Business Page – January 18, 2004

SUMMIT OF THE AMERICAS

Introduction

Guyanese will continue to argue over whether President Bharrat Jagdeo should have skipped the Summit of the Americas in favour of going to India to participate in the Indian Pravasi Summit, later upgraded to a state visit. There is a logical other than an emotional case which both sides can make. The President must be acutely aware that if Guyana is to have  a  cricket  stadium in time for World Cup 2007, India will have a big hand in that.

On the other hand Guyana has some rather pressing hemispheric problems including its preparedness for the establishing of the Free Trade Area of the America (FTAA), border dispute with an increasingly volatile neighbour, strengthening its relationship with another giant neighbour Brazil, the small matter of the mobility of its Minister of International Trade and maintaining contact with President Bush. After all, the Guyana President had shown that he was not averse to breaking ranks with some of his Caricom colleagues and chose to attend the 82-minute breakfast session with President Bush last year while several of them were not invited. President Jagdeo was no doubt rewarded for his concession to Mr. Bush (agreement to support exemption from the World Court)but it is fair to assume that President Jagdeo did not come away empty-handed. Yet was there not something more he could get from Uncle George who is in a particularly generous mood in this (re-) election year?

 Domestic problems

 Almost all regional heads have domestic issues including Bush, President Lula of Brazil, Chavez of Venezuela, Aristide of Haiti and Manning of Trinidad, who appears to be finding the opportunistic relationship with the Muslimeen ‘brothers’ increasingly embarrassing and which, according to popular talk in T&T, is the real reason for his absence from the Summit. Yet at least for a few days, the Summit of the Americas in Monterrey, Mexico from the 12^th – 14^th January 2004, allowed some distraction for the leaders who attended. With a security cordon that now defines all of Bush’s ventures abroad, the leaders still managed to do what they always do at such occasions - talk, talk and talk- all the time the majority of them getting increasingly bored.

 This however did not apply to President Bush, the newest head, Prime Minister Martin of Canada and host President Vicente Fox, representing the countries of the North American Free Trade Agreement (NAFTA) sealed by President Clinton in 1994. The War on Iraq, which has made Bush arguably the most unpopular US President ever among the people of the world, caused the warm friendship which Bush and Fox initially shared to dissipate, while Canada felt slighted in being left out of the juicy contracts available to those countries which had supported Bush’s war in varying degrees.

 Electoral generosity

 Within a month prior to his departure for Mexico, President Bush announced sweeping reforms that would regularize illegal workers in the US – mainly Mexicans crossing the huge porous border – to remain in the US for a period of three years. This was consistent with one of Bush’s 2000 elections campaign pledges but on which for three years he appeared to have reneged, embarrassing and then estranging Fox. He has now kept good on his promise though more with his eyes on his re-election in 2004 rather than on honour. Whatever the motive, all is forgiven and Bush has invited Fox to his Ranch at Crawford, Texas – the ultimate accolade – hoping that the joint television appearances will score points for Bush. And Paul Martin seemed to be as surprised as anyone when he was told by Bush himself that, contrary to an earlier announcement by the US Government, Canadian companies would be eligible to bid for billions of dollars’ worth of contracts to rebuild Iraq.

 President Bush had as a result of these acts of generosity assured himself that when he took his seat, he could count on at least two friends in the grand room. There was too, the ultimate ring-winger Urebe of Colombia, the largest recipient of military aid in the region but which perhaps not unsurprisingly, the US does not crow about. Of course Castro was excluded as he has been from all regional summits but he too knew that he could count on his friend and soul brother Chavez, President Nestor Kirchner of Argentina and Lula of Brazil to keep him informed.

 The dream

 If everything goes to plan, and that is clearly a dream which few seem to take seriously, the Free Trade Area of the Americas (FTAA) will come on stream by the end of 2005.  This was the decision made when the leaders of 34 countries of the hemisphere held their Summit of the Americas in Quebec, Canada.

 The FTAA would create a market of close to 800 million people accounting for approximately 11 trillion dollars in GDP.  This is a colossal and ambitious move which could have serious political, economic and social repercussions and transform a number of the smaller member countries almost beyond recognition. Essentially the leaders had agreed that negotiations would be completed by January 2005 with systematic tariff reduction following rapidly thereafter. 

As they did at the Quebec Summit in 2001, Brazil and Venezuela, two of the region’s most powerful countries entered the Summit with grave misgivings about the rush to complete the process. Brazil had sought unsuccessfully to get the support from other countries in the region to apply a more cautious approach to the plan. The Bush  Administration’s strategy at that time was to undermine any such initiative by offering to enter into bilateral trade agreements, such as the one proposed with Chile thus isolating those troublesome countries showing any hesitation. With several changes at the leadership of quite a few more countries such a ploy was unlikely to succeed this time round and it is to Bush’s credit that he did not try. Readers will recall that just about that time, President Bush hosted the Chilean President where the possibility of such a deal was again put on the table. Canada and Mexico all over again!!

Second tier ‘axis of evil’

Perhaps emboldened by the growing prestige of Brazil in building an international coalition against the American brand of free trade, Venezuela was even more opposed to FTAA particularly the clause that implicitly provides for the exclusion of those countries that where democracy does not exist. President Chavez must have been conscious of the danger that “democracy” will be defined by the USA and that his own flavour of it may not be accepted by the USA. He must suspect that Bush would consider him as among the second tier ‘axis of evil’ and consider the public identification with influential and powerful heads a form of insurance against possible acts of destabilization.

Bush sees only terrorists and friends and that therefore his war on terror must dominate any bilateral or multilateral agenda. Yet he did not quite succeed in imposing his will on the summit and led by Brazil and the issue of fair trade loomed large given that FTTA is due to begin on 1^st January 2005.

Judging by results, the summit was not a success. The USA’s wish that the group recommit itself to the 2005 in the final communiqué was not allowed. While the heads restated their commitment to 2005, there is now no firm date and there are sufficient reasons to believe that NAFTA is now not imminent. The non-NAFTA countries seem to want to retain some political distance from those of NAFTA and to build regional integration first based on their renewed self-confidence, dissatisfaction with the Washington Consensus model and their discomfort with Big Brother from the north.

Conclusion

It is apposite to ask where do Guyana and Caricom come into all of this? Thirty years after the launching of CARIFTA we do not have full compliance by all member countries and regional countries seem to change trade policies and practices without rhyme or reason. FTAA will have enormous implications for Guyana whose economy depends on a few commodities for which we are price takers. Our exports of manufactured goods are negligible and with the exception of a few products like rum, our manufacturing base may find competition unbearable. The big question is how are we going to pay for the imports, which with lower import taxes and fewer barriers to entry, will become more attractive?

Many Caricom countries had appeared to treat the CSME as a treaty obligation rather than a practical necessity, and as irrelevant given the perceived imminent commencement of FTAA. Trinidad had gone so far as to announce its intention to jumped over the heads of its poorer Caricom partners and to join NAFTA, while others had taken a fairly cavalier view of some of the import and duty provisions. Will they now be prepared to give the CSME and Caricom integration their best shot? That seems more sensible and desirable.

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