Economy & Trade, Headlines, Latin America & the Caribbean, North America

TRADE-OUTLOOK: ALCA’s Prospects to Become Clearer in 1999

Estrella Gutierrez

CARACAS, Dec 23 1998 (IPS) - Regional states pursued plans this year to set up a Free Trade Area of the Americas (FTAA), but it will become clear only in late 1999 whether the ambitious, and rather lopsided project, will really get off the ground.

The trade ministers of the 34 countries involved in building the world’s largest market meet Oct. 30 in Toronto to review the results of the series of meetings of negotiating groups, set to begin Jan. 6.

The FTAA talks were formally launched Apr. 19 in Chile by all heads of state and government of the Americas – except Cuba – after more than three years of preparations, with the mandate that significant progress should be seen by the year 2000, and with a Dec. 31, 2004 deadline for the process to be concluded.

The idea is to gradually knock down all barriers to trade in goods, services and investment from Alaska to Tierra del Fuego, an area of 40 million square kms and home to more than 760 million people, with a combined gross domestic product of more than eight trillion dollars.

It is the most ambitious undertaking in a continent where countries with economic weight as unequal as the United States and Dominica or Brazil and Haiti coexist, and the results will determine continentwide relations in the next century.

In a report released this month, the Caracas-based Latin American Economic System (SELA) said the backdrop to the negotiations was their varying significance to each region.

Latin America and the Caribbean absorbs only 20 percent of U.S. exports, and half of that 20 percent goes to Mexico. The United States on the other hand buys 80 percent of all Caribbean and Central American exports, 60 percent of those of the Andean Community countries and around 40 percent of the sales of members of the Southern Cone Common Market (Mercosur).

The aim for Washington – which launched the initiative at the first summit of the Americas in Miami in December 1994 – is to “level the playing field” among the hemisphere’s economies and use the FTAA’s achievements to support other negotiations, particularly those at the World Trade Organisation (WTO).

“For Washington, the FTAA is only one piece in a global strategic vision, whose objective is outlined according to its aim of addressing the issues that interest it and not those of its interlocutors from any other scenario,” said Manuela Tortora, a consultant in international economic relations.

Latin America and the Caribbean, meanwhile, see the FTAA as a vehicle for redesigning their relations with the United States on three different levels: the regional, bloc and national level.

But beyond the different priorities, there are shared objectives such as setting up a trade bloc with as great a weight as the European Union, obtaining greater access to the giant U.S. market and its neighbour, Canada, and receiving more investment.

In practice, it is a question of consolidating – on a more reciprocal basis than is currently the case – the policies toward an economic opening that Latin American and Caribbean countries have been following since last decade, and especially throughout the 1990s.

Venezuelan Deputy Minister of Trade Jose Antonio Martinez said that in 1998, the FTAA had marked three milestones. The first was reached in March, when ministers of the 34 nations, gathered in San Jose, Costa Rica, reached decisions as to the principles, objectives, mechanisms, sites and chairs of the negotiations.

A month later, the presidents of the 34 members of the Organisation of American States (OAS) – from which Cuba was expelled in 1962 – formally launched the negotiations, and the first meeting of the nine working groups set up took place throughout September and part of October.

That first round of negotiations – held in the U.S. city of Miami, Florida, the site of negotiations until Feb. 28, 2001 – simply outlined the methods and objectives of each working group. Over the following two years, the negotiations will be based in Panama City, and the process will conclude in Mexico City.

In the first few days of December, the deputy ministers, who comprise the Commercial Negotiating Committee – whose acronym CNC will become well-known over the next few years – met in Surinam to review and shore up what was decided on in Miami.

The meaty neogtiations will get underway on Jan. 6, and as of then the nine negotiating groups and three consultative groups will meet almost non-stop until mid-September.

But it is a committee, not a working group that will kick off the new series of meetings: the committee on electronic trade, which the United States wanted to directly involve in the negotiations, as it is one of Washington’s top FTAA priorities.

The question of treatment of small economies – nearly all of which are grouped in the Caribbean Community (Caricom) – was also left to a consultative group, which will be present in all other groups. Another committee will coordinate participation by civil society.

The nine working groups are market access, agriculture, services, intellectual property rights, investment, subsidies/anti- dumping/compensatory rights, competition, government procurement, and dispute settlement.

Martinez said that at the meeting of deputy ministers in Suriname, which will be followed by at least two others next year – in April and October, in the run-up to the annual ministerial gathering to be held in Toronto – it began to become clear that substantial advances could be seen within the next year.

It could be deduced from the Suriname meeting that the significant advances which the presidents proposed for the year 2000 could be seen in the area of “business facilitation” and the harmonisation of aspects that will be essential to the economic opening, such as the customs procedures of the 34 countries.

But Martinez said he did not believe that by late 1999 the negotiating groups would have advanced beyond setting the key principles for the opening and outlining the various chapters of the negotiations, which in some cases, like investment, could already include the exceptions.

The question is how hard Washington will push to try to advance more, especially in issues of special interest to the United States, which do not involve trade in goods, but rather services, investment, government procurement, and other new issues like intellectual property and competition.

Tortora said it was wrong to think that the U.S. Congress’ refusal to grant the government “fast-track” authority for negotiating multilateral trade accords would keep Washington from pressing the accelerator on those issues.

Fast-track, she pointed out, is only necessary for approving final agreements, and only with respect to aspects that run counter to U.S. trade law 301, which does not involve any of these so-called new issues. “It limits the concessions made by Washington, but not those it receives,” she summed up.

Martinez said the FTAA partners have so far agreed that all decisions must be reached by consensus, all issues are to be discussed simultaneously, nothing is agreed until everything is agreed, and rights and obligations are to be shared, although managing assymetries will be discussed throughout the process.

It was also established that the countries would be able to negotiate individually or by bloc.

There are three negotiating groups in full swing: Mercosur (Argentina, Brazil, Paraguay and Uruguay) – often joined by associate member Chile, which nevertheless attempts to maintain its individuality, the Andean Community (Bolivia, Colombia, Ecuador, Peru and Venezuela) and the 15-member Caricom.

The three groups coordinate their action and have a single spokesperson in all negotiations. Central America has not yet hammered out the details on a plan to do the same. Panama and the Dominican Republic are on their own.

Also acting separately are the North American Free Trade Agreement (NAFTA) trio – Canada, the United States and Mexico.

In practice, the idea is to extend NAFTA to the entire continent through an FTAA, even if that happens by means of a new, and different, accord.

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