|Free Trade Area of the Americas - FTAA|
FTAA - COMMITTEE OF GOVERNMENT
REPRESENTATIVES ON THE PARTICIPATION
COVER SHEET FOR OPEN INVITATION CONTRIBUTIONS
May 1, 2002
In response to the invitation of the Committee of Government Representatives on Civil Society, the Council of the Americas is pleased to submit the attached comments regarding the ongoing Free Trade Area of the Americas (FTAA) negotiations. Our submission addresses a number of framework issues surrounding the negotiations, including the role of the Civil Society Committee.
The Council is grateful for this opportunity to put its views before the Committee.
Attachments - Cover Sheet, Comments (5 pages)
Views of the Council of the Americas on the FTAA Process
Submitted to the Committee of Government Representatives on Civil Society
May 1, 2002
The Council of the Americas (the “Council”) is grateful for this opportunity to provide its views to the Committee of Government Representatives on Civil Society (the “Committee”). The Council continues to believe that the Committee’s role as a liaison between civil society and Free Trade Area of the Americas (“FTAA”) negotiators is particularly important, and should be given a high priority by the Hemisphere’s trade ministers.
This paper is the Council’s third submission to the Committee over the course of the FTAA negotiations. Previous submissions have included the Council’s in-depth views on specific negotiating objectives, and we anticipate that future submissions will provide additional advice in that regard. The current paper is devoted to broader framework issues surrounding the FTAA negotiations.
Accordingly, this paper addresses a wide range of policy issues, including the schedule for completion of the FTAA; the ongoing role of civil society and public support for the FTAA; the transparency of the negotiating process; overarching Summit of the Americas objectives; fundamentals for broad Hemispheric benefits; good governance and other conditions for an effective agreement; overlapping disciplines, such as labor and the environment; and, the synergy between FTAA negotiations and World Trade Organization (“WTO”) talks.
Schedule for completion of the FTAA
In previous submissions to the Committee, to U.S. negotiators, and to Hemispheric trade ministers through the mechanism of the Americas Business Forum, the Council joined other interested parties in calling for the completion of FTAA negotiations by December 31, 2003, in order to implement the agreement as of January 1, 2005. Although some parties considered this proposal to be an acceleration of the timetable for the FTAA, it was our view that the proposal was simply a clarification of the schedule approved by the Hemispheric heads of state at the Miami Summit of the Americas in December 1994, which was left deliberately vague.
Subsequently, at the Buenos Aires Ministerial and the Quebec Summit in April 2001, the Hemispheric trade ministers and heads of state approved a schedule for completion of FTAA negotiations no later than January 2005, and implementation of an agreement no later than December 2005. This schedule is only slightly less ambitious than the one we had proposed, and we enthusiastically endorse this decision, and believe that it is fully in keeping with the spirit of the Miami Summit Declaration. The establishment of dates certain for the conclusion and implementation of the FTAA is a true milestone in the process.
Our enthusiasm for this schedule is tempered by a note of caution, however: this timeline allows only a short period for governments to ratify and implement the agreement. An extraordinary amount of hard work and preparation will be necessary to achieve this ambitious schedule. We urge countries to begin those preparations now to the greatest extent possible.
A Continuing Role for Civil Society
As 2005 nears, the work of the Committee will become increasingly important. In large part, the successful implementation of the FTAA will depend on the attitudes of the public throughout the Hemisphere towards open markets, generally, and free trade in the Americas, particularly. The public’s approval of this undertaking can be much increased by an ongoing dialogue between Hemispheric governments and their citizens.
The Committee has made commendable efforts to date to keep the first stages of the negotiating process open to the views of the Hemisphere’s citizens. Now the time has come for the Committee to take a more proactive stance, and begin to communicate with citizens in each FTAA country regarding the expected benefits of the agreement. This outreach effort should anticipate and address the arguments that are likely to be raised in opposition to the FTAA, including, where appropriate, by promoting reforms necessary to resolve legitimate concerns.
