TRADE: Cuba Looking For an “In” With FTAA

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Sep 20 1999 (IPS) - The Cuban government, frozen out of the negotiations to establish a Free Trade Area of the Americas, (FTAA) is looking for an “in” through bilateral and sub-regional treaties with Latin American and Caribbean nations.

Time appears to be on the side of the Cubans, who are confident that the US-backed FTAA will find it difficult to ignore Cuba when it completes an intricate network of trade accords, analysts say.

Cuba was the only country in the region not to be invited to the Summit of the Americas, whose first meeting in Miami resulted in the proposal to create the free trade area – due to come into effect in the year 2005 by uniting 34 Latin American and Caribbean nations.

Havana, however, continues to follow negotiations “which still have a lot of ground to cover,” says Jose Alvarez Portela, director of Trade Policy for Latin America and the Caribbean at the Cuban Ministry of Foreign Trade.

Portela believes the refusal of the U.S. Congress to grant the fast-track authority sought by President Bill Clinton in the trade sector has taken away the dynamism and drive Latin American countries expected in the process.

The delay could favor Cuba, which since August has been a full member of the Latin American Integration Association (ALADI), which includes Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela.

“We think we have advanced a lot in our relations with Latin America and the Caribbean in our efforts to secure a spot in the FTAA,” Alvarez Portela says.

Cuba’s membership of ALADI would provide the opportunity to deepen and widen the “Partial Accords” that Cuba has signed with each of the member states, with the exception of Paraguay, he says.

Negotiations with Paraguay hopefully will be completed during talks Cuba plans with countries of the Southern Common Market (Mercosur) whose members also include Brazil, Argentina and Uruguay, Alvarez Portela adds.

The Partial Accords effectively constitute the “first step in the integration process,” he says, with the next stages being a free trade accord, a customs union and then a common market.

This would help the advance toward “an economic and monetary union, and finally, to a political union, the steps of a normal integration process,” he says.

Cuba is interested in working with ALADI to “deepen and improve its competitiveness,” so that when FTAA arrives, it will have advanced far enough to be an instrument that even supercedes the US-led bloc.

“Free trade accords between developed and developing countries must be carried out and negotiated with a great deal of caution and prudence, due to the asymmetries that exist in the economies on each side,” Alvarez Portela told IPS.

He considers preferable a free trade accord among Latin American countries, “with the end of achieving a negotiating power that allows progress toward a treaty of that type with any industrialised nation or bloc like the European Union.”

The way in which countries of Latin America and the Caribbean are uniting and integrating, means “they will have greater bargaining power to cut an agreement of any category with developed nations,” he says.

Cuba also is working toward a “five plus one” agreement with the Andean Community and a Partial Accord with Caricom (the Caribbean Community) that would unite the island with 15 countries in the region.

Alvarez Portela notes that an agreement already has been signed with Guatemala and says Cuba hopes to achieve something similar with other Central American countries.

In 1980, trade between Cuba and Latin America and the Caribbean surpassed 1.3 billion dollars, of which some 1.2 billion dollars went on Cuban purchases.

Cuba’s main trading partners with ALADI are Mexico, Venezuela and Argentina. According to figures released by Alvarez Portela, the island exports nearly 65 million dollars and imports 880 million dollars to the ALADI nations.

Oil contributes significantly to this deficit with Latin America – accounting for nearly 50 percent of the value of imports.

Any price increase in crude oil has “a perverse effect” on the trade balance, more still when it cannot be offset by basic Cuban export products, whose prices are generally low, says Alvarez Portela.

In the context of its reinsertion in Latin America and the Caribbean, Cuba is attempting to negotiate solutions for its foreign debt with countries in the region.

The greatest regional debt is with Argentina and Mexico which, according to official figures, represent 12.8 and 4.4 percent respectively of the total with Western countries, which has risen to 11.2 billion dollars.

“All that is being negotiated, from the standpoint of seeking a solution,” comments the Cuban official.

Alvarez Portela gives as an example, agreements to buy medical supplies from Cuba – which would dedicate one percent of the amount charged to paying off debts. Some countries already have accepted this, he says.

Cuba, a member of the Latin American Economic System (SELA) and the Association of Caribbean States (ACS), had been an observer at ALADI conferences since 1984 but was made a full member on Aug 26 at a meeting in Montevideo.

But the island nation has been excluded from the Organisation of American States (OAS) since 1962 and has suffered under the so- called Helms-Burton Law of 1996, which tightened the economic embargo that Washington has maintained against Cuba since the 1960s. (FIN/IPS/pg/ag/ip-if/ks/mk/99)