VOXXI: The challenges for Michael Froman, new U.S. Trade Representative

The Challenges for Michael Froman, new U.S. Trade Representative
W. Alejandro Sanchez
VOXXI
July 3, 2013
Originally published: http://www.voxxi.com/challenges-for-michael-froman-new-ustr/

Thanks to the ongoing NSA/Edward Snowden controversy and recent landmark decisions in the U.S. regarding gay marriage, one recent development that has gone relatively unaddressed is Michael Froman’s appointment as the new U.S. Trade Representative (USTR).

Froman as President Obama’s former Deputy National Security Advisor for International Economic Affairs, brings a wealth of experience to the position. This experience will be vital as the White House fashions a new doctrine of how to approach Latin America, with the Trans Pacific Partnership (TPP) as its flagship initiative, while dealing with other regional crises, like ongoing tensions with Ecuador over the Snowden affair.

But although Michael Froman is qualified for the job, a concern may be that he is not well versed enough in Latin America to properly address the region.

Trade and geopolitics

When it comes to Latin America and the Caribbean, in spite of recent trips by the U.S. President and  Vice President Joe Biden, new trade initiatives are still lacking. In recent years, Washington’s only and major successes have been the ratification of the controversial free trade agreements with Colombia and Panama.

Moreover, there have been stalemates regarding treaties. For example, when President Obama went to Mexico in May, he did so without the U.S. Congress having ratified the Transboundary Hydrocarbons Agreement– an accord finally passed by the House of Representatives in late June.

The U.S. leader’s trip was not affected by the failure to ratify the treaty, but it would have been a useful add-on to demonstrate that President Obama is interested in further cementing trade ties with Washington’s historical, regional partners. This means that Michael Froman has his work cut out for him.

Furthermore, the developing problem with Ecuador is an example of how seemingly unrelated geopolitical issues affect trade.. As has been widely reported, Ecuador’s head of state, President Rafael Correa, had planned to grant asylum to Snowden, though this support seems to be becoming unstable.

This development did not help the South American state return to Washington’s good graces, particularly as Quito-Washington relations have been tense since Correa was elected in 2006.

The Snowden affair affected trade relations, as Ecuador has decided to leave the Andean Trade Promotion and Drug Eradication Act (ATPDEA). Some analysts have argued that the “renunciation of trade benefits was a dramatic but mostly symbolic threat. The U.S Congress was widely expected to let the benefits lapse in coming weeks […].”

Indeed, Ecuador alone is not a U.S. trade partner comparable to China or Japan, but with Venezuela’s Hugo Chavez gone, Correa could become an important leader within the ALBA bloc. Combine that with Ecuador’s natural resources (i.e. petroleum), and it becomes clear that Froman would benefit from becoming knowledgeable regarding  Latin American geopolitics and the multiple ideological and economic blocs in the region.

The TPP

Shortly after Michael Froman was sworn in as the new USTR, the renowned economist Clyde Prestowitz wrote about him for Foreign Policy. In his opinion, Froman will follow the lackluster path of his USTR predecessors.

“There is no reason to imagine that he is now going to break out of the mold,” wrote Prestowitz. In addition, Prestowitz recollected that, during a meeting with Froman, the official “[told me] that [the] TPP is mainly about geopolitics, not trade […] It’s to reassure Asian allies and friends that America will be there to offset the influence of China and it’s about trying to contain China.”

While hailed as examples of an increasingly globalized and interconnected world, we must remember that trade agreements are diplomatic tools made to advance a country’s geopolitical interests. It would seem that Michael Froman has a global view of how the TPP can be used, particularly its effects on ongoing developments in Asia vis-à-vis Beijing.

Nevertheless, the TPP includes Latin American nations too, whose governments may not have the same global-view of how this trade agreement can be utilized regarding China, but which are interested in how this accord could benefit their domestic economies. Just as the TPP includes Washington’s allies in Asia and the Pacific, it also includes close U.S. partners in the Western Hemisphere, namely nations like Chile, Mexico and Peru.

In fact, the recent 17th round of discussions regarding the TPP took place in Lima.

In spite of concerns that the economic growth Latin America has experienced over the past decade is coming to a halt, several regional states continue to enjoy a strong financial market. For example, Chile, Colombia, Mexico and Peru have united to form the Pacific Alliance.

The group accepted Costa Rica as a new member during their recent summit in Cali, Colombia. As a happy coincidence, most of the aforementioned nations are also part of the TPP and have historically been close allies of the U.S.

Michael Froman, don’t forget about us

As the new USTR, Michael Froman will have a full plate of issues that will have to be addressed throughout President Obama’s second term. Understandably, Asia will play a prominent role in the White House’s agenda, along with discussions of a potential free trade agreement between the U.S. and the European Union.

But the USTR would be wrong to not give Latin America and the Caribbean some well-deserved attention, particularly as there are several resource-rich, economically-growing and, most importantly, Washington-friendly governments in the region.

Throughout his nomination and confirmation process, Froman received the support of influential U.S. think tanks like the Council on Foreign Relations and the American Enterprise Institute. Nevertheless, there is a concern that he may focus too much on the “big picture,” such as the U.S. trade relations with entrenched global economic powers, and not enough with smaller but important and rising powers, like those in Latin America.

Read more: http://www.voxxi.com/challenges-for-michael-froman-new-ustr/#ixzz2Y5ZS02UZ