Free Trade Area of the Americas - FTAA


Trade Negotiations

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March 9, 2004

Original: Spanish
Translation: FTAA Secretariat




From: Víctor Álvarez, Vice Minister of Industry, Head of the Delegation of the Bolivarian Republic of Venezuela to the Trade Negotiations Committee
To: Delegations of the countries participating in the FTAA Trade Negotiations Committee
Re: Venezuela and the FTAA negotiations
Date: Puebla, 8-11 April 2003

At this, the Thirteenth Meeting of the TNC, it is my great honor and duty to communicate to you the thoughts and concerns of the government of the Bolivarian Republic of Venezuela regarding the status of the FTAA negotiations.

As we explained at the Quito Ministerial Meeting, there is an increasing awareness and growing concern in Venezuela of the effects that the FTAA may have on the economy, politics, environment, culture, labor, and human rights.

Given the importance of decisions made in the framework of the FTAA, the government of Venezuela is obliged to keep its citizens informed about the implications of issues under negotiation in the FTAA. This obligation is set forth in Article 73 of the Constitution of the Bolivarian Republic of Venezuela, which states, “International treaties, conventions, and agreements that could compromise national sovereignty or transfer power to supranational entities (…) shall be submitted to referendum.”

As Venezuela understands it, the FTAA is not merely a trade agreement. While it is true that the objective is to create a free trade zone, it is also true that what the negotiating groups are proposing is the establishment of a supranational legal and institutional system that will eventually prevail over the current system in our country. Hence, a full awareness of the implications that the issues under negotiation in the FTAA will have for national sovereignty is of crucial importance to Venezuela. In fact, Article 153 of the Constitution states, “(…) Rules adopted in the framework of integration agreements shall be considered to be part of the body of laws currently in force and shall apply directly and preferentially to domestic legislation.” Depending on the way in which the FTAA Agreement is concluded, Venezuela could end up having to “constitutionalize” the Agreement. Due to the implications for sovereignty and democracy, the government of Venezuela is therefore obliged to submit all matters related to this issue to referendum.

For all of these reasons, we remain concerned about the way in which negotiations have been conducted to date. We feel that the TNC has yet to arrive at the decisions and agreements needed to ensure that extensive information on the implications of the FTAA is provided to our citizens in a transparent manner. As the negotiations proceed, there is an ever greater and more urgent need to ensure that extensive information on the implications of each and every one of the issues under discussion in the negotiating groups is broadly disseminated.

We must remember that the intention to guarantee transparency in the negotiating process was affirmed at the 2001 Summit of the Americas in Quebec. The demands made by social organizations throughout the Hemisphere remind us that the moment has arrived to follow through on this commitment. At the Quebec Summit, the president of the Bolivarian Republic of Venezuela, Hugo Chávez, expressed reservations about the dates set for concluding negotiations and inaugurating the FTAA, as, in his opinion, more time was needed for, inter alia, the dissemination of information and public debate.

It must be recognized that FTAA negotiations are based on a set of theoretical and political assumptions that have not been discussed in sufficient detail by the people of our countries and their respective social and business organizations. Consequently, these assumptions cannot be interpreted as the result of a common consensus. For these and other reasons, the Venezuelan government hereby proposes that several of the issues underpinning the basic definition of the FTAA be put, once again, to debate.

Firstly, as a result of the crisis underway since the military coup of 11 April 2002, Venezuela has a new appreciation of the extraordinary importance of the need for governments to be able to draw on a wide spectrum of public policies to respond to crises (whether environmental, political, or economic), as well as to be able to tackle the challenges and demands associated with fair, sustainable development. The commitments and disciplines assumed under the Agreement will severely restrict the ability of countries to implement, as national interests warrant, many of these public policies in a sovereign and democratic manner. The implications of the following could be particularly devastating: prohibitions regarding performance requirements, restrictions on using government procurement to promote national development goals, the liberalization of all public services (which, in Venezuela’s case, would make it difficult to comply with constitutional obligations to Venezuelan citizens in critical areas of social policy and access to public services) and the issue of regulations being discussed in the context of liberalizing agriculture, which could also hinder Venezuela’s ability to comply with the constitutional mandate to promote policies aimed at ensuring food security for the country.

