FTAA/Miami: Consider the EU
Published on Wednesday, November 19, 2003 by the South Florida Sun-Sentinel
FTAA/Miami: Consider the EU
by Sarah Anderson
 

U.S. trade negotiators appear poised for another embarrassing debacle.

Two months after a World Trade Organization meeting collapsed in Mexico, negotiators are in Miami; this time they aim to break the stalemate over a planned hemisphere-wide pact known as the Free Trade Area of the Americas.

But despite last-ditch efforts, U.S. negotiators are deadlocked with their counterparts from Brazil, Argentina and other nations who fear the proposed deal would benefit large U.S. corporations more than the peoples of the Americas. The top U.S. trade negotiator has responded by criticizing Brazil, the region's largest economy, by calling it the leader of "won't do" nations.

Perhaps after one more failed summit, the U.S. government might be more willing to rethink its approach. For starters, George W. Bush and his advisers should consider Europe's integration experience. While far from perfect, it does offer a couple of guiding principles.

Lesson one: Address economic disparity head-on. The EU has spent hundreds of billions of dollars in grants to narrow gaps between richer and poorer member countries and regions, the bulk of it since the 1980s.

The largest recipients were the so-called "poor four" -- Ireland, Greece, Spain and Portugal. To varying degrees, all have made progress. Since 1982, Ireland has become one of the wealthiest European countries, while Spain and Portugal have increased their gross domestic product per capita levels from 73 to 81 percent and 61 to 72 percent of the EU average, respectively. Greece fell behind in the 1980s, but gained ground over the past decade.

These trends are in stark contrast with our own regional integration experiment, the 1994 North American Free Trade Agreement. NAFTA's "poor partner," Mexico, has seen its GDP per capita plummet as a percentage of the North American average. This figure was 40 percent in 1982 (before Mexico began sweeping free market reforms), 32 percent in NAFTA's first year, and 30 percent in 2001.

Even more disturbing are World Bank figures that point to a jump in Mexican poverty from 51 to 58 percent during the trade deal's first four years.

NAFTA, the FTAA's blueprint, contains no mechanisms to transfer resources to Mexico. Promoters argued, mistakenly, that the free market alone would lift living standards.

Lesson two: Tackle social and environmental as well as income gaps. Through EU-level regulations, for example, Irish women won a long battle for equal pay legislation and Austrian activists got a parental leave policy. New Eastern European members now must adopt EU environmental, human rights and workplace standards. While the EU is willing to pay for training, infrastructure and other needs to help countries comply, at the end of the day EU regulations are binding.

The EU, of course, is no egalitarian paradise and we should not adopt their model wholesale, but instead try to learn from their efforts to reduce disparities. A major question, of course, would be how to pay for it. A sliding scale would mean that U.S. taxpayers would foot most of the bill. Why then, should Americans open their pocketbooks?

First of all, without economic and environmental improvements in the poorer countries, there is no way to effectively reduce the incentive for companies to export U.S. jobs to areas of low wages and lax environmental enforcement.

Secondly, Americans now bear the burden of the billions of dollars spent every year to patrol our borders. In the EU, efforts to level the playing field make possible something unthinkable here -- "open borders." In Spain and Portugal, EU support helped narrow the gaps so much that outmigration flows have been but a trickle.

A collapse of the Miami talks would be reason for celebration. But then the real work would need to begin to solve our serious existing problems. A good first step for U.S. trade officials would be to drop the insults and acknowledge that perhaps they can learn something from others.

Sarah Anderson is the director of the Global Economy Project at the Institute for Policy Studies in Washington, D.C. and the co-author of Field Guide to the Global Economy (New Press).

Copyright © 2003, South Florida Sun-Sentinel

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