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

TRADE-AMERICAS: Business Forum Divided on ‘Flexible’ FTAA

Rogelio Santo Domingo

MIAMI, Nov 19 2003 (IPS) - Despite their desire to return home with agreements in progress, some of the participants in the 8th Americas Business Forum expressed doubts Wednesday about the proposal for a “flexible” Free Trade Area of the Americas (FTAA) treaty..

The business sector’s position is to not stand in the way of the FTAA, which is why many entrepreneurs are trying hard to understand the new path laid out by the United States and Brazil, the co-chairs of the hemisphere-wide trade negotiations.

The Business Forum concluded Wednesday with participants agreeing to support the FTAA until the end and to make every effort to overcome the obstacles, Carl Cira, head of the Forum’s workshop committee, told IPS.

However, a dozen of the largest business groups in the United States, including high technology consortiums and major manufacturers, rejected outright the “new vision of the FTAA” proposed by Washington and Brasilia.

They issued a statement saying, “We urge negotiators at this critical time to focus on achieving a comprehensive agreement that will yield the highest level of liberalisation and rules across the board.”

The new vision for the western hemisphere that these big companies criticise is the proposal for a flexible trade agreement, what has been dubbed the “FTAA lite”, with the possibility to opt out of specific provisions.

The text was drafted by the U.S. and Brazilian governments for the 8th FTAA ministerial conference, involving the 34 governments of North and South America and the Caribbean (all except Cuba), to take place here Thursday and Friday.

The co-chairs are poised to impose a less ambitious model for a treaty than the one originally proposed by the United States nine years ago in this same city, at the Summit of the Americas.

Following the confrontations in previous weeks over farm subsidies, government procurement, investment rules and intellectual property rights, the U.S. and Brazilian delegates agreed on a draft of a minimal text that leaves these touchy issues to the World Trade Organisation.

The United States rejected the Brazilian demand to cut its massive farm subsidies, and in response announced opposition to talks on the other contentious matters.

The U.S.-Brazilian blueprint sets out a trade liberalisation process in stages, and allows each country to sign bilateral agreements, though within the general framework of the FTAA.

As stated by Adhemar Bahadian, Brazilian representative and champion of the “FTAA lite” proposal, the countries of the hemisphere “don’t have to reach an agreement” this week on the thornier issues.

Robert Zoellick, U.S. trade representative, took a similar stance, defending the strategy of bilateral agreements as giving impetus to the FTAA.

He said it must be kept in mind that the countries involved in the FTAA have different timing, but that the broader goal is to establish free trade in Latin America.

According to Cira, the relative harmony between Brazil and the United States is fostering hope that a way can be found to advance in the negotiations as the trade ministers arrive in this south-eastern U.S. city for the Thursday-Friday meetings.

Carlo Lovatelli, head of the Brazilian Agribusiness Association and part of the large private sector delegation from his country, said that the business leaders are clear that the FTAA now being proposed “is the only one with the possibility of real policies” that can be implemented.

It is substantially different from the treaty originally envisioned at the 1994 Summit of the Americas, “but an FTAA ‘lite’ is better than no FTAA,” says Lovatelli.

Representatives of the U.S. Chamber of Commerce support Washington’s new approach – being tested with several Andean countries – of establishing formal bilateral commitments, some of which go beyond the aspirations of the FTAA.

The Chamber sees as positive the potential launch of bilateral talks between the United States and Andean nations like Peru and Colombia, and possibly Ecuador and Bolivia. Agreements with these countries would be added to the one signed with Chile in September and the treaty being finalised with five Central American countries.

“But this initiative must not detract from the effort to complete the Free Trade Area of the Americas, which remains our top hemispheric priority,” cautioned the Chamber’s vice-president for international affairs, Daniel Christman.

He said bilateral agreements are tempting because they would create markets for U.S. exporters and business and job opportunities for both countries involved, but that it would also be tempting for these countries not to make the sacrifices needed for the FTAA.

The U.S. Chamber of Commerce is also insisting that the talks must include the issues of intellectual property protections and investment rules – which are taboo for the Brazilian negotiators.

The Chamber also maintains a cautious attitude towards some of the bilateral discussions underway. Christman said pressure would be put on the Andean governments to resolve pending investor disputes before launching negotiations early next year.

Despite their spirit of persistence, the differences between the corporate interests of the various countries have come to the forefront.

“FTAA lite” brings with it the danger that the American business community will lose its enthusiasm for free trade, said Mickey Kantor, who served as trade representative under former U.S. president Bill Clinton (1993-2001) and negotiator of the North American Free Trade Agreement (NAFTA), comprising Canada, Mexico and the United States.

On another front, the powerful National Industrial Confederation of Brazil is unrelenting in its criticism of U.S. trade protectionism and insists that if subsidies and non-tariff trade barriers remain in place, the promise of greater access to the North American markets will be broken.

As such, the business leaders of the Americas on Wednesday left the negotiating table served up for the trade ministers, and their message is as ambiguous as the flexible agreements and multi- and pluri-lateral pacts being sought by the governments.

What the Business Forum is apparently saying is: “We are with you, but we don’t all necessarily agree with everything you are seeking.”