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Latin American trade negotiations with the United States

Published online by Cambridge University Press:  22 May 2009

John S. Odell
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The traditional relation between richer and poorer countries, whereby the former exported manufactures and the latter exported primary products, has been undergoing an accelerating transformation in recent years. Developing countries are emerging as serious competitors in the world economy in a widening range of manufactured products, and increasing industrial exports is one of the highest foreign-policy priorities of their governments. At the same time, demands for import restrictions have been increasingly heard in the older industrial countries. The result is that bilateral bargaining to regulate trade and market shares has become a common but understudied element of the North-South diplomatic agenda. Despite all our recent discussion of the international economic order, our knowledge of this type of bilateral conflict is quite sketchy. Industrial trade issues touch several often-conflicting policy objectives of the country involved, including employment and growth, price stability, debt servicing, domestic political power and stability, and the strength of bilateral political ties. Latin American countries and the United States have historically been mutually important as trade partners, and some

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Articles
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International Organization , Volume 34 , Issue 2 , Spring 1980 , pp. 207 - 228
Copyright
Copyright © The IO Foundation 1980

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References

1 On LDC manufactured exports, see Chenery, Hollis and Keesing, Donald B., “The Changing Role and Composition of LDC Exports,” paper prepared for symposium at the Institute for International Economic Studies, Stockholm, 08 1978Google Scholar; UNCTAD, Trade in Manufactures of Developing Countries and Territories: 1974 Review, UN Document TD/B/C.2/161, 1976Google Scholar; UNCTAD, Dynamic Products in the Exports of Manufactured Goods from Developing Countries to Developed Market-Economy Countries, 1970–1976Google Scholar, UN Document ST/MD/18, 1978; Watkins, Stephen B. and Karlik, John R., “Anticipating Disruptive Imports,” New International Realities (National Planning Association) (Fall 1978)Google Scholar; The Economist, 10 June 1978, pp. 84–85; Morton, Kathryn and Tullock, Peter, Trade and Developing Countries (London: Croom Helm, 1977)Google Scholar; Perez, Lorenzo L., “Export Subsidies in Developing Countries and the GATT,” Journal of World Trade Law 10 (1976): 539–545Google Scholar; Morrison, Thomas K., Manufactured Exports from Developing Countries (New York: Praeger, 1976)Google Scholar; Lary, Hal B., Imports of Manufactures from Less Developed Countries (New York: Columbia University Press, 1968)Google Scholar; Grunwald, Joseph, ed., Latin America and the World Economy: A Changing International Order (Beverly Hills, Calif.: Sage Publications, 1978)Google Scholar. On protectionism, see IMF, The Rise in Protectionism, Pamphlet No. 24 (1978)Google Scholar; IMF, Annual Report on Exchange Arrangements and Exchange Restrictions; GATT, International Trade; Strange, Susan, “The Management of Surplus Capacity: or how does theory stand up to protectionism 1970s style?” International Organization 33 (1979): 303–334CrossRefGoogle Scholar.

2 Cf. Nye, Joseph Jr, “Transnational Relations and Interstate Conflicts: An Empirical Analysis,” International Organization 23 (1974): 961–996CrossRefGoogle Scholar.

3 In order to make the research more manageable, I exclude from this study the negotiation of “orderly marketing agreements”; these are covered by current work

4 19 U.S.C. S1303; “A Roadmap to the Trade Act,” Law and Policy in International Business 8 (1976): 171–174Google Scholar; Wyman, Donald L., “U.S.-Latin American Relations and the Cases of the Countervailing Duty,” in U.S. Commission on the Organization of the Government for the Conduct of Foreign Policy, Appendices, 7 vols., 1975, vol. III, pp. 234–242Google Scholar.

5 19 U.S.C. S13O3(d).

6 A package of multilateral trade agreements, including a new code on export subsidies and countervailing duties, was signed in April 1979, and U.S. implementing legislation was signed in July 1979. Under these new rules, developing countries which subscribe to the code will be permitted under certain conditions to maintain export subsidies and domestic subsidies without penalty. As part of the agreements the United States amended its law to provide for countervailing duties only in cases in which “material injury” to domestic producers can be demonstrated. Administrative discretion in countervailing duty enforcement was reduced, and the Carter administration proposed, further, to move enforcement authority from the Treasury Department to the Commerce Department (see New York Times, 20 July 1979). The economic and political consequences of these new developments and of decisions in other countries will not be clear for several years.

