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What is the FTAA

What is the FTAA In 1994, the leaders of the thirty-four democratic countries of the Western Hemisphere launched the process of creating a Free Trade Area of the Americas (FTAA). The FTAA will be established by 2010 with the aim of gradually eradicating barriers to trade and investment in the region. The final characteristics of the FTAA will be determined through negotiations by government officials from the thirty-four participating countries. The trade issues that are presently under discussion are: market access; investment; services; government procurement; dispute settlement; agriculture; intellectual property; antidumping, subsidies and countervailing duties; and competition policy. Guiding principles for these negotiations are (1) the agreement will be consistent with the rules of the World Trade Organization (WTO), (2) all countries will be participants in all parts of the agreement, and (3) the final agreement will build on the existing agreements in the region such as the Andean Community and the Southern Cone Common Market (known by its Spanish acronym MERCOSUR). Guiding Principles of the Negotiations • Decisions by consensus (one nation, one vote). • Consistent with rules and disciplines of the World Trade Organization. • Commitment to improve on WTO rules and disciplines. • Single undertaking with simultaneous negotiations in all issue areas. • Co-existence with bilateral and sub-regional trade agreements. • Countries negotiate and accept obligations individually or as members of sub-regional groups. • Special attention to smaller economies and difference in levels of development. • Rights and obligations shared by all countries. • Countries to ensure that national laws and regulations conform to FTAA obligations. The central purpose of the FTAA is to promote economic growth and prosperity of the member countries by lowering barriers to trade and investment within the Western Hemisphere. According to the principles, it is a WTO plus agreement in the sense that the standards and disciplines of the WTO constitute the foundation on which the FTAA is to be constructed, but to be a success it must exceed these. In addition, the FTAA process co-exists with existing trade agreements and the sub-regional trade blocs can have a place at the negotiating table. As is also clear from the list of principles, the FTAA will not exist as a final agreement until each issue has been negotiated (single undertaking) with the approval of all thirty-four nations. The objectives and principles also mandate special consideration be given to the smaller, less developed countries of the hemisphere. These provisions reflect both the unique challenges facing the smaller, poorer countries and their influence in a process in which each country, regardless of size, in effect has veto power. With the FTAA negotiations still at an early stage, it would be useful to remember that the important decisions in multilateral trade talks usually do not get made until the very end, frequently when it appears as though the talks will fail to produce a significant agreement. This pattern is built into the FTAA process as the negotiations are conducted as a single undertaking, and there is no agreement until everything is decided. The biggest slow down of the negotiations was the continued failure of the U.S. Congress to renew the President Clinton’s fast-track authority, his ability to negotiate trade agreements and submit them to up-or-down votes. The 1994 Miami Summit ended with assurances from President Clinton that he would secure fast-track authority and use it to gain Chile’s admission to NAFTA. Without it, not only has Chile’s admission to NAFTA fallen by the wayside, but there are growing questions about U.S. approval of the final FTAA agreement. Doubts concerning Washington’s resolve and leadership have clouded the negotiations and provided an opening for countries not enthusiastic in their commitment to hemispheric integration. The economic downturn that affected South America in 1998-99 also clouded the FTAA negotiations. Brazil’s devaluation triggered a trade dispute with its neighbors (especially Argentina) that threatened to destabilize MERCOSUR. The member countries of the Andean Community face dire economic and political problems that could spill over their borders and undermine not only the Community but the FTAA as well. In contrast to the situation in South America, Mexico and Central America are doing relatively very well, and they may conclude that they are better off casting their fates with the United States and Canada through an expanded NAFTA or bilateral trade agreements. Another development that slowed down the process of the FTAA was the U.S. elections last year. The goal of the FTAA is to impose the failed NAFTA model of increased privatization and deregulation hemisphere-wide. Imposition of these rules would empower corporations to constrain governments from setting standards for public health and safety, to safeguard their workers, and to ensure corporations do not pollute the communities in which they operate. Effectively, these rules would handcuff governments' public interest policymaking and enhance corporate control at the expense of citizens throughout the Americas. FTAA would deepen