TORONTO, Canada -- Free trade must be linked to protecting jobs and the environment, says Deputy Secretary of Commerce Robert Mallett.

Addressing the Americas Business Forum Nov. 3, Mallett acknowledged that in the United States and around the world "there is a great suspicion of free trade" for fear it may trigger job loss and destroy the environment.

Mallett said he knew of such suspicions from personal experience, because his own father was forced to retire early when his industrial plant closed.

To this day, Mallett said, his father believes that the plant closed from foreign competition and too many burdensome government regulations.

However, Mallett expressed his own firm belief that "open trade is not contrary to the interests of working people, that competition invariably leads to more growth and to more and better jobs."

Mallett said that environmental problems don't stop at a nation's borders. "It affects every person, every square foot of this planet. So it is the same with jobs. When one country allows an 11-year-old child to be pulled from school to work in a factory for a few cents a day, it affects more than that one child, or that one country; it affects workers in Flint, Michigan, in Ontario, Canada, and everywhere around the world where workers are fighting for equal wages."

"So to those who say that it's none of our business" what happens in other countries, "I have a very simple answer -- that's sheer poppycock," said Mallett.

"Globalization is not a prediction, it's a fact, a reality," added Mallett. "The more we fight to lower barriers among countries, the better off we'll be." To renew protectionism around the world would lead to a "spiral of retaliation at the expense of working people everywhere," he said.

Another speaker at the forum, Cesar Gaviria, secretary general of the Organization of American States, said globalization offers the world opportunities, "but to take advantage of them we need sound policies on many fronts, and not only with respect to trade."

He observed that people are "now demanding results in the battle against poverty; they want a fairer distribution of income, higher real wages for workers, lower unemployment rates, and an educational system that can cope with the requirements of globalization and the communications revolution."

Gaviria said the greatest benefits of the proposed Free Trade Area of the Americas "no doubt" will be manifest once the agreement comes into effect in 2005.

Nevertheless, Gaviria warned, "if we put all our emphasis on the critical date of 2005, we run the risk of discounting the ability of the negotiating process itself to create opportunities and to provide a series of collateral benefits."

These benefits, he said, will include providing "strategic direction to the process of economic reform in our countries, sending positive signals to markets and investors about where our countries will be five or ten years from now in terms of their macroeconomic situation and trade rules, and providing additional impetus to the regional integration efforts in Latin America and the Caribbean, an area where impressive progress has been made over the last few years."

TORONTO, Canada -- In his 30 years of working for Latin America and the Caribbean, Enrique Iglesias, president of the Inter-American Development Bank (IDB), says he has seen few collective regional initiatives as "impressive" as the one that will create a free-trade zone from Canada to Argentina.

In a statement to the Western Hemisphere Trade Ministerial held in Toronto Nov. 4, Iglesias said the process creating the Free Trade Area of the Americas (FTAA) is "itself already generating benefits for the hemisphere and the world community."

The FTAA's "formula of success," he said, includes "having a political commitment to a clear objective, providing precise terms of reference for future work, and providing for high-level benchmark political and technical reviews and continuous adjustment and further refinements as the process moves forward."

In sum, Iglesias indicated, creating the FTAA offers a good model for carrying out other initiatives designed to improve the lives of the hemisphere's 850 million people.

Iglesias said he was especially impressed by the commitment to openness in creating the FTAA. This "transparency," he said, has been generating a "wealth of databases and inventories on national and regional trade-related issues," information that Iglesias said was previously very difficult to obtain.

"The wise decision" to make much of the information about the trade pact public on an official FTAA home page "will contribute to more transparency in business transactions," Iglesias said. "Since information moves markets, the transparency exercises are undoubtedly already contributing indirectly to trade and investment promotion in the hemisphere and with the rest of the world."

Meanwhile, a new IDB report distributed at the trade ministerial said Latin American exports to the world are estimated to decline in 1999 by slightly more than one percent. The report said the fall in total exports is mostly explained by the "weak performance of intra-regional trade," which was severely affected by the "spillovers" of the global financial crisis that afflicted much of the world between mid-1997 and early 1999.

Among the region's sub-regional trade groups, large declines in exports are expected for the South American common market called Mercosur (-14 percent), the Central American Common Market (-9 percent), and the Andean Community (-4 percent).

