A Fast-Track "Truco?"

 
Argentina's Clarín newspaper asks in its December 12, 2001 edition if the Trade Promotion Authority (TPA) approved by the House and on its way to the Senate is not really a "fake Fast Track." Other voices in Latin America have even stronger opinions. In fact, reaction in the region has been so negative that one wonders if the process has done more harm than good. Below are the specific areas that have incensed one group or another in Latin America with regard to TPA:

1. Anti-dumping. TPA maintains the capacity of the United States to take unilateral punitive action and to defend current international mechanisms to control attempts to undermine US competitiveness through dumping and subsidies. Many nations view these mechanisms as strongly biased and protectionist.
    

2. Intellectual property. TPA vetoes any "forced transfer of technology," which refers to agreements that force companies to share their core technologies, many developed through US tax and military subsidies, to gain market access. This issue has been an important aspect in the sale of US aircraft and other high-value merchandise. In addition, many countries blame intellectual property rights for severely limiting their ability to create better jobs and more value-added investments. The current controversy over the cost of medicines due to patent rights is also part of the concerns of developing countries.
    

3. Agriculture. According to Latin American critiques, the TPA as approved by the House effectively vetoes any tariff concessions for key agricultural products (i.e., sugar, orange juice) and support for US agricultural exports. The subject is complicated and is being hotly debated at the moment, especially in Brazil and Argentina. As the new policy is clarified and extended to more products, additional voices are bound to join the outcry.
    

4. Foreign investment. The TPA bill introduces the concept of an "exchange clause" that would prevent governments from using exchange rates as tools to defend their exports. This language disturbs Brazil, since it echoes Argentine complaints about the devaluation of the real in 1999. TPA seems to frown on any country that devalues its currency to make its exports more competitive.
    

5. Caribbean Basin and Andean preferences. The key vote for TPA passage (115-114) was achieved through the promise of reversal of textile trade preferences for developing countries, including apparel and textile commitments made in last year's trade bills with Caribbean Basin and African nations and upcoming concessions to Andean nations. A hail of protests has come from countries counting on investment, employment and foreign exchange earnings from exports of clothing and other textile items to the US market. The administration would have to modify the Caribbean Basin and Andean Trade Preference legislation to keep its promise. In the meantime, Central American producers are up in arms.

More thorny issues are bound to appear as countries, employers and civic organizations review the language of TPA, especially after it is passed by the Senate. In one country at least, the reaction has been swift. While officially Brazil has expressed interest in continuing the FTAA negotiations, the TPA language has made it even less enthusiastic about the treaty. Minister of Agriculture Pratini de Morais has once again been the point person against the US position and an "imperialist" FTAA. Central Bank President Armínio Fraga called the TPA language "a negative surprise," and President Fernando Henrique Cardoso himself stated that there will be no FTAA under these conditions. The Brazilian House reacted with a non-binding resolution asking the government to withdraw from the FTAA negotiations because of TPA. This vote, approved by all political parties, opens a new front in the trade battles. Previously, little has been heard from the legislative branches of the Latin American governments. Now, with TPA demanding close and constant consultations with the US Congress, similar concern is bound to arise in other countries in the region. In fact, many observers believe that the real political problems in gaining a hemispheric free trade zone will not be in the US, but in Latin America's legislatures.