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 We insist that all FTAA participants must share the benefits of free
trade
equally, that liberalization of trade should be reciprocal, and
that it should
lead to the attenuation—rather than the
aggravation—of the existing
disparities in our region.
By
Rubens Barbosa
The negotiating process of the Free Trade Area of the Americas (FTAA) will enter its
final stage in the next few months as 34 countries begin their detailed
discussions on trade liberalization through the reduction of tariffs, including
tariff peaks, and the elimination of nontariff trade barriers.
Brazil wants the FTAA to be a landmark agreement that will define new trade
patterns in the hemisphere in a balanced and equitable manner.
This essentially means that it will contribute to fostering and advancing our
many common values and goals, as well as a greater sense of partnership and
cohesion. The FTAA should help to reduce the disparities that now exist in and
among our countries, as well as throughout our region.
The ultimate goal of the process is not free trade for its own sake, but rather
achieving the developmental, technological, economic, social, and political
gains that we believe an FTAA can help generate.
These benefits will not emerge automatically or as an inevitable corollary of
increased trade liberalization, but will require a balanced and equitable
process of give and take.
Current circumstances clearly attest to the need to improve market access for
all countries in Latin America, which is the best way to avoid periodic
financial crises and overcome difficulties in capital market assessments.
Brazil has been an active player in the ongoing negotiating process aimed at
establishing an FTAA. The Brazilian government has pursued these negotiations in
earnest since the initiative was first introduced, and shares the will to
conclude them successfully by 2005.
From the start of the negotiations, Brazil's main goals have been to achieve
market access, reciprocity, and balanced results at the end of the FTAA process.
But to achieve a balanced, equitable, and viable agreement we must bear in mind
that tariff reduction or elimination is not the only, and sometimes not even the
most significant, step toward freer trade. Ending practices such as the unfair
subsidization of agricultural production and the abusive application of trade
remedy mechanisms is as necessary as lower tariffs to allow trade and progress
to flourish around the region.
A LOOK AT THE ISSUES
Beginning this November, Brazil and the United States will be co-chairs during
the final negotiating stage and thus will share the responsibility of dealing
with the existing challenges, as well as those that arise during this period
when complex trade-related rules will take their final shape and final market
access concessions will be made.
To engage in this delicate and complex process, it is necessary that every party
have a mandate to negotiate all trade-related issues that are on the table. In
this sense, the recent passage by the U.S. Congress of trade promotion authority
(TPA) for the president was a positive development, enabling the United States
to engage fully in the process and providing momentum for the multilateral and
hemispheric negotiations to move forward.
The TPA, however, is merely a necessary precondition for negotiations to
proceed; it does not, by any means, provide a formula for overcoming some of the
more important hurdles in the negotiating agenda that will need to be addressed
in order to successfully conclude the negotiations by January 2005. Because of
the restrictive language it contains in certain key areas, the TPA, as approved,
may limit the U.S. capacity to negotiate and may delay for an unreasonable
period of time the liberalization of trade for a list of sensitive products.
Agreeing on methods and modalities to dismantle tariffs in the negotiations on
market access and agriculture, as well as defining the future framework of the
services chapter, are among the critical issues, as are trade remedies and
disciplines for domestic support in agriculture, which still need to be worked
out in order for us to conclude a successful hemispheric agreement by 2005.
SHARING THE BENEFITS
Brazil recognizes that a number of the difficulties in the negotiating process
are related to the economic asymmetries among the countries of the Americas, and
that successful completion of the FTAA will require taking into account the
needs of the smaller economies, both during and after the negotiations.
Nevertheless, it would be contrary to the spirit and the ultimate goal of the
FTAA negotiations to adopt rules and disciplines that in the end would allow the
FTAA to become a mere aggregation of bilateral understandings, rather than a
comprehensive agreement built on the regional application of the most favored
nation principle.
In view of our trade negotiating goals, allowing a "bilateral approach" to
prevail as the general rule would result in widespread discrimination among
preferential partners, which, in turn, would result in the artificial diversion
of trade and investment flows within the hemisphere.
We therefore insist that all participants must share the benefits of free trade
equally, that liberalization of trade should be reciprocal, and that it should
lead to the attenuation—rather than the aggravation—of the existing
disparities in our region.
