Articles

What is the FTAA?
What is your Government negotiating on your behalf?
Why?

All these are legitimate questions. The problem for many citizens of the Caribbean is that they have absolutely no idea of the answers. In that ignorance they are not unlike the vast majority of citizens of the United States or Canada or Brazil. But, I would submit that citizens of the small economies of the Caribbean have more of a need to know or more accurately more of a stake in knowing because to a man or woman they will be more effectively impacted than any of the larger countries of the hemisphere. This article, and those which follow, will attempt to fill the knowledge gap that currently exists.

GENESIS OF THE FREE TRADE AREA OF THE AMERICAS (FTAA)

The effort to unite the economies of the Western Hemisphere into a single free trade agreement began at the Summit of the Americas, which was held in December 1994 in Miami. Trade cooperation is but one element of the Summit of the Americas process. Other areas of cooperation, in and out of the public eye since 1994, relate to finance, transportation, health and education, drug control and governance.

As far as trade is concerned, our Heads of Government agreed to construct a Free Trade Area of the Americas, or FTAA, in which barriers to trade and investment will be progressively eliminated, and to complete negotiations for the agreement by 2005.

Since that time, the negotiations moved from a preparatory phase into the negotiation phase in 1997. The venue of the negotiations has moved from Miami to Panama City to its present site in Puebla, Mexico. Negotiators have therefore wracked up frequent flyer miles while working to complete an extremely complex series of mini-agreements knitted into a single larger Agreement. The objective is to facilitate the freer movement of goods, services and capital in the Western Hemisphere through rules governing that trade in the following areas:

Goods
Intellectual Property
Services
Competition Policy
Investment
Subsidies & Anti-Dumping
Agriculture
Dispute Settlement
Government Procurement

FTAA STRUCTURE

Each Negotiating Group has a Chairman and a Vice-Chairman. Technical support is provided to the process by the Tripartite Committee (Technical experts from the Organization of American States, United Nations Economic Commission for Latin America and the Caribbean, and the Inter-American Development Bank). Administrative support for the negotiations is provided by the Secretariat of the FTAA.

In addition to the above, there is an overall Chair of the negotiations. The Chairmanship of the Negotiations: rotates every eighteen months, or at the conclusion of each Ministerial meeting. The following countries have been designated to serve as Chair of the FTAA process for successive periods: Canada; Argentina; Ecuador; as well as Brazil and the United States (jointly). The two largest countries in the hemisphere now share that responsibility.

Heads of Government have given their Trade Ministers authority to exercise the ultimate oversight and management of the negotiations. In turn, between Ministerial meetings, the Vice Ministers Responsible for Trade, acting as the Trade Negotiations Committee (TNC), have the central role in managing the FTAA negotiations. The TNC:

• guides the work of the negotiating groups and other committees and groups and decides on the overall architecture of the agreement and institutional issues
• ensures the full participation of countries in the FTAA process
• ensures transparency in the negotiations, overseeing the administrative secretariat

At the end of September 2003 the TNC will convene in Port of Spain. It will have several crucial matters to decide and will pass those recommendations to the Ministers of Trade for consideration at the upcoming Ministerial meeting in Miami in late November 2003.

GUIDING PRINCIPLES OF THE FTAA NEGOTIATIONS

In pursuing the negotiations, the participating countries decided to abide by a number of principles. These include, among others:

• decisions will be taken by consensus – In pursuing the negotiations, the majority will not rule. All parties must agree with any decision, and the objection of any single delegation, no matter how small is enough to prevent any particular decision from being taken;
• negotiations will be conducted in a transparent manner – Information, as much as is possible, will be shared with the public of the region. Of course, for the negotiation to proceed there are limits to the transparency that is possible but a sincere effort is being made. Now, for example, anyone can access the latest public text of the FTAA Agreement at the FTAA’s Web site (www.alca-ftaa.org) ;
• the FTAA will be consistent with World Trade Organization rules and disciplines, and should improve upon these rules and disciplines wherever possible and appropriate – Anything agreed at the FTAA level must be in accordance with the rules set by the World Trade Organization. The World Trade Organization (of which all FTAA participants with the exception of the Bahamas are members) will eventually have the opportunity to pass judgement on the final Agreement. For their part, FTAA members agree that the FTAA must be an improvement on existing WTO provisions and market access;
• the FTAA will be a single undertaking (“nothing is agreed until all is agreed”) – Countries will not be able to choose parts of the Agreement they like and others they don’t. Similarly all parts of the FTAA will come into effect at the same time. ;
• the FTAA can coexist with bilateral and sub-regional agreements and countries may negotiate and accept the obligations of the FTAA individually or as members of a sub-regional integration group. – CARICOM will not cease to exist as a result of the FTAA as it provides generally, and in specific areas, better treatment to its members than is likely to be negotiated under the FTAA.; and
• special attention will be given to the needs of the smaller economies – Though not defined, CARICOM views all its members as smaller economies and therefore deserving of receiving more favourable treatment from other FTAA parties.

