James Stamps, "Free Trade Area of the Americas"

[Excerpted from International Economic Review March/April/May 1998. pp. 1-5]

In December 1994, the 34 democratically-elected heads of state of the Western Hemisphere met in Miami for the first hemispheric summit since 1967 (see table 1). At the Miami Summit, President Clinton and the other leaders committed to "to begin immediately to construct the Free Trade Area of the Americas (FTAA) in which barriers to trade and investment will be progressively eliminated. . . . to conclude the negotiations of the Free Trade Area of the Americas no later than 2005, and agree that concrete progress toward the attainment of this objective will be made by the end of this century."

Since the 1994 Miami Summit, hemispheric trade ministers, vice ministers, and their representatives have met on numerous occasions in anticipation of the formal launch of the FTAA negotiations. In addition, twelve working groups were created to lay the groundwork for eventual FTAA negotiations. The working groups covered: dispute settlement (established in May 1997); market access; customs procedures and rules of origin; investment; sanitary and phytosanitary measures; standards and technical barriers to trade; subsidies, antidumping and countervailing duties; smaller economies; competition policy; government procurement; intellectual property rights; and services. Each working group was directed to compile inventories of hemispheric practices; identify areas of commonality and divergence; and provide recommendations on how to proceed in the construction of the FTAA in each respective area. The U.S. Administration periodically has provided specific recommendations to the Congress on the FTAA negotiations. In its September 1997 report, the Administration stated that the FTAA "needs to go beyond the WTO and be future-oriented. . . . be responsive to new technologies and new ways of doing business, and . . . be the 'state-of-the-art' in trade and investment agreements when it is concluded."

As the FTAA process entered 1997, several countries had expressed different opinions and tabled specific proposals for the scope and the timing of the FTAA negotiations. Among the issues about which opinions differed were-

compatibility of the FTAA with existing or new sub-regional economic groupings;
phasing and scope of the FTAA negotiations; and,
the role of input from labor in the negotiations.

At the September 1996 FTAA Vice Ministerial Meeting in Florianopolis, Brazil, the United States put forward a position paper listing 12 issues for discussion at subsequent meetings during 1997. Among other things, the United States proposed that the FTAA negotiations commence with a first stage of negotiations focusing on hemisphere-wide disciplines-namely, investment; services; government procurement; standards and technical barriers to trade; sanitary and phytosanitary procedures; customs procedures; intellectual property rights; and market access for industrial and agricultural products. The proposed second stage of the negotiations, beginning approximately at the turn of the century, would address subsidies; safeguards; antidumping and countervailing duties; competition policy; and dispute settlement. The United States also proposed that the FTAA "incorporate the best appropriate elements of the WTO or existing sub-regional integration arrangements," that the FTAA "strive to further secure the observance and promotion of worker rights," and that the FTAA be a "hemisphere-wide" and "comprehensive agreement."

Final Phase Discussions Before Negotiations

The year 1997 marked the final phase of discussions among the FTAA members leading up to the April 1998 launch of formal negotiations. The hemispheric vice ministers met in February (Recife, Brazil) and in April (Rio de Janeiro, Brazil) 1997 to address the U.S. proposals as well as the ongoing differences of opinions. By the April 1997 meeting, there was agreement in favor of a comprehensive launch of FTAA negotiations at the 1998 Summit meeting. However, the United States and several Latin American countries continued to differ in their respective proposals on how and what to negotiate. Brazil had proposed a slower timetable for negotiations in 3 phases, with primarily "business facilitation" measures such as the harmonization of customs procedures and certain standards to be negotiated first, with tariff-reducing market access talks not scheduled until a later phase closer to the 2005 deadline.

