Changing dynamics in free trade talks

Free trade negotiators from Panama and the United States will be meeting for a fourth round of secret talks between August 9 and 13 in Tampa, with the Moscoso administration looking to close the deal at those sessions. If an accord is reached, then she would probably call another special legislative session to ratify it before she leaves office and the process would likely be accompanied by rioting and street blockades.

(You read it here first, folks: equip your vehicle now with some reading material and other supplies that might make it easier for you to sit out a prolonged traffic jam.)

On the US side there would be no ratification before the November presidential election. Already CAFTA, the free trade deal between the United States and several Central American countries, is being held up because the Bush administration can’t muster the votes to get it passed and because a battle over the issue during the fall election season would likely cost the Republicans control of the presidency and both houses of Congress. However, it seems from Senator Kerry’s voting record that there is not a great deal of difference between his ideas on free trade and President Bush’s, so after the election the chances would be good for American ratification of both CAFTA and any agreement reached with Panama.

Meanwhile, events elsewhere are likely to affect the outcome of the US-Panamanian negotiations.

In Geneva, an impasse between industrialized and developing countries over the issue of farm export subsidies seems to have been broken, with the United States and the European Union agreeing in principle to end these subsidies. Negotiations to flesh out the meaning of this agreement will begin in September.

The possibility of a free trade deal leading to Panamanian agriculture being overwhelmed by imports of subsidized US farm products has sparked a number of large protests by farmers over the past few months and the WTO deal --- whatever it will really mean in practice --- may alleviate some of those concerns. That should give President Moscoso a scintilla of hope that, if a free trade argument makes it impossible to drive across Panama City or Colon, at least the traffic will flow in Chiriqui and Los Santos.

(The industrialized countries’ competitive advantage in the agricultural sector is not based on subsidies alone, unless one wants to count such things as better transportation infrastructure, greater access to credit, better across-the-board education and more highly mechanized operations as “subsidies.” Thus farmers here would still have cause for concern despite the commitments made in Geneva.)

Even if farmer protests are defused the labor unions and leftist groups who have been marching against the free trade talks all along would almost certainly escalate their pressure when a free trade pact is submitted to the Legislative Assembly. These groups may represent a relatively small minority of society, but over issues on which they enjoyed far less public support than on this one they have shown themselves adept at bringing city traffic to a standstill.

While the WTO was meeting in Switzerland, Martín Torrijos was in South America, visiting Brazilian President Lula da Silva and Argentine President Néstor Kirchner. In Buenos Aires Torrijos announced his intention to sign a free trade pact with MERCOSUR, the South American trading bloc that’s dominated by the Brazilians and Argentines.

Does this mean a dramatic shift in Panamanian bargaining strategy, away from Mireya Moscoso’s bilateral approach and toward Latin American collective bargaining for a Free Trade Area of the Americas based on something other than the NAFTA model? Torrijos is not a radical on economic issues, but for several months now a number of Panama’s business leaders have been warning that while they support free trade in principle they aren’t ready to accept an agreement that puts Panama at a disadvantage.

That might be the only deal that’s available at the moment. Although the negotiations have been secret, it has been widely reported in the daily newspapers and on the television stations here that the Americans have been unyielding in their opposition to key Panamanian demands such as excluding rice and several other farm products from the deal, allowing cruise ships to board US-bound passengers here and authorizing Panamanian banks to do business in the United States.

On the US side of the talks there is less urgency to close the deal than for the members of the Moscoso administration’s team, most of whom are about to be sidelined from public life for at least five years, starting on September 1. To the extent that the US pays any attention to Panamanian public opinion, they may not be so eager to associate a free trade pact with the discredited Moscoso administration by closing the deal in Mireya’s final days in power.

The Torrijos team has had observers at the talks since the May elections, and there have been no public rows between them and members of the Moscoso team. However, Martín’s people give every appearance that they expect the negotiating process to continue into the next administration.

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Changing dynamics in free trade process

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Fast-changing free trade dynamics