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Union of the Americas

June 13, 2013

The European Union and its 27 members and 23 languages celebrate the 20th anniversary of the Treaty of Maastrict on November 1st. Its GDP at $15.821 trillion ranks #1 in the world. The euro has become the second largest reserve currency and the second most traded currency behind the U.S. dollar. Regardless of the EU’s birth pangs and ups and downs over the years, the system works for its member nations. The only question is when the countries in North & South America will form the Union of the Americas?

It is no longer prudent economically for the United States and other countries on ‘this side of the pond’ to go it alone. While NAFTA was a step in the right direction, it falls short in many critically important areas that would be addressed by the Union of the Americas. For instance, passing products between the United States and Mexico is still a veritable nightmare. Not only do countries have major trade competition from the EU, Japan, South Korea and Taiwan, but China is quickly emerging as an economic force to be reckoned with.

Creating the Union of the Americas is not a question of ‘if’ it will happen but ‘when’. Manufacturing has already shifted to countries where workers are being paid a lot less for the same functions. For instance, with minimum wage in the United States at approximately $16,000 per year – how can a worker compete with someone in another country who can be paid $5,000 per year for the same job? The bottom line is the price that is charged to a consumer for a product – and the consumer always wants to pay as little as possible. No country understands this better than China. As a result, Chinese businesses ‘flood’ every market that they enter with low cost and generally low quality goods. If a product breaks – it was so inexpensive to purchase the first time around that a replacement is still cheaper than what most competitors charge for one product. China’s trade practices have become a worrisome issue for many foreign governments.

But there are other problems as well. The United States has grappled for years over the question of illegal aliens. Additionally, American universities have grown to be so expensive that graduates are being saddled with debts approaching house payments – that need to be repaid in half or a third of the time. Minimally, the first thousand dollars of a college graduate’s monthly salary will go to pay for his student loans. A Mexican private university costs approximately $3,000 per year in the Baja. The public universities are approximately $1,800 per year. Illinois State University was one of the cheapest schools in Illinois at $24,000 per year. While these are just a few of the issues – the list of problems are legion and the solutions few. The Union of the Americas needs to become a reality as soon as possible.

This is my ‘wish list’ for the Union of the Americas:

1) A common passport. It pains me that school age children in Peru or Mexico may never have the chance to visit Disney World, Universal Studios or SeaWorld. In fact, families should be able to travel to other countries to visit important historic or popular sites without hindrance.

Persons living in any of the countries in the Americas should be automatically approved for a Union of the Americas Passport — as long as they can show proof of citizenship in one of the member countries. This passport should also allow them to breeze through border crossings between member countries similar to the Sentri Program.

2) A common sales tax. The way that many countries tax their citizens and businesses has become a problem. This is especially true in the United States. Some persons and businesses pay more/less than their fair share in taxes. This is also one of the issues behind the problem with illegal aliens – who is going to pay for the costs of their services?

A common sales tax for all member nations is not only a fair way to raise taxes – but it is also a fair way to distribute the tax burden.

3) A common currency.  The U.S. dollar is already the number one traded currency in the world. In addition, many of the countries in the Americas allow payment in dollars for goods and services – along with their own currencies. It is easy for the member nations of the Union of the Americas to adopt the dollar and make it even stronger against the Euro and other major currencies.

4) A true free trade zone.  While the provisions of NAFTA are still being implemented for the United States, Canada & Mexico – a true free trade zone needs to be created for all of the member countries in the Union of the Americas. As a result, there should be no ‘economic borders’ between member counties (i.e. system of corrupt and inefficient custom brokers that currently hamper effective trade between countries). As a consequence, many of the regulations that are not in place to promote product quality but to impede trade instead need to be removed.

5) A common education system.  Education is the future for every country in the world. Providing a low cost and effective educational experience has become a huge problem – especially in the United States. The U.S. has the most expensive education system in the world. While there have been calls from various sectors and prominent individuals to overhaul the United States education system, nothing will be done about it until the Union of the Americas is created. The U.S. has gone from 1st to 17th over the past several decades. Additionally a college education is now out of reach for many low income and struggling middle class families in the United States.

6) A common defense. The American defense contractors are some of the largest sellers of arms in the world. The problem for most countries is that it is becoming very expensive to maintain a large and technologically advanced standing army, air force and navy. In fact, the lion’s share of the national debt of most countries is tied to their arms expenditures.

The Monroe Doctrine (1823) already set precedent for a common defensive program. At that time, the United States warned European colonial powers to stay out of North and South America – unless they wanted war with the United States. A common defense for the Union of the Americas would take a lot of the financial pressure away from each member country. In addition, the cost of arms could be discounted – not only allowing a cost savings but uniformity as well.

This list is just a start of the areas that need to be addressed and overhauled as the Union of the Americas is created. In my opinion, with a rising China expected to be the only super power within the next ten years, this new union needs to be created yesterday – or at least as soon as possible!

Anthony Cota

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