Wants New Trade Deals by Alan Tonelson (NAPSA)—The multinational companies supporting fast-track trade negotiating authority have long pointed to Latin America as a major prize at stake. With new trade negotiating authority, the president could finally open the entire Western Hemisphere to American exporters. In August, these arguments (plus, manysay, gobs of corporate money) convinced Congress. Yet the multinationals themselves lately have been making clear that their portrait of Latin America as an exciting new market is untrue. Their own recent earnings releases and forecasts show that the companies mainly see Latin America as another Third World production base for supplying American customers, and a new free trade agreement will guarantee them access to the U.S. market. If their plans materialize, America’s workers and national financeswill lose out big-time. Latin America has always been a tiny customer for U.S. goods. (The hemisphere outside the NAFTA countries—the United States, Canada, and Mexico—rep- resents only 15 percent of the region’s total economic output.) Lately, however, most South American countries have been suffering from economic slumps and heavy debts that will force them to export much more than they import. Some big U.S. firms like Procter & Gamble and Caterpillar are growing Latin American sales. Many more American companies are losing their shirts. As early as January 2002, FleetBoston, the financial services company, an- nounced that $538 million in charges related to Argentine losses had helped produce a fourth-quarter 2001 companywide loss of more than $500 million. Fleet’s second-quarter 2002 earnings included another $449 million Argentina-related charge. Citigroup, the world’s largest financial services company, lost money on its first quarter 2002 Latin America operations, with regional income down 16 percent year-on-year. Both banks were greatly assisted by the taxpayerfinanced bailout of Brazil. Falling dollar-denominated sales in Latin America pushed Colgate-Palmolive’s worldwide sales slightly into negative territory. Second quarter year-on-year Latin sales growth was flat. Meanwhile, the Western Hemi- sphere (excluding the United States) was the worst performing region for DuPont, 3M, Kodak, Coca Cola and McDonald’s. Some of the biggest corporate hits in Latin America were taken by automakers GM and Ford. Nor are any of these companies forecasting a swift turnaround. Why, then, the corporate enthusiasm for this struggling region? As a July 25 Wall Street Journal article reported, auto companies worldwide “are slowly starting to use factories in the developing world to supply the major markets of the United States, Japan and Europe.” The reason: The Third World growth they predicted “never materialized and the companies now are scrambling to find ways to keep these expensive plants from turning into white elephants.” Thus, the automakers are replacing rich-country workers and factories with their much cheaper Third World counterparts. Because of trade agreements like NAFTA, the creation of the World Trade Organization and market-opening with China, access to the U.S. market is now guaranteed by treaty to developing countries everywhere. These deals enable the multinationals in numerous industries to pick from a plethora of bargain-basement production sites for use as export platforms to the United States. These practices and trade agreements can boost corporate bottom lines over the short term but they can only undermine America’s longer term future by gutting our middle-working class and pushing U.S. trade deficits toward ever more dangerouslevels.