We note with cautious optimism a report recently issued by Oxfam International (http://www.maketradefair.org/assets/english/Report_English.pdf), an organization widely renowned for its work fighting poverty, and an outspoken critic of free trade in the past. Oxfam has now reversed its previous position and concluded that international trade is an important means to combat poverty. We believe that more such victories are possible with an effort to better educate the public about the benefits of open trade.
The public release of the FTAA draft negotiating chapters last July set an unprecedented level of transparency for a major multilateral trade negotiation and was widely acclaimed. We realize that in some respects such transparency increases the difficulty of the job of the negotiators. Nevertheless, given the ambivalent public perception of the benefits of trade and the increasing complexity of trade agreements and their interactions with other policy disciplines, we feel that the increased transparency is well justified. This move inspires greater confidence among the public at large, and removes a key argument from those who would oppose trade agreements on their face.
We encourage the committee to maintain and improve this level of openness, including by releasing the revised draft texts at the appropriate time, hopefully before the end of 2002.
Summit of the Americas
At the Miami Summit of the Americas in 1994, where the formal FTAA process was begun, Hemispheric heads of state agreed to an ambitious agenda of initiatives aimed at creating a broad-based Hemispheric partnership. The success of the FTAA, as the economic component of the Summit agenda, will be judged in part on the success achieved in Summit initiatives in the areas of democracy, labor, environment, education, poverty reduction, and others.
We urge the Committee to stress the strategic importance of the FTAA as the central economic component of the Hemispheric initiative, and the key to shared prosperity in the Americas, while highlighting the broad nature of the Summit agenda, and taking steps to move that agenda forward.
The key benefit of expanded trade is economic growth leading to the creation of wealth and shared prosperity throughout the Hemisphere and across all economic levels of our Hemispheric society. We urge the Committee to push for expanded technical assistance wherever necessary to enable countries to benefit from market openings, and we urge each FTAA country to invest in the infrastructure - physical, legal, educational and societal - that will enable its citizens to take full advantage of the opportunities created by expanded trade. Implementation of the full Summit of the Americas agenda, not only the trade portion, will be critical to gaining shared prosperity through the FTAA.
Effectiveness of the Agreement
Governments can stifle business and economic growth through unintended consequences of their legal and regulatory framework. The conditions that are essential to business are transparency, predictability, stability and flexibility. In other words, laws should be well-known and easily understood, law enforcement should be fair and consistent, changes to the law should come about through due process and with fair warning, and laws should be structured to facilitate legitimate business practices. With these conditions in place, investment can thrive and economic growth will follow. Where those conditions are not in place, it is usually the smallest economic actors who are most hurt, lacking the resources to operate effectively in an unduly complicated or restrictive environment.
The same is true of trade agreements, where the smallest countries will inevitably suffer the most from complicated, restrictive, or inconsistent rules. Consequently, a key aim of negotiators should be to seek the simplest and most flexible rules of origin - consistent with clarity and fairness, the most harmonized customs procedures, and the simplest framework possible. This will help all the countries of the Hemisphere to receive the maximum benefit from the FTAA.
In the last half century, a multilateral rules-based system for international trade has emerged and matured. Early on, that system was focused on the most elemental barriers affecting trade, namely tariffs and quotas. An early step in bringing the benefits of open trade to the world involved the “tariffication” of quotas, and the reduction of tariffs. Significant exceptions notwithstanding, those efforts have met with considerable success. As those most conspicuous barriers have slowly come down, trade negotiators have turned their attention to less obvious, but no less significant obstacles to trade.
Issues like subsidies, intellectual property rights, investment law, and government procurement have gradually come under the umbrella of trade agreements. With this expansion of the trade agenda, inevitably trade agreements have sometimes bumped up against other policy disciplines, which have been the primary purview of domestic policymakers. This overlap has raised questions of respect for national sovereignty and sometimes brought about, at least nominally, conflicting policy aims. Nowhere has this conflict been more apparent than in the question of applying trade disciplines to labor and environmental standards.
