Free Trade Area of the Americas - FTAA

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June 10, 2002

Original: English



Name(s) Mark Smith
Organization(s) Brazil-U.S. Business Council (U.S. Section)
Country: United States


April 22, 2002

TO:       Committee of Government Representatives on the Participation of Civil Society

FROM: U.S. Chamber of Commerce
            Association of American Chambers of Commerce in Latin America (AACCLA) U.S. Section
            of Brazil-U.S. Business Council

SUBJECT: Submission in response to the Committee’s Open Invitation to Civil Society in FTAA
                 Participating Countries


On behalf of our three organizations, thank you for the opportunity to offer our views on the Free Trade Area of the Americas (FTAA) negotiations as market-access negotiations begin and as we look forward to the U.S. and Brazilian co-chairmanship of the last years of the process.

In a time when the Western Hemisphere is experiencing a period of economic hardship and political uncertainty, the FTAA serves as an important rallying point for those in the hemisphere committed to political and economic freedom. Indeed, the FTAA offers the most concrete opportunity for the countries of the region to escape the boom-and-bust cycle and enter into a rules-based system that offers unprecedented political and economic stability. Mexico’s post-NAFTA experience illustrates how quickly a trade agreement like the FTAA can change the fortunes of the region. Today, Mexico enjoys single-digit interest rates and inflation, investment grade ratings for its government bonds, and a bustling export sector.

No one should overlook the fact that the NAFTA - and the reforms it encouraged - has strengthened the democratic process in Mexico. A similar effect in a number of other countries in the region that are still at risk could shore up our ideals of lasting peace and civil liberties for all the citizens of the Americas.

While we are emphatic supporters of the FTAA process, we would like to firmly register our opposition to the linkage of labor and environmental standards to trading privileges, using either the Jordan-U.S. free trade agreement as a template or possibly going further by enforcing these standards with trade sanctions. Our view is widely supported by our trading partners in the region, who correctly believe that these stipulations will be used as non-tariff barriers that will undermine the economic benefits of an FTAA. We share the opinion that the International Labor Organization best addresses labor matters and that environmental concerns are already being addressed separately through negotiations on multilateral environmental agreements.

As you will recall, the Jordan-U.S. FTA stirred controversy in the Congress out of proportion to its modest commercial impact due to its inclusion of rules on so-called “blue/green” standards. Moreover, the critics of this agreement were reassured that the Jordan-U.S. FTA was never intended to be a “template” for other FTAs. On the conviction that FTAs should address trade issues only, our three organizations oppose this “mission creep” and urge our trade negotiators to stick to their mandate to enhance trade.

Another point of concern stems from controversy surrounding rules to protect private investors known as “investor-state claims” mechanisms. Rules permitting investor-state arbitration grant investors access to an impartial, independent decision-making body when they make claims against foreign governments for breaking rules established in trade agreements and investment treaties. Investor-state claims mechanisms are included in more than 1,900 bilateral investment treaties and trade agreements worldwide, and they represent a longstanding and respected part of international commercial jurisprudence.

It is ironic that some in the United States should question the validity of these mechanisms. Today, annual sales by overseas affiliates of U.S. companies surpass $2.5 trillion, a level roughly two and half times that of U.S. merchandise trade. As such, the United States is a leading beneficiary of these protections against discriminatory treatment. Indeed, this is why U.S. negotiators have included such provisions in over 40 U.S. investment treaties with other countries. In an era when countries compete with one another to attract direct investment, rules to guarantee investors access to due process and just compensation safeguards are arguably more important than ever, and we urge that they be included in the FTAA as well.

We have also attached for your review our specific recommendations for the nine FTAA negotiating areas (in English, Portuguese, and Spanish). Thank you for this opportunity to provide our comments and voice our concerns.

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