NEW YORK -- An Americas-wide free trade initiative, long stuck in neutral amid U.S. protectionism and political turmoil south of the Rio Grande, is sputtering forward again.
Chile on Wednesday became the first South American country to ink a free trade pact with the U.S., capping 11 years of talks by striking a deal that allows more than 85% of Chilean goods to enter the world's biggest market tariff-free as early as next year.
The trade accord followed a meeting Tuesday between Brazilian (news - web sites) President-elect Luiz Inacio Lula da Silva and U.S. President Bush (news - web sites) in which Mr. Lula, a longtime critic of U.S. policy, said his administration is committed to clinching a Free Trade Areas of the Americas deal by 2005 as originally planned.
The developments inject new life into hemisphere-wide talks that have taken a back seat in recent months to the White House's self-described war on terrorism in other corners of the world. Washington's introduction earlier this year of steel tariffs and $180 billion in subsidies for U.S. farmers also threatened to derail the FTAA project, which was first launched in 1994 and aims to bind together 34 countries.
Trade analysts say a lot of hurdles still need to be cleared, though, for the envisioned free trade zone spanning 800 million people and $3.4 trillion in trade to become a reality.
"What I don't know is if this will end up being an episodic moment in Latin American relations or whether there will now be a continuing effort that goes beyond drugs and beyond terrorism, which so far have dominated (Washington's) relations with the region since [ex-U.S. president] George Bush Sr.," said Charles Gillespie, a partner at Scowcroft Group, a Washington-based business consultancy, and the U.S. ambassador to Chile from 1988-91.
The Chilean accord was a relatively easy sell. A National Association of Manufacturers (news - web sites) study said the lack of a free trade deal with Chile had cost U.S. exporters $800 million a year in sales and a loss of 10,000 jobs. The small South American country's economy, for its part, is export-dependent and its government has already notched similar pacts with other trade partners including Canada, the European Union (news - web sites) and South Korea (news - web sites).
Wednesday's accord is "a great treaty. It will strengthen our exports, will encourage foreign investments into our country," said Juan Claro, head of the Industrial Development Society, Chile's largest private business association.
Regional prospects, though, might have gotten a more important boost from Mr. Lula's visit to the White House. Brazil, which houses around 40% of South America's output, had hesitated to get on the FTAA bandwagon and advocated a go- slow approach even before Mr. Lula, a veteran leftist politician, won presidential elections in October.
"In many ways this is sort of a Nixon going to China thing for the Brazilians, " said Robin Rosenberg, deputy director of the University of Miami's North-South Center and a member of an FTAA task force in Florida.
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