First Summit of the Americas:

FREE TRADE AREA OF THE AMERICAS (FTAA)

 

The Organization of American States is dedicated to the solution of economic problems, interested in devoting the largest amount of its resources to the economic development of its member states whenever possible, and serious about strengthening economic relations in the hemisphere. When the Leaders from the U.S., Latin America, Canada, and the Caribbean met in Miami, 1994, they knew this. They aimed at creating a hemispheric common market committed to liberalized and free trade.

Hemispheric economic integration was the most talked about topic at the First Summit of the Americas in Miami, and, indeed, it was here that Governments set the groundwork for the Free Trade Area of the Americas. In proposing the FTAA Agreement, the Summit's Plan of Action gave its blessing to the GATT/WTO process and committed itself to knocking down barriers to trade and investment. In Miami, member states resolved to commit themselves to trade liberalization, transparency, market access, and economic integration. Nonetheless, in their efforts to foster economic progress, enhance domestic prosperity, and raise living standards, they never sacrificed their commitments to improved working conditions and environmental protection.

Namely, the Miami Summit's discussions of FTAA focused on the following topics:

• Eliminating tariffs and non-tariff barriers affecting the trade of goods and services;
• Working with private sector and international financial systems to create a hemispheric infrastructure;
• Cooperatively improving telecommunications and transportation, which will permit efficient movement of goods, services, capital, information and technology;
• Eradicating poverty and discrimination in the hemisphere;
• Guaranteeing sustainable development, which is essential to economic prosperity and progress; and a host of other things including:

• Agriculture
• Subsidies
• Intellectual Property Rights
• Government Procurement
• Antidumping and Countervailing Duties
• Sanitary and Phytosanitary Standards and Procedures
• Dispute Settlements
• Competition Policy

The nine cornerstones of the FTAA process, declared in 'Initiative Nine' of the Miami Summit's Plan of Action, are:

1. A strong commitment to multilateral rules and disciplines, which are consistent with GATT/WTO and other sub-regional trade agreements;
2. Pursuing trade liberalization and sub-regional integration, while making mutually supportive economic and environmental policies, taking other international organizations in account, avoiding disguised trade restrictions, and ensuring sustainable development and worker rights;
3. Maximizing openness by building upon existing hemispheric agreements;
4. Recognition of the sovereign right of each nation to implement international commitments in harmony and accordance with its own legislation and procurements;
5. Technical assistance to the smaller nations to facilitate integration into the agreement;
6. Holding meetings under existing trade and investment fora in order to determine areas of commonality and divergence and to insure an environment of openness for minister's recommendations to the FTAA process;
7. Transparent and understandable subregional and bilateral agreements that will advance trade and investment in the Americas, with assistance from the Tripartite Committee;
8. Ongoing participation, review and guidance of the ministers responsible for trade;
9. OAS assistance in initiating the process and arranging ministerial meetings.

The FTAA is, of course, a central component of the Summit process. When realized, the FTAA will be the largest free trade agreement in history, with an expected combined GDP of over $9 trillion, and a market of some 765 million people.

Upon the completion of the Miami Summit, the Hemisphere's Trade Ministers took steps to ensure concrete progress. Adhering strictly to the schedule mandated by Heads of State and Government at Miami, Ministers held four major meetings to advance the FTAA agenda. They took place in:

1. Denver (June, 1995)
2. Cartagena (March, 1996)
3. Belo Horizonte (May, 1997)
4. San Jose (March, 1998)

Held in June, the first Trade Ministerial meeting established several fundamental principles for an FTAA (Words into Deeds, p. 67):

• That it be consistent with the provisions of the World Trade Organization;
• That is be balanced and comprehensive, covering all areas in the Miami Summit document; and
• That all countries would adhere to all of the FTAA obligations.

