Council on American Affairs (COHA) Washngton, D.C. December 6, 2007
Government representatives would be wise to exercise caution because FTAs are not always one-way tickets to long-term stability. In fact, recent Latin American history has indicated that abruptly opening vulnerable local markets can accentuate already grave domestic social problems. The typical scenario found throughout the region ritualistically portrays a sharp reduction of tariffs by a Latin American country, followed immediately by a wave of U.S. exports that can be counted on to flood the domestic market, and in turn, end up shutting down what has now become non-competitive domestic production. The experience has been that many Latin American markets have proved to be too weak to compete with a highly-subsidized U.S. economy, in spite of benefiting from a competitive advantage offered by cheap wages…
