Free Trade Area of the Americas - FTAA


Trade Negotiations

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March 29, 2004

Original: Spanish
Translation: FTAA Secretariat



Name(s) Dr. Isidro Morales and Dr. Paulino Ernesto Arellanes Jiménez
Organization(s) Universidad de las Américas Puebla and Benemérita Universidad Autónoma de Puebla
Country Mexico
FTAA Entity addressed in the contribution FTAA Process

Rapporteur’s Report on Roundtable 2, “The FTAA after the Eighth Ministerial Meeting: Changes and Continuity”

This roundtable included the following participants: Dr. Isidro Morales of the Universidad de las Américas- Puebla; Dr. Jaime Staay Reyno of the Benemérita Universidad Autónoma de Puebla, and Dr. Annette Hester of the University of Calgary. The questions and comments made by the public contributed to the enrichment of this roundtable.

It was pointed out in the discussion at this roundtable that the Miami Ministerial Meeting marked a watershed in the negotiations, since the agreement as it was originally envisioned will no longer be reached. The FTAA is now to be an agreement based on minimal principles, and each country can then proceed to negotiate more substantive agreements with the other countries.

This arrangement is quite understandable, since the WTO meeting in Cancún turned out to be a failure for the U.S. when Brazil blocked the negotiations. In Miami, the U.S. did not want to fail again, and as a result, a two-tier formula for the FTAA was proposed. In this sense, the Miami Ministerial marked the start of the fragmentation of the agreement, which is weakening the original proposal for the FTAA. Furthermore, no country will be able to further an agenda aimed at decreasing economic and social inequalities.

Furthermore, Brazil's approach has been to consolidate Mercosur and turn it into a negotiating bloc at the international level. Mercosur is, however, a minimally-institutionalized agreement, considering the fact that Brazil and Argentina have altered their tariffs in response to their respective internal crises. Mercosur is, therefore, more of a strategic bloc than a trading bloc.

In Miami, both Brazil and the U.S., despite having different strategies in the FTAA, were able to salvage their respective political agendas by agreeing on an “FTAA-light” and another FTAA “à la carte”. CAFTA marks the beginning of bilateral agreements with the U.S. and virtually no country currently has the capacity to negotiate comprehensively with the United States. Brazil opted to defend its interests and has consequently seen its leadership erode in Latin America.

The Eighth Ministerial Meeting made clear that it is no longer possible to overlook the differences between countries and expect to negotiate an FTAA as it was conceived at the outset. It should be recognized, however, that it was impossible for the 34 countries to negotiate from the very beginning.

For its part, the U.S. has recorded three achievements:

- It emerges with some type of FTAA agreed to according to the established agenda.

- It has sidelined “rebel” governments.

- It facilitates second-tier negotiations.

After Miami, what has changed and what will stay the same in the FTAA is unknown, although it is understood that the idea of an extensive and comprehensive FTAA has been abandoned. There are three uncertainties currently surrounding the FTAA negotiations:

At this time, the FTAA negotiations are marked by three uncertainties:

- What are the elements left in the minimized FTAA (1st tier)?

- How will the second-tier issues be negotiated?

- What will be the relationship between the first and second tiers?

In Miami, the first-tier negotiations incorporated all the points on which minimal disagreements had been recorded. The points on which there were more disagreements were kept out. As a result, much has been lost in the negotiations. There are still conflicting positions on export subsidies. The U.S. has no interest in giving up ground on the subsidy issue, while Mercosur does not want the situation to continue.

Little has been said about which areas would be negotiated in the second tier, other than that the negotiations would be plurilateral in nature. Doubts have arisen over whether the second tier implies that the U.S. wishes to negotiate the agreements reached in the first tier as a single package. This has created an air of pessimism in the negotiations, as the countries suspect that the US is dividing the countries in order to negotiate from a stronger position. As such, a free trade area seems to an impossible goal, given that the multiple clauses and negotiations make the process inflexible. There is a gap between the rhetoric of free trade and the negotiations themselves.

What is the relationship between the first and second tier? To what extent is the second tier part of the FTAA? To what extent will FTAA principles apply in the plurilateral negotiations? There are numerous uncertainties, but beyond them, ongoing negative elements also exist due to two significant problems within the FTAA:

- The U.S. strategy takes little heed of the large disparities among the countries of the FTAA.

- The negotiation process is being carried out behind the backs of the people that will live with the consequences of the FTAA. Other opinions expressed in this regard, however, made it clear that there is much more transparency in these negotiations than in previous ones. Participants also noted that congresses and legislations should become more involved in the negotiations to ensure that the demands of civil society are taken into account.

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