UNDERSTANDING ALCA

Abstract

Brazil needs to relearn quickly how to think its future to be able to point with clarity what the national interests of its citizens are, and defend them in discussions to join the Americas Free Trade Area (ALCA). Accomplishing this task will require the mobilization of academia, businessmen, workers and representatives of the Legislative, the Judiciary and the Executive Powers. This involvement is necessary when it comes to defining the conditions under which we enter into a partnership with the hegemonic power that now controls the world economy. Or, won't we? First, we must understand that ALCA is a United States production system's thinking, which sees in it the possibility to consolidate and expand their business across America. American history shows a country with remarkable ability to envision the future. They are what they are because since its foundation, they carefully looked after their interests; and the American interests are the sum of the interests of its citizens, its agriculture, its industry and its domestic and foreign trade. Up to the present, U.S. law favors itself above all others and their interests are also above everybody's else. The U.S. rush to constitute ALCA is just another step in the pristine desire, born with the Monroe Doctrine in 1823 to build a prime hunting ground for their interests. The proposition that "any zone of free trade increases the welfare of its participants" is not part of economics: it is pure manifestation of the ideological hegemony thought built by a certain "American science". This is smuggled to the underdeveloped world in the minds of some scholars mesmerized by the pursuit of success and recognition of their masters. We must look to the United States and see what they did; not what they recommend we do. A first good read would be the famous Report on Manufactures that one of the founding fathers, Treasury Secretary Alexander Hamilton, submitted to Congress in 1791. In it are the tasteful arguments that have underpinned a whole protection policy of the nascent U.S. industry. Its principles had enormous influence in determining the economic policies that produced the country's development. The opening of the U.S. domestic market, several grid limitations and restrictions aside, is something very new. We just have to remember that around the Second World War in the 1930s, customs revenue was the most important item of tax collection as North America. US competitors self-destroyed during the war and the US imposed a "world order" through the International Monetary Fund (IMF), International Bank for Reconstruction and Development (IBRD) and the General Agreement on Tariffs and Trade (GATT, now WTO) that remain under their control. They were also generous with losers as well as their partners in victory by launching the Marshall Plan. They also allowed the three major opponents (Germany, Italy and Japan) to receive the blessings of an undervalued exchange rate that strongly encouraged the reconstruction of their economies from 1950 until practically 1970. Therefore, au contraire of certain current line of thought, the United States should not be hated. They should be admired and imitated ... Those who know that geography and history affect the transformation of economic theory into economic policy, also know that no country today has the degree of freedom that the United States enjoyed to perform its remarkable growth. Brazil is in a similar position to the U.S. in 1900, but inserted in the political and economic structure conditioned by the new "world order" prevailing in the beginning of this 21st century. Brazil is being pushed toward ALCA. Time is running out and our ability to sustain our position with solid arguments is not being built. We cannot leave it to the bureaucrats, even the most competent. We cannot fail to force a broad discussion with Academia, the private sector and Congress. Fortunately there are some initiatives in this direction: the chairman of the House of Representatives, Mr. Aécio Neves, recently approved the formation of a nonpartisan commission, which will convene at the beginning of the second semester for a series of public hearings in which the idea is to deepen the discussion on ALCA. It is the opportunity for different sectors of society to come forward and present their arguments regarding the desirability (or not) and the conditions of our participation, protecting the interests of citizens and industrial sectors. Our diplomats are extremely competent, but it is not their place to design trade integration policies. It is up to society and the Congress, with the support of academia and the experience of the private sector, to deepen this analysis and try to understand what will become of the Brazilian economy within ALCA. Strictly speaking, one cannot be either for or against, since there are few studies about it. In fact, we do not have the necessary information. Maybe we're being unfair, but we do not believe that the Brazilian government has a serious, professional study, about the consequences for the economy of its integration into the ALCA. And what's worse, we do not have an adversarial academia able to shed light on the problem under different theoretical and empirical perspectives. The idea that under any circumstances, an association for free trade is completely beneficial is not only a scientific proposition: it is a manifestation of religious faith. There are, however, some practical issues to be preliminarily addressed, as claimed in a welcome speech by President Fernando Henrique Cardoso during the meeting of heads of state held in April in Quebec. The first one is the need to regulate the U.S. antidumping law, without which our participation in ALCA may be undesirable. Even Alan Greenspan admits that there "are often imposed (measures) on behalf of trade justice, but they are frequently used to prevent competition." Therefore the President is justified in defending the sharing of the management of the problem: "let us not go into that game as a country that has no voice or that has a colony mentality. As if it was a favor for us to join ALCA. It's not. It's business, tit for tat...". The President referred also to non-tariff restrictions (labor, health and environmental) that often introduce a veiled protectionism under the guise of low fares. At that point, his speech coincided with President Bush, with a different perspective, condemning the "self-defeating protectionism" that lurks behind those restrictions. There is no guarantee that practical consequences can be draw from these discourses, but as one can see, there is ample room to define important preliminary issues to our entry into ALCA.