Latin American trade deals

A brawl broke out the last time Peruvian congress decided to debate the ratification of a Free Trade Agreement with Washington. This week, the fisticuffs will serve as reminder that US President George Bush's attempt to extend the NAFTA approach to his friends in Latin America is a particularly sensitive issue.

Nevertheless, US Congress may finally ink a bilateral trade deal with Lima, after environmental and labour safeguards were enacted. The presidents of both countries will be able to sell this as a political victory.

Peruvian President Alan Garcia has mobilised heavy hitters such as prominent Peruvian economist Hernando de Soto to lobby for its approval. The trade deal will secure market access for Peruvian exports, which should help ensure that the country's economy, among the region's top performers since 2002, remains buoyant.

However, Garcia was elected last year by a narrow margin, and enjoys little support in the Andean highlands, which has largely failed to benefit from recent strong economic performance, and where support for anti-system figures, such as last year's defeated presidential contender, Ollanta Humala, is strongest. His government has already faced a series of strikes and violent demonstrations, which could well flare up again.

Bush may also seek to gain domestic capital from the passage of a trade agreement. It would be the first deal to have been negotiated by the Bush administration and placed before a Democratic Congress. As such it would test the new template on trade reached through an agreement between congressional Democrats and the administration in May.

But the agreement with Peru is but one of a series of bilateral deals, most of which will not enjoy such good fortune. Agreements with Colombia and Panama are seen as tougher sells in Congress.

Bush will see an agreement with Colombia as the 'trophy' deal, considering Bogota's key role in the 'war on drugs' . However, human rights concerns, and a continuing scandal over alleged links between senior figures close to the government and right-wing paramilitaries, mean that agreement will remain stalled for the foreseeable future. A deal with Panama faces a similar fate, after an extremely controversial figure was elected speaker of Congress.

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