Post: #1

U.S.-Colombia Free Trade Agreement just went into effect. Will Colombia become the most dangerous and poorest country in Latin America?

It looks to me Colombia will become much dangerous than Mexico and way much poorer.

A similar treaty, NAFTA created millions of poor people in Mexico and tens of millions of immigrants to the United States, not to mention the violence.

Nafta left Mexico's traditional farmers without an income source and they had to cross the border or become kidnappers, drug dealers, etc.

Small businesses were hit hard by NAFTA and owners had to become employees in bigger companies or join organized crime.

Mexico is a mess now due to NAFTA and previous policies that created monopolies like TELMEX.

What will happen to Colombia which is currently in a much worse economic situation than Mexico was before NAFTA?

Post: #2

The thing with all these free trade agreements is that they're not really free trade agreements. If they were, they would include free movement of people for the poor countries (and not just for the rich ones) which would enable them to take advantage of their prime comparatative advantage: cheap labor. Of course, unfortunately this is not politically possible.

Post: #3

Why do you think that NAFTA has anything to do with Mexico's current troubles? Most of what is going on in Mexico has to do with the drug war. In fact, it mostly have to do with the Mexican cartels taking over from the Colombian cartels.

Post: #4

(05-16-2012 06:24 AM)encanto Wrote:  Nafta left Mexico's traditional farmers without an income source and they had to cross the border or become kidnappers, drug dealers, etc.

So was it the North American Agreement on Environmental Cooperation supplement, or the North American Agreement on Labor Cooperation supplement, that forced Mexican farmers to become kidnappers and drug dealers?

Post: #5

Post: #6

(05-16-2012 06:34 AM)j r Wrote:  Why do you think that NAFTA has anything to do with Mexico's current troubles? Most of what is going on in Mexico has to do with the drug war. In fact, it mostly have to do with the Mexican cartels taking over from the Colombian cartels.

The drug war is a consequence of NAFTA. NAFTA left millions in poverty and without an income source. Many people just turned to organized crime. Others decided not to become criminals and crossed the border to get a job. You're right, the Mexican cartels took over but that's because now it's easy for them to recruit desperate people and pay them very little.

I am really afraid a worst situation is just around the corner for Colombia.

Post: #7

(05-16-2012 10:07 AM)encanto Wrote:  

(05-16-2012 06:34 AM)j r Wrote:  Why do you think that NAFTA has anything to do with Mexico's current troubles? Most of what is going on in Mexico has to do with the drug war. In fact, it mostly have to do with the Mexican cartels taking over from the Colombian cartels.

The drug war is a consequence of NAFTA. NAFTA left millions in poverty and without an income source. Many people just turned to organized crime. Others decided not to become criminals and crossed the border to get a job. You're right, the Mexican cartels took over but that's because now it's easy for them to recruit desperate people and pay them very little.

I am really afraid a worst situation is just around the corner for Colombia.

OK, but how? You're just asserting that NAFTA led to poverty without offering any evidence or even a mechanism. First, demonstrate how this works, then show that there is a similar set of circumstances in Colombia. If you cannot do that, then there is no reason to believe that Colombia has anything to worry about from an FTA with the United States.

And no, the drug war has almost nothing to do with NAFTA. The Colombians used to use the Mexican gangs to transport across the border. Eventually the Mexicans started moving up the supply chain. It helped that the Colombian cartels were getting squeezed in their home country by the Uribe administration.

Post: #8

Colombia already is extremely dangerous and poor. Hopefully the free trade agreement with the USA and other countries will be good for the country, which has a lot of natural resources, this could be a major plus for the economy.

I don't think NAFTA is the main reason why Mexico is so messed up right now, if anything, it probably created more wealth and jobs there after manufacturing plants were relocated there.

I'm no expert on this stuff, all I know if that my country, which is also rich in natural resources and a member of NAFTA, seems to be doing fairly well with free trade.

Countries that don't invent things like the USA, Japan, Germany but scoop and pump shit out of the ground and send it abroad like Australia, Canada OPEC nations, etc. benefit from free trade, imo.

Post: #9

(05-16-2012 11:04 AM)j r Wrote:  The Colombians used to use the Mexican gangs to transport across the border. Eventually the Mexicans started moving up the supply chain. It helped that the Colombian cartels were getting squeezed in their home country by the Uribe administration.

