The Mexican cities of Cancún and Puebla will host the negotiations of the World Trade Organization and the Free Trade Area of the Americas this year, and progress continues apace. But where is the Latin American Agenda?

- Fabricio Van Den Broeck

In just 12 months, the WTO carried out the first phase of the negotiations ordered by the Ministerial Conference in Doha, Qatar, in November 2001. Its working groups are drafting a large part of the agenda for the next ministerial meet, to take place in the Mexican resort city of Cancún in March.

Meanwhile, the Trade Negotiations Committee of the FTAA revealed in November 2002, in Quito, the second draft of the treaty, and moved to transfer the negotiations to Puebla, Mexico, headquarters for the final stage of creating this hemisphere-wide accord.

In both instances, negotiators hope to reach definitive agreements by Jan 1, 2005, a goal now considered within reach due to the U.S. congressional of so-called “fast-track” authority for the president to negotiate trade agreements. This authority allowed the George W. Bush administration to sign of a bilateral free trade accord with Chile in 2002, the first the superpower has finalized since 1994.

But the dynamic of the trade treaty process has not necessarily implied progress in regards to the positions of developing countries, particularly those of Latin America. The status of three of their demands upholds this affirmation.

The long-standing item on the Latin American agenda — the reduction of farm subsidies — has not yet found a favorable response in the WTO or FTAA. Faced with this fact, representatives from the region have resolved to tie the issue to further advancement of WTO negotiations. In spite of this, and particularly because the European Union does not have a clear mandate to unblock the farm trade issue in the WTO, it is likely that trade talks in any arena will remain paralyzed throughout 2003, or will be limited to defining alternatives for the non-compliance of industrialized countries to the anti-subsidy agreements that date back to the 1994 Uruguay Round.

Another of the Latin American concerns — protectionism for the textile and clothing sectors — could unfold in a slightly different way. In the context of the FTAA, modest advances are expected, conditioned on the adoption of a rules of origin mechanism proposed by the United States, which seeks to force Latin American exporters to manufacture garments using U.S.-produced inputs.

Within the WTO, the issue is not likely to see significant development in compliance with the quota reduction programs approved in 1994, unless the recent admission of China — the world's largest and most competitive textile exporter — into the WTO fold leads to a significant shift in power relations.

The third and oldest Latin American demand is recognition of differentiated development levels, which the region's countries hope would alleviate their commitments in terms of economic liberalization. However, the outlook is not good for such acknowledgement.

Tariff reductions, as dozens of studies have shown, impose on the developing countries a disproportionate productive and fiscal effort, as they must standardize their tariff average to that of the industrialized world (five percent), down from an average rate three times as high (15 percent). And this is being asked without any guarantee that their goods will have access to the larger industrialized markets, protected by quota systems, frequent recourse to anti-dumping or strict rules of origin mechanisms, excessive health controls and an emerging obstacle that the European Union hopes will be one of the central issues in WTO talks: environmental requirements related to international trade.

The principal benefit granted developing countries within the FTAA and the WTO — extended timelines for the gradual reduction of tariffs — seems in this context to lack significance, given the increase, or at least the continuation, of protectionism by industrialized countries for products which are often key for the poor countries' exports.

A second benefit, technical assistance, indirectly reveals the tight margin for maneuvering by the poorest countries. This support seeks to resolve the very real limitations of these nations in confronting the complexity and variety of the negotiation issues. The Inter-American Development Bank (IDB) has created a program of technical assistance seminars for the delegations from Central America, the Caribbean, the Andean Community and the Southern Common Market (Mercosur) to attend to the requirements of the WTO and FTAA negotiations.

Although its necessity is beyond question, it is not understood how technical training by itself will allow Latin America to confront the refusal of the industrialized economies to open their markets, and even less, how it will facilitate the efforts of the governments that will have to explain to their societies — on the verge of economic collapse — their reasons for participating in such an inequitable process.

Even more, given that the assistance programs take place in the final phases of both the WTO and FTAA process and that, as such, their impact will be modest, it is fitting to ask whether these actions are not motivated only by the desire to shore up the battered scaffolding of globalization, set upon a foundation of mud.