US, Brazil headed for FTAA battle royale

A major showdown between the United States and Brazil is expected to dominate Miami when trade ministers from 34 countries in the western hemisphere meet in the coming weeks on the final round of talks on the proposed Free Trade Area of the Americas (FTAA). The two countries will face a litmus test on whether they can bridge their sharp and wide differences on trade to avoid Miami ending up disastrously like Cancun last August. Brazil’s agriculture minister Roberto Rodrigues has already said that the Miami meeting which takes place from November 17-21 could fail unless Washington includes the controversial issue of farm subsidies in the talks. “Miami could be for the FTAA what Cancun was for the WTO. There is a fundamental point and that is agriculture,” the Brazilian minister warned. Tensions between Washington and Brasilia heightened following the collapse of negotiations at the fifth ministerial meeting of the World Trade  Organisation (WTO) in Cancun, Mexico. The US blames Brazil, as the leader of the so-called G21 group of developing countries, for creating the tense atmosphere in Cancun and delivering harsh rhetoric that made it more difficult for countries to reach consensus on any issue. The core issue at Cancun for the group was reducing the subsidies paid by wealthy nations such as the US and the EU to their farmers which would allow developing nations to be more competitive on world markets and escape the poverty they now suffer. The US  still wants to complete negotiations on the proposed FTAA by January 1, 2005 even though many countries believe the collapse of world trade talks — which have been closely linked to the FTAA talks, particularly on agriculture — have thrown that target into doubt. The FTAA, if and when it goes into effect, will be the world’s largest free trade area with a potential population of 800 million and a gross domestic product of US$14 trillion. But the US and Brazil have vastly different visions for the scope of the regional free trade pact.

The US is supporting a single, comprehensive agreement that would slash tariffs on manufactured and agricultural goods, while strengthening rules governing services trade, investment, intellectual property protection and government procurement. Brazil, as leader of the Mercosur trade bloc which also includes Argentina, Uruguay and Paraguay, has proposed a three-track approach that envisions a series of bilateral agreements to cut tariffs and a hemispheric pact on items such as rules of origins and dispute settlement, but leaves negotiations on more controversial issues to the WTO. Deputy US Trade Representative Peter Allgeier has described the Mercosur plan as an “outdated” approach to trade liberalisation and said that the US was committed to working with Brazil to try to forge a common vision for the FTAA. “Obviously, that means we should not be engaging in divisive rhetoric,” said Allgeier who along with Brazilian Ambassador Adhemar Bahadian were the co-chairs at September’s Trade Negotiating Committee (TNC) meeting in Port-of-Spain. Calling on Brazil to work constructively to help create a hemisphere-wide free trade agreement, Allgeier said if the United States could not establish wide-ranging free trade agreements, it would work towards establishing bilateral agreements between willing countries — a position which the US expressed following the Cancun debacle. Allgeier said countries that did not agree with a US-backed plan for a comprehensive FTAA could opt out of the project — poking directly at Brazil.” If certain countries at the end determine that in their self interest they’d be better off outside the agreement or wait and see how the agreement goes, then that’s their prerogative, and the other countries will go ahead and implement the agreement,” said Allgeier last month while in Brazil promoting the US vision of the plan.

Ambassador Bahadian, in a veiled reference to the US, said, some parties are “mixing a lack of realism with excessive maximalism in the search for results that have been shown not to be accomplishable in practice.” “What seems contradictory to me is that a country would make explicit its national sensitivities, seek to exclude themes from the table, and then, at the same time, try to stop other countries from doing the same,” he said. Trinidad and Tobago Trade Minister Kenneth Valley has suggested the adoption of a simpler agenda for the FTAA to avoid the mistakes which led to the collapse of the world trade talks in Cancun. “We must not allow the recent results at the multilateral level to impact the FTAA. This may require the adoption of a simpler agenda over the next 16 months which encompasses equilibrium in the demands, ambitions, concerns and sensitivities of all our countries,” he said at the opening of the TNC meeting in Port-of-Spain. Valley  said while world trade suffered a setback following the collapse of the talks in Cancun, he was hopeful that progress will be made at the FTAA level. But word out of the TNC meeting is that very little was accomplished and it will be left up to the ministerial meeting in Miami, if it settles down to serious business, to determine the course of action for the ambitious FTAA agenda. Meanwhile Miami is forking out at least US$10 million for the week-long event which is expected to attract over 6,000 delegates. Most of the money will go towards security as Miami expects mass protest demonstrations involving tens of thousands of anti-globalisation critics, farmers and trade unionists among others. Miami will want to avoid any street violence and ugly demonstrations as seen in Cancun and Seattle at the 1999 WTO meeting since this could botch their chances of securing the FTAA headquarters. Miami is competing for the FTAA office against the City of Atlanta; Puebla, Mexico; Port-of-Spain, Trinidad and Panama City, Panama.

Quality of FTAA agreement counts — RNM boss

Caribbean Regional Negot-iating Machinery (RNM) Director-General Ambassador Dr Richard Bernal CARICOM’s chief negotiator said the sub-region is committed to negotiating a multilateral, “balanced” and comprehensive FTAA based on a single-undertaking. This was the region’s position provided that “the FTAA builds on appropriate flexibilities to accommodate differences in levels of development and size of economies, in a way that promotes the development of these countries,” said Ambassador Bernal. While committed to an FTAA process and goals of completing it by 2005, Bernal however said Caricom  must not become pre-occupied with the date.

“The quality of the agreement is more important than meeting any specific deadline.” CARICOM advocates three guiding principles in FTAA negotiations: agreement on a comprehensive package of measures, in each FTAA discipline, regarding special and differential treatment for smaller economies  not confined to longer adjustment periods or technical assistance; bringing development issues to bear through the Summit of the Americas process; and the FTAA, when completed, must be compatible with and respect the integrity of sub-regional integration processes. The RNM director-general indicated that the region’s approach has been, and will continue to be, the negotiation of asymmetric liberalisation across the FTAA disciplines and safeguards and exemptions in elements of negotiating groups.