Colombia's proposed "dry canal" proposal with China has focused attention of how U.S. demands of free trade and privatization have impacted Latin American countries.
For 30 years, Washington has been shopping a trade-not-aid based economic diplomacy across Latin America and beyond. According to what is generally known as the “Washington consensus”, the US has provided Latin America loans conditional on privatization, deregulation and other forms of structural adjustment.
The 30-year record of the Washington consensus was abysmal for Latin America [and] prompted citizens across the Americas to vote out supporters of this model in the 2000s. Interestingly, the only significant card-carrying members of the Washington consensus left in Latin America are Mexico and Colombia. That explains why Washington was so shocked at Mr Santos’ remarks [regarding negotiations with China].
Before China “gets” Colombia, there is now a rallying cry that says the US must pass the US-Colombia Free Trade deal – which would make Colombia deregulate its financial services industry, scrap its ability to design innovative policies for development and open its borders to subsidized farm products from the US.
According to a study by the UN, the agreement will actually make Colombia worse-off by up to US$75 million (S$95 million), or 0.1 per cent of its GDP.
Meanwhile, the Financial Times reports that China has lent over US$110 billion to developing countries over the past two years, more than the World Bank has made in three years.
This is excerpted from a commentary by Kevin Gallagher, professor of international relations at Boston University and a research fellow at the Global Development and Environment Institute.