On one side, trade proponents have sought to prevent the use of labor and environmental laws as de facto trade barriers. On the other, labor and environmental activists have accused trade agreements of undermining labor and environmental standards, and of exploiting low standards in developing countries to the detriment of local and global labor and environmental priorities. Both sides reflect valid concerns.
Regardless, these issues have become part of the trade debate and they should be addressed head on. The free trade agreement between the United States and Jordan, and elements of the trade negotiating authority bill now at issue in the U.S. Congress, have established a means of handling the intersection between trade and labor and the environment, which we support. That approach calls for countries to maintain and enforce labor and environmental laws that are already in place, while countries retain the discretion to allocate resources as they see fit. Any number of other approaches are possible. The point is that the issue should be addressed constructively, not avoided. As trade agreements continue to cover broader policy territory, such conflicts are likely to be more prevalent in the future.
FTAA and the WTO
With the advent of the Doha Development Agenda talks in the World Trade Organization (WTO), FTAA negotiators face the challenge of carrying on simultaneous talks in separate fora, and of bringing each effort to a successful and useful conclusion on essentially identical timelines.
The biggest challenge raised by the concurrent progress of these talks is probably the division of resources necessary to simultaneously cover two major sets of negotiations. Another question raised by the WTO talks concerns the continued relevance of the FTAA. If the WTO talks are a success on a global level, will the FTAA still be necessary? Our answer is a resounding “yes,” since the FTAA is inherently a much more ambitious project than can hope to be achieved on a global basis for quite some time. The FTAA will be a Hemispheric-wide free trade area, whereas the WTO, for the time being at least, has a more modest vision of achieving liberalized rules-based trade, but not free trade to the extent envisioned by FTAA negotiators.
While potentially they might divert some resources from the FTAA effort, the WTO negotiations could also prove to be the catalyst that makes an FTAA agreement possible. Certain issues central to the FTAA talks, agricultural subsidies most prominently, may be difficult to resolve except on a multilateral basis in the WTO. The ability to conclude an FTAA may well hinge on the ability of negotiators at the WTO to reach a global resolution on the question of farm subsidies. There are similar synergies between the FTAA and WTO talks in other areas, as well. Negotiators can make an opportunity of this challenge by actively identifying and exploiting synergies between these two parallel negotiating tracks.
In summary, we would like to see the FTAA countries take the following specific actions at the Quito Ministerial: begin to lay the groundwork for ratification of an agreement; undertake jointly and severally to communicate the benefits of the FTAA to the public; commit to release revised draft FTAA chapters in a timely manner; enhance the linkage between the FTAA and other Summit of the Americas objectives; examine countries’ technical assistance and infrastructure needs; resolve to simplify, liberalize and harmonize trading rules for the benefit of all economies; take a constructive approach to difficult issues such as labor and environment; and, explore opportunities created by concurrent FTAA and WTO talks.
FTAA negotiators have made considerable progress; an agreement signed and implemented on the schedule established at the Quebec Summit is within reach. Nevertheless, significant obstacles remain. The most significant challenge may be to maintain the political will necessary to complete such an ambitious project. Recent developments in the Hemisphere remind us that the job of opening markets and safeguarding democracy is never done.
We believe that the Committee has one of the central roles in seeing the FTAA to its successful conclusion. The active inclusion of civil society in the completion of the FTAA will be crucial if the agreement is to be widely embraced by the Hemisphere. The Committee has done a good job of listening. Now it is time to speak. The subsequent dialogue will benefit all parties.
We congratulate the Committee and the ministers and negotiators on their excellent work in bringing the FTAA to its current state, and we look forward to working with the FTAA countries for completion and implementation of a successful and well-received agreement in 2005.
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