The recent sabotage of PDVSA, the national oil industry, is a pathetic example of everything stated in this document. This action was no more than the violent reaction of the oil industry’s aristocracy to the Venezuelan government’s decision to regain control of the country’s main industry. In other words, the opening up and liberalization of PDVSA catapulted Venezuela into becoming a participant, ahead of time, in the proposal for a fully liberalized, global world. Previous governments took Venezuela to the WTO without reserving any special rights regarding its oil. According to the vision that previously governed PDVSA and which was finally overthrown, the only advantage of having natural resources was to be limited to attracting investment and was not to be a force for driving the nation’s economic and social development. With this approach, PDVSA opened its doors to transnational capital and very quickly renounced its right to use its extraordinary purchasing power to ensure markets for its national industry, which was consequently replaced as the main petroleum supplier. And to top it all, the oil industry’s liberalization was coupled with the relinquishing of a previously existing right that required foreign investors to transfer technology and provide technical assistance as well as human resources training. As a result of this, the oil industry was no longer the powerful engine that only a few years earlier had driven national development. Increased foreign investment and the rise in exports did not, in the end, generate sectoral link-ups with a powerful multiplying effect on the productive apparatus’ growth and development. Our concern lies, therefore, in that any agreements that are finally reached in the negotiations on investment and government procurement, to mention only two examples, would mean that Venezuela would have to, once and for all, give up these tools for leveraging national development.

Secondly, Ministerial Declarations issued in the framework of the FTAA negotiations have repeatedly affirmed and ratified the commitment to hold consultations that allow for ample participation by civil society in the negotiation of this Agreement. The Quito Ministerial Declaration agreed that “the views expressed (by civil society) constitute a valuable contribution to the negotiations.” Consistency with these resolutions means adopting the willingness to table for discussion those issues that social organizations and movements have been raising in recent years1. Criticism and observations made by social and political organizations and movements throughout the continent, from the Southern Cone to Canada, have generally referred to important issues related to the general guidelines of the agreement being negotiated. The Agreement’s lack of balance between the protection provided for commercial and trade-related rights and that provided for human, labor, cultural, environmental, gender, and even democratic rights has been repeatedly pointed out.

As indicated below, only recently has the dissemination of the Agreement's content and an invitation to the participation of civil society in the FTAA discussions been rather timidly arranged. It would not make much sense to extend such an invitation if the underlying political orientations were already determined and the only matter left to negotiate were limited technical issues.

And Venezuela’s intention in presenting this document is precisely to take advantage of the opportunity “to exchange general viewpoints on the overall status of the negotiations…”

Finally, the FTAA has been defined, as a negotiation process, as a “comprehensive, single undertaking” negotiated on a consensus basis. This means that the issues that have already been discussed are not agreed to in a definite manner until the negotiations of the entire text have been concluded. As the negotiations advance, issues could arise that initially were not discussed in sufficient depth, or whose medium or long-term implications were not sufficiently clear to the country representatives participating in the negotiation. The fact that the negotiations have been pursued in a piecemeal manner, namely by negotiating the different chapters of the Agreement separately, has made it difficult for countries that have a weaker capacity and institutional framework for negotiations to follow up on the implications of the process as a whole.

In this spirit, Venezuela would therefore like to point out some of the issues that it considers should be left open for discussion.

1. Liberalization policies and the role of the state in development

The main challenge facing the countries of Latin America and the Caribbean is to overcome the poverty and vast inequalities that make the region one of the most imbalanced in the world. Any program aimed at building the future of Latin America and the Caribbean must give priority to addressing the issue of poverty and achieving environmentally sustainable development. There is no guarantee that the hemispheric liberalization of investments and capital flows alone will ensure the spread of well-being to all peoples.

The evidence would suggest the contrary: over the last two decades, liberalization and deregulation have increased at a rapid pace around the world. Meanwhile, however, inequalities have been exacerbated both within and among countries. Dani Rodrik, professor of economics at Harvard University, states:

“The principles of the Washington Consensus do not serve as useful guidelines for promoting economic growth in Latin America.”

“The periods of economic growth have no relation with the policies of integration to the world economy2”.

The experience of recent decades in the region suggests that it is not the liberalization policies set out by the Washington Consensus that most favor economic growth. During the sixties and seventies, when development and import substitution policies were implemented, average annual economic growth levels in the region far exceeded those recorded when structural adjustment policies, liberalization and outward-looking growth models became widespread. “Between 1960 and 1980, there was sustained growth, at an average pace of 2.9 percent a year; between 1980 and 1990, the region had negative growth of –0.8 percent a year; and starting in 1990 economic growth resumed at an average pace of 1.6 percent a year” 3.

