The Effects of Terrorism on Hemispheric Trade and Integration

 
The terrorist attacks on civilian targets in New York and Washington dealt a hard blow to a US economy already heading for recession. To restore some normality and a potential increase in economic activity, some observers have recommended that the US government foster a return to routine, a stable stock market and a sense of security. Yet President Bush and his administration's civilian and military leaders have pointed out that the war on terrorism will be difficult and long. Attacks on terrorist camps and cells throughout the world and the expected counterattacks by terrorists are not the stuff of normalcy. America must get used to this new situation, as must also America's trading partners.

Bush administration officials have stated that they will continue to promote the trade agenda and other economic policies and initiatives. On September 24, US Trade Representative Robert Zoellick gave a speech to the Institute of International Economics in which he told the American public that the trade agenda was a high priority, that US leadership on trade is needed and trade liberalization will be pursued vigorously. The US-Chile free trade talks continue, and in fact were going on at the time of the terrorist attacks. They are still targeted for completion by year's end, and the Senate has already approved by voice vote the free trade agreement with Jordan. A ministerial meeting in Washington of the MERCOSUR countries and a deputy ministers meeting of the Central American Common Market countries in Managua also pledged to reinvigorate trade policy. The Bush administration has said it will seek extension of the Andean Trade Preference Act when it expires in December, and the FTAA negotiations are continuing without interruption.

Nevertheless, many Americans continue to delay their travel plans out of fear and uncertainty about what will happen next. To bolster aviation security, the FAA sent a technical mission around the world to advise on the new security measures being taken at US airports and urge airport authorities abroad to tighten their own security. As a result, some foreign airports have upgraded security based on ICAO directives. All Latin American airports meet FAA standards and none lack certification. But the augmented security measures announced by the US Customs Service for goods and people entering the US has caused an increase in costs through lost time and added expenses. Reuters has reported that the time lost owing to new security measures for cargo has added substantially to cost. Insurance rates have gone up, in some cases drastically. The Miami Herald reports that Mexican cargo trucks have a three-hour wait at the border, and the Mexican government estimates that there has been a 15% drop in truck traffic and a 30% drop in passenger traffic through border crossings during the weeks following September 11. Mexican hotels report a 20% decrease in occupancy rates.

In matters of visa policy, there have been no changes, according to the State Department. Many proposals for change in visa policy have been put forth in Congress but no hearings have yet been scheduled. Close consultations between the State Department and Congress on this issue are ongoing.

Observations
Although the administration continues to promote trade as vital to economic growth and efficiency, it is difficult to believe that the same amount of time and urgency will be devoted to these matters as before September 11. After the war on terrorism, domestic economic issues are likely to dominate the time of administration and Congressional leaders in the short term. Some immediate priorities include assistance to the airline industry and attempts to create a greater sense of security for fearful airline travelers. The federal government also must decide how much to provide as insurer of last resort to back up the insurance companies in the aftermath of the attacks, for which estimates of damage range from $15 billion to $40 billion. Another question that may emerge soon is the impact of new security measures on driving up inflation.

Latin American governments have supported the US in its announced response to terrorism, including attacks against the Afghanistan bases of Osama bin Laden. However, there is not likely to be any substantial material support from the region. Polls show that the majority of Latin Americans do not support US counterstrikes against foreign terrorist bases. Latin America is more concerned with economic issues and the region's own development. Solidarity with the US is in most cases quite shallow. The US Congress will presumably understand this as it works its way through competing priorities. Meanwhile, the Marxist guerrillas in Colombia seem to be stepping up their attacks, perhaps convinced that the US is preoccupied elsewhere and that both the Colombian and US governments are too demoralized to take on a tough fight.

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