Pact Should Benefit Big Industries in State : Summit: Gains in technology trade expected, but agriculture could suffer.


California’s high-technology, energy and medical industries should be big winners if hemispheric free trade agreement set in motion Sunday by President Clinton and 33 other leaders at the Summit of the Americas in Miami comes to pass, but the states’ agricultural and manufacturing sectors might be among the losers.

Economists said the proposed agreement, which would eliminate tariffs and other barriers to trade among all the nation’s of North and South America, would generally benefit U.S. industries that enjoy a clear technological advantage: Semiconductor makers and software companies would likely see huge markets opening.

Any expansion of trade engendered by a new free-trade deal would also benefit the state’s transportation industry, notably its ports. Santa Fe Pacific Corp., for example, said its port facilities in San Diego and Los Angeles would see a significant increase in ship container traffic from hemispheric free trade.


But industries that depend on low-cost, unskilled labor are in jeopardy, because there is no way they can compete with farms and factories staffed by impoverished Latin American workers, economists said.

Although any hemispheric free-trade deal is at least a decade away, California’s economy could feel the pinch much sooner if Chile gains quick admission to the North American Free Trade Agreement, as proposed on Sunday. Chile is a big producer of table grapes and wine, which, if allowed to enter duty-free, could cause economic dyspepsia for the state’s vintners and growers.

“Grape, avocado and tree crops growers--those are some at-risk areas,” said Ross Starr, a UC San Diego economics professor. The state’s citrus industry, for one, would face increased pressure from Brazil, whose massive orange juice concentrate industry now has only limited access to U.S. markets.

California could also face major problems as a result of the recent passage of Prop. 187, according Peter H. Smith, a political science professor and director of Latin American studies at UC San Diego.

The proposition, designed to deny illegal immigrants access to education and health care services, has created the perception among many South American nations that “California is hostile to Latin America,” Smith said.

“It’s a mistake to think that Prop. 187 is only going to affect our relationship with Mexico,” Smith added. “Although the law may be tied up in court, the political damage has been done.”


A Western Hemisphere free-trade zone would differ from other trading blocs such as the European Union in that it would join countries at very different levels of economic development, Starr said. “The danger in such an agreement is that we put at risk the wage levels of low-skilled American workers.”.

Nora Lustig, senior fellow for policy studies at Brookings Institution in Washington, D.C., said the benefits of increased trade go beyond considerations of winners and losers and provides a “net gain overall” that benefits everyone, as evidenced by better-than-projected gains of member countries of the European Union and NAFTA.