Increasingly, it is generally agreed (even in studies conducted by many international and inter-American financial agencies, such as the World Bank and the Inter-American Development Bank) that the market alone is not capable of guaranteeing growth, of overcoming poverty or of achieving equity. The role of the State and public policies must be re-introduced as necessary conditions for achieving the desired goal of equitable, democratic and environmentally sustainable development. The principles underlying the FTAA negotiations have been marked by an ideological bias, according to which market forces are always preferred over actions taken by the State, regardless of the regions´ experience and the ways in which the State has participated in all the successful historic experiences of capitalist development. The issue of relations between the market and the State cannot be resolved once and for all, for all future situations and all possible circumstances, on the basis of general theoretical or political assumptions. The appropriateness of greater or lesser levels of State regulation or intervention is an open issue that must be resolved according to constantly changing conditions and to the political choices of the voting public, which are based on an evaluation of the platforms presented by different candidates and parties. Without this possibility of choice, it would be difficult for us to speak of democracy. The policies of liberalization and structural adjustment, therefore, cannot be established as fixed long-term commitments, as this would impose extraordinarily severe restrictions on the future room for maneuver of democratic politics.

In this scenario, the countries of Latin America would find themselves increasingly vulnerable in an increasingly unstable international context, with severe limitations and even bans being placed on the very public policies that would enable them to respond to these changing conditions.

2. Inequalities in levels of development

The negotiations of the Free Trade Area of the Americas started out against the backdrop not only of abysmal differences in the sizes of the economies, but also of extraordinary differences in the levels of development. One of the key goals of a successful integration project, as demonstrated by the experience of the European Union, is to ensure that integration allows for concrete steps to be taken towards significantly reducing these huge inequalities. This requires that firm commitments be made (with procedures that guarantee their fulfillment) so that the implementation of the Agreement will make an effective contribution to reducing these inequalities.

The issue of the vast inequalities with which the FTAA negotiations process started has been recognized time and again in the documents issued at Presidential Summits and Ministerial Meetings. The Quito Ministerial Declaration states:

“We reaffirm our commitment to take into account in designing the FTAA, the differences in levels of development and size of economies in the Hemisphere, in order to ensure that these economies participate fully in the building of, and benefits resulting from, the Agreement…”

The measures that have been discussed under the issue of "preferential treatment" or under the category of "smaller economies" neither pave the way for nor provide guidelines for policies that could effectively contribute to a significant reduction in these vast differences. It is not really a matter of large and small economies, but of highly different economic structures. The measures concentrated on so far have been limited to strengthening the countries’ technical capacity to tackle the FTAA negotiations, but no decisions have yet been made regarding the necessary and urgent measures that must be applied in order to reduce and eliminate the profound imbalances that exist among our countries. If action is not taken to improve social conditions and the conditions of production, highly unequal countries will be treated as equals and forced to compete under the same rules despite their relative backwardness and weaknesses. It is therefore indispensable that we move on from technical assistance measures and extensions of deadlines if we are to comply with the FTAA’s commitments and regulations for the creation of the mechanisms and funding necessary to correct the asymmetries and disparities among those countries currently involved in negotiating the Agreement.

There is much more that can and must be done within the framework of the Hemispheric Cooperation Program. Only pursuing technical assistance measures as a means of ensuring that countries are in a position to participate in the negotiations does not constitute adequately addressing the divide which separates the weak countries from the powerful ones. Applying equal treatment to profoundly unequal economies can only benefit the strongest at the expense of the weakest. Neither technical assistance with the adaptation process, nor deadlines spanning a few years will solve these problems. This issue is of particular concern in light of the fact that the “General Objectives and Principles” of the negotiation of the Agreement stipulate that “The rights and obligations of the FTAA will be shared by all countries.”4 Intrinsic to this situation is is the demand for a certain principle of reciprocity among economies and economic agents that are fundamentally unequal. For progress to be made in reducing these fundamental inequalities, it if of paramount importance that we embrace the challenge and stand firm in our commitments which will necessarily demand a significant transfer of resources from the richer to the poorer countries. For countries with weaker economies, the establishment of a free market is not solely dependent on tariff reduction measures. It will also depend on investments in the improvement of the conditions in their productive and social environment, as well as on changes in prevailing competition conditions in the main markets of the Hemisphere. Venezuela knows that its exports still face significant barriers in these markets. Therefore, the sincere will to resolve the issues regarding developing countries’ access to different markets must necessarily be translated into the correction of the disparities and changes in the conditions for competition. Support policies for production, contingent protection measures, as well as challenging technical barriers that prevent access by weaker countries still prevail in the main markets. And free trade, when engaged in under these terms and with disadvantages, only benefits countries with higher levels of industrialization and development.

