Free trade agreements with the United States : what's in it for Latin America?

Abstract

Unlike earlier analysts, who have focused on U.S. objectives, the authors focus here on what 11 Latin American countries (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela) stand to gain from a preferential removal of U.S. trade barriers - that is, from the development of a free trade area (FTA) arrangement. They find that the United States is limited in its ability to extend significant FTA preferences to most Latin American countries because of the existing Generalized System of Preferences and the cuts in import duties negotiated in such previous multilateral trade negotiations as the Tokyo Round. They do not formally project the potential FTA-induced expansion of U.S. exports, but do make some detailed comparisons of the levels of tariff and nontariff protection in the U.S. and Latin American markets. Those comparisons suggest that the U.S. trade gains - particularly for highly protected transport and machinery products - are likely to be considerably greater than those for Latin America in the U.S. market. Their analysis also accents the potential dangers associated with independent negotiation of FTAs. Agreements that extend preferences to U.S. products below tariffs paid by other countries in the region would have a serious negative impact on trade among Latin American countries. Finally, the authors note that a successful conclusion of the Uruguay Round could greatly affect their projections.

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