TRADE-AMERICAS: The Third Route to the FTAA

By Estrella Gutiérrez Reprint | | Print |

Estrella Gutierrez

CARACAS, Mar 15 1996 (IPS) - An American Urguay Round, to liberalise and regulate trade, services and investments between the 34 countries, could be “the third alternative,” offering the continent globalisation without abandonning regionalism.

On Mar. 21, the old Colombian coastal city of Cartagena, the site of many other integration “happenings,” will welcome all the American trade ministers from Canada to Argentina, except for Cuba, who will take another tenuous step in this direction.

This will be the second preparatory ministerial meeting for formal negotiations within the next two years, planning to lead to the creation of the Free Trade Area of the Americas (FTAA) by 2005.

Miguel Rodriguez Mendoza, the Venezuelan meeting coordinator told IPS that as the discussions begin, two paths to liberalisation are already available from the Hemisphere summit in Miami in December 1994.

The first suggestion would mean signing on “case by case” to the North American Free Trade Agreement (NAFTA), operative since January 1995, a process whose complexity was shown by the delays which plagued Chile’s membership attempt.

This nation was invited to join the bloc a year ago, but as yet has not managed joint negotiations with the NAFTA members, Canada, Mexico and the United States.

The second possible route would mean the progressive convergence of the existing liberalisation agreements, dynamising and broadening this process, somewhat akin to the developments attempted to a limited degree with little success by the Latin American Integration Association (ALADI).

The third alternative would mean “negotiating a different agreement, a general agreement which would allow the liberalisation of the trade of goods, services and investments, which deals with access to markets, investment regimes and the everything else.”

Rodriquez, on a brief visit to Caracas, said this would mean a sort of hemisphere Uruguay Round, along the lines of the world meetings from 1986 to 1994, leading to the creation of an American version of the World Trade Organisation (WTO).

Thus, the various subregional schemes would be strengthened, forming part of a continental free trade area. “Things hemispheric do not contradict the subregional and there are different geographic and geopolitical situations to take into account,” he said.

This different agreement could be “relatively simple if it is prepared well, because the benchmark of the WTO exists, many issues are already set and do not have to be returned to,” he added, stressing a view widely held by other minsters and analysts.

While North America has NAFTA, all the Latin American nations are members of integration and liberalisation schemes – except for Chile which has stuck to bilateral agreements.

The English-speaking Caribbean nations also have a community and participate in a Greater Caribbean association with all the Spanish-speaking nations which share the coastline.

However, the Organisation of American States (OAS) official responsible for motivating the FTAA negotiations stressed that all options were open at the moment, as they are still in the preparatory phase.

Rodriguez said there were other elements which also limited the Cartagena meeting from taking “big decisions.”

Firstly, the US government does not have congress approval to negotiate on trade and the issue will not be resolved before the November presidential elections, while the two leading parties cannot afford to give anything away.

This basically means there will be no active US participation in the FTAA process until 1997.

As a result, the Southern Common Market (Mercosur) of Argentina, Brazil, Paraguay and Uruguay – extremely active and operating as a true negotiating bloc – insisted the recommended timing is respected, in order to consolidate its own union process.

However, Rodriguez, formerly Venezuela’s trade minister, said he was sure “the US has a firm commitment to the FTAA and the Bill Clinton administration has given repeated demonstrations of this.”

He spoke of the Punta del Este conference (1961), Tlateolco (1972) and the Initiative for the Americas (1990) as some of the many important “happenings” on the way to dialogue and integrating understanding which did not lead to any concrete outcome.

Now the process is seriously underway, he said, eleven working groups have started their tasks and complete knowledge of what is happening in each area, country and block will soon be available for the whole hemisphere.

This data collection is an unavoidable and very complex task as there are great differences in the 34 nations involved, which have vastly varying levels of development, he said.

Latin America, must also consolidate its subregional agreements and get organised to work together in preparation for the negotiations – something Rodriguez said most were doing.

The only dark spot on the face of the continent is the future of the Andean Pact (Bolivia, Colombia, Ecuador and Venezuela), which sources in regional organisations in Caracas admitted is lacking coordination following an internal crisis.

This group is especially important as it contains the middle- sized economies and has special negotiating power as the region’s biggest importers from the United States, outdoing even the Mercosur nations.

Rodriguez said the position of the smaller nations was “more difficult to see,” though “it is possible they may all participate, with specific measures so that some can gain some benefit.”

“It is a political and not a technical issue, which must be politically resolved in some phase of the negotiations to be satisfactory,” he said, as it is of great concern to the small Caribbean countries.

He stressed that the Latin American and Caribbean nations stood to “gain and not lose” in the process, though the first step of unilateral liberalisation hit them hard. “The cost of further liberalisation will be small,” he said.

In return, as the region will have to “put its house in order” prior to negotiations and in the later FTAA, the nations will benefit from stronger legal guidelines, clear rules with their main market, where violations will be more difficult, which will, in turn, attract massive investments in development.