Letter From Chile

A few weeks ago, Latin American trade ministers met in Quito, Ecuador, for what was expected to be a decisive negotiating round for the Free Trade Area of the Americas (FTAA), a far-reaching economic integration agreement involving every country in the Western Hemisphere except Cuba. The FTAA, like the North American Free Trade Agreement (NAFTA), is aimed not just at lowering tariff and nontariff barriers to trade but also at enshrining rules on investment, services, government procurement and a host of other issues, locking into place many of the neoliberal market reforms. Now, with the election in Brazil of Luiz Inácio Lula da Silva, who has said the proposal amounts to the "annexation" of Brazil by the United States, the fate of the FTAA, due to be signed in January 2005, appears less than certain. Da Silva pledges to keep Brazil in the talks but has made it clear that his government will demand significant changes. A leftward shift in politics throughout much of the region, precipitated in part by the failed economic prescriptions of the IMF and its "Washington Consensus" in Latin American countries like Argentina, is putting further strains on the FTAA negotiations.

Despite a growing uneasiness in official thinking about the hemispheric trade accord, one area in which Latin American leaders continue to show no sign of challenging the United States is the environment. Many Latin American countries, including Brazil, still continue to argue against including any environmental constraints in trade accords, on the grounds that such commitments can be used as a form of protectionism. They also argue that they can't afford to boost environmental controls, or that economic growth and poverty reduction are more important than sustaining ecosystems.

To be sure, there is also growing opposition among Latin American nations to investment rules such as NAFTA's Chapter 11, which effectively gives transnationals the power to target and invalidate national environmental laws. Take Alicia Frohmann, one of Chile's chief trade negotiators, who told me in an interview that "to expose ourselves to the kind of demands by US investors like what has happened with NAFTA, where the investors say regulatory changes have been tantamount to indirect expropriation and have demanded huge compensation involving many millions of dollars--well, that would be very difficult for Chile." And most governments and environmentalists agree on one thing, a NAFTA-style environmental side agreement is not the answer to environmental concerns.

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