important for Latin America, particularly as regards the Mercosur-CAN union. If the government of Colombia, as it appears, accepts the FTAA as is, or signs a bilateral treaty with the U.S., subsidized U.S. products would begin to slip into Colombia and eventually would circulate within the member nations of the CAN and Mercosur. Wouldn't this open door harm the new bloc? Would there be any mechanisms of protection?

JAP: Yes, [an open door] would harm an important sector of the Colombian bourgeoisie, which cannot compete with those subsidized products. It would harm the CAN as well. In fact, the proposal of an FTAA or a free-trade agreement is a serious blow to any bona fide process of Latin American integration, call it what you will. It's a serious blow to the Central American Common Market, a serious blow to the Caricom, Mercosur, the CAN, to all of them. That's because these are integration blocs that are symmetrical, subregional and have some concepts of protection and reciprocity within the partner nations. On the other hand, the FTAA is an asymmetrical and continental process whose only strong commitment is to the transnational corporations, not to the national bourgeoisies, because [the FTAA] is not a national project.

So, yes, [an open door] is a serious blow and a way to break the resistance, the unity, the dissidence that may exist in Latin America. But watch out, it could have a boomerang effect, because the bourgeoisie could see that its life raft is a South American alliance and could pressure the decision makers, from a political standpoint, to participate more vigorously in a South American Free Trade Area.

Things are stated in those terms. It's a kind of action-reaction that we'll have to evaluate as it develops daily on site. We do know, however, that the FTAA's effects will kill off a sizeable segment of the bourgeoisie, even of the bourgeoisie that has some power, because it cannot compete with imported products of better quality, made with a higher level of productivity and, on top of that, subsidized. And evidently these economic differences can tilt the balance toward a kind of Latin American association or integration, regardless of whether the participants are much too Bolivarian or much too Mariateguists or much too whatever. It's a basic question of surviving as a bourgeoisie. 

PW: Until now, the FTAA – as originally conceived – is at a standstill. “Too many sticks were stuck in the spokes,” as the saying goes, so the latest meetings have been canceled. Therefore, would you say the only road left to the Bush administration is to enter into bilateral agreements and quietly sabotage the chances of integration of other blocs?

JAP: Yes, to the degree that the Bush administration sees the chances for multilateralism are fading, it will opt for bilateralism. Now, it seems to me that [the U.S.] might have another card under its sleeve: dollarization. With the dollarization of their economies, countries also become subordinated and controlled. In the wake of economic sovereignty, everything else follows. However, [dollarization] remains under wraps; it hasn't played the role everyone expected it to.

PW: Why not?

JAP: The Bush administration still believes it can achieve its objectives through bilateral accords. With them, [the U.S.] could still extract concessions it hasn't through multilateral negotiations. I'm thinking about the hot issues of farm subsidies or investments. [The U.S.] can also resort to political-military pressure; let's not forget the Colombia and Puebla-Panama plans. But so far, this is the reality: thanks to the fortitude of the most important Latin American nations, the FTAA's predicted swift implementation has been brought to a halt. It was expected to be an expeditious and tranquil implementation; negotiations were expected to be completed by 2005. 

Another very important component of this reality is the fact that the FTAA's dissident governments are joining forces. If any of them dissents separately it could be defeated. But if they join together, even if their hues are different, they could make things difficult for the U.S. negotiators.

José Ángel Pérez, who holds a Master's in Economic Science, is a researcher at the Research Center for World Economy (CIEM) in Havana, Cuba.