At the Third FTAA Trade Ministerial Meeting held in Belo Horizonte, Brazil, on May 13-16, 1997, the foreign trade ministers reviewed the FTAA work program; evaluated the progress that has been achieved in trade liberalization in the hemisphere since the 1994 Miami Summit, noting in particular the increasing widening and deepening of existing sub-regional and bilateral agreements; and considered the work undertaken by the vice ministers regarding the various approaches for construction of the FTAA. In their Joint Ministerial Declaration, the ministers committed to formally launch the FTAA negotiations at the April 1998 FTAA Summit of the Americas in Santiago, Chile, and agreed to so recommend to their respective heads of state. However, because of ongoing differences of opinions, the ministers agreed to leave the formulation of the FTAA negotiation procedures, including such issues as objectives, approaches, structure, and venue of the negotiations, for their next (fourth) meeting scheduled for March 1998. The ministers also reached agreement in the following areas during the Belo Horizonte meeting:

to use consensus as the basis of decision making in the FTAA process;
to ensure that the outcome of the FTAA negotiations will constitute a "comprehensive single undertaking" that can co-exist with bilateral and sub-regional agreements "to the extent that the rights and obligations under these agreements are not covered by or go beyond the rights and obligations of the FTAA";
to make the FTAA consistent with the WTO; to allow countries to negotiate and join the FTAA individually or as members of a sub-regional integration group negotiating as a unit; to give special attention to the needs and economic conditions of smaller economies in the FTAA process; to establish a temporary administrative secretariat to support the FTAA negotiations; to conclude the FTAA negotiations by the year 2005, at the latest;
to consider the inputs from stakeholders, including labor, and to encourage all countries to take such inputs into account during the negotiations; and to establish a Preparatory Committee (PrepCom) consisting of the 34 vice ministers responsible for trade, with the responsibility of intensifying their efforts to build consensus and to complete recommendations on the remaining issues-namely the objectives, approaches, structure, and venue for the FTAA negotiations-for decision by the Ministers at their next meeting in San José, Costa Rica in March 1998.

The first FTAA PrepCom meeting took place in Lima, Peru on June 1, 1997. At that meeting, senior trade officials approved the outline of the agenda to be negotiated for the April 1998 Summit including a U.S.-proposed reference to labor standards. Differences among participants again surfaced during the second PrepCom meeting that took place October 27-30, 1997 in Costa Rica. At that meeting, the MERCOSUR countries presented their request that FTAA negotiations be based on the principles of "balance, simultaneity, and gradualism"; other countries expressed the concern that "gradualism" could slow the pace of the negotiations. Other key issues left unresolved at the Costa Rica meeting were:

the site for the FTAA negotiations-the United States had proposed Miami, while several Latin American nations had proposed Rio de Janeiro among other locations;
the structure of the negotiations, including the oversight, advisory, and support bodies needed; the number of working groups that will be set up as negotiating groups once formal FTAA negotiations begin-various participants have proposed that from as few as 5 to as many as 12 negotiating groups be established; trade in agricultural products, including a decision as to whether to create a separate negotiating group on agriculture or to address agricultural matters in the market access group; and
the question of whether to include labor and environmental issues in the FTAA negotiations

.These and other issues were addressed again at the third PrepCom meeting in San José, Costa Rica, February 10-12, 1998, but again no resolution was made.

FTAA Negotiation Framework

All outstanding issues were resolved at the fourth PrepCom meeting in San José, Costa Rica, March 17, 1998, and the subsequent meeting of hemispheric trade ministers on March 19, 1998. In describing the final FTAA negotiation framework, Ambassador Barshefsky stated that "[t]he United States achieved all of its key objectives . . . setting the stage for a comprehensive and successful launch of substantive negotiations at the [April 1998] Santiago Summit."

In their Joint Declaration issued at the conclusion of their meeting, the trade ministers- reaffirmed their commitments to the declarations made at the 1994 Miami Summit; pledged to recommend to their respective heads of state to initiate negotiation of the FTAA during the Second Summit of the Americas held in Santiago, Chile, on April 18-19, 1998;

reaffirmed their commitment to concluding the negotiations no later than 2005; reaffirmed their commitment to achieve concrete progress in the negotiations by the year 2000, setting as a specific goal the conclusion of agreements on business facilitation in such areas as customs procedures, professional services, and intellectual property rights by the turn of the century; and
established an expert government-private sector working group that will make recommendations at the next FTAA meeting on the topic of electronic commerce in the hemisphere.

