With the upcoming Free Trade Area of the Americas meeting in Miami this week, world trade, and the issues attached to it, have come to the forefront of discussion again. At the meeting, negotiations concerning an expansion of the North American Free Trade Agreement to every country in Central America, South America and the Caribbean, excluding Cuba, will take place and bring the treaty closer to its proposed implementation in 2005.
The new agreement is hoped to spur international trade, a lot of which will no doubt go through ports in Florida, namely Miami and Tampa Bay. But as the larger World Trade Organization treaties have shown over the last couple of months alone, implementation of such treaties can be tricky, as nations are still trying to protect their individual interests.
The main difficulty with free trade is that it brings international trade into local communities where previously its influence had been negligible.
Farmers in a remote province of China could, all of a sudden, not only compete with other farmers in China, but also with farmers throughout the rest of the world.
Suddenly, contrary to the old saying, the price of tea in China matters on an international level.
This of course means that competition is a lot more intense, as the same commodities are now being traded in larger communities involving far more parties.
This is not only a problem in far away lands, but also hits home in the Unites States. Last week, for example, the WTO ruled that the United States was being “inconsistent” with free trade agreements as the Bush administration had imposed tariffs as high as 30 percent on steel imported from the European Union. The E.U. is now threatening to impose sanctions totaling $2.2 billion on U.S. exports, ranging from oranges grown in California and Florida to textiles and steel products such as Harley Davidson motorcycles. As the British Broadcasting Corporation pointed out, these tariffs are well chosen, as they mainly affect industries in swing vote states. With an upcoming presidential election, Bush may be forced to choose between upsetting the steel industry by removing the protections or being seen as having caused a downturn in other industries affected by E.U. tariffs.
For the process of world free trade to succeed, the United States will have to accept that it cannot pick and choose when it wants to abide by genuine border-free trade. With goodwill toward the United States at a low, policies, such as the protectionist measures enjoyed by the steel industry, will likely result in retaliatory measures that will hurt U.S. industry more than low-priced steel imports.