The FTAA's Trade Negotiating Committee (TNC) held a crucial meeting two weeks ago in Port of Spain, Trinidad. The meeting confirmed the existence of two widely different conceptions of the design of the agreement.
Much has changed since the FTAA process was initiated at the Miami Summit of the Americas in 1994 and the launch of formal negotiations at the Santiago Summit in 1998. The original design was for an agreement that would be "WTO plus"; meaning that more stringent rules would be applied for the liberalization of trade in goods and services and the protection of intellectual property than those obtaining in the WTO; and the agreement would extend to the treatment of investment, government procurement and competition policy.
Moreover, since the FTAA would be a reciprocal arrangement; the treatment of smaller and less developed economies would not be the subject of separate negotiations in the architecture of the process. A Consultative Group on Small Economies would merely bring their special concerns to the attention of the nine negotiating groups. A proposed Hemispheric Cooperation Programme (HCP) would mobilize technical assistance for capacity building to help these countries to negotiate the agreement and implement its provisions.
In the past two years there has been an unraveling of the earlier consensus that prevailed around these basic principles of the FTAA. The smaller countries, especially those in the CARICOM grouping, have been insisting on recognition of their needs by means of special and differential treatment involving elements of extended or permanent non-reciprocity in obligations.
A special brainstorming session on this subject was held by the Association of Caribbean States (ACS) and the Latin American Economic System (SELA) in Caracas just prior to the TNC meeting. This helped to refine the kind of measures that would give effect to S&D in the different areas of the FTAA.
More recently, other proposals have emerged for a considerable scaling back of the agreement in either breadth or depth. The rules for intellectual property, investment, competition policy and government procurement would be limited in their application or these subject areas would be shifted entirely from the FTAA to the WTO negotiating arena.
Proposals to this effect were put forward at the TNC meeting in Port of Spain by the MERCOSUR grouping, led by Brazil; with varying degrees of support from some other South American countries and from CARICOM.
Underlying the MERCOSUR position is the view that South American economic integration should be consolidated in advance of a full-fledged FTAA.
Notably, negotiations for a MERCOSUR-Andean Community agreement resumed immediately after the TNC meeting.
MERCOSUR is also insisting that stringent rules for market access in the FTAA would apply equally to trade in agricultural goods; and hence that the vexed question of US agricultural subsidies should be addressed.
Some countries also believe that the proposed HCP is not enough. They argue for the creation of special funds under the FTAA to address asymmetries in size and levels of development by financing infra-structural works and business re-engineering. Venezuela's proposal is for a Fund for
Structural Convergence, while CARICOM speaks of a Regional Cooperation Fund. In either version, the Funds would operate in similar to the European Union's Structural Funds and would be integral to the FTAA. The ACS-SELA brainstorming session also covered this subject.
These are crucial issues for the countries of the Greater Caribbean.
The upcoming meetings of the US and Brazilian co-chairs, the Hemispheric Cooperation programme, the Consultative Group on Small Economies, the special TNC meeting and the Ministerial Meeting to be held in Miami in mid-November, will be followed with great interest.
(Professor Norman Girvan is Secretary General of the Association of Caribbean States.)