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PrintJune 25, 2007
Free trade for America's enemies?
To hear the international left excoriate free trade, you'd think it would be a no brainer for leftist states like Ecuador and Bolivia to reject any trade with the U.S. It's a core position of union hardliners, anti-globalization activists, and populists of all kinds. Better still, leftwing heroes Fidel Castro and Hugo Chavez hate it totally. Both Ecuador and Bolivia recently elected leaders who reject free trade as 'yanqui imperialismo,' and vowed to stop its advance.
But all of a sudden, they're seeking the benefits of free trade from the U.S., in what's a tremendous ideological somersault. They're seeking an extension of de-facto free trade privileges from the U.S. that expire on June 30. Those trade privileges historically have been a precursor for free trade pacts. They're now saying they never hated the trade at all. But it's not exactly because they've had a change of heart.
Presidents Rafael Correa of Ecuador and Evo Morales of Bolivia, are both running notoriously anti-American regimes. They have blasted the U.S. as a capitalist oppressor, and said their whole national mission is to slip its imperialist shackles. Needless to say, they've been no friend to the U.S. in the United Nations. Worse yet, they've forged alliances with some of America's worst enemies, like Iran and Cuba. They've also grown increasingly slack and obstructive in even fighting the drug war that plagues the entire Andean region. Morales has increased coca production by 8%, keeping the street price of cocaine steady even as Colombia's production falls 9%. Ecuador has emerged as a major drug transshipment point and money laundering center - something that is evident by its well-developed illegal immigrant smuggling routes to the U.S., which are the region's best. Ecuador has announced "irrevocably" that it will shut down a tiny U.S. military base at Manta port that tracks drug planes, in order to kick out the U.S. imperialists.
But in exchange for fighting the war on drugs, they've both been recipients of large amounts of U.S. aid in 2006 - $120 million in Bolivia's case and $500 million in Ecuador's. Along with this aid, which is both humanitarian and technical, they both have preferential "ATPDEA" trading privileges to sell their goods duty-free in the U.S. without having to reciprocate the favor to American firms.
With a setup like that, they can, in practical terms, reject and obstruct the idea of real free trade, which would ask them to open their markets to U.S. competition, as long as they retain their current trade privileges. Thus, America's generosity to them has provided a platform for them to condemn real free trade with impunity. But under the radar, they feverishly want a continuation of these one-way US trading privileges, which is why they're suddenly telling America they never really meant it about the 'imperialismo' charges and all that as the expiration beckons.
With a setup like that, they can, in practical terms, reject and obstruct the idea of real free trade, which would ask them to open their markets to U.S. competition, as long as they retain their current trade privileges. Thus, America's generosity to them has provided a platform for them to condemn real free trade with impunity. But under the radar, they feverishly want a continuation of these one-way US trading privileges, which is why they're suddenly telling America they never really meant it about the 'imperialismo' charges and all that as the expiration beckons.
It might be a good idea to continue the current trade privileges to these countries. After all, both are insignificant economies to America, but U.S. trade amounts to a huge portion of their GDPs. It could be argued that extending trade preferences might help keep their battered private sectors alive as Chavez-style centralization of the economy becomes a reality.
But there are some bigger reasons not to extend it. Investor's Business Daily argues against it for Ecuador on a couple of fronts. One, Ecuador isn't helping in the war on drugs, and that's the whole rationale for the trading privileges. Two, both of these Marxist regimes are taking over and destroying their private sectors anyway. If trade privileges are extended to these countries, the U.S. may find itself trading tariff-free with the Irano-Ecuadorean People's Tractor Company, or the Che Guevara Cuban-Bolivian State Textile Mill, allowing state enterprises to get fat off American buyers and thus entrench the current regimes and their permanent grip on power.
In reality, that may be why they are making their somersaults. They seek to destroy their private sectors but to avoid the U.S. embargo Fidel Castro earned when he destroyed Cuba's economy and took away everything Cubans had.
Ecuador's and Bolivia's sudden sweetness to the U.S. as they plead for trade privileges is probably a plot to entrench themselves and their state enterprises forever through a steady stream of American dollars in trade.That will give them a freer hand to socialize their economies and break contracts without consequences.
Some leaders in Congress, like Sen. Charles Grassley see right through it and ask that trade not be extended to these countries. Grassley writes:
As for Bolivia and Ecuador, I see no reason to further extend ATPA benefits. In fact, it boggles my mind that the governments of Ecuador and Bolivia would even ask us for extensions of these trade preferences. After all, the current leaders of those two countries have based their careers on attacking U.S. policies-our trade policies in particular. Yet, ironically, they wrap their arms around one U.S. trade law, the ATPA. Why? Because under this program they can sit back and receive duty-free access to our market no matter how irresponsibly they act. Apparently, it doesn't matter to them that Ecuador expropriated the assets of its largest foreign investor, a U.S. company, and subsequently sent in troops to guard the facilities that it seized. Apparently, it doesn't matter that President Morales of Bolivia nationalized Bolivia's hydrocarbon sector and ordered the Bolivian military to occupy gas fields. President Morales also threatened to evict foreign companies, including U.S. companies, unless they turned the titles to their properties over to the state. Well, the fact is, those actions matter to me. We should not reward the bad behavior of those two governments by maintaining unilateral trade preferences on their exports to the United States. We should not let ATPA evolve into an entitlement program. Instead, we should allow ATPA to lapse, and then see what type of economic relationships the governments of Bolivia and Ecuador want to establish with the United States. For starters, those relationships must be based on a genuine respect for the rule of law.
But Bush, unfortunately, is reportedly said to favor extending the privileges for another two years, the exact frame of time Ecuador will take to shut down the Manta base. He could do worse and extend it for five years, as Ecuador is demanding, but even two years is a lot of time for Correa to do a lot of "revolutionary" expropriating to an economy. Let's hope Bush changes his mind. We don't need phony friends like Ecuador and Bolivia, who abuse us continuously unless they want something from us like trade privileges. The likelihood is, they'll use these privileges to strengthen their consolidation of power internally, and then turn them against us like a captured weapon.
