Global Policy Forum

Two heated debates about free trade took place here last week, yet they were so different they might as well have been on separate planets. The most visible one was at a meeting of trade ministers from the United States and 33 other countries, who tried to hammer out a plan for negotiating a free-trade zone from Canada to Argentina. The other was led by ordinary citizens.

Inside a heavily fortified hotel, the ministers were deeply divided about practical issues but shared many basic assumptions: More trade is better than less, open borders are better than closed, cross-border investment is healthy.

The United States wants more access to Latin American markets for services like insurance, telecommunications and health care. Latin American countries want the United States to drop its barriers and subsidies for agricultural products, including sugar, cotton and soybeans.

Outside the ministerial talks, the issues were different. Ecuador's large indigenous groups, which have considerable political influence, are convinced that there is no such thing as a good deal. Some say a hemispheric agreement will give carte blanche to foreign oil and mining companies in the Amazon rain forest. Others fret that farmers will be wiped out by foreign imports. "We cannot compete with them," said Ermel Chavez, head of a group in northern Ecuador called Front for the Defense of the Amazon. "We will become nothing more than consumers."

Many of the indigenous protesters are supported and prodded by anti-globalization groups based in the United States. Public Citizen, an advocacy group based in Washington, helped organize "reality tours" to demonstrate the impact of foreign oil companies. Global Exchange, a group based in San Francisco that opposes the free-trade talks, promoted interviews with indigenous leaders from Ecuador and Colombia. The AFL-CIO federation of unions, the most adamant and powerful American opponent of free-trade deals, had top representatives here as well.

That said, there was no mistaking the level of genuine popular unease here and in other countries. ALCA, the Spanish acronym for Free Trade Agreement for the Americas, has become a big topic in local newspapers and among ordinary people. Ordinary Ecuadorans have experienced both the benefits and costs of greater global integration. In a bid to halt inflation, the government adopted the U.S. dollar as its own national currency nearly two years ago. That stabilized prices. But because of the strength of the dollar against other currencies, imports from other countries soared and exports stagnated.

Almost every country in Latin America has been hit by trade shocks. Colombia, once one of the world's biggest exporters of coffee, is now far behind Vietnam. Argentina, once a major wheat exporter, has been forced to switch over to soybeans.

Various currency crises, meanwhile, have all but obliterated a free-trade zone that unites Brazil, Argentina, Uruguay and Paraguay. The regional trade group began to crumble when Brazil decided in 1999 to let its currency decline in value. That almost devastated Argentine exports to Brazil because the Argentine government kept its peso locked one-to-one with the U.S. dollar. Regional trade imploded this year when the Argentine government defaulted on foreign debt worth about $140 billion and the peso collapsed.

Despite the disruptions, there are good reasons to believe that more free trade and openness ultimately offer more security. The two Latin American countries that have so far weathered the current global economic slowdown - Mexico and Chile - are also the most open. Mexico, of course, has been part of the North American Free Trade Agreement for eight years.

Chile has arduously liberalized its economy for years and is now close to signing a bilateral free-trade deal with the United States. The problem is that a pan-American free-trade zone would cover more than trade. It would also affect rules for doing business, such as sanitary regulations for food imports and enforcement of labor and environmental standards. Many Latin Americans fear that the United States wants to impose its system on them, and they are correct.

But it is worth remembering that the United States has taken its own lumps. When California decided to phase out the use of a gasoline additive, the Canadian manufacturer of the additive sued, citing investor-protection measures in NAFTA. The U.S. government now wants to make it harder for companies to make such claims.

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