BRAZIL: FTAA-lite wins as summit ends early
The fears that the Free Trade Area of the Americas (FTAA) summit in Miami would end in a shouting match and failure proved misplaced. In fact, the meeting ended cordially, and a day early, as the two main protagonists decided to cut their losses and agree to disagree.
In essence, the Brazilian vision triumphed. The Brazilian vision is that no country should be forced to liberalise its markets. Each country can choose what it will liberalise and to whom. This was an apparent setback for Mexico, Canada and Chile, which have opened their markets to the US: the risk is now that other countries will get the same access as they have to the US without having to open up their domestic markets in the same way.
The Argentine foreign trade minister, Martin Redrado, technically the deputy foreign minister, explained that the summit's final communiqué showed that the 34 countries invited to form the FTAA have agreed on a way of establishing the area. In fact, they have given themselves another year to sort out the 5,000 tricky issues, rather than thrashing them out, as had been hoped, at the Miami summit.
Both the US and Brazil have given ground. The US has dropped its demand that the FTAA should set standards for patent protection and government procurement and ensure fair treatment for foreign investors. Brazil has dropped its demand that the US end US$40bn in agricultural subsidies.
What the final communiqué implies is that each of the FTAA countries has to agree to a minimum standard but that each country can also offer more liberalisation to particular partners, if it wishes. The communiqué also specifies that each country can opt out of the bits of the FTAA it does not like. So Brazil need not sign up to the FTAA rules on intellectual property or government procurement, while the US need not sign up to the rules on agricultural subsidies. Exactly how the minimum standards will work and be enforced is far from clear. Brazil appears to have avoided linkages or conditionality, which the US and its close trade partners were threatening. This is important. The communiqué does not give countries the right to impose conditions on other countries when they liberalise their trade.
The Brazilian foreign minister, Celso Amorim, has been careful not to boast about Brazil's success. He denied that the communiqué pointed towards a 'FTAA-lite': he said that if each country wanted more liberalisation, and if the negotiations over the next year were successful, a broad (or full strength) FTAA could result.
What is not clear is what happens next. None of the ministerial teams in Miami seemed clear about how the new flexible structure will work. This could mean that the next meeting of FTAA officials, in February, will be as difficult as the last meeting was in Port of Spain, Trinidad.
The US government, which will then be in a pre-election phase, is unlikely to be very flexible. The danger then for Brazil, if the next meeting is rowdy, is that the next ministerial FTAA meeting is scheduled for the middle of 2004 in Brazil. This meeting could produce the final crisis for the FTAA.
In theory, the US government should not want the FTAA to collapse. By then it may even be desperate for a foreign policy success. The US is most likely, however, to want to keep the FTAA on the back-burner until the presidential and congressional elections are over next November. It will also probably keep the bilateral free-trade agreements it is either negotiating or promising to negotiate with its closest allies in the region on the same schedule. Each of these FTAs (with Central America, Panama, and with each of the Andean countries with the exception of Venezuela) is negotiated by the White House but has to be approved by Congress.
In essence, the Brazilian vision triumphed. The Brazilian vision is that no country should be forced to liberalise its markets. Each country can choose what it will liberalise and to whom. This was an apparent setback for Mexico, Canada and Chile, which have opened their markets to the US: the risk is now that other countries will get the same access as they have to the US without having to open up their domestic markets in the same way.
The Argentine foreign trade minister, Martin Redrado, technically the deputy foreign minister, explained that the summit's final communiqué showed that the 34 countries invited to form the FTAA have agreed on a way of establishing the area. In fact, they have given themselves another year to sort out the 5,000 tricky issues, rather than thrashing them out, as had been hoped, at the Miami summit.
Both the US and Brazil have given ground. The US has dropped its demand that the FTAA should set standards for patent protection and government procurement and ensure fair treatment for foreign investors. Brazil has dropped its demand that the US end US$40bn in agricultural subsidies.
What the final communiqué implies is that each of the FTAA countries has to agree to a minimum standard but that each country can also offer more liberalisation to particular partners, if it wishes. The communiqué also specifies that each country can opt out of the bits of the FTAA it does not like. So Brazil need not sign up to the FTAA rules on intellectual property or government procurement, while the US need not sign up to the rules on agricultural subsidies. Exactly how the minimum standards will work and be enforced is far from clear. Brazil appears to have avoided linkages or conditionality, which the US and its close trade partners were threatening. This is important. The communiqué does not give countries the right to impose conditions on other countries when they liberalise their trade.
The Brazilian foreign minister, Celso Amorim, has been careful not to boast about Brazil's success. He denied that the communiqué pointed towards a 'FTAA-lite': he said that if each country wanted more liberalisation, and if the negotiations over the next year were successful, a broad (or full strength) FTAA could result.
What is not clear is what happens next. None of the ministerial teams in Miami seemed clear about how the new flexible structure will work. This could mean that the next meeting of FTAA officials, in February, will be as difficult as the last meeting was in Port of Spain, Trinidad.
The US government, which will then be in a pre-election phase, is unlikely to be very flexible. The danger then for Brazil, if the next meeting is rowdy, is that the next ministerial FTAA meeting is scheduled for the middle of 2004 in Brazil. This meeting could produce the final crisis for the FTAA.
In theory, the US government should not want the FTAA to collapse. By then it may even be desperate for a foreign policy success. The US is most likely, however, to want to keep the FTAA on the back-burner until the presidential and congressional elections are over next November. It will also probably keep the bilateral free-trade agreements it is either negotiating or promising to negotiate with its closest allies in the region on the same schedule. Each of these FTAs (with Central America, Panama, and with each of the Andean countries with the exception of Venezuela) is negotiated by the White House but has to be approved by Congress.