Free Trade Area of the Americas What Will Happen to Latin America

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Free Trade Area of the Americas What Will Happen to Latin America

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Many people in the western hemisphere desire the "American dream." The prosperity and economic boom of the 1990s in the United States has many nations longing for open markets, so they can begin to taste some of the good times. On the planning table is the "Free Trade Agreement of the Americas" (FTAA) that would create the largest free trade agreement the world has ever seen. It is hoped that by the year 2005, the FTAA will create a market of 800 million people in the Americas, from the Arctic to Antarctica.

This past April, 34 nations participated in the Summit of the Americas in Quebec. President Bush actively took part in that summit and has been asking the U.S. Congress for authority to negotiate this agreement. "I will look south, not as an afterthought, but as a fundamental commitment of my presidency. Those who ignore Latin America do not fully understand America itself," said the president (Latin Trade Magazine, June 2001, p. 30). He has promised that the trade zone will not only create markets for the United States, but will fortify democracy in Latin America and spread the economic benefits equitably.

Can a partnership be forged between the United States and Latin America? What is the most likely scenario for these nations, according to Bible prophecy?

As pointed out in a recent New York Times article, the combination of democracy and free enterprise in Latin America does not guarantee higher living standards. Every nation in the western hemisphere except Cuba presently has an elected government, with increasingly open markets. Yet, 224 million Latin Americans (roughly 36 percent of the population) live in poverty. Many of these nations are experimenting with democratic capitalism for the first time. As a result of this experimentation, economic benefits do not filter down to the masses, because the region's rigid social structure isn't equipped to equitably distribute wealth.

"Latin Americans get to choose their leaders, but once they are in place, it's the old cliques that make the bottom-line decisions that are suitable to their own needs, not the needs of the people," says Hernando De Soto, a Peruvian economist ("Latin America's Poor Survive It All," New York Times, June 24, 2001).

The source of divergence

Why are the United States and Canada so much more prosperous and more democratic than Latin America?
Ibero-America actually had a head start on the United States and Canada. The first permanent Spanish settlement was established in 1493 on Hispaniola in what is today the Dominican Republic. The first permanent British colony was established more than a century later, in 1607 at Jamestown in what was to become Virginia.

Venezuelan writer Carlos Rangel wrote: "As late as 1700, the Spanish American empire still gave the impression of being incomparably richer, much more powerful and more likely to succeed than the British colonies of North America" (Lawrence E. Harrison, The Pan-American Dream, 1997, p. 18). Latin America had an earlier start, yet British America surpassed it in power and influence.

Lawrence Harrison writes: "As we approach the end of the 20th Century, Latin America is roughly fifty years behind the United States and Canada in terms of the prosperity of its citizens and the solidity of its democratic institutions" (ibid, p. 18). What explains this flip-flop in history?

We can turn to Bible prophecy for the answer. God made known through Jacob that Joseph's descendants would receive the birthright promises "in the last days" (Genesis 49:1, 22-26). It is because of the tremendous physical blessings promised to the descendants of Joseph that the United States has prospered so much more and become more powerful. The United States was molded from British, Anglo-Protestant traditions, whereas Latin America traces its roots to Ibero-Catholic culture. These are the fundamental differences that explain the divergence between the nations of the Americas at the beginning of the 21st century.

Where will it go from here? Can a partnership be forged among all the nations of America?

Leadership needed

There are many who believe that without leadership, the United States might lose out in the competition for Latin American markets. Jenny Bates, an international economist at the Progressive Policy Institute, writes: "There is an emerging risk of the United States being slowly shut out of Latin American markets, while our competitors, particularly the European Union, gain ground. In the future, if Latin American countries face lower barriers on imports from the EU than from the United States, they will purchase goods and services, including highly lucrative capital goods, from our competitors. This potential outcome is not lost on the Europeans" (Blueprint Series, Ideas for a New Century, 2001, p. 5).

Despite President Bush's desire to negotiate a free trade pact, many forces are at work to prevent it. Powerful U.S. interest groups, especially labor unions and environmentalists, oppose free trade. The U.S. Congress itself might be against it, as President Clinton found out when he failed to obtain the renewal of "fast track" negotiating authority that he needed to forge a similar accord.

Whether free trade is reached throughout the western hemisphere, one can be sure that Europe is watching these developments closely. Europe has a strong historical, cultural and demographic relationship with many countries of Latin America. European multinational corporations have established a major presence there.

Corporations from Spain are especially dominating in acquisitions of banking, energy and telecommunications to the point that they will soon hold pan-regional power in Latin America. A trade agreement between Mexico and the European Union was recently signed, which was Europe's response to NAFTA. Some economists believe that agreement set the pattern for possible future trade agreements between Europe and Latin America.

From "dollarization" to "euroization?"

"Dollarization," the abandoning of a country's local currency to adopt the dollar, has been occurring in some Latin American nations. Last year, Ecuador officially adopted the dollar. El Salvador began using it as legal currency on January 1, 2001. Guatemala joined the race to dollarize in May, and it is also being discussed in Costa Rica and Nicaragua. Argentina has pegged its peso one-to-one with the dollar for a decade.

Now Argentina has announced it will also link its peso to the euro. The value of the peso will be fixed at one euro, as soon as the euro rises to parity with the dollar. When the euro rises or falls against the dollar, the peso will be set at the mid value between the two currencies.

Cuba has also debated switching to the euro, although no action has been taken at this time. Might this become a trend, if poor Latin American countries see a more powerful Europe rising and the leadership of the United States declining, as Bible prophecy foretells?

Economic system foretold

Latin America's desire to embrace globalization and free markets could lead it to make an economic pact with a coming world economic system that is unveiled in the 18th chapter of Revelation. There it describes the merchants of the earth becoming rich by her (verse 3) and states they will mourn because Babylon, the greatest customer for their goods, will be gone after she is destroyed (verse 11).

The increasing presence of European multinational corporations, along with the historical and cultural ties between Europe and Latin America make the possibility of future trade alliances and monetary movements worth watching. WNP