From the little I recall about this, at one point it was a lot easier to move drugs from S. America to the US via boat and plane. But when the US really started cracking down on that, much of the delivery had to go through Mexico, and that gave the Mexicans enormous leverage and the Mexican smuggling business became much more lucrative. So more money, more people wanting in, bigger turfs to protect = more violence.

Post: #10

Maybe this is off topic, but have any of you seen the mexican cartel beheading video? Scary ass shit!! I live in LA, so I may or may not have taken excursions to TJ when with buddies in San Diego. I know native Mexican dudes who refuse to go back to Mexico because they are scared of the drug violence. I used to like to go golfing on the baja peninsula, I wont go anymore. If Mexico has gone to shit, I can only imagine Columbia.

Post: #11

(05-16-2012 06:50 PM)assman Wrote:  

(05-16-2012 11:04 AM)j r Wrote:  The Colombians used to

From the little I recall about this, at one point it was a lot easier to move drugs from S. America to the US via boat and plane. But when the US really started cracking down on that, much of the delivery had to go through Mexico, and that gave the Mexicans enormous leverage and the Mexican smuggling business became much more lucrative. So more money, more people wanting in, bigger turfs to protect = more violence.

this....the drugs are still manufactured i ncolombia then go to mexican carels where they are distrubuted.

Post: #12

NAFTA created a artificial price floor in Mexico. For farmers for example USA corps could import food products and sell them cheaper undercutting local producers. They couldn't turn profits and were ran out of business. Also NAFTA does not work both ways it is still difficult for Mexican locals to import into the USA and then still face protections or even cheaper goods from the pacific. On a larger scale USA corps move factories into Mexico to take advantage of cheap labour. These factories pay next to nothing, less so than a farmer would make selling goods and living of his land. These drives people into more disparate situations thus leading to the taking a chance and fleeing to America to make more money.

Drugs can be related to this but I do remember that in prior Mexican power shifts the drugs were largely left to flow in the USA. It could not be stopped so resources were not wasted trying to do so. Things shifted when the USA started to help fund and arm corrupt "officials" to fight the drugs. This has obviously just created more hostility driving up prices. 50k have been killed since this mess popped off about 3-5 years ago. It's a full scale war down there that the USA is complicit it. Drugs and it's money laundering make up a huge percentage of market volume in America.

NAFTA tho only is meant for USA corps. It was always ment to exploit Canada's resources and Mexican labour and nothing more. Both countries nearly went bankrupt (Mexico pretty much did while Canada went into IMF crisis mode) almost instantly after it was ratified in 1994. coincidence?

Post: #13

Quote:OK, but how? You're just asserting that NAFTA led to poverty without offering any evidence or even a mechanism. First, demonstrate how this works, then show that there is a similar set of circumstances in Colombia. If you cannot do that, then there is no reason to believe that Colombia has anything to worry about from an FTA with the United States.

And no, the drug war has almost nothing to do with NAFTA. The Colombians used to use the Mexican gangs to transport across the border. Eventually the Mexicans started moving up the supply chain. It helped that the Colombian cartels were getting squeezed in their home country by the Uribe administration.

I read a lot about Latin American politics and economics. It is a well known fact among top Latin American economic experts that NAFTA caused all problems I mentioned above. There have been numerous protests against NAFTA in Mexico as well as against the US-Colombia trade agreement. The most respected Colombian economists and political analysts are comparing it to NAFTA. High profile politicians like Ron Paul on the right are opposed to these agreements because they don't consider them free trade but rather managed trade which means they only benefit a group of corporations and have a negative impact on most of the economy. On the left we have everyone from Chavez to Cristina Fernandez strongly opposing them for the same reasons.

As far as I know the Colombian did not "use" the Mexicans. The Mexicans just purchased drugs from them for resale. Then the Mexican cartels got really strong because of all the poverty and unemployment NAFTA created. They started hiring their own well trained armies or sicarios. Yes, they moved up the supply chain as they prospered. Drug trafficking seems to be the only sector that grew in Mexico after NAFTA.

Frankly, it really sucks that Colombia risks becoming another Mexico.

Post: #14

(05-16-2012 01:44 PM)scotian Wrote:  Colombia already is extremely dangerous and poor. Hopefully the free trade agreement with the USA and other countries will be good for the country, which has a lot of natural resources, this could be a major plus for the economy.

