Trade This Election
Now that the electoral dust has settled, did voters tilt the balance against or in favor of trade integration in the region?
Headline writers called it the “Battle for Latin America’s Soul.” With a record 12 presidential elections and nine congressional contests scheduled in Latin America for late November 2005 to December 2006, the phrase captured the widespread perception that double-digit unemployment and a rising wave of dissatisfaction would propel nationalist, anti-establishment candidates into office, and effectively kill the economic reforms launched a decade earlier. But the big surprise was what did not happen on trade policy. Except for Ecuador’s presidential contest (where the election of Rafael Correa resulted in the shelving of free trade talks with the United States), the 2006 election battles barely altered the trade policy fault lines that first emerged at the November 2005 Summit of the Americas in Mar del Plata, Argentina. In fact, they only made clear how effectively those fault lines are reshaping the southern hemisphere’s trade landscape.
The lines are equally clear in the northern half of the hemisphere, where the results of the November mid-term congressional elections in the U.S. confirmed the growing protectionist mood of Americans and helped Democrats win key victories in swing states. That puts Washington’s approval of free-trade agreements with Peru and Colombia this year in doubt.
The prospects for renewal of the President’s Trade Promotion Authority, which expires in June, are grim. Washington’s loss of steam in free trade negotiations, combined with the internal disagreement within Mercosur and an increasingly activist Pacific trading bloc, make the dream of economic integration across the Americas more distant than ever. Further north, the impact of Canada’s turn to a right-of-center government with the election of Conservative Prime Minister Stephen Harper in February 2006 is still unclear. Harper has signaled that he will renew efforts to advance Canada’s trade agenda, and this may lead to a stronger Canadian involvement in the hemisphere.
Here are some of the key trade trends to watch during 2007...