The gateway to SUCCESS:Doing business in emerging markets

Background

Free trade has been the aspiration of many civilizations. Mankind has come into the realization that the spiritual desires and aspirations of human beings, besides their material needs, can be achieved only as far as such human beings can exchange their goods and services with the rest of the human beings. An isolated artist can move into progress if he/she can get recognition from their peers about his/her artistic products value. And the same is valid for all other who have a profession or activity, for those that are good with their hands and can "manu-facture", etc.

Free trade means being able to buy and sell or exchange with each other without restrictions or interference. Over the centuries, the organization of civilized societies in larger groups, families that gather into tribes, tribes that gather into clans, clans that gather into nations, etc., all of them have realized that they should restrict trade with foreigners (or "gentiles", as the history proves) in order to protect and enhance the abilities of their members. Once they mature, and they achieve a self-sustainable skill sets, then they realize that without such foreigners (or "gentiles") they cannot prosper.

For that reason, it is not strange to realize that in many instances of history (when Marco Polo started his travel to the East in the XIII Century, when Elizabeth I of England started switching the balance of power removing Spain from the top and starting the British Empire, and in the XIX Century), the tendencies to moving into free trade were profound and outstanding. After the two World Wars of the XXth Century, free trade became the overall aspiration of the international community, hence the creation of the General Agreement of Tariff and Trade (GATT). The end of the XXth Century reinforced this overall consensus, that free trade was a worldwide aspiration. Or… is it?

Over our years of practice as attorneys, business managers and consultants, those who today are FTAA CONSULTING, INC. have come to realize that our mission is to enhance free trade. That we shall allocate of our resources in terms of intelligence, knowledge, skills, creativity, social connections, ability to shape others behavior, etc., to make sure that free trade is realized and that all people from all economic and social levels can achieve a bettering of their economic and social conditions through such free trade.

When in 1992, Europe agreed on the Maastricht Treaty to create a single economic Europe, the then President Bush (senior) announced the intention of the United States to move forward to create a Free Trade Area of the Americas, from Alaska to the "Tierra del Fuego" (Southern Chile and Argentina). This was followed by the 1994 Summit of the Americas, where the then President Bill Clinton reached an agreement with the Chiefs of State of 33 other countries of the Western Hemisphere to create such "FTAA". The starting point was NAFTA, the North American Free Trade Agreement, binding Canada, the United States and Mexico, which became effective in January 1st, 1994. Everything made sense at that time: Europe tending to become the largest economic power on earth, and America moving towards a defensive and sustainable economic block trying to create a free trade area and expanding economic welfare to more than 500 million souls.

Within such environment, we incorporated FTAA CONSULTING, INC.. Clearly, if the legal and institutional framework would provide for free trade, then a lot of consultancy would be needed to make sure that all such new laws and regulations are applied consistently with such aspiration.

The bad news is that such legal and institutional framework suffered several setbacks that have been postponing its adoption.

The good news is that despite such setbacks, the need for our consultancy services has been growing. And obviously, the need for them and its scope is larger, because our clients need to deal with diverse and often unpredictable laws, regulations and business practices that affect their economic aspirations.

Two major setbacks can be mentioned: In the first place, the political and diplomatic strategies led by the United States were blind to recognize the leadership that Brazil exercises in the political and diplomatic arena in the past. Failing to come into terms with Brazil led to the dissolution of the required consensus to achieve a free trade area of the Americas. Besides, some changes in political leadership, particularly in Venezuela, let to an anti-free trade area of the Americas movement. Then the political and diplomatic approach of the United States was redirected to achieve bilateral free trade agreements to such countries that would follow the United States guidelines. Again, here the political transition in the United States to get into the hands of a generation of ignorant politicians without compass that is leading the United States to its fall, caused the Free Trade Agreements that were achieved to be blocked in the United States Congress for reasons that the United States legislators fail to fully understand and where they are guided by the troublemakers that make more noise, and not by hard evidence. For such reason, the only bilateral Free Trade Agreement that was approved was the United States- Peru Free Trade Agreement. Panama and Colombia were left in the limbo, and the political and diplomatic efforts of the United States in the past were defeated.

The second setback was the advent of China. Since 1978, China emerged from its central planned economy to become a market-oriented economy (still under supervision of the Communist Party), whereby the Chinese hard work, extraordinary intelligence and ability to learn and copy, made that China should emerge as the new superpower. Now it is only a matter of time before the United States concede as Spain should concede after the defeat of the "Invincible Armada", that its empire is over, and that the reins of the world would pass into China.

In the face of these new realities, free trade keeps being a great challenge for every kind of business organization, either individual, small business partnership or large corporation.

While developing countries (such as those of Latin America) are no longer required to shape their rules into free trade oriented laws and regulations, and while all these global and continental forces are at play (China, to a lesser extent Russia, the socialist movements led by Cuba and Venezuela and blindly followed by countries such as Ecuador or Bolivia or Nicaragua), then it is mandatory to understand how and where to deploy resources in the Western Hemisphere.

And here, there is an additional challenge: Since September 15, 2008, large investors realized that the United States and most of the Western European investment management was essentially flawed. As in the Hans Christian Andersen fairy tale: "No one in Wall Street dared to tell the emperor that he was naked, because nobody wanted to look stupid and raise its hand to demand explanations about such complex derivatives and securitization jargon". Therefore, sound risk management became the most important practice worldwide.

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