Bridges Weekly Trade News Digest • Volume 6 • Number 36 • 24th October 2002
Mercosur Moves Toward Free Trade Arrangements With Other Regional Areas
CARIBBEAN ISLANDS MAKE PROGRESS ON S&D IN FTAA
According to sources, on 14 October, Caribbean countries obtained what some officials have termed a "breakthrough" in the process of seeking special and differential treatment (S&D) in the Free Trade Area of the Americas (FTAA). At a conference in Trinidad between US and Caribbean trade negotiators, the small island states gained recognition of their special situation vis-à-vis other larger members of the 34-member area, around which negotiations are set to conclude in 2005. "The US is fully aware that Caribbean countries face very special problems," said US Trade Representative Robert Zoellick after the meeting. "They are generally small economies. They are island economies. We want to bring them along the process of growth of openness and trade, but if we are going to do that effectively we have to recognise the special problems and challenges, and be able to design solutions for them." A US official at the Trinidad meeting said that ultimately about 24 of the 34 countries in the FTAA could be granted derogations, though he stated this could impede implementation of the agreement as countries negotiated concessions. Central American countries are also seeking S&D, and requests for similar treatment from countries such as Bolivia and Ecuador was also highly possible, said one Caribbean government official.
FTAA trade ministers are set to meet in Quito, Ecuador on 1 November to review progress in the FTAA negotiations.
"Caribbean states struggle to make size count," FT, 14 October 2002.
According to Brazilian minister of development, industry and foreign trade Sergio Amaral, South American trade bloc Mercosur is drafting a preferential tariff agreement with the Caribbean Communities (Caricom) and the Central American Common Market (MCCA). Amaral met with representatives of the Caribbean and Central American trade blocs in Brazil on 22 October to establish a schedule for talks. It has been proposed that Mercosur concede a 30 to 40 percent reduction on its import tariffs on goods from Caricom and MCCA. Amaral said this could be the first step toward a free trade zone treaty joining the three regions of the American continent. Meanwhile, negotiations between Mercosur and the Andean Community towards a free trade agreement are reaching their final stages. The two blocs are aiming to conclude negotiations before the end of 2002. Mercosur encompasses Brazil, Argentina, Uruguay and Paraguay while Chile and Bolivia are associated members. The MCCA encompasses El Salvador, Nicaragua, Costa Rica, Honduras and Guatemala, while the Caricom bloc brings together 15 Caribbean nations, among them Jamaica, the Bahamas and Haiti. The Andean Community consists of Bolivia, Colombia, Ecuador, Peru and Venezuela.
"S. American trade bloc seeks accord with C. America, Caribbean," KYODO NEWS, 23 October 2002.
NAFTA TRIBUNAL FINES CANADA 6 MILLION OVER LAW BANNING TOXIC WASTE EXPORTS
On 21 October, a North America Free Trade Agreement (NAFTA) dispute panel awarded damages of over CDN 6 million (plus interest) to US investor S.D. Myers, resulting from a temporary Canadian government ban on the export of hazardous polychlorinated biphenyl (PCB) wastes in 1995 (rescinded in 1997). S.D Myers filed the claim in 1998 — one year after the US government enacted its own ban on the import of such materials. Under NAFTA’s controversial investor-to-state dispute mechanism (found in Chapter 11 of the agreement), any foreign investor from Canada, Mexico, or the US can bring a lawsuit directly against any of the other two governments in the agreement (i.e. these rights are not available for domestic investors). The damage award comes after a November 2000 NAFTA ruling that found the Canadian government in breach of two of Chapter 11’s clauses: National Treatment (1102) and Minimum Standard of Treatment (1105). In February 2001, Canada asked the Federal Court to set aside the tribunal’s decision on the grounds that elements of the decision exceeded the tribunal’s jurisdiction and were made in conflict with Canada’s public policy. The Canadian Federal Court has yet to make a final ruling, and Canada’s Trade Minister Pierre Pettigrew alluded to the importance this ruling might have on the final outcome, stating "[it] is particularly important to [study the ruling closely] in light of the fact that we have asked the Federal Court to review this case." Canadian watchdog group, the Council of Canadians, alleges that the ruling contravenes Article 4.9 of the 1989 Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, which commits parties (of which both countries are, though the US has not yet ratified) to only export such wastes should the state of export not have the ability to deal with the waste in question. Canada, the Council of Canadians point out, does have such facilities for recycling PCB’s.
"NAFTA Tribunal Awards Damages in S.D. Myers Case," GOVERNMENT OF CANADA PRESS RELEASE, 21 October 2002; "NAFTA trade rules trump environment - again" COUNCIL OF CANADIANS, 21 October 2002.