Chile Politics — 11 October 2011

The US Congress is once again considering the stalled Colombia free trade agreement and a new one with South Korea.  President Obama is backing these treaties as do most politicians and economists.  In fact if you look at the opposition, as in the comments posted by the readers of “The New York Times” posted here , one might conclude that the only opposition is–well, everyone else.

So as the USA considers this pending legislation it is worth while to look back at the Chilean-Singapore-USA free trade agreement that was signed into law in 2004.

Advertising and politics are closely related.  Both are well-versed in the practice of couching what might be otherwise be distasteful or awkward into pleasant sounding euphemisms.  So it is with this idea that trade between nations might be better for both if only trade between the two were somehow “free”.  After all any legislation marked as “free trade” must be good, because to call it  “free trade” suggests that in its absence trade must be encumbered by some kind of restraints.   Usually those restraints are tariffs or out right protectionist policies.

Listen to the words of the US Department of Commerce.  On their web site they look back at the bill writing with enthusiasm, “Upon entry into force of the U.S.-Chile Free Trade Agreement (FTA) in 2004, 80 percent of U.S. consumer and industrial goods exports to Chile became duty free”.  

Carrying the same refrain the friendly folks at the Office of the US Trade Representative say, “Key U.S. farm products will benefit from improved market access,including pork, beef, soybeans, durum wheat, feed grains, potatoes, and processed food products such as french fries, pasta, distilled spirits and breakfast cereals. Tariffs on U.S. and Chilean wine equalized at low U.S. levels, then eliminated.”

Well I live here in Chile and it have never seen ANYTHING made in America on the shelves of the stores here.  You can buy Apple iPhones and Whirlpool appliances here.  But iPhones are made in China and Whirlpool washing machines are certainly not assembled and shipped from Michigan, the home of Whirlpool, to here.

What about “French fries, breakfast cereals” and U.S. wine.  Well you can buy Cheerios and other cereals in the grocery store here but U.S. wines are not sold here because there is no market for that since Chile makes their own wine.  As for French fries those must be in France because they are not here.

It must be the case that the true aim of the Chilean Free Trade agreement was to increase the export of U.S. agriculture products and perhaps some high end mining equipment or some other industrial goods to Chile.  At least that is the common sense conclusion.  It was also the opinion of Chilean corn farmers who were protesting that free trade policy when I visited Chile in 2005 by driving their tractors onto the highway to block traffic.  These local growers did not want to be overwhelmed by corn coming from the USA which of course is subsidized there.

There must be some kind of subterfuge going on here.  That is the blunt opinion of the head of the American Manufacturing Trade Action Coalition who–not sure he meant to be funny–said in that same New York Times article that, “….multinational companies aren’t looking at this and saying, ‘It will be great to make things in Ohio and send it to South Korea.’ No, they’re looking at this and saying, ‘It will be great to make things in South Korea and send it to Ohio.’ ”  In other words the only one who benefits are the corporations as not their workers. 

Whether or not free trade agreements are good for anyone living in America besides the stockholders of the corporations is probably not worth debating at this point.  The damage has been done as the great majority of manufacturing jobs have already left the USA and will not be coming back.  So to reject these pending agreements with Korea and Colombia would be to reverse course on what has been US policy since President Reagan came to power.  To do so would contradict one’s self and that makes no sense.  As for the working class people in the USA and the industrial suppliers and other people who work in jobs peripheral to that manufacturing those people are going to have to find something else to do.  With unemployment in the USA at crisis levels for 5 years now it is clear that the USA does not know what to do about that.

Note:  The Chilean Singapore Free Trade agreement created a new class of visa for professionals who wish to work in the USA called the H1B1 visa.  You can read about that on the web site of the U.S. Embassy in Santiago.


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