Glories of Free Trade
Bloggingheads TV honcho Bob Wright has long talked about how membership in international organizations like the WTO could be a powerful carrot and stick to force countries to reform their political and economic systems. In many cases, our policies of economic isolation of countries we don’t like haven’t been effective at being an impetus for political or economic reform (see Iraq, Cuba, Myanmar, Iran). It’s mostly because we haven’t been credible in offering these countries a light out of the tunnel, for Iran and Iraq, there never was (or will be) a free trade deal to sign, so the leaders don’t have a large incentive to give up their power in the hope of improving their economic situation. Robert Novak’s recent column, however, reports that Democratic pressure on Colombia, in advance of voting on their proposed FTA with the US, has lead to Uribe to start cleaning up his corrupt military:
The forced resignation two weeks ago, under pressure from President Alvaro Uribe, of three prominent officers accused of drug trafficking is not likely to end the shakeup in Colombia’s army and navy. More heads will roll in a long-overdue purge of corruption in the military. The credit has to go to the left-wing members of Congress who have taken over the Colombian account on Capitol Hill since the Democratic victory in the 2006 elections.
A conservative American with close, longtime ties to Colombia put it to me bluntly: “The firing of these officers is seen as President Uribe’s way of clearing the decks to make the Democrats in Congress happy, in order to secure the free-trade agreement. There are plenty more generals and admirals to get the heave-ho.”
Can I say how much I love Congressman McGovern, who’s leading the pressure on Colombia to clean up their corrupt, cartel infected military? I mean, we get to relive the glory days of congressional opposition to militant right wingers in Latin America and do it as a pretext to a FTA?! Fantastic!
As a side note, this is a great example why union, environmentalist and general left wing opposition to small, bilateral FTAs is so counterproductive. Even if free trade was such a bad thing for manufacturing jobs, wages and the living standards of the United States (I don’t think they are, but roll with me anyway) an FTA with Colombia or CAFTA wouldn’t do anything to exasperate that (dubious) trend, instead, FTAs are a way of integrating small countries into the global financial system, allowing them to access a large export market and a great incentive for political reform. Of course, being a committed (yet liberal) globalist, I want to see a WTO round complete with a deal to sign that cuts down on Western and Japanese agricultural subsidies, but until then, these regional FTAs are the way to go.
PS – There’s an interesting study that the Atlantic wrote up showing how CAFTA has improved the living standards of small time rural farmers – “The study finds that although rural incomes will likely decline as protective tariffs are phased out over the next 20 years or so, food prices in those countries will drop enough in almost every scenario to make up the difference—often with extra cash to spare. The typical rural household in CAFTA countries devotes a substantial chunk of its earnings to buying basic food items, and import tariffs (some as high as 154 percent) inflate their cost. As a result, the authors find, “lower food prices would mitigate and, in most cases, reverse the negative effect that lower incomes would have on rural welfare.””