Trade Ministers found that access to detailed information on each other's trade regimes and hemispheric working groups would allow them to make progress toward concluding FTAA negotiations by 2005. To do so, they created seven working groups to be chaired by separate countries. They are:

1. Market Access (chaired by El Salvador)
2. Customs Procedures and Rules of Origin (Bolivia)
3. Investment (Costa Rica)
4. Subsidies, Anti-dumping, and Countervailing Duties (Argentina)
5. Standards and Technical Barriers to Trade (Canada)
6. Sanitary and Phytosanitary Measures (Mexico)
7. Smaller Economies (Jamaica)

At the meeting, ministers asked each working group to identify and examine trade-related measures in its respective area with a view to identifying the possible approaches to negotiations in that area. In order to do so, groups shared information on tariffs, private sectors goals and objectives, market access, customs, investment, anti-dumping, smaller economies and other topics. Country participation was strong and significant progress was made.

Smashed between the Second Americas Business Forum and the Vice Ministers meetings on working group guidance was the second Trade Ministerial meeting. Convened in Cartagena in March 1996, its main accomplishments was the Ministers' creation of five additional working groups (Word into Deeds, p. 68):

1. Services (chaired by Chile)
2. Competition Policy (Peru)
3. Intellectual Property Rights (Honduras)
4. Government Procurement (United States)
5. Dispute Settlement

The groups examined and identified trade-related measures and made new recommendations on approaches to FTAA negotiations. Ministers also assigned the Vice Ministers of Trade greater leadership and considered establishing study groups on the protection of the environment and workers' rights.

The third Trade Ministerial meeting set out a well-defined work program for the twelve Working Groups and established a Preparatory Committee of Vice Ministers. The VPs were charged with recommending that Heads of State and Government initiate FTAA negotiations at the Summit of Americas meeting in April 1998 in Santiago, Chile. The Preparatory Committee was directed to make recommendations on the negotiations for decision by Ministers at the March 1998 San Jose meeting too. The recommendations of working groups and the input of civil society, including labor and other groups, were to be included in their deliberations.

A Business Forum again preceded the Ministerial meeting and provided an opportunity for the private sector to make its views known to Trade Ministers. The Tripartite Committee was asked to prepare a feasibility study on the creation of a temporary administrative secretariat to support the FTAA negotiations. Significant progress has been made in defining objectives and principles to guide the negotiating phase of the FTAA. They are evident in documents laid out in the fourth meeting at San José (Words into Deeds, p. 68).

The fourth Trade Ministerial in Costa Rica concluded the three-year long preparatory phase of the FTAA. At the meeting, the Ministers Responsible for Trade recognized the 34 countries' hard work, progress achieved in trade liberalization, and implementation of the obligations assumed by their Governments. In addition, they approved and forwarded to the Hemisphere's Leaders recommendations on a framework defining objectives, principles, structure and organization for FTAA negotiations. After reiterating their recognition of the Miami Declaration of Principles and Plan of Actions' broad social and economic agenda, taking into account the differences in the levels of development and size of economies, and reviewing the Committee of Vice-Ministers' proceedings, they set out a bold 'Initiation of the Negotiations' and 'Structure and Organization of the Negotiations' agenda (Words into Deeds, p. 69 and Official Documents, p. 342 and 343).

In the 'Initiation', they simply recommended that the Heads of State and Governments initiate negotiation of the FTAA during the II Summit of the Americas, and reaffirmed the principles and objectives that guided their work since Miami (Official Documents, p 342).

In San José, the Ministers also laid out a flexible structure for the negotiations, which they expected to modify over time as required to assist the FTAA. Meetings were set to be scheduled at least every 18 months, and the particulars of the Trade Negotiations Committee (TNC) at the Vice ministerial level were determined. The TNC is to take the overall responsibility of ensuring the full participation of all the countries in the FTAA process. Meeting at least twice a year, it is also to take into account the concerns of the smaller economies and concerns related to countries with different levels of development.

Directly borrowing from previous Ministerial meetings, the Ministers established nine negotiating groups on: market access; investment; services; government procurement; dispute settlement; agriculture; intellectual property rights; subsidies; antidumping and countervailing duties; and competition policy. Chairmen and Vice-Chairmen would be selected taking into account the need to maintain geographic balance among countries. After determining the logistics, setting meeting sights, and assigning Chairs and Vice-Chairs for these negotiating groups, the Ministers mandated the TNC to develop a working program for the negotiating groups in order to ensure that they began their work no later than the 30^th of September, 1998 (Official Documents, p 343 and 344).

