Dr Anthony T Bryan
Last week, Brazilian President Luiz Inácio Lula da
Silva shook up hemispheric trade negotiators with the resonant
statement that the FTAA is low priority for Brazil.
As he told a group of labour leaders: For two years,
FTAA has not been discussed in Brazil because we took it off
The remark was sufficiently provocative that a Republican
in the Florida Senate feels bolstered in his efforts to strip
$525,000 in state funding for Florida FTAA, the group lobbying
to have Miami named as the headquarters for the proposed FTAA
Since the Ministerial Meeting of November 2003 the FTAA process
appears to have ground to a halt.
In addition, during the past few weeks the postponement of
a scheduled end of March meeting of the Trade Negotiations
Committee (TNC) and the cancellation of plans for Brazilian
and US negotiatorsthe two key countries and co-chairsto
meet this month indicate a further delay in the resumption
The process is not yet completely moribund.
The FTAA is expected to be on the agenda while US Secretary
of State Condoleeza Rice is in Brazil this week and the TNC
co-chairs expect to meet in Washington, DC on May 12 as a
step toward the resumption of the seventeenth TNC meeting.
Despite the intention of the office of the US Trade Representative
to pursue the FTAA goals, and indications from the Brazilian
Foreign Ministry that they still have an interest in the trade
pact, some issues have to be addressed even before the resumption
These include the funding of the FTAA Secretariat after June
30 and beyond 2005 and the outcome of the request for an extension
of the US Trade Promotion Authority (TPA) by President Bush
on March 30.
The TPA as it currently exists would apply only to trade agreements
concluded by July 1. The Presidents request would provide
for an extension to include agreements entered into before
July 1, 2007.
With respect to the latter, unless the Presidents request
is granted, in less than two years US officials will lose
their authority to implement international agreements or proceed
with an FTAA in the absence of TPA or a similar congressional
In the meantime, understandably, the other potential member
countries of the FTAA are growing worried about its future.
Why the impasse?
Trade economist Jeffrey Schott, speaking at a conference at
the University of Miami in early April, placed part of the
blame for the lack of movement toward an FTAA on the seeds
of delay planted at the Ministerial in Miami in November 2003
when an FTAA compromise was pushed through at the trade ministers
At that time, wounded by the failed WTO meeting in Cancun
in September 2003 that had resulted in a breakdown in the
Doha round of multilateral trade negotiations, trade officials
at the FTAA were under pressure not to fail.
The substantive differences between the major actors at the
FTAA negotiating table were even greater than in the WTO talks,
so the co-chairs of the FTAA processthe US and Brazilconstructed
a procedural compromise that allowed them to shake hands and
promise to resume negotiations in early 2004. In reality they
put a plaster on their differences and then got out of town.
In short, the Miami Declaration adopted a two-track approach
to the FTAA that allowed talks in all the existing negotiating
groups, but offered countries greater flexibility to opt out
of making commitments in sensitive areas, take specific issues
or products off the negotiating table or assume different
levels of commitments.
According to Schott, This diplomatic double-speak basically
accommodated two levels of negotiation: a core FTAA in which
countries could exclude sensitive issues, and supplementary
accords by a subset of FTAA participants that covered FTAA-plus
commitments otherwise known as plurilateral
agreements that only obligate those countries that sign the
specific part. In essence the weak Miami agreement moved
away from the comprehensive trade accord that hemispheric
leaders had promised at the Summit of the Americas in 1994
At another level the ongoing Doha round talks, leading up
to the sixth WTO Ministerial at the end of 2005, have shifted
the focus of the US and other countries from the hemispheric
wide trade talks.
While the FTAA process may have stalled the region has moved
ahead with a number of bi-lateral free trade agreements (FTA).
Assuming that, despite a fierce fight in the US Congress,
the US-Central American Free Trade Agreement (CAFTA) does
become a reality all that is left for the US to negotiate
are potential FTAs with Caricom and Mercosur. Free trade agreement
will turn Caricom preferences into commitments.
Mercosur is much more elusive given Brazilian opposition.
Brazils strategy is similar. It has signed basic bi-lateral
FTAs with most of its Latin American and Caribbean neighbours,
and product specific agreements with Mexico and China and
is negotiating a free trade pact with the European Union (EU).
But given the current impasse the US seems to be taunting
Brazil and its Mercosur partners to catch up by surrounding
them with FTAs.
Kick-starting the process
As a practical matter, in order for the FTAA negotiation to
move forward and succeed, Brazil must negotiate on services,
government procurement and intellectual property issues, and
the United States must be willing to improve market access
for a number of Brazilian agricultural and processed agricultural
The political opposition by domestic sectors in each country
has effectively constrained their respective negotiators.
First, unless the co-chairs Brazil and the US agree to move
the FTAA process forward it will be mired in the mud for a
long time. They bear the responsibility for the negotiations
going off-track and they bear the responsibility for putting
them back on track.
Second, for both Brazil and the US the FTAA is not important
unless both countries are members.
Third, the keys to success in the FTAA are agreements on a
hemispheric package of market access reforms (including agriculture
and other goods and services), liberalisation of existing
tariffs and quotas, and reform of regulatory and administrative
practices (including inter alia customs procedures and sector-specific
In addition, political leaders throughout the Americas must
reiterate their original objective of achieving free trade
in the hemisphere.
Such a renewal of commitment must be embedded in the Declaration
of the next Summit of the Americas in Buenos Aires in November
Catching its breath
For the Caribbean countries, the delays in the FTAA negotiations
may allow some breathing space. Several of the countries in
the region are still far from able to cope with the changes
and need time to adjust.
The full CSME needs to be operational before additional steps
toward hemispheric, or wider global liberalisation, is agreed.
In trade negotiations, at this point the region seems to be
heading sequentially toward a completed Economic Partnership
Agreement (EPA) in 2007, an FTA with the US and an eventual
Dr Anthony T Bryan is a senior associate in the Americas Program
at the Centre for Strategic and International Studies in Washington,
DC and Professor Emeritus at the University of Miami.