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A Welcome Shift

Obama appears to be moving in the right direction on free trade with Latin America.



12:00 AM, May 7, 2009 • By JAIME DAREMBLUM
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In recent weeks, the Obama administration has quietly done an about-face on free trade with Latin America. On April 20, U.S. trade czar Ron Kirk told reporters that President Obama did not think it would be necessary to renegotiate the North American Free Trade Agreement (NAFTA). This marked a reversal from Obama's campaign pledge to "make sure that we renegotiate" NAFTA. Speaking at the Georgetown University Law Center three days later, Kirk said "there is strong bipartisan support for the pending free trade agreement (FTA) with Panama," which he is working to complete. Kirk indicated that he is also reviewing the pending free trade agreement with Colombia, in hope of finding "a way forward." Obama had opposed both of these trade deals during the campaign.
Critics may attack the president for flip-flopping on trade, but this is a most welcome flip-flop. Seeking a renegotiation of NAFTA would have poisoned U.S. relations with Canada and Mexico. (Canadian prime minister Stephen Harper applauded Obama's switcheroo on NAFTA, pronouncing himself "delighted" at the decision.) And rejecting the trade pacts with Panama and Colombia would have been a diplomatic disaster for Obama; indeed, it would have given all Latin countries ample reason to doubt his commitment to the region.


In his opening remarks to the recent Summit of the Americas, Obama called for "a new sense of partnership" in the Western Hemisphere. "I pledge to you that we seek an equal partnership," he told the assembled Latin American and Caribbean officials. "There is no senior partner and junior partner in our relations; there is simply engagement based on mutual respect and common interests and shared values." It is hard to square those comments with opposition to hemispheric trade liberalization. Obama must realize this, despite what he said on the campaign trail.
Unfortunately, congressional Democrats are deeply hostile to free trade. Moving forward with the Panama and Colombia FTAs would be "absolutely outrageous and a serious mistake," declares Congressman Mike Michaud, a Maine Democrat and cofounder of the House Trade Working Group. Many Democratic lawmakers are concerned that Panama has become a tax haven, and they want the Panamanian government to sign a tax information exchange agreement before the FTA goes through. The tax fight certainly poses an obstacle to FTA ratification, but U.S. officials should be able to overcome it.

Getting Democrats to back the Colombia accord will be much harder. The American labor movement, a powerful Democratic constituency, fiercely opposes the Colombia FTA, even though the South American nation has made great progress in curtailing violence against labor activists. Kirk may be able to temper Big Labor's opposition by tinkering with certain provisions in the trade deal, but many American union officials are utterly intractable. Will Democrats risk alienating their core supporters in order to help Obama win approval of the Colombia pact? Let's hope so. Panama and Colombia are two key U.S. allies with firmly pro-American governments. Colombia is led by President Alvaro Uribe, a conservative lawyer whose policies have been wildly successful in reducing criminal activity and have also helped strengthen the Colombian economy. Panama's current president, Martín Torrijos of the center-left Democratic Revolutionary party, who has been an eager advocate of free trade with the United States, will leave office on July 1. His successor, billionaire supermarket tycoon Ricardo Martinelli of the center-right Democratic Change party, was elected this past Sunday in a landslide. Martinelli will manage an ongoing $5.2 billion expansion of the Panama Canal, which began under Torrijos. When it comes to promoting trade liberalization in the Americas, Obama should not stop with Panama and Colombia. He should also reach out to Brazilian president Luiz Inácio Lula da Silva and Uruguayan president Tabaré Vázquez. The Bush administration launched a new U.S.-Brazil Commercial Dialogue in 2006 and signed a Trade and Investment Framework Agreement with Uruguay in 2007. Obama should build on these efforts and seek formal FTAs with both countries.

Trade talks with Brazil--both inside and outside the Doha Round of global trade negotiations--will be especially important. Despite his background in leftist union politics, President Lula has become a robust free trader. His country now has the largest economy in Latin America, and it is a major regional power. In his April 23 speech at Georgetown Law, Kirk affirmed that the Obama administration is "committed to a successful conclusion of Doha." Brazil will be critical to achieving that outcome.