I don't think NAFTA is the main reason why Mexico is so messed up right now, if anything, it probably created more wealth and jobs there after manufacturing plants were relocated there.

You have to ask yourself who's going to be benefiting from those natural resources, big American corporations or the Colombian people?

Manufacturing plants in Mexico did not benefit the people of Mexico, they benefited corporations with cheap labor while the Mexican workers were paid very low wages that couldn't satisfy their income needs. Most of them eventually turned to organized crime. Most of the plants are gone now. They went to Asia.

Post: #15

(05-18-2012 08:46 AM)encanto Wrote:  

Quote:OK, but how? You're just asserting that NAFTA led to poverty without offering any evidence or even a mechanism. First, demonstrate how this works, then show that there is a similar set of circumstances in Colombia. If you cannot do that, then there is no reason to believe that Colombia has anything to worry about from an FTA with the United States.

And no, the drug war has almost nothing to do with NAFTA. The Colombians used to use the Mexican gangs to transport across the border. Eventually the Mexicans started moving up the supply chain. It helped that the Colombian cartels were getting squeezed in their home country by the Uribe administration.

I read a lot about Latin American politics and economics. It is a well known fact among top Latin American economic experts that NAFTA caused all problems I mentioned above. There have been numerous protests against NAFTA in Mexico as well as against the US-Colombia trade agreement. The most respected Colombian economists and political analysts are comparing it to NAFTA. High profile politicians like Ron Paul on the right are opposed to these agreements because they don't consider them free trade but rather managed trade which means they only benefit a group of corporations and have a negative impact on most of the economy. On the left we have everyone from Chavez to Cristina Fernandez strongly opposing them for the same reasons.

As far as I know the Colombian did not "use" the Mexicans. The Mexicans just purchased drugs from them for resale. Then the Mexican cartels got really strong because of all the poverty and unemployment NAFTA created. They started hiring their own well trained armies or sicarios. Yes, they moved up the supply chain as they prospered. Drug trafficking seems to be the only sector that grew in Mexico after NAFTA.

Frankly, it really sucks that Colombia risks becoming another Mexico.

I don't put too much faith in what is publicly said by them anywhere in the world.

Post: #16

These free trade agreements are great for the international corporations. Not so great for the smaller local businesses and workers. NAFTA destroyed American manufacturing. I think a lot of problems in America could be fixed with just imposing some import taxes.

I am no economist or anything and don't know a lot of the details. Just my two cents.

Post: #17

(05-16-2012 10:07 AM)encanto Wrote:  The drug war is a consequence of NAFTA. NAFTA left millions in poverty and without an income source. Many people just turned to organized crime. Others decided not to become criminals and crossed the border to get a job. You're right, the Mexican cartels took over but that's because now it's easy for them to recruit desperate people and pay them very little.

You seem to be entirely ignoring Calderon's 2006 declaration of war on the drug cartels.

Post: #18

Encanto:

Have you ever been to Latin America? Or are you just parroting some left wing rag?

Mexico's economy has actually grown alot since NAFTA. This is a chart of GDP: http://www.mexicomaxico.org/Voto/PIBMex.htm

Here's an article about how Mexico's middle class is becoming is growing: http://www.washingtonpost.com/world/mexi...story.html

Of course, that's articles on the internet. If you were actually to go to Mexico, and meet the people who lived there, you would see that while it is still a developing country there are a lot of middle class people there as well.

I've been to Mexico, and I've also been to some genuinely poor countries like Philippines and Peru. There is a big difference between Mexico and the poorer countries.

Neither is Mexico extremely dangerous. Parts of the country are unsafe in the North because of the drug war, but in Mexico City and in the south it is much much safer and people's daily lives are not affected.

You come across as someone with very strong opinions and equally strong ignorance. I'd suggest you get out there and start traveling instead of worrying about what some government policy might do in the future.

Post: #19

(05-20-2012 10:21 PM)Celtic Wrote:  Encanto:

Have you ever been to Latin America? Or are you just parroting some left wing rag?

Mexico's economy has actually grown alot since NAFTA. This is a chart of GDP: http://www.mexicomaxico.org/Voto/PIBMex.htm

Here's an article about how Mexico's middle class is becoming is growing: http://www.washingtonpost.com/world/mexi...story.html

Of course, that's articles on the internet. If you were actually to go to Mexico, and meet the people who lived there, you would see that while it is still a developing country there are a lot of middle class people there as well.

