FTAA and a Challenge to the EU

Although the European Union has faced numerous obstacles in recent months to further integration, it still poses a potential economic and political threat to American global hegemony. It is imperative that the United States and the rest of North and South America rise to meet this challenge. The European Union has sought supranaionalistic political integration as well as economic integration. This led to substantial protests from far left and far right political constituencies on the European continent, while England still even holds out against full economic integration. The pursuit of this Customs Union-style integration should be a lesson to those of us in the United States and elsewhere in North and South America, as we examine the Free Trade Agreement of the Americas. FTAA is a trade union, in contrast to the customs union of the EU. Trade unions maintain national political sovereignty as well as sovereignty over monetary policy, while having a unified position on trade barriers and subsidies.

The elimination of trade barriers and subsidies in all countries, coupled with each country being able to maintain its own monetary policy and political autonomy gains all of the benefits of EU brand customs unions without nearly as much of the domestic political backlash and integration woes. By not adopting a common currency, and rather continuing to allow flexible exchange rates between the member countries of the trade union, North and South America will not have to deal with the dilemma of maintaining a singular monetary policy for economies at quite different levels of development. The EU, for example, needs to maintain growth-oriented interest rates for the sluggish economies of Western Europe (Germany, France, Italy), while simultaneously needing to curb inflation in the booming economies of Eastern Europe. These sorts of inequity problems will not plague the FTAA, by contrast, for reasons mentioned above.

The greatest challenges to the FTAA are the US government's unwillingness to end agricultural subsidies and the presence of radical left-wing communist/socialist protests in countries like Venezuela, Argentina, Brazil, Paraguay, and Uraguay. The United States, Canada, and Mexico can attest to the vast successes of NAFTA, and should push forward with other freedom-oriented countries in North and South America to ratify an agreement that will benefit everybody, and if the hold-out countries want to limit their economic growth potential, we should let them alone; they will be coming back in a few years when they have witnessed the effects of free trade in their neighboring countries.