7 19 U.S.C. S160–173; “A Roadmap to the Trade Act,” pp. 166–171; “Antidumping Duties,” in U.S. Commission on International Trade and Investment Policy, United States International Economic Policy in an Interdependent World, 1971, vol. I, pp. 395–408Google Scholar. Several interviewees maintained that antidumping proceedings are more “cut-and-dried” than countervailing duty proceedings, and despite an original intention to include them, I found no examples of antidumping cases whose outcomes could be attributed to anything other than routine application of standard operating formulas by U.S. agencies. Some antidumping cases may arise because American businesses, feeling successful foreign competition, lack the capacity to conduct their own investigations of prices charged in the foreign market, and hope mistakenly that activating a U.S. government investigation might produce data favorable to them. A study of antidumping complaints involving state-owned firms or major powers or larger amounts of current trade might reveal a different political process, however, as suggested by the Ford administration's subtle handling of the huge complaint against automobile imports in 1975–76.

8 In the case of Mexican processed asparagus, the ITC was evenly divided on the question of injury, and President Ford determined that the imports had not caused serious injury. In the large 1976 shoe case, the ITC unanimously found injury, and 5 of the 6 commissioners recommended some form of import restrictions. The cabinet was pressured both by A merican shoe producers and by consumer groups, and failed to reach an agreed recommendation to President Ford. The departments of State, Treasury, Defense, OMB, and Council of Economic Advisers took the consumer-oriented free-trade position; the departments of Labor and Commerce and the Special Trade Representative favored trade restrictions. At the time the domestic shoe industry was experiencing a brisk recovery. Ford decided against import curbs and in favor of adjustment assistance to firms and workers. Later in the year the footwear case was reopened at the request of the Senate Foreign Relations Committee. The ITC sent President Carter a recommendation for a tariff-rate quota restriction. Carter decided in early 1977 to reject that recommendation, to negotiate orderly marketing agreements with Taiwan and South Korea, to warn other suppliers against surges of imports, and to provide new adjustment assistance to domestic industry. Later that year the ITC held that ferrochromium imports threatened to injure U.S. producers and recommended raising tariffs. South Africa, Brazil, and Yugoslavia were the main suppliers. In rejecting import relief, President Carter held that it would mainly benefit the dominant firm in the U.S. industry, that absence of relief would not lead to job losses, and that relief would be inflationary and might encourage protectionism against U.S. exports.

9 The image of a very unequal relationship is shared by many who have analyzed inter-American relations in terms of “dependency” despite the other sharp differences between this view and traditional power analysis. Though dependency analysis does not often deal directly with discrete diplomatic disputes, it might lead one to expect that the United States uses those occasions as another means of domination and exploitation of Latin America.

10 See Dominguez, Jorge, “Consensus and Divergence: The State of the Literature on Inter-American Relations in the 1970s,” Latin American Research Review 13 (1978): 106–108Google Scholar. An example of an “unorthodox dependency” perspective is Jaguaribe, Helio, Political Development: A General Theory and a Latin American Case Study (New York: Harper and Row, 1973), pp. 371–386Google Scholar. While my reference to dependency perspectives pertains to their vision of international relations, dependency analysts themselves are equally concerned with conflicts within dependent states, and the connections between external and internal forces.

11 See Nye, op. cit.

12 Wriggins, W. Howard, “Up for Auction: Malta Bargains with Great Britain, 1971,” in The 50% Solution, Zartman, I. William, ed. (New York: Doubleday, 1976), pp. 208–234Google Scholar.

13 Odell, John S., “The Politics of Debt Relief: Official Creditors and Brazil, Ghana, and Chile,” in International Debt and the Less Developed Countries, Aronson, Jonathan, ed. (Boulder, Co.: Westview Press, forthcoming)Google Scholar.

14 See Bergsten, C. Fred, “The Threat from the Third World,” Foreign Policy 11 (Summer 1973): 102–124CrossRefGoogle Scholar and “Coming Investment Wars?” Foreign Affairs 53 (10 1974): 135–152CrossRefGoogle Scholar; Haq, Mahbub ul, The Poverty Curtain (New York: Columbia University Press, 1976): chap. 9Google Scholar.

15 With rough classifications and a relatively small number of cases, no sophisticated data analysis will be possible. But here and at other points, evidence casting some light on a question can be mentioned.

16 Business Latin America, 8 January, 22 January, 5 February, and 30 April 1975.

17 U.S. State Department unclassified files.

18 Pastor, Robert, “Congress's Impact on Latin America: Is There a Madness in the Method?” In U.S. Commission on the Organization of the Government for the Conduct of Foreign Policy, Appendices, 7 vols., 1975, vol. Ill, p. 267Google Scholar.

