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The Honolulu Advertiser

Posted on: Friday, November 21, 2003

'Hollow' agreement emerges from free-trade talks

By Paul Blustein
Washington Post

Demonstrators attempted to pull down a fence while trying to disrupt international talks on free trade yesterday in Miami.

Associated Press

MIAMI — Top officials from the United States, Canada, Latin America and the Caribbean agreed yesterday on parameters for a free-trade zone in the Western Hemisphere. But they bridged vast differences with fuzzy language suggesting that the trade pact will be much less ambitious than initially conceived.

Ending their gathering a day earlier than scheduled, ministers from 34 countries maintained that they had taken a significant step toward forging a "Free Trade Area of the Americas," an important goal of President Bush.

"We're at the point where we're negotiating an ALCA, not just seeking it," said U.S. Trade Representative Robert B. Zoellick, using the Spanish acronym for the FTAA.

Brazilian foreign minister Celso Amorim, who co-chaired the meeting with Zoellick, contrasted the outcome with the breakdown of global trade talks in Cancun, Mexico, two months ago, saying, "Today we can be very happy that we have reached a common result."

But the declaration, a vaguely-worded compromise between the clashing positions of the United States and Brazil, indicated that the FTAA has undergone a substantial alteration since talks were initiated nine years ago. The original plan would have essentially extended the North American Free Trade Agreement all the way south to Tierra del Fuego, but the declaration envisions a watered-down accord in which member countries can pick and choose how far they want to go in making their economies appealing to multinational companies.

As a result, even though protesters outside the heavily-guarded downtown perimeter were denouncing their governments for acting on behalf of corporate interests, anti-trade activists were jubilant at the conclusion.

"Today's outcome turns the FTAA into a hollow shell of an agreement," said David Waskow, a trade policy analyst with Friends of the Earth, which has opposed many trade pacts on the grounds that they protect foreign firms at the expense of environmental standards.

The delight of activists like Waskow was matched by gloom among U.S. business representatives, who said they would insist on a much more far-reaching FTAA than the one outlined in the declaration but were glad that negotiations were continuing.

"This is not what we wanted, and we have serious concerns," said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers. "But the alternative, allowing the talks to collapse because a way could not be found to bridge the gap with Brazil, would have been a disaster for all."

Talks to establish the FTAA were launched in 1994 at a summit here hosted by President Clinton during the height of enthusiasm about the rewards countries could reap by opening their markets and adopting U.S.-style rules of global capitalism.

Congress had just approved NAFTA, linking the U.S. economy with Canada and Mexico, and Washington proposed a similar pact for the rest of the countries in the hemisphere, except Cuba, to be completed by early 2005.

Using NAFTA as the model, U.S. policymakers and businesses were seeking not just the elimination of tariffs and other barriers to the flow of goods among member nations, but agreement on a series of codes securing property rights for foreign investors, protecting copyrights and patents, and other goals important to companies establishing operations abroad.

But sluggish growth, combined with a number of severe financial crises, set back the free-market cause in the region and brought left-wing governments to power, notably in Brazil, whose economy dominates South America. Brazil has led the opposition to a NAFTA model for the FTAA, arguing that the deal should focus narrowly on increasing trade among member nations rather than on matters such as intellectual property rights.

Anxious to avert a repetition of the breakdown in Cancun, when Brazil led a bloc of developing nations confronting Washington over the terms of a global trade accord, U.S. and Brazilian officials crafted a document that fudges how broad and deep the FTAA will be.

"Negotiations should allow for countries that so choose, within the FTAA, to agree to additional obligations and benefits," the declaration states. In effect, that means countries like Costa Rica and El Salvador could accept a full-blown, NAFTA-style set of commitments as they evidently prefer, while Brazil could stick with its stated intention to make only limited changes in its economic system.