US 'agrees' to downgrading of FTAA

By Guy de Jonquières in Miami and Edward Alden in Washington, FT.com site
Published: Nov 17, 2003

The US and Brazil have drafted proposals for this week's crucial ministerial meeting on the planned Free Trade Area of the Americas that would limit the scope of the agreement in an effort to forestall a complete breakdown in the negotiations.

The draft text, seen by the Financial Times, reaffirms long-standing plans to create the FTAA by January 2005. However, it calls for an agreement only on a basic set of common rights and obligations and says individual countries should be free to make different levels of liberalisation commitments.

It suggests such commