The FTAA and the future of the agricultural sector

One of the priorities for our country should be to envision and project what the future of our agricultural sector will be within an integration system such as the Free Trade Area of the Americas (FTAA) proposes.

Analyzing the impact of Argentina's membership of the FTAA on our country’s agricultural sector would force us to examine in the first instance, its significance for our country in terms of its participation in international trade, secondly, what the FTAA is today and what it could become in the future, and finally, how the agricultural sector might participate within the framework of this agreement.

Argentina within the context of world trade According to the World Trade Organization’s most recent statistics (www.wto.org), our country accounts for 0.40% of total annual world goods exports and 0.14% of total annual world goods imports. Meanwhile, MERCOSUR’s participation in world exports is 1.4% and its participation in world imports is 0.95%. Furthermore, not only is our country's participation in world exports low, some 60% of these consist of raw materials and products of agricultural origin. The FTAA/Argentina issue can therefore be analyzed from two perspectives: 1) We are negotiating Argentina's inclusion in an agreement whose main partner uses subsidies to compete in what are the most important markets for our country in terms of competitiveness and exports; and 2) We are negotiating our country's inclusion with the full awareness of this situation and should therefore have a plan aimed (among other things) at adding value to our exports. This brief description of the situation should help to bring into evidence the insignificant measure of our country’s participation in international trade, as well as to highlight the importance of the agricultural and food sector as part of our total exports.

FTAA, past, present and future The FTAA should be seen as part of the most comprehensive movement towards hemisphere-wide integration yet undertaken, one that also addresses social, political, economic and cultural issues. In December 1994 heads of state meeting in Miami gave the initial nudge to the creation of the FTAA. The aim of the agreement is ambitious and seeks to unite 34 democracies of different sizes and levels of development under a single free trade agreement geared towards developing and improving the standard of living of the region’s inhabitants. From these beginnings until today, many meetings have been held in various places, and many draft agreements have been revised. Now we’re on the third draft issued on November 21, 2003, and the Trade Negotiations Committee (TNC) meeting which should have taken place on 18 and 19 March 2004 has been suspended. Given the latest developments, the initial impetus seems to have diminished somewhat. Who or what is conspiring against the evolution of this process? The cooling down seems to result from situations and changes in priorities rather than a plan to deliberately halt the process. The fact that this is an election year for the United States does not help. The FTAA “issue” does not seem to attract votes for the candidates, on the contrary. There is a collective conscience in certain sectors of the American society that views the FTAA as a process that will generate unemployment in the domestic economy. This is a sensitive subject in American society. It surfaced during the gestation of the NAFTA, and President Bush is currently faced with a similar problem in which manufacturing unions are demanding trade sanctions against China because they believe that China’s labor policies produce unemployment in the United States. Notwithstanding these delays, no expert questions the high probability of hemisphere-wide integration in the near future. Meanwhile bilateral agreements among the so-called Free Trade Agreements (FTA) are being drawn up along the same lines as the FTAA: free trade among the nations of the hemisphere.

Is the FTAA a threat or an opportunity for our agricultural sector? The issue of subsidies on agricultural products is an unresolved barrier which engenders delays in the evolution of the process. The chapter on agriculture demands the effort and goodwill of all the partners. The NAFTA bloc has indicated that it would like to break the deadlock in this area. There have been declarations from the trade representative of the United States, Robert Zoelick, and the international negotiator for that country, Peter Allgeier, implying that there is some intention to rethink the structure of subsidies for the United States’ agricultural sector. In this context, what should Argentina's strategy be with regard to the Agriculture / FTAA issue? At first glance, the sector perceives the issue more as a threat than as an opportunity. And when it comes down to details the Mercosur bloc, in an effort to protect their respective rural interests, suggests that this chapter be dealt with under the umbrella of the WTO. Upon closer scrutiny of the issue from Argentina’s perspective, however, wouldn’t it be advisable to revise the sector’s strategy for the future? Wouldn’t it be advisable to take advantage of the situation to draw up plans towards creating an agro-business sector that produces and exports products with greater added value? Wouldn't it be advisable to take advantage of the thrust towards integration so that the more developed countries can assist in the development of the lesser developed countries and specifically in the addition of value in our most competitive sector (for example investment in areas such as infrastructure and communications)?
The Fourth Summit of the Americas will be held in our country next year. What better opportunity for civil society and the private sector of our country to get involved in the process. Already, institutions such as the Inter-American Network for Democracy (Red Interamericana para la Democracia - RID), the Summit of the Americas Secretariat (OAS), and the Forum for the Participation of Civil Society have begun working. In concrete terms, it will be a great opportunity for our agricultural sector to analyze how it wants to participate in a hemisphere-wide integration project. No one is unaware of the negative external circumstances and conditions, (such as tariff barriers and subsidies to certain activities), however, the current situation affords us the possibility to become an unrestricted partner in one of the most important markets in the world. Surely this fact alone means that the agricultural sector should analyze how it might become involved in this agreement. Then, based on the results of such analysis, we might change our position from considering the situation to be a threat to capitalizing on it as an opportunity.

Buenos Aires, March 26, 2004.
Mr. Bernardo C. Piazzardi
Fundación Nueva Generación Argentina
(New Generation Foundation, Argentina)