Bury FTAA? Easy for Chavez to say!

Chavez was happy like a pig in shit last week, basking in worldwide media attention and lefty adoration for his “principled stand” against one of those gringo proposals everyone loves to hate – the Free Trade Area of the Americas. For all the talk about burying FTAA, one basic fact was mostly ignored in commentary of the summit: it’s murderously easy for Chavez to rant at length about this because Venezuela already enjoys most of the benefits of Free Trade.

To explain. Countries engage in trade negotiations in order to improve their access to other countries’ markets. If Country A exports mostly shirts, and shirts face high tariffs in Country B’s, then Country A has an obvious interest in negotiating better access to Country B’s market.

You’ll have noticed that Country V’s exports are overwhelmingly dominated by oil. Oil already faces low-to-no tariffs all around the world. (It’s just too important an input for other countries to tax it at the border.) So oil-exporters like Venezuela are in a peculiar position when it comes to trade negotiations: the basic impetus that drives most countries to negotiate really doesn’t apply to them.

It’s true that oil products do face high taxes once inside the border, but no country negotiates tax policies in international trade talks, and energy taxes are certainly not on the FTAA agenda. So Venezuela has nothing much to gain from hemispheric trade talks.

This is why it’s so easy – but also so fatuous – for Chavez to rant against FTAA. He can talk himself blue in the face, knowing that our access to foreign markets isn’t really in doubt.

This also explains why Brazil and Argentina, which are also skeptical of FTAA, were so much more circumspect in criticizing it. Brazil and Argentina’s exports are centered on basic manufactures and agriculture, sectors that face serious barriers in the US market. They have much more to gain from negotiating a trade agreements with the US than Venezuela ever will.

In fact, FTAA is an issue taylor-made to Chavez’s brand of demagoguery. He can use it to make grand sounding fulminations against imperialism at basically no cost. It’s the ultimate risk-free way to position himself as a world leader and get the drooling admirations of ñangaras near and far. Que manguangua!