The 97-page report, entitled "Integration and Trade in the Americas," said the decline in exports cannot be attributed to protectionism in export markets. While some Asian countries have temporarily raised tariffs on some of their imports, the combined effect of such measures on Latin American exports appears to be relatively limited, the report said. Also, "there appears to be no evidence" that Asian exports have displaced those of Latin America in the United States, European Union, or Japanese markets, according to the report.

Preliminary estimates show that intra-Latin American exports will decline by 26 percent in 1999, with large declines projected for Mercosur (-31 percent), and the Andean Community (-21 percent). On the positive side, however, the report said Mexico's exports to the United States and Canada, its partners in the North American Free Trade Agreement (NAFTA), will be higher in 1999 than in 1998.

Economic growth in the three countries continued unabated through the recent financial crisis, the report said, attributing this expansion to the "successful functioning" of NAFTA.

Between 1994 (when NAFTA went into effect) and 1998, Mexico's exports to the United States grew yearly by 19 percent on average while its exports to Canada did so by 35 percent, the report said.

Speaking October 27 before the Brazil-U.S. Business Council at the U.S. Chamber of Commerce, Eizenstat said globalization must be accepted by the general population for a country to make important structural reforms, such as those involved in deregulation and privatization of financial institutions.

Reiterating President Clinton's words on the matter, Eizenstat stressed that globalization must have a "human face." The administration, he said, believes "very strongly that it is critically important" for countries to invest in their human capital, in education, and in job training so that all parts of society benefit.

Eizenstat said the United States is working with international financial institutions such as the World Bank and the International Monetary Fund (IMF) to ensure that when a country experiences an intermittent economic crisis and adopts necessary austerity measures, the poor do not bear the brunt of the financial burden.

With respect to Brazil, Eizenstat said the South American nation "needs to assure that the benefits of growth are shared by all its people."

Eizenstat noted that like other countries in the region, Brazil has a high degree of income inequality. However, he added that the government's economic reform program, called the Plan Real, has slashed inflation from over 2000 percent to two percent in just four years, and "made an important contribution to improving the well-being of the poor. Brazil has an interest in continuing the fight against income inequality and poverty, and has taken important measures recently to improve its social safety net."

Testifying Oct. 22 before the Senate Armed Services Committee, Wilhelm acknowledged that the scheduled Dec. 31, 1999, handover of the Canal to Panamanian authority "raises legitimate questions about our future security relationship with Panama and our ability to respond effectively to known and unanticipated threats to the Panama Canal," but assured legislators that "we are not aware of any current internal or external threats to the Panama Canal, and we have no evidence that it has been targeted by terrorists or foreign governments."

He noted, however, that Southcom believes "that the Canal must always be regarded as a potential target for both conventional and unconventional forces, given its importance to global commerce and for military transits." He assessed the likelihood of such threats, concluding that "internal and non-lethal" problems posed the greatest danger: "the potential for corruption and watershed mismanagement is real," Wilhelm conceded, and "could negatively [affect] Canal operations."

He also examined allegations that Chinese leverage in the region could impede access to the Canal, and reports that Colombian drug traffickers would seek to exploit the Canal's vulnerability once U.S. military forces withdraw. While noting that "potential future external threats" might entail "a hostile foreign power and/or transnational criminal organizations," he predicted that the Chinese were not inclined to interfere with Canal waterways.

Wilhelm pointed out that "China's goals in Panama are to ensure unrestricted access to the markets and natural resources of Latin America, and to promote China as a political and economic alternative to the U.S." Although he agreed that concerns about China's motives were not entirely unwarranted, he emphasized that fears specific to the Panama Canal were probably misdirected. "In my view, the impact of Chinese commercial interests in Panama is less a local threat to the Canal, and more a regional threat posed by expanding Chinese influence throughout Latin America," he warned.

As for the heightened risk of drug-related or other illicit activity, Wilhelm contended that Panama was unlikely to become a magnet for smugglers. "While illegal commerce in drugs, arms and aliens threatens the stability of all nations astride the numerous trafficking routes, the most serious threats are to Mexico and Colombia," he pointed out.

"Transnational crime in Panama will likely increase after the U.S. withdraws, but presently, there is no identified threat to Canal operations from transnational criminals."