the negative effects of NAFTA we've seen in Canada, Mexico and the U.S. over the past seven years and expand NAFTA's damage to the other thirty-one countries involved. The FTAA would intensify NAFTA's "race to the bottom": under FTAA, exploited workers in Mexico could be leveraged against even more desperate workers in Haiti, Guatemala or Brazil by companies seeking tariff-free access back into U.S. markets. A quick look at NAFTA's legacy reveals disastrous consequences: • An estimated 395,000 U.S. jobs have been lost since NAFTA as companies relocated to Mexico to take advantage of the weaker labor standards. These workers usually find jobs with less security and wages that are about 77% of what they originally had. • The U.S. trade surplus with Mexico has become a deficit for the first time. • Despite promises of increased economic development throughout Mexico, only the border region has seen intensified industrial activity. Yet even this small "gain" has not brought prosperity. Over one million more Mexicans work for less than the minimum wage of $3.40 per day today than before NAFTA, and during the NAFTA period, eight million Mexicans have fallen from the middle class into poverty. • In addition, the increase of border industry has created worsening environmental and public health threats in the area. Every day, forty-four tons of hazardous waste are disposed of improperly. In this time, birth defects have increased dramatically. In the first year of NAFTA in one Texas border county, fifteen babies were born without brains -- an unprecedented 36% increase from the year before! • Along the border, the occurrence of some diseases, including hepatitis, is two or three times the national average, due to lack of sewage treatment and safe drinking water. The FTAA will contain a series of commitments to "liberalize" services, which is much like the General Agreement on Trade in Services (GATS) within the WTO. "Services" is a broad category that includes education, health care, environmental, energy, postal services and anything else we pay for that isn't a physical object. Possible effects of the FTAA services agreement include: • removal of national licensing standards for medical, legal and other key professionals, allowing doctors licensed in one country to practice in any country, even if their level of training or technological sophistication is different; • privatization of public schools and prisons in the U.S., opening the door to greater corporate control, corruption and the temptation to cut critical corners (such as medical care for inmates or upkeep of safe school facilities) in the interests of improving profit margins; and • Privatization of postal services transferring U.S. Postal Service functions to a few delivery companies like FedEx, which could then send postal rates through the roof. Some interesting recommendations toward a new foreign policy should be made known to the representatives of all thirty-four nations involved in the FTAA debacle, three of the most important are: • Trade negotiations should be opened up to a broader representation of society. • Labor, environmental, and other relevant social issues should be included in the negotiations of trade agreements. • Investment policy should balance investors’ needs for clear rules with the needs of each country’s development strategy. At the Summit of the Americas, President Clinton declared that, with the Free Trade Agreement of the Americas, "we can create a partnership for prosperity where freedom and trade and economic opportunity become the common property of the people of the Americas." If this partnership is to comprise all of the hemisphere's peoples, and not just a relatively small, elite and well-connected group of investors, then the FTAA process must be vitally democratized and reoriented. The future strength of the region depends on it. Bibliography: BIBLIOGRAPHY Barlow, Maude. 2001. The Free Trade Area Of The Americas And The Threat To Social Programs, Environmental Sustainability And Social Justice In Canada And The Americas [online]. Available from World Wide Web: (http://www.stopftaa.org/info/info_maude.html) Cavanaugh, John. “Hemispheric Network for Just and Sustainable Trade and Development.” Inside NAFTA 6 (2000): 12-15. Foreign Trade Information System. 2001. Free Trade Area of the Americas (FTAA) Process. [Online]. Available on the World Wide Web: (http://www.sice.oas.org/ftaa_e.asp) Global Exchange. 2000. Top Ten Reasons to Oppose the Free Trade Area of the Americas [online]. Available on the World Wide Web: (http://www.globalexchange.org/ftaa/topten.html) Hansen-Kuhn, Karen. 1996. Free Trade Area of the Americas [online]. Available from the World Wide Web: (http://www.foreignpolicy-infocus.org/briefs/vol1/ftaa.html) Nason, Jesse. 2000. FTAA Myths vs. Reality [online]. Available on the World Wide Web: (http://www.stopftaa.org/info/info_factmyth.html) Nason, Jesse. 2000. Straight from the Horse's Mouth: A critical look at what the FTAA says about itself. [Online]. Available from the World Wide Web: (http://www.stopftaa.org/info/info_quotes.html) Public Citizen: Global Trade Watch. 1999. Unveiling "NAFTA for the Americas" [online]. Available from World Wide Web: (http://www.stopftaa.org/info/info_publiccitizen.html)

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