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In the News
Last Updated: 11/17/2005
The Summit of the Americas: An Overview
Benjamin Hess

While the most enduring images of the fourth annual Summit of the Americas will be those of anti-U.S. rioters looting businesses and clashing with police on the streets of Mar del Plata, the annual meeting of 34 heads of state throughout the Americas and the Caribbean also highlighted some of the current challenges facing the region.

The Summit, which was held November 4 and 5 in the seaside resort city of Mar del Plata, Argentina, convened under the banner “Creating Jobs to Fight Poverty and Strengthen Democratic Governance.” This is a crucial issue in a region where high unemployment rates (the United Nations estimates the regional unemployment rate at just under 10 percent) have correlated with widespread poverty and a growing informal sector. According to the World Bank, about a quarter of the people in Latin America and the Caribbean live below the poverty line. The International Labor Organization reports that, between 1990 and 2003, seven out of every ten new jobs in Latin America and the Caribbean were created in the informal sector.

The expansion of the informal sector has several important consequences. First, informal workers have no access to important benefits such as health care or a retirement pension. Second, many of the hemisphere’s governments do not have the means to effectively regulate the workplaces to ensure that they comply with minimum health or safety standards. Finally, the governments have no mechanisms for assessing and collecting taxes from informal businesses, which means that they forgo hundreds of millions of dollars every year that could be invested in education, health care, and job-creation programs. Thus, “once an informal, always an informal” – or in other words, the governments’ failure to create formal employment for its citizens pushes them into the informal sector, where they receive no benefits and pay no taxes, leaving them in a precarious situation if they fall ill or can no longer work. Meanwhile, the government loses out on cash that could be used to stimulate economic growth and expand the formal sector.

The issue of employment, however, was somewhat overshadowed at the Summit by discussions over the proposed Free Trade Area of the Americas (FTAA), even though the FTAA was not even on the scheduled program. Strong proponents of the FTAA, including the United States, Canada, Mexico, and Panama, argued that free trade is one of the best methods for generating economic growth and creating employment in Latin America. Despite receiving support from 29 of the 34 nations, no progress was made regarding an agreement due to the vociferous opposition of Venezuela and the MERCOSUR block, which consists of Argentina, Brazil, Uruguay, and Paraguay. Venezuela’s president Hugo Chávez proclaimed victory and promised that the FTAA would never be implemented, while members of the U.S. negotiation team claimed they were pleased with the discussions and felt that an agreement would be reached soon.

Much of the media buzz surrounding the Summit focused on the stormy diplomatic relations between the United States and Venezuela. Although nothing occurred, the distraction drew attention away from many of the real issues facing Latin America and the Caribbean. In addition to poverty and unemployment, the region has the most unequal distribution of income in the world after sub-Saharan Africa. Furthermore, political instability, the poor quality of public education, and the poor’s lack of access to basic services have combined to create a precarious situation for many countries. Although the countries did take a step in the right direction by producing a 70-point Plan of Action to promote decent employment, eliminate child labor, stimulate economic growth, and encourage democratic governance, most policymakers agree that major reforms of political, economic, and social institutions are required in order to reverse the region’s long history of poverty and inequality.

Benjamin Hess is a Master's candidate at the University for Peace, studying International Peace Studies.


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