The Negotiating Groups, as conceived in San José, are as follows (Official Documents, p. 344):

The Chairman and Vice-Chairman of each group were selected with the need to maintain geographic balance in mind. The groups involved will report their results to the TNC no later than December 2000

All negotiating group meetings will be held in a single venue, which will rotates among three countries according to the following schedule:

The extensive preparatory work that was done between 1995 and early 1998, including that of the TNC and the 12 working groups, allowed the Heads of State and Government to officially launch FTAA negotiations in April of 1998 at the Santiago Summit.

In San José, Ministers also determined the peculiarities of chairing the FTAA. The Chairmanship of the FTAA process will rotate among different countries at the end of each Ministerial Meeting. The country that will chair the FTAA process will host the Ministerial Meeting and will also chair the TNC. The countries that will hold the Chair and Vice-Chair of the FTAA process will be:

Ministers also created a Consultative Group with the following instructions: a) follow the FTAA process, keeping under review the concerns and interests of the smaller economies, and b) bring to the attention of the TNC the issues of concern to the smaller economies and make recommendations to address these issues.

The Administrative Secretariat for the negotiations will report to the TNC and will:

1. Provide logistical and administrative support to the negotiations;
2. Provide translation services for documents and interpretation during deliberations;
3. Keep the official documents of the negotiations; and
4. Publish and distribute documents.

The Tripartite Committee Institutions will fund the Administrative Secretariat, and the TNC will determine the size and composition of the staff.

After thanking the Tripartite Committee for their logistical support, the Ministers requested that appropriate resources, such as allocation and technical assistance, be given to them by respective institutions. The Ministers also expressed their appreciation and reiterated their interest -- that the pertinent multilateral, regional and sub-regional institutions continue to offer additional contribution in response to specific requests from the TNC and the negotiation groups.

The Ministers did not exclude civil society from their discussions on the FTAA. Instead, they reaffirmed their commitment to the principle of transparency of the negotiation process, which would facilitate the constructive participation of the different sectors of society. By encouraging business and other sectors of production, labor, environment and academic groups to participate, they were able to establish a committee of government representatives to receive civil society's inputs, analyze them and present the range of views for their consideration.

Commitments to concrete progress by the year 2000, an invitation to Caricom to lead a joint government-private sector committee of experts that will make recommendations to us at their next meeting, and acknowledgement of Costa Rica's contributions were also made.

General Principles:

1. Decisions in the FTAA negotiation process will be made by consensus.
2. Negotiations will be transparent and benefit all participants of the FTAA.
3. The FTAA Agreement will be consistent with the rules of the WTO.
4. FTAA should improve upon the WTO rules and disciplines.
5. The negotiations will begin simultaneously in all the issue areas.
6. The FTAA can co-exist with bilateral and sub-regional agreements.
7. Countries may negotiate and accept the obligations of the FTAA individually or as members of a sub-regional integration group negotiating as a unit.
8. Special attention to be paid to the needs of smaller economies, to insure their participation.
9. The rights and obligations of the FTAA will be shared by all countries.
10. Measures agreed upon to facilitate the integration of smaller economies in the FTAA process shall be transparent, simple and easily applicable.
11. All countries shall insure that their laws, regulations and administrative procedures conform to their obligations under the FTAA agreement.
12. Differences in each countries level of participation should be taken into account.

General Objectives:

1. To promote prosperity, raise standards of living, improve working conditions and protect the environment through increased economic integration.
2. To establish a Free Trade Area by 2005.
3. To maximize market openness through a balanced and comprehensive agreement.
4. To facilitate the integration of smaller economies.
5. To strive to make our trade liberalization and environmental policies mutually supportive.
6. To further secure worker rights and renew Governments commitment to the observance of internationally recognized core labor standards.

Annex II

To view objectives by issue area, please visit the CICE web site. They have information on market access; agriculture; rules of origin; customs procedures; investment; standards and technical barriers to trade; subsidies, antidumping and countervailing duties; government procurement; intellectual property rights; services; competition policy and dispute settlement.