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

TRADE: Deadlocked FTAA Agreement Still Hard to Solve

Emad Mekay

WASHINGTON, Nov 10 2003 (IPS) - A short-notice meeting called by the United States last weekend for trade ministers from the Americas might have saved U.S. officials a major upset a la Cancun when ministers meet again next week, but analysts say the gathering did nothing to change positions on the main issues blocking a regional trade deal.

While officials described the meeting between U.S. Trade Representative Robert Zoellick and trade ministers from 16 Latin American nations over the Free Trade Area of the Americas (FTAA) as ”flexible” and ”useful”, they gave little indication of concrete improvements in an impasse that has already taken down global trade talks in Cancun in September.

“I think we now have a good basis for a successful meeting in Miami,” Brazilian Foreign Minister Celso Amorim told reporters in a conference call Saturday.

“Of course, the substantive issues are not resolved, but the general approach is one that, maybe with observations that should be included, will enable us to move forward.”

The trade agenda of the administration of U.S. President George W. Bush suffered a major setback during the World Trade Organisation (WTO) negotiations in the Mexican resort in September as developing countries banded together to oppose trade rules they said harm poor nations, especially rich countries’ agricultural subsides for their farmers.

Concerned that developing nations in Latin America could follow the same tactics during the FTAA talks in Miami the week of Nov.17, Washington called the ”mini-ministerial” here last weekend.

The FTAA will encompass 34 countries from the western hemisphere – all except Cuba – and is modelled after the controversial North American Free Trade Agreement (NAFTA) between the United States, Mexico and Canada.

Washington has been pushing for a signed deal by January 2005 despite strong opposition from civil society groups, some economists and some government leaders.

”It is going to be a challenge,” said a senior U.S. official in another conference call after the weekend meetings. ”It is always a challenge when you have 35 countries sitting around and having to agree on every single word in a document.”

“But I feel certainly better about it today than I did two days ago because we’ve got some useful insight.”

Washington wants the FTAA to include rules covering, among other things, government procurement, foreign investment and lower trade tariffs, especially on manufactured goods.

Latin American governments, led by Brazil and Argentina, say these issues must be left for talks in the WTO’s multilateral setting, and must be tied to reducing U.S. protectionism, especially measures to protect its farmers.

”The U.S. wants all the issues (included) that ironically do really not belong to a trade agreement,” said Mark Weisbrot, an economist with the Centre for Economic and Policy Research in Washington.

”They want intellectual property so they can try and force countries to adopt U.S.-styled patent laws; they want the investment rules to give their corporations more power to sue governments or anything that infringes on their profits and they want the procurement rules, but they don’t want to talk about agriculture,” he added in an interview.

Including more than 800 million people throughout the hemisphere, the FTAA will create the largest free-trade area in the world – a potential goldmine for major U.S. and Canadian corporations selling goods and services.

But Brazil – the largest economy in Latin America – and other countries have locked horns with the United States over Washington’s refusal to discuss its legislation on anti-dumping rules against imported products, subsidies that protect farmers and non-tariff barriers – such as health and sanitary standards – that it imposes on imports.

Brazil, whose country’s exports were particularly stung by the U.S. farm bill and recent steel tariffs, has previously described the FTAA as an “annexation” of Latin American economies to that of the United States.

Venezuelan President Hugo Chavez, whose country was dropped from the mini-ministerial, has also questioned the benefits of the U.S.-backed FTAA to Latin America’s cashed-strapped countries.

Some economists and activists say the deal would further erode environmental protection, workers’ livelihoods and human rights. Many of them see the deadlock between Washington and some developing countries dragging on in Miami, even after last weekend’s meeting.

”Everything that I have seen from Brazil has said that the United States is refusing to offer anything that’s meaningful for Brazil or Argentina, especially around market access and subsidy reduction,” said Vicki Gass of the Washington Office on Latin America (WOLA).

Pointing to recent U.S. polls that showed Americans also doubting so-called ”free trade” agreements because of the loss of domestic jobs after NAFTA, Weisbrot predicted the Miami talks will not succeed because the FTAA does not benefit the United States or Latin American countries.

Activists say more than 765,000 jobs have disappeared from the United States as a result of NAFTA.

”I cannot see it (Miami) going very far at all because this is a bad deal really for everybody and for the majority of people in all the countries, including our own,” Weisbrot said. ”It’s a net loss for South America. And I don’t see any reason why they would agree to it.”

But Gass, while agreeing the deal could harm Latin American economies, doubted whether the countries could long resist Washington.

Latin American nations, she said, could be subject to arm-twisting because many of them have already signed on to plans to liberalise their economies, making them indebted to the World Bank and the International Monetary Fund (IMF), which opens them up to Washington’s influence.

Those nations precarious positions are compounded by their ruling elites who, often in the past, sided with Washington and U.S. companies as long as they were ”skimming off” at the expense of their own people.

Gass also argues that the White House is so influenced by the interests of U.S. corporations that it could overlook the obvious damages from the deal to labour rights at home and the environmental and social damage in other countries.

”They are going out for the interest of their multinational corporations, and Bush wants to win the (2004) elections,” she said. ”They’ll do all the protectionism that they need and continue their policy of, ‘do as I say not as I do’.”