19 Footwear News, 1 April 1974; New York Times, 4 August 1974, p. F6. Severo Gomes was known as relatively weak in Brazilian policy making, but this issue also elicited a difference between the Foreign and Finance ministries in Brasilia, with the Foreign Ministry favoring the harder line. “Ultimately, the president resolved the difference on terms somewhat more favorable to Itamaraty than would have been the case in the preceding administration.” (Schneider, Ronald M., Brazil, : Foreign Policy of a Future World Power [Boulder, Co.: Westview Press, 1976], p. 110.)Google Scholar

20 Interviews with former U.S. officials. The compromise outcome in Brazil's case is better explained by other factors, noted below.

21 Interviews; Business Latin America, 10 May 1978, p. 152.

22 It is difficult to judge conclusively how much effect the NSC role had, since other actors and strategies were at work as well.

23 Interview with a former U.S. official.

24 Interviews with former U.S. officials.

25 Interviews in Washington.

26 A Coca-Cola subsidiary producing instant coffee in New Jersey found its own solution to the international conflict, by acquiring control of a freeze-dry soluble plant in Brazil in 1969, putting it on the winning side either way (Business Latin America, 13 March 1969, pp. 82–83). The reversal of the National Coffee Association's position was not sufficient by itself to halt efforts by U.S. leaders, particularly Congressman Wilbur Mills, to press for Brazilian concessions. (Bloomfield, Richard J., “Who Makes American Foreign Policy? Some Latin American Case Studies” [Cambridge, Mass.: Harvard University Center for International Affairs, 1972].)Google Scholar

27 American Embassy Brasilia to Department of State, unclassified cable 0945, 3 February 1976.

28 O Estado de Sāo Paulo, 13 May 1976. Also see joint communiqué by Simonsen and Simon, 11 May 1976; Journal of Commerce, 12 May 1976; Business Latin America, 26 May 1976; Latin America Economic Report, 28 May 1976.

29 Milenky, Edward, Argentina's Foreign Policies (Boulder, Co.: Westview Press, 1978), pp. 55–59, 72, 123–124; Business Latin America, 12 December 1973 and 8 May 1974; Latin America Economic Report, 11 January 1974 and 17 May 1974; Washington Post, 13 January 1974, p. A29; 19 April, p. Al; 20 April, p. A12; and 22 April, p. A22; Business Week, 13 April 1974, p. 80Google Scholar.

30 U.S. Department of State Bulletin (05 1974): 517, 544Google Scholar.

31 Business Latin America, 29 June 1972, pp. 201–202. During the antidumping proceedings the Mexican firm hired Joseph Califano as counsel and was supported by the Antitrust Division of the Justice Department. Testifying before the Tariff Commission for the U.S. producers, however, were Senator Russell Long of Louisiana and Representatives Hale Boggs, Herbert, F. Edward, and Joe Waggoner of Louisiana. (Chemical Marketing Reporter, 3 04 1972.)Google Scholar

32 Butler, Robert W. Jr, “Trade Conflict: The Mexican-Canadian Yarn War of 1969–1970,” Inter-American Economic Affairs 25 (1971): 21–30Google Scholar. Colombia recently protested Japan's trade surplus with Colombia by banning imports of Japan's electronic products, consumer durables, and cars. (Economist, 5 August 1978, p. 66.)

33 See Bloomfield.

34 Journal of Commerce, 26 November 1974; Footwear News, 3 February 1975; Wyman, pp. 238–239. In 1978 Argentina used technocratic strategies and achieved its objectives more fully.

35 Footwear News, 17 June 1974; New York Times, 4 August 1974, p. F6.

36 Interviews in Washington; Footwear News, 16 September 1974; Business Latin America, 18 September 1974 and 26 May 1976.

37 U.S. Congress, House, Committee on Ways and Means, Waiver of Countervailing Duties on Certain Mexican Steel Plate: Communication from the Assistant Secretary of the Treasury, House Doc. 94–406, 94th Cong., 2d sess., 11 March 1976; interview in Washington. In any case the Mexican government imposed a temporary embargo on steel exports in late 1972 due to the strength of domestic demand in Mexico, and the flow of steel plate to the United States fell sharply. (American Metal Market, 21 December 1972.)

38 Federal Registers 41 (1976): 1299Google Scholar.

39 Interviews in Washington; Federal Register 42 (1977)Google Scholar: 57201 and 43 (1978): 18659–18661; Business Latin America, 10 May 1978, p. 152.