Agreement was also reached on matters concerning the structure, organization, and venue of the negotiations. The initial structure is intended to be flexible and may be modified over time as required to facilitate the negotiations. Moreover, a Trade Negotiations Committee (TNC) was established at the vice-ministerial level with the responsibility of ensuring the full participation of all the countries in the FTAA process. The TNC is required to meet at least twice a year beginning June 30, 1998.

Negotiating Groups

Nine negotiating groups were established at the March 1998 meeting. The negotiating groups (and their respective initial chairman and vice-chairman) are for: market access (Colombia/Bolivia); investment (Costa Rica/Dominican Republic); services (Nicaragua/Barbados); government procurement (United States/Honduras); dispute settlement (Chile/Uruguay and Paraguay); agriculture (Argentina/el Salvador); intellectual property rights (Venezuela/Ecuador); subsidies, antidumping, and countervailing duties (Brazil/Chile); and competition policy (Peru/Trinidad and Tobago). The TNC is responsible for guiding the work of the negotiating groups.

Venue

The meetings of the negotiating groups will be held in a single venue, which will rotate among the following three countries according to a specified timetable:

Miami, United States, from May 1, 1998 to February 28, 2001;

Panama City, Panama, from March 1, 2001 to February 28, 2003; and

Mexico City, Mexico, from March 1, 2003 to December 31, 2004 (or until the conclusion of the negotiations).

Chairmanship of the FTAA Process

The chairmanship and vice-chairmanship of the FTAA process will rotate among different countries at the end of each subsequent ministerial meeting among the following countries and in the following order:

chairman: Canada; vice-chairman: Argentina, May 1, 1998-October 31, 1999; chairman: Argentina; vice-chairman: Ecuador, November 1, 1999-April 30, 2001;
chairman: Ecuador; vice-chairman: Chile, May 1, 2001-October 31, 2002; and
co-chairman: Brazil and the United States; no vice-chairman; November 1, 2002-December 31, 2004 (or until the conclusion of the negotiations).

Participation of Civil Society

The FTAA process will establish a committee (chairmanship to be decided at a later date) of government representatives, open to all member countries, to receive inputs from business and other sectors of production, labor, environmental, and academic groups, to analyze their inputs, and to present the range of views for consideration in the FTAA process.

Launch of Negotiations

On April 18-19, 1998, the democratically-elected Heads of States and Governments of the countries of the Americas met in Santiago, Chile, issuing The Declaration of Santiago at the conclusion of the second summit of the Americas. In it, they:

reaffirmed their will to continue this most important undertaking which requires sustained national efforts and dynamic international cooperation; approved the Plan of Action and undertook to carry out its initiatives;
expressed confidence "that the Free Trade Area of the Americas will improve the well being of all our people;" directed Ministers Responsible for Trade to begin negotiations for the FTAA, in accordance with the March 1998 Ministerial Declaration of San Jose;
reaffirmed their determination to conclude the negotiation of the FTAA no later than 2005, and to make concrete progress by the end of this century;
stated that the FTAA agreement will be "balanced, comprehensive, WTO-consistent, and constitute a single undertaking;"
said the FTAA process will be transparent, and take into account the differences in levels of development and size of the economies in the Americas, in order to create opportunities for participation by all countries; and
encouraged all segments of civil society to participate in and contribute to the process in a constructive manner.

President Clinton highlighted the advances registered in the last three and half years since the Miami Summit, noting that the regional economy grew 15 percent last year and inflation was the lowest level in the last fifty years. Other achievements cited by Clinton were Chile's and Uruguay's fights against poverty, the reduction of inflation in Brazil and Argentina, foreign investment attracted by Bolivia, investment in the energy resources of Venezuela and the fact that Peru and Ecuador were able to move towards peace.

The U.S. President reconfirmed before the thirty-three leaders U.S. willingness to move toward the realization of the FTAA stating that "it is something we must do." He also called for deepening democracy and human rights in the region and adoption of measures against corruption and drugs. In informal remarks on April 30, 1998, however, President Clinton indicated that he would not renew his request for fast track negotiating authority until after this Fall's Congressional elections. Such authority is considered essential to formally concluding an FTAA.

Shortly after the Summit, President Clinton also accepted the resignation of Thomas (Mac) MacLarty, who had served as his Special Envoy to the Americas and is credited with helping strengthen U.S. relations with the region.