I've been to Mexico, and I've also been to some genuinely poor countries like Philippines and Peru. There is a big difference between Mexico and the poorer countries.

Neither is Mexico extremely dangerous. Parts of the country are unsafe in the North because of the drug war, but in Mexico City and in the south it is much much safer and people's daily lives are not affected.

You come across as someone with very strong opinions and equally strong ignorance. I'd suggest you get out there and start traveling instead of worrying about what some government policy might do in the future.

The USA and Canadian GDP has grown also. You could paste and merge GDP charts and they would largely look the same. GDP is a terrible measure of growth and wealth. All the chart shows is the volatility of being on a American dominated system. When Mexico had steady largely State-Driven growth you see steady modest growth levels with no to little recession. After the credit messes of the 70s/80s you now just find Mexico in a rapid boom and bust situation that helps a few but not many.

Look at NAFTA and the Colombian arrangement and then look at the direction that the OAS is going. More inclusive pacts which work of the strategic strengths of the region and looking abroad collectively for opportunities. This pact will alienate Colombia at a time when the OAS is solidifying itself as a legitimate political and economic counter to the traditional Washington norms. NAFTA was the same junk that Africa had forced onto it by the Imperialists where markets and infrastructure were modded to benefit the main player instead of strategically leveraging the countries natural assets.

I an also a outsider looking in but it's no coincidence the Northern parts in which Americas political and economic interests are the strongest have completely turn to shit. Mexico is a large place and as much as the Govt may try to run it cohesively as one unit it's obvious from a outsider it is rife with staunch regionalism like other large countries like Russia, Nigeria, Brazil, China, and to a lesser extent Canada (Quebec, and our Atlantic regions).

Post: #20

I thought all this shit was over.

Post: #21

If there is anyone who thinks that individuals Colombians being able to legally trade with Americans freely will make the country poor, they will have four things to explain:

Explain how two people trading with each other for mutual advantage will make either one of them worse off. And if either one of them was to become worse off, why wouldn't the trade just not take place?

Explain how a Colombian buying a good from another Colombian 1km within his borders is good, but buying a good from someone 1km outside of his borders destroys economic wealth.

Explain how the division of labour makes people poorer.

Explain why the law of comparative advantage is wrong.

Post: #22

(05-16-2012 10:07 AM)encanto Wrote:  The drug war is a consequence of NAFTA.

The drug war is a direct consequence of the prohibition of drugs. End the prohibition on drugs, end the drug war. Actually, "the drug war" and the prohibition of drugs are the same thing. But if we're referring to the consequences of the drug war, such as the violence and cartels, those are the direct result of prohibition. Just as the murderous, powerful mafias and corrupted police were a result of alcohol prohibition in America.

The way to increase the violence is to crack down on the drug dealers even harder. This will increase the black market prices for drugs, making the profits even higher and the incentives greater to become involved in the drug trade. But since the consequences are high, only the most brutal of thugs will get involved. Since they will be making more money, they'll have more to pay off the police in Mexico and degrade the rule of law.

Post: #23

(05-21-2012 02:18 PM)kosko Wrote:  The USA and Canadian GDP has grown also. You could paste and merge GDP charts and they would largely look the same. GDP is a terrible measure of growth and wealth. All the chart shows is the volatility of being on a American dominated system. When Mexico had steady largely State-Driven growth you see steady modest growth levels with no to little recession. After the credit messes of the 70s/80s you now just find Mexico in a rapid boom and bust situation that helps a few but not many.

You are saying that the economic booom in Mexico has only helped a few. What are you basing this on? Have you been to (a non touristy area of Mexico?)

And what about the poll showing half of Mexicans describing themselves as middle class? Are they just stupid, in need of foreign leftists to tell them their economy really isn't improving and that their elected leader's policies are wrong>

Post: #24

Encanto, hopefully this article will sooth your fears of Colombia becoming the next Mexico, hopefully it will become the next Chile:

http://business.blogs.cnn.com/2012/04/18...nnovation/

Quote:(CNN) – Buying real estate in Colombia is not the sort of thing that your local bank branch manager is likely to recommend. But to me it is a sensible, even prudent, macro-bet on a country which is the next star of Latin America.

