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ANDRES OPPENHEIMER CAFTA rejection would hurt U.S.



Published: Wed, July 27, 2005 @ 12:00 a.m.



If President Bush fails to pass the U.S. free trade deal with five Central American countries and the Dominican Republic, he might as well cancel his coming trip to Latin America and say "adios" to the region.

Judging from what I heard from several Latin American officials last week, a ''no" vote by the U.S. Congress on the Central American and Dominican Republic Free Trade Agreement -- predicted by some congressional head counters -- would be the U.S. equivalent to the recent French and Dutch "no" vote against the proposed European Union Constitution.

It would amount to a virtual death sentence to the already troubled U.S. effort to create a 34-country, hemisphere-wide Free Trade Area of the Americas, as well as to U.S. sub-regional trade negotiations with the Andean nations bloc -- Colombia, Peru, Ecuador and Bolivia -- as well as with Panama, they say.

If the U.S. Congress doesn't approve an agreement with a group of friendly Central American neighbors that together amount to only 1.9 percent of U.S. worldwide trade, the argument goes, it would be unrealistic to hope that it would sign much larger trade deals with the Andean bloc, or with Latin America as a whole.

House opposes CAFTA

Last month, the Senate passed CAFTA-DR by a narrow margin. But Democratic Party legislators in the House -- pressed by protectionist labor unions and big sugar -- are nearly unanimously against it, which could kill the treaty.

For U.S. foreign policy in Latin America, that would be a disaster, among other things because free trade has long been -- both under Democratic and Republican administrations -- the cornerstone of U.S. cooperation plans with the region.

For at least two decades, Washington's message to Latin America has been, "Trade, not aid."

A major blow to the U.S. free trade campaign would effectively kill the only carrot in the U.S. foreign policy agenda toward the region. Without free trade, all the United States would have left to offer to the region would be "negative agenda" issues such as U.S. demands to curb illegal immigration, drug trafficking and security threats.

"It would send a terrible signal to Latin America," Peru's Foreign Trade Minister Alfredo Ferrero told me in an interview. "The United States already has an image problem in Latin America: It's not seen as a partner. If they can't pass CAFTA, it would make things much worse."

Dilemma of Andean nations

Andean countries are especially worried. Their current trade preferences under an anti-drug deal with the United States expire at the end of next year, and failure to renew it or sign a free trade deal could cripple their exports.

It's not that Latin American countries lack a Plan B. Venezuela's self-proclaimed revolutionary President Hugo Chavez is more active than ever promoting his "anti-imperialist" Bolivarian Alternative for the Americas. With huge oil profits in hand, and Brazil's regional leadership dampened by its ruling party's corruption scandals, Chavez is drawing the biggest headlines ever in Latin America.

In recent weeks, despite the fact that Venezuela's National Statistics Institute reported an 11 percent rise in the country's poverty during Chavez's first four years in office, Chavez has signed deals to create three regional oil companies -- Petrosur, Petrocaribe and Petroandina -- through which Venezuela will subsidize oil production and exports.

In addition, Chavez has recently vowed to purchase $500 million of Ecuador's foreign debt. He made similar promises to Argentina, Brazil and Bolivia.

Many of these deals come with strings attached. Venezuela's June 29 energy cooperation agreement with 12 Caribbean Community countries stipulates that its "fundamental objective" is to promote economic development "based entirely on the principles for integration referred to as the Bolivarian Alternative for the Americas."

My conclusion: If CAFTA-DR doesn't pass, Bush would be well advised to reconsider his Nov. 4 trip to Argentina for the 34-country Summit of the Americas.

He would not only be stepping into hostile territory -- the mayor of the host city, Mar del Plata, has already been quoted as declaring him "the world's most disagreeable person" -- but would arrive with nothing but "negative agenda" issues for the region.

X Andres Oppenheimer is a Latin America correspondent for the Miami Herald. Knight Ridder/Tribune.




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