SMALLER ECONOMIES

CARICOM initiated the idea that other FTAA members should provide special treatment to smaller economies and has played a leading role in the development of the idea over the last several years. The basic premise is that differences in size of economies of the FTAA will impact on the ability of countries to enjoy the fruits of the FTAA process and specific measures must be developed to redress these imbalances. A Consultative Group on Smaller Economies has been established to monitor the extent to which issues of concern to smaller economies have been taken into consideration in the nine Negotiating Groups. Some countries favour implementing this idea through the market access aspect of the negotiations. CARICOM considers that a multi-faceted approach is needed. In other words, there should be specific provisions applying specially to CARICOM in the text of the Agreement, preferential market access, and a cooperation element involving financial and other resources to address the special needs of smaller economies.

To date, FTAA members have not agreed on a wide-ranging development fund type of assistance. Instead, for the time being, countries have implemented what is being called a Hemispheric Cooperation Programme or HCP. The HCP is being developed and implemented by the Consultative Group on Smaller Economies and aims to strengthen the capacity of smaller economies to participate in and take advantage of FTAA. Ostensibly it will promote closer linkages with development imperatives and trade liberalization, strengthen institutions and build capacity for policy-making. At the moment, smaller economies have been engaged in the development of national strategies and CARICOM countries have received technical assistance from the OAS, IADB and UNECLAC as well as from private consultants. These strategies will define, prioritize, and articulate their needs related to strengthening the capacity for preparing for negotiations, implementing trade commitments, and adjusting to integration.

Meanwhile some guidelines have been developed for the specific measures that will implement the principle of special and differential treatment for Smaller Economies. Among the stipulations are that the measures should:

1. Be flexible and take account of individual needs.
2. Be transparent, simple and easily applicable.
3. Be determined by each of the Negotiating Groups and by the Trade Negotiations Committee when it impacts on more than one Negotiating Group
4. Be determined on the basis of case-by-case analysis
5. Include transitional measures, which could be supported by technical cooperation programs.

CARICOM IN THE NEGOTIATIONS

CARICOM participates as a group in these negotiations. Heads of Government gave to the Caribbean Regional Negotiating Machinery (CRNM) the responsibility for coordinating CARICOM participation. Ambassador Richard Bernal leads the CRNM. He is supported by a relatively small group of technical staff. Presently the CRNM includes technical experts on Services, Intellectual Property, Agriculture, Government Procurement and Market Access. In addition, the CRNM has received financial assistance to allow for the conduct of a number of technical studies in areas related to the negotiations. The CRNM also has held a series of Technical Workshops on areas being negotiated with public servants in the region. The CRNM is responsible for the negotiations at the World Trade Organization, the renegotiation of the cooperation agreement with Europe as well as negotiations with Canada and the FTAA.

At the FTAA negotiations, the CRNM has appointed a Lead Negotiator and an Alternate Negotiator for each body of the negotiations. This process has allowed CARICOM to be an active participant in all aspects of the negotiation of the FTAA.

CARICOM has held leadership positions in the past, including Chairing the Consultative Group on Smaller Economies, Investment and Services as well as Vice-Chairs of other groups such as Anti-dumping and Subsidies and Market Access. At the moment, the Bahamas chairs the Negotiating Group on Services and Trinidad and Tobago is Vice-Chair of the Negotiating Group on Competition Policy and the Consultative Group on Smaller Economies.

Currently, also CARICOM has endorsed the candidature of Port of Spain for the site of the Permanent FTAA Secretariat. Other candidates are Miami, Panama City and Atlanta.

Future articles will provide specific information on the various FTAA Negotiating Groups, discuss some of the issues of highest relevance to the Caribbean, and consider why Governments negotiate free trade agreements.