Our view is that a Free Trade Area can be an opportunity for everyone alike if, and only if, the main powers of the Hemisphere share the political, economic, and financial costs of opening up spaces for the productive efforts made by weaker countries. In this regard, the creation of Compensation Funds for the financing of infrastructure and services projects aimed at decreasing asymmetries and differences among countries is an essential condition to prevent the Free Trade Area from becoming a space in which some win while many lose.

We wish to emphasize that Free Trade Zones are not set up only by eliminating tariffs. Structural, legal, and economic convergence is vital to ensure that the FTAA is a win-win alliance. Whether a Free Trade Zone ends up delivering the opportunities promised to all depends on the degree of solidarity attained. The main powers of the continent should support the creation of convergence funds, so that free trade policies could be harmonized with national interests.

3. Mandate for transparency in the negotiations and democratic participation

On repeated occasions, presidential and ministerial declarations on the FTAA have established mandates and commitments regarding transparency in the negotiation process. Civil society’s participation in the follow-up of the process depends ultimately on the one condition: transparency in the negotiation process. Up to now, however, transparency has been very limited. Only after civil society organizations throughout the continent exerted pressure was a first draft of the negotiations released in June 2001, after several years of ongoing negotiations. The second draft of the negotiation was made public in November 2002. These drafts only provide societies with a limited capacity to discuss what is happening in the FTAA negotiations. The numerous brackets, with no mention as to which countries have suggested the text in each set, makes it impossible for the people of any given country to identify their respective government's negotiating position. A great deal is left to the discretion of the government representatives to the negotiations and, in fact, their positions are kept secret which from the outset makes it impossible to hold any well-informed and democratic debate on the issue.

Only if the negotiation process is truly transparent for society as whole; for business sectors; workers; indigenous, cultural, and environmental groups; political parties; parliament, and the press will we be able to assert that we are moving toward an integration that can be considered to be a democratic process. In the case of Venezuela, pursuant to the provisions of article 73 of the Constitution regarding Referendums for Bills and National Concerns, the government would have to hold a referendum on the FTAA before approving or ratifying the Agreement.

In order to attain greater transparency, as well as full access for societies to all the information, and public discussion of the FTAA negotiations, the timetables for the negotiations would have to be changed. These are the costs that are necessary for democracy. The accelerated pace of the current meetings and negotiations and the efforts to conclude these negotiations by the end of 2005 make it impossible for the negotiations to be transparent and also prevents the various social sectors and society as a whole from being consulted before far-reaching decisions such as those involved in the current FTAA draft chapters are made.

The demand for a democratic, transparent process, access to information, and the right to participate in the FTAA decision-making process stems, fundamentally, from the fact that the Agreement is much more than a limited trade agreement. The Agreement’s broad scope is set forth in precise terms in one of the General Guidelines issued at the Fourth Trade Ministerial of the Americas. According to this principle:

“All countries shall ensure that their laws, regulations, and administrative procedures conform to their obligations under the FTAA agreement.”

What is being requested is the politico-institutional redesigning of State structure. In many instances, and Venezuela is one, substantial constitutional changes would be needed. This being the case, we cannot continue to negotiate as if these were just some trade negotiations in which only experts and specialists in the different areas of commercial and international law need participate. Democratic negotiations need to include in an effective manner all sectors of the population continent-wide because every sector will be affected to some extent by the agreements being negotiated.

4. Social and Environmental Affairs

The Quito Ministerial Declaration reiterates that the “negotiation of the FTAA will continue to take into account the broad social and economic agenda contained in the Miami, Santiago and Quebec City Declarations and Plans of Action, with a view to contributing to raising living standards, increasing employment opportunities, improving the working conditions and increasing the health and education levels of all people in the Americas, and better protecting the environment.” As we have already stated, however, there is a vast gap between the commercial commitments and disciplines set out in the text of the Agreement’s various chapters and the commitments acquired with respect to human, labor, cultural, and environmental rights. Likewise, there is a huge gap between investor rights and the rights of States.

