AMERICAS: FTAA Negotiations to Start March 1998

By Estrella Gutiérrez Reprint | | Print |

Estrella Gutierrez

CARACAS, Mar 11 1997 (IPS) - Negotiations to establish the Free Trade Area of the Americas (FTAA) will be launched in March 1998, lasting between five and seven years, and promoting a contient free of tariff and customs barriers by the year 2020.

These are some of the agreements reached by the 34 countries seeking the ways forward and time schedules to complete the FTAA in 15 years, Venezuela’s preparatory stage negotiator, Miguel Rodriguez Mendoza, told IPS.

Rodriguez, on a short visit to Caracas, said the meeting of viceministers in the Brazilian city of Recife in late February, had raised four proposals which showed “an enormous level of coincidences, with important differences on several sensitive points.”

Another meeting of viceminister, in Rio de Janeiro in April, and the third annual ministerial meeting in another Brazilian city, Belo Horizonte, completed the adjustment of the agreements allowing for great advances despite the many existing divergences.

“It is totaly clear now that this negotiation is something that will go ahead and also which is going to be very complex because the countries are very different one from another, both economically and legally,” said the 48 year-old official, a man with an intellectual air.

The FTAA, when it comes into being, will include 700 million people, 14 percent of the world population, holding 31 percent of the world’s wealth, and trade which totalled 900 billion dollars of exports and 1.05 trillion of imports in 1995.

Some 75 percent of the total exports belong to the US and Canada, along with 78 percent of imports.

One point on which the countries and proposals coincided was that the launching of formal negotiations must be made during the second hemisphere summit in a year’s time in Santiago, Chile. The initiative to create the FTAA first arose in the Americas Summit in Miami, in December 1994.

Rodriguez said the proposals forged by the United States, Canada, the Southern Cone Common Market (Mercosur) and the English- speaking Caribbean Community (Caricom), had four points of particular agreement.

The first is that the FTAA must cover the whole hemisphere, and must coexist and be “completely compatible” with the subregional blocs, must not try to be anything more than a tariff-free zone and must not be reached by the expansion of any already existing scheme.

The options under consideration include a convergence through the merging of the North American Free Trade Area (NAFTA) of Canada, Mexico and the United States, and/or the Mercosur, made up of Argentina, Brazil, Paraguay and Uruguay.

The next step will then be to draw up an agreement between the 34 countries of the Organisation of American States (OAS) – where the one marked absence is that of Cuba – to be achieved through new and independent negotiations different from those already in existence.

“This will be independent of the already existing blocks, however much stronger these become, which will be a great help to the Caribbean and Latin American countries in this negotiation,” explained Rodriguez, formerly Venezuela’s foreign trade minister before his 1995 electin to guide the FTAA.

The second consensus is that members will be able to participate in the negotiations either individually or as a group. The Caricom and Mercosur are already planning to operate as blocs, while the Andean Community and Central America have not declared their intentions. The NAFTA members will negotiate individually.

The United States has accepted this dual formula, but on the condition that the groups have a clearly established leader of negotiations, and that the agreements made will be followed by all of the group members.

The third point of agreement is that the aims of the negotiations should be those agreed on in Miami in the 11 working groups, whose internal dynamism contributed to “making going into reverse on the project more difficult.”

This would make it a modern liberalisation agreement, which would go beyond tariffs and issues like dumping or subsidies, to incorporate aspects like investments, free competition, intellectual property and services.

The fourth great point of consensus was that “the full plan which comes out of this process will be accepted as a whole and all the countries will have the same level of rights and obligations,” said Rodriguez.

At the moment, no one is suggesting explicit recognition of different treatment for the smaller economies, he said, “but it is implicit that the smaller countries will have greater flexibility when the time comes to make commitments.”

There are other points of agreement, like that there will have to be a General Secretariat to carry business ahead, concentrating the negotiations in no more than three cities.

But the disagreements are still many, stressed Rodriguez, in Caracas to explain the FTAA process to integration officials in the region, in a seminar organised by the Latin American Economic System (SELA).

The greatest of these refers to whether or not there should be stages in the negotiations, and, if this is the case, what should be negotiated first.

Canada and Caricom, who currently have the broadest and deepest proposal according to Rodriguez, agree that all the issues should be negotiated and concluded at the same time, by 2003 or 2005.

The United States and the Mercosur have suggested negotiations in two and three stages, respectively. There are also various opposing suggestions of what should be done in these stages in between these two proposals.

The Mercosur said the first years should concentrate on discussing measures to facilitate business, that the years 2000 to 2002 should be dedicated to harmonising aspects related to trade and to tackle the agricultural issues, and from 2002 to 2005 to concentrate on access to the markets and its norms.

Meanwhile, the United States wants everything the other way round: it wants access to the markets and issues like intellectual property discussed first, leaving everything else until later.

Rodriguez, as SELA official, coordinated the regional stance during the preparatory leg of the Uruguay Round of global trade negotiations launched in 1986, and later participated in this as minister, practically until it ended in 1994.

His experience here led him to conclude that negotiation in stages “is what will actually occur,” but taking into account that the agreement must end “as a whole at the same time,” and that tackling any issue either before or afterwards would have no practical effect.

“In the Uruguay Round, the launch was simultaneous but the negotiation was clearly in stages, first came discussions of aspects like the settlement of disputes, and the preparatory stage was deepened, then followed the norms and lastly liberalisation and the new issues,” he said.

This knowledge allowed him to insist the stages were inevitable, although everything will formally begin to be negotiated at the same time. “We don’t need to make decrees on this,” he said.

Open negotiation of all the issues also has the advantage that if everything is on the table all the countries remain active in the process, even if each of the 34 negotiators has some issue of special interest to them.

Furthermore, everyone is more “comfortable” because they will be satisfied on some point, even if the opposite happens on another issue, and therefore the advances made will be less tense.

Canada and the United States want the Secretariat to be a special separate body, centralising all the negotiations, carrying out the research and organising the meetings.

Caricom wants this organ to have a function similar to that of the World Trade Organisation, a broad based entity which emerged from the Uruguay round of talks.

The Mercosur, meanwhile, is suggesting the Secretariat be formed by a strengthened version of the present tripartheid committee, made up of the Interamerican Development Bank, the OAS and the UN Economic Commission for Latin America and the Caribbean (ECLAC), which acted as technical support in the preparatory phase.

Rodriguez listed the working groups dealing with the preparatory work as: access to markets, customs procedures and norms of origin, investments, technical norms and barriers to trade, health measures.

Then there are those working on subsidies, antidumping and compensation rights, the small economies, State sector purchases, intellectual property, services and the competition policy.

He said Latin America and the Caribbean would be facing an unprecedented negotiating challenge over the next few years, although many of them were not yet aware of the true dimensions of this, for they also have to advance on and deepen their intraregional liberalisation in a parallel form with the FTAA effort.