Bridges Weekly Trade News Digest • Volume 9 • Number 38 • 9th November 2005
Summit Of The Americas Fails To Resurrect FTAA
The Fourth Summit of the Americas, held in Mar del Plata, Argentina, came to a late close on 5 November after countries were unable to overcome their differences over establishing a Free Trade Area of the Americas (FTAA).
Despite the fact that it had not even been formally on the agenda, the FTAA — a potential free trade agreement (FTA) that would encompass every country in the western hemisphere except for Cuba — emerged as the centre of attention at the summit.
FTAA negotiations have been effectively deadlocked since February 2004, primarily over issues related to farm subsidies and intellectual property rights (IPRs) (see BRIDGES Weekly, 8 April 2004; and 9 March 2005). However, some countries, led by Mexico, had hoped that the Mar del Plata meeting would be able to serve as a venue to revive the talks. Although the gathering was originally intended to focus on job creation, poverty reduction, and democratic governance, when a group of countries insisted that the summit’s final declaration include support for reviving the FTAA, the prospective hemispheric FTA came to monopolise discussions.
Summit members split on FTAA
Initially launched at the first Summit of the Americas in 1994, the FTAA negotiations were supposed to come into force on 1 January 2005. However, the intervening years saw the potential FTA become bogged down in a series of disagreements. The FTAA ministerial meeting in November 2003 saw countries agree to a more flexible two-tier approach to the FTAA in an attempt to broach differences primarily between the US and Brazil (see BRIDGES Weekly, 26 November 2003). Negotiations effectively came to a halt in April 2004, when governments failed to resolve differences on US agricultural subsidies and the agreement in general (see BRIDGES Weekly 8 April 2004).
After prolonged negotiations in Mar del Plata, five of the 34 countries represented refused to support efforts to pursue the FTAA. Brazil, Argentina, Venezuela, Uruguay and Paraguay insisted that the final declaration contain explicit text against the FTAA, stating that "conditions do not exist to attain a hemispheric free-trade accord that is balanced and fair with access to markets free of subsidies and distorted commercial practices."
Nevertheless, backing remained strong from traditional supporters. "It is a people’s agenda," said Canadian Prime Minister Paul Martin of the FTAA. "Freer and fairer trade will lift more human beings out of poverty than all of the assistance programs in the world combined."
US President George W. Bush, also an FTAA supporter, left the summit when it became clear that no further progress would be made. He departed immediately for Brazilia to prepare for a previously scheduled 6 November meeting with Brazilian President Luiz Inácio Lula da Silva. The US and Brazil are currently the co-chairs of the FTAA negotiations.
Despite the fact that relations between Bush and Lula appeared amicable, they were unable to come to an agreement on the FTAA. Nevertheless, they made statements reiterating their commitment to the FTAA process after the meeting. The presidents agreed that a successful Doha Round, which would address trade-distorting agricultural subsidies in developed countries, is essential to the future of the FTAA.
Bilaterals and WTO summit complicate FTAA negotiations
The US and Uruguay signed a bilateral investment treaty at the summit, another example of the US’ continuing interest in negotiating more manageable trade and investment deals such as the Central Free Trade Agreement (CAFTA) and the FTA with Chile. The US is also pursuing an FTA with the four Andean Community countries; the talks are set to resume on 14 November. Countries in the hemisphere have signed a barrage of bilateral trade deals during the ten years of inconclusive FTAA negotiations. "Reaching a consensus in a body of this size [the FTAA] is sometimes a difficult task," a senior US administration official told reporters following the summit.
A major underlying issue standing at the centre of the FTAA deadlock is timing. With only five weeks left before the WTO Ministerial Conference in Hong Kong, the FTAA may simply not be a top priority for many governments in the region (see BRIDGES Weekly, 2 November 2005). With this in mind, Bush alluded to the potential impasse even before the start of the summit "the Doha round really trumps the FTAA as a priority, because the Doha round not only involves our neighbourhood, it involves the whole world."
"Trade Accord Eludes Americas Summit Group," INTERNATIONAL HERALD TRIBUNE, November 6 2005; "Summit of the Americas: Leaders Agree To Disagree on FTAA," INTER PRESS NEWS AGENCY, November 8, 2005; Bush is Set to Meet Brazil’s Leader After Summit Ends Without Deal," ASSOCIATED PRESS, 6 November 2005; "Despite FTAA Defeat at Americas Summit, Free Trade to Be Imposed on Colombians," COLOMBIA JOURNAL ONLINE, 7 November 2005; "Fact Sheet: Accomplishments at the Fourth Summit of the Americas," WHITE HOUSE PRESS RELEASE, 5 November 2005.