Colombia now takes its place alongside an Asian tiger like Indonesia and the future giant of South Africa in the CIVETS group of rapidly growing emerging markets. It is the new darling of “smart money” which views it as the hidden gem of Latin America. Although it continues to suffer from out-of-date negative perceptions, its attractiveness is coming onto both the tourist and investor’s radars.

The negative perceptions that persist present opportunities. In Colombia’s modern and industrious second city, Medellin (where Hewlett Packard has just located its entire Latin American Headquarters), prime property is found for under $750 per square meter, with rental yields in excess of 10% commonplace. There are very few places in the world with statistics like this that share Colombia’s potential. I have just made a macro-bet on Colombia via a real estate purchase.

Colombia’s traditional Achilles heel, security, has improved significantly in recent years. Popular ex-President Álvaro Uribe, (who left office with 80%+ popularity ratings), backed up by significant quantities of U.S. aid, took a hardline approach and routed the FARC guerrillas to make Colombia's cities safe again. FARC are at their weakest in decades, although considerable problems remain in some rural areas.

Colombian guerrillas killed

Proexport, the National Colombian Tourist Board, decided the country was ready to challenge the security perceptions head-on and launched a successful campaign in 2008 based around the slogan, “Colombia: el riesgo es que te quieras quedar”(Colombia: the risk is wanting to stay). Its stunning, tropical landscapes are finally starting to receive the attention they deserve: A tourist boom is under way with double digit percentage growth.

[b]Economically, Colombia is flying ahead with annual growth of 6%. Rich in natural resources, especially oil, coal and gold, Colombia pursues the same framework of the free-trade export-led model that has elevated Chile into being the first South American country awarded membership of the "rich nation’s club" - the Organization for Economic Cooperation and Development (OECD).[b] Chile has come far with that model and Colombia can go even further. It has the advantage of mass: Its population is the second largest in South America. Crucially, its economy is considered one of the most diversified in the continent - a key asset in a region where under-diversification is too common.

Its strengths are not going unnoticed. JPMorgan sees Colombia’s investment potential as second only to Brazil in the whole of Latin America. Foreign investors are pouring dollars in. Foreign direct investing to Colombia grew 113% between 2010 and 2011 according to official United Nations figures, injecting a record $14.4 billion into the country in 2011.

Colombia proudly follows an ambitious free trade agenda, following in the footsteps of Chile which has signed agreements resulting in free trade with more than 90% of the world’s population. Colombia is unashamedly pro-business, pro-trade and outward looking. “The message we send to our producers is you are in the world, not just Colombia. The future is about being competitive and this is as painful as giving birth”, Finance Minister Juan Carlos Echeverry said in March. A free trade agreement has just been struck with the European Union and a long awaited free trade agreement with the United States was finalized at last weekend's Summit of the Americas.

I attended the Summit of the Americas with my company Intern Latin America . It's a great time to be in Colombia - get in before it becomes mainstream.

Post: #25

(05-23-2012 01:42 PM)Roark Wrote:  If there is anyone who thinks that individuals Colombians being able to legally trade with Americans freely will make the country poor, they will have four things to explain:

Explain how two people trading with each other for mutual advantage will make either one of them worse off. And if either one of them was to become worse off, why wouldn't the trade just not take place?

Explain how a Colombian buying a good from another Colombian 1km within his borders is good, but buying a good from someone 1km outside of his borders destroys economic wealth.

Explain how the division of labour makes people poorer.

Explain why the law of comparative advantage is wrong.

Suppose Colombia has a comparative advantage in producing coffee (probably this is true in reality). After the FTA is signed, suppose US coffee makers lobby their government to make them invest in the US coffee industry, enablig them to (artificially) produce coffee cheaper/more efficiently than their Colombian counterparts, who would then be forced out of business.

Then there's also the issue of trade distorition (both Paul Krugman and Jagdish Bhagwati have written extensively on this and of course explain it better than me). Bilateral trade agreements, as opposed to multilateral ones, drive away "natural" trade and make countries trade disproportionately with the countries with which they have a FTA. If you have a multilateral trade agreement, the market decides the trade patterns. This is not necessarily the case with bilateral trade agreements.

Also, as I mentioned in post #2, poor Colombians who would gladly work for peanuts in the US are not allowed to do so, which means their greatest comparative advantage is rendered almost useless. Real free trade is fair, universal, multilateral and without too much involvement of the governments.

I agree with you in theory though, but not in practice.