All the countries participating in the FTAA are also signatories to a wide range of international agreements and treaties whose aim is, precisely, to protect human rights and the environment. The NAFTA experience has already proven that, on occasion, the commitments that a country assumes in new bilateral, multilateral, or global agreements may come into conflict or even contradict other agreements previously signed and ratified by that country. The FTAA is not an agreement that addresses human, labor, cultural, or environmental rights. However, it must be ensured that the commitments to be acquired upon the signing of this Agreement do not jeopardize the commitments that all of our countries may have previously acquired under other treaties. There are grounds for real concern given the fact that free trade agreements in general (as has been the case with NAFTA) do provide for mechanisms that ensure their enforcement through the imposition of heavy sanctions, which are much more effective than the mechanisms provided for in agreements and treaties on human, labor, cultural, and environmental rights. This ability to ensure enforcement of rules is also a feature of World Trade Organization (WTO) agreements.

We thus propose that a Negotiating Group be created, in collaboration with the major indigenous and peasant organizations, labor unions, human and migrants’ rights organizations, etc. throughout the continent, and with the technical support and financial backing of the OAS, the IDB, and the ECLAC, to conduct an in-depth evaluation of the commitments acquired by our governments under agreements on human, environmental, gender, labor, cultural and other rights, and their potential conflict with the commitments that our governments would acquire if the current version of the FTAA Agreement were to be signed.5

This group should also undertake the evaluation of current constitutional texts, legislation, rules, and procedures in each country to clearly assess which commitments entailing legal and political changes are being acquired when negotiating an agreement whose criteria is that:

“All countries shall ensure that their laws, regulations, and administrative procedures conform to their obligations under the FTAA agreement.”

Without this evaluation, countries would be negotiating partially in the dark, without being fully aware of the exact implications of the issues being negotiated. Without this information, systematically organized, it would be extremely difficult to hold a public debate and establish a well-informed, democratic decision-making process throughout the continent.

Finally, to avail our countries of the necessary timeframe that will allow them to amply report and discuss the implications and consequences of all these important issues related to the FTAA negotiations and, on that basis, be able to develop the conditions and strengths needed to take advantage of opportunities and face the threats inherent to this process, the government of the Bolivarian Republic of Venezuela insists anew on the need to discuss the feasibility and desirability of:

  1. Creating the Negotiating Group on Compensation Funds, with the mandate to design mechanisms that would enable, with the signing of the Agreement, firm commitments to be acquired that would guarantee a significant reduction in the differences in the levels of development between nations and between productive sectors, with precise social and economic goals, fixed deadlines, and follow-up mechanisms.

  2. Creating a Negotiating Group on the relationships between FTAA commitments and other commitments acquired by some or all countries in other treaties in the entire spectrum of human rights and environmental rights, as well as with the constitutions and legal systems of each country participating in the negotiations. The mandate for this group should be to count on the ample participation of social organizations and movements from the entire continent, and of international and inter-American organizations concerned with these issues (UN, ILO, WHO, etc.). Another mandate should be to oversee that the FTAA agreement does not weaken the valuable progress made in international law in the areas of human rights and environmental rights.

  3. Initiating the wide and massive dissemination of all FTAA negotiation drafts and texts in order to guarantee the total transparency of the entire process so that proposals from social, production, political, labor, indigenous, and other organizations can be effectively considered and incorporated into the texts of the Agreement.

  4. Postponing the dates for the conclusion of the negotiations and the implementation of the agreements until an efficient answer and solution has been given to the series of problems posed by the asymmetries and differences among countries and until a broad base of social and political support is guaranteed for the approval and implementation of the FTAA.

In appreciation of the good will and disposition of the delegates at this TNC to listen to and consider this democratic request from our people and our government, I remain,

Yours sincerely,

Víctor Álvarez R.
Vice Minister of Industry

Puebla, Mexico, 8 April 2003


1 The documents of the Social Continental Alliance, which brings together important social and union organizations that are widely representative of the entire continent, are an example of contributions that are fundamental to issues discussed in the FTAA. [http:/]

2 Inter-American Development Bank, Alternatives to Globalization, March 31, 2003.

3 Ibid

4 Fourth Trade Ministerial Meeting, op. cit., Annex 1.

5 For this task, it would also be advisable to count on the participation and support of the international and inter-American organizations that are responsible for following up on and enforcing these treaties. Thus, for example, upon examining the possible impact that the FTAA Agreement might have on international labor or indigenous rights organizations, such as those established in Agreement No. 169 of the ILO, the organization in question could participate as a consultant. The same should occur when addressing issues on human rights (United Nations), health (WHO), the environment (UNEP), and so on.


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