U.S. Accused of Being Soft on Open Markets

The Europe-Latin America summit that ended here Tuesday provided a good forum for bashing an uninvited guest--the United States--for what some countries say is its tendency to talk the free-trade talk but walk a more protectionist line.

Brazil and other Latin countries complain about U.S. restrictions on products ranging from sugar, tomatoes and orange juice to steel, textiles and shoes, often in the form of anti-dumping penalties.

Difficulties getting into the lucrative U.S. market have hindered the ability of developing nations to “export their way” out of recent financial crises.

Indeed, if anything, U.S. political sentiment has grown more protectionist over the last year in response to just such pressures from overseas. The perceived unfairness is creating political problems for Latin leaders trying to steer the free-market path as powerful unions in Brazil, Venezuela and elsewhere demand protection of jobs.

“It’s hard to expect Brazil to keep liberal policies while more developed countries close their doors to it and to other countries that have natural advantages,” said Paulo Levy, research coordinator at the Institute for Applied Economic Research, a government-backed think tank here.

The U.S. counters that its anti-dumping measures--recently imposed against steel from Brazil, among other countries--are applied only when imported products are being sold for less than they cost to make or are unfairly subsidized.

And U.S. trade officials argue, with some justification, that theirs is the most open market in the world. The mammoth U.S. trade deficit is evidence enough of a relatively liberal import policy, said Sidney Weintraub, senior fellow at the Center for Strategic and International Studies in Washington.

But that is difficult to accept in Latin America, one of the few regions in the world that runs a trade deficit with the U.S.--$13 billion last year.

In Chile, officials are beginning to wonder if the United States will ever follow through on its promise to expand the North American Free Trade Agreement and to form a Free Trade Area of the Americas. Chile is first in line to join, but has been waiting five years on the dance floor.

Such disappointments provided some of the motivation for Latin countries to look more to themselves for trade options and to start negotiations later this year toward the creation of a Europe-Latin America free trade zone.

On Saturday, Brazil and four Andean countries completed a deal here for a tariff-reduction scheme that will lower barriers on 3,000 items or 90% of the trade between the partners. Chile is holding bilateral talks with Mexico to establish a free trade zone much like it has had with Canada since 1992.

“The U.S. is obviously watching all this,” said Jeffrey Schott, fellow at the Institute for International Economics in Washington. “Which is what the Latins and Europeans want.”

While insisting Chile has not given up on NAFTA, the country is “evaluating free trade with other regions in the world,” said Patricio Leiva Lavalle, Chile’s former ambassador to the European Union and a member of Chile’s summit delegation here.

“We want to deepen relations with the USA,” Lavalle said, but the failure of President Clinton to procure “fast track” negotiating authority from Congress has “impeded” the process.

Leaders here claim U.S. policy is often inconsistent, unfair and subject to political pressure, especially in basic commodities, the prime exports of lesser developed countries that cannot as yet compete globally in manufacturing sectors.

The U.S. dumping penalties against Brazilian steel followed heavy lobbying in Washington by U.S. steelmakers, which were responding to a surge in shipments of certain types of steel from around the world.

Though Asian producers were also cited, the latest action is in line with ongoing U.S. barriers against Brazilian steel, complained Rudolf Buhler, technical director of the Brazilian Steel Institute.

Buhler said: “Brazil is one of the few nations in the world with a trade deficit with the United States, and these problems we have in exporting steel certainly aggravate that. It’s vital to our economic recovery to reduce the trade deficit.”

Brazil also points to the frustrations of its exporters of orange juice concentrate, which compete with Florida producers. CTM Citrus, a juice concentrate manufacturer in Limeira, an agricultural zone 100 miles south of Sao Paulo, said it gave up its U.S. export business two years ago because of high tariffs and red tape.

“It’s very bureaucratic and the taxes became very high, more than 50%. To explain we are not dumping, we had to hire U.S. lawyers with very high fees,” said Giovanni Nilce, CTM’s finance officer.

One Brazilian official who asked not to be named described the principle of free trade with the United States as mostly theory, like “someone’s Ph.D. thesis.”