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Tuesday, February 25, 2003

Cincinnati's place in foreign trade



By Tatiana Lannelongue
Guest column

Free-marketeers have drawn heavy fire over the years from home-grown protectionists and anti-globalization interests - both foreign and domestic.

Now, with the selection of Cincinnati as the host city for the Central American trade negotiations this week, comes an opportunity for our region to exhibit its renowned Midwestern pragmatism and serve not as the next theater of conflict, but rather as a model of good sense.

In terms of simplicity, the concept of free trade is exemplary. Who can argue with the logic that if countries are allowed to focus on what they do best, and that if the resulting "best in kind" products and services are allowed to freely move across borders, then a certain equilibrium will be reached and access to the best products at the lowest prices will be available to all?

Notwithstanding the simplicity of the concept, the implementation of free trade has regrettably come with its share of controversy and turmoil.

A case in point is the North American Free Trade Agreement.

When NAFTA was first introduced in 1994, the goal was to promote trade between Canada, Mexico and the United States by progressively eliminating tariffs, reducing quotas and opening markets.

Since then trade between the United States and Mexico has tripled; between the United States and Canada, it has doubled. Each day, the NAFTA partners conduct nearly $1.7 billion in trilateral trade, an enormous increase over the pre-NAFTA rate - one that has a huge net positive effect on job creation and economic growth.

By all measures - and particularly that of performance against goals - NAFTA has been a success.

Yet NAFTA, like many of the other U.S. free trade initiatives, has been virulently criticized by protectionists, special interests and domestic lobbyists.

And only too often the resulting politically charged debate has resulted in a shift away from free-trade policies and has damaged the United States' global free-trade credibility.

But bowing to domestic protectionism not only makes our industries uncompetitive internationally, it also postpones the inevitable.

In all the major economic regions, markets are being unified: the EU in Europe, AFTA in Asia, Mercosur and CAN in Latin America, the South African Customs Union in Africa, and the list goes on.

In our own hemisphere, the United States has led in creating an integrated market capable of responding to the rising economic challenges from other regions.

Last month's free trade agreement with Chile and the more recent Central American trade negotiations are steps in that direction.

Cincinnati's selection as host city for the Central American negotiations is a tremendous opportunity for our region that should not be underestimated.

First, we can expect an increase in regional visibility and credibility with the participating nations (El Salvador, Honduras, Costa Rica, Guatemala and Nicaragua), which over time will translate into increased trade. Currently, Florida commands 46 percent of total U.S. trade with the region, but with the heightened visibility provided by the negotiations, Ohio stands to make some significant gains in trade "share."

Second, a heightened appreciation within our local industrial base of the market opportunity provided by these countries will stimulate an increase in business activity and focus. Central America's 36 million consumers already annually buy from the United States almost half as much (about $8 billion) as what China's 1.3 billion consumers buy (about $19 billion). The liberalization of trade between our countries can only serve as a conduit to further growth.

Put simply, the increased familiarity between our region and the Central American countries will provide all parties with the confidence and motivation to more aggressively pursue bilateral trade and business.

Therefore, throughout the course of the upcoming Central American Trade negotiations, our regional goal should be to exhibit a readiness for expanded global trade and a Midwestern pragmatism toward dealing with challenges.

If we subscribe to a vision that includes a vibrant, successful and "global" Midwest, then we in Cincinnati - though thousands of miles away from the more "international" cities on the East and West Coasts - must lead the charge.

---

Tatiana Lannelongue is managing director of Saucini, an international sales and global market development firm based in Cincinnati. She is a member of the Southern Ohio District Export Council, a volunteer business group active in trade issues.




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