On paper, Chile looks like a great addition to NAFTA. But U.S. politics could get in the way.
Advocates of free trade would have a tough time finding a more suitable country than Chile to join in the North American Free Trade Agreement.
The nation enjoys steady economic growth and a stable currency and has made a mostly smooth transition from military dictatorship to democracy. Better yet, from a trade perspective, Chile has relatively low import tariffs, few exports that compete with American products and, because it's located far from the United States, poses little threat of illegal immigration.
But timing, politics and a protectionist mood among the American electorate threaten to derail what should be a simple deal - at least as far as trade pacts go. "There really is no underlying reason why this should be a controversial issue in the United States," says Andres Velasco, former chief if staff of the Chilean Ministry of Finance and now a member of Chile's NAFTA advisory group.
One sticking point is an ongoing debate between the White House and Congress about "fast track, a strategy that allows the president to negotiate complex trade pacts on which Congress must vote up or down, without amendments. The administration argues that it needs fast-track authority broad enough to negotiate side agreements on labor and the environment; Republican legislators say they will approve fast tracking only for a bare-bones trade treaty.
"The Trade subcommittee views fast-track extension as one of its highest priorities," says Rep. Philip Crane, an Illinois Republican and chairman of that particular Ways and Means panel. "It will not be linked to any specific country" but can aid the Chile-NAFTA discussions. "Republicans, and many Democrats, do not believe fast-track extension should be encumbered with labor and environmental issues unless they are directly related to trade" says Crane. An aide to Rep. Bill Archer, a Texas Republican and chairman of the entire Ways and Means Committee, says that Archer opposes fast-track authority for labor and environmental issues, although he supports Chile's accession to NAFTA.
Yet some Democrats might not vote for a deal without side agreements. "What we have in our hands is not a negotiating problem, it is a ratification problem:" Chile's Velasco says. "The ball is largely in the court of the U.S. Congress."
Despite lukewarm popular support for NAFTA, the Republican congressional leadership generally favors adding Chile to the pact - although Sen. …