In This Review

Prospects for Free Trade in the Americas
Prospects for Free Trade in the Americas
By Jeff J. Schott
Institute for International Economics, 2001, 80 pp.

This fact-filled yet clear analysis of the FTAA takes the reader through the relaunch of the initiative in April 2001. Schott first looks at the readiness of each country, touching on variables such as price stability, budget discipline, and promarket reforms. Not surprisingly, he finds Brazil to be the most difficult negotiating partner for the United States -- and also among the least prepared -- even though Brazil and its fellow Mercosur countries have all recently taken major steps to liberalize trade and deepen integration. Much of the FTAA's success will depend on the durability of economic growth, which is essential for sustaining reforms and making them acceptable to Latin Americans. That said, Schott sees difficult signs ahead, especially rising income inequality in those regions with high unemployment; also troublesome is the FTAA's weak political backing among business leaders and government officials. Finally, there is the threat of spillover from the strife-ridden Andean region. Colombia is now facing a debilitating paramilitary insurrection; Ecuador has exposed the shallow roots of Andean democracy; and Venezuela's Hugo Chavez is taking his government in an autocratic direction. But the greatest danger, Schott warns, is the weakness of the U.S. commitment to the FTAA and the deep political divisions on this question.