For Brazil, as was stated by President Fernando Henrique Cardoso in his speech
at the Quebec City Summit, "a Free Trade Area of the Americas is welcome if its
creation is a step toward providing access to more dynamic markets; if it indeed
leads to common antidumping rules; if it reduces nontariff barriers; if it
prevents the protectionist distortion of sound sanitary norms; if, while
protecting intellectual property, it also furthers the technological
capabilities of our people; and also if it goes beyond the Uruguay Round to
redress the inequalities resulting from those negotiations, particularly with
regard to agriculture. Otherwise, it would be irrelevant or, worse,
undesirable."
THE NEED FOR COMPROMISE
The simultaneous negotiation of a hemispheric FTA and the World Trade
Organization (WTO) Doha Round will certainly represent a challenge for the
co-chairs of FTAA negotiations. It is true that multilateral rules establish the
framework within which regional or bilateral trade agreements are negotiated. It
is also true that some of the FTAA "hot topics" are equally controversial in the
multilateral arena. So these two processes will inevitably become intertwined
between now and 2005.
I do not have—and I actually doubt that anyone has—an easy answer for all
the "what if" scenarios. Let us hope that a spirit of compromise will prevail,
so that freer and fairer trade for all can be implemented on the basis of
negotiated breakthroughs. Brazil will be doing its part, together with our Mercosur partners in the FTAA, and the United States will certainly do its part,
as became clear with its groundbreaking agricultural proposal presented last
July in the WTO.
But one must acknowledge that deadlocks at the multilateral level, especially
those regarding agriculture, subsidies, and trade remedies, could jeopardize
completion of the hemispheric negotiations within the agreed timeframe, taking
into consideration the principle of single undertaking in both negotiations.
Another crucial issue for the completion of the FTAA hinges on the simultaneous
negotiation of ongoing and new trade initiatives among hemispheric partners.
Although initiatives aimed at providing better market access conditions within
the region should be fully supported, there is a potential risk of dissipating
the negotiating efforts to complete the FTAA once our partners have achieved
their main trade goals through other negotiating fora.
LONG-STANDING PRIORITIES
The FTAA constitutes only one part of Brazil's broader trade negotiating agenda
in the hemisphere, the centerpiece of which has been the construction of
Southern Cone Common Market, MERCOSUR.
MERCOSUR has been affected by the current economic and financial crises in all
its member countries, casting doubts about its survival.
For Brazil, nonetheless, the current crisis provides a priceless opportunity to
review our economic integration agenda. Any objective assessment of the current
situation would clearly indicate the vast successful interaction that already
exists and the degree to which the economies in the region have effects on one
another. Our geographical circumstances, as well as the commonality of our
values, objectives, and even cultures, points to a need for increased
cooperation and integration. However, we are aware that, in order to keep moving
forward, we will have to define our trade agenda realistically within new and
achievable timeframes, so as to pursue our goal of building a common market.
The specific details of Brazil's future positions on MERCOSUR and the FTAA will
obviously depend on the results of the October 2002 elections. All candidates,
although proposing a more assertive stance in the negotiations, have indicated
their intention to proceed with the negotiating process.
But a retrospective look at our commitments and achievements in these two
negotiating arenas can offer important insights into Brazil's core trade policy
guidelines that in all likelihood will be maintained by the government of the
next president of Brazil, regardless of who is elected. These long-standing
priorities have been to increase market access for our main exports and improve
our competitiveness in the international economy through economic integration.
We are fully aware that the creation of the FTAA will involve costs similar to
those associated with all integration and trade liberalization processes. But if
a balanced and equitable agreement is achieved, its benefits will clearly
outweigh its costs. That is why our commitment to these negotiations has
remained steady and strong since their inception by the heads of state during
the Miami Summit of the Americas in 1994.
Brazil believes that fundamental values—such as strengthening democracy,
protecting human rights, safeguarding the environment, and fighting against
poverty, discrimination, and organized crime—should be placed at the core of
any meaningful integration process in the hemisphere.
Brazil and the United States have roles to play in this process, which should be
the basis for progress and sustained growth for all countries in the region.
Rubens Barbosa is the Ambassador of Brazil to the United States
and can be reached by email at
ambassador@brasilemb.org
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