EDITORIAL: Free Trade stumbles

WHEN the North American Free Trade Agreement (NAFTA) was first mooted, it was thought that the islands of the Eastern Caribbean would be part of the set-up. These islands, along with others in the region, are part of the hemisphere and would quite naturally be part of any trading arrangement set up in the wider region.

Pitted alongside such economic powerhouses as the United States, Canada and Mexico, and those in Latin America, the arrangement would have been very uncomfortable for the mini states in the region. This did not take place, and somehow it was narrowed down to three countries – the USA, Canada and Mexico.

Of late NAFTA has become a real issue for the United States which, according to the American President Donald Trump, has been shuttering US factories and sending jobs across the border to low-wage Mexico. This has given rise to speculation that NAFTA will have to be renegotiated, at least that is what Mr. Trump has been suggesting, if there is to be any future for the trade pact. That process of negotiating a modern NAFTA agreement has already commenced.

He is on a role in his “America First” agenda and what will emerge is just not clear. Trump had made trade a key plank of his election campaign in last year’s presidential race while promising to bring back jobs to the United States. In that campaign, he said that somehow the United States had been at the losing end of the agreement and that he wanted a mandate, among other things, to correct that situation.

But if the mighty United States is complaining about fallouts from NAFTA, what would have been the situation with smaller states which are unable to compete in an arena of powerful states? We would have no chance of surviving in that environment. As small entities in an agreement comprising powerful trading partners, our interests would hardly count for much since it’s still a case where trade policy has been seen as selling goods/services to others while buying as little as possible from other trading partners. God help you when you are small.

Following NAFTA there was the Free Trade Area of the Americas (FTAA), which was promoted as a response to the European Union and which was to embrace all the countries of the Western Hemisphere with the exception of Cuba.

To participate in the FTAA, all countries were expected to restructure their economies by lowering tariffs, ending government support to economic sectors, opening up their procurement markets, and to follow along the lines similar to what the World Trade Organisation (WTO) has been mandating in its trade rounds. Smaller countries because of their size and their micro-economic sectors and firms, wanted special and differential treatment, longer phase-in periods for agreements reached at the negotiating table and a recognition that the liberalisation schedule would not be that demanding in the early stages of any agreement.

The FTAA was touted as the most ambitious trade agreement in this hemisphere. However, the big players like the USA, Brazil, Argentina, Colombia and Chile, among others in South and Central America, could find no common ground in negotiating the way forward. That experience has either ended or has been shelved. That’s why we will wait to see what comes out of the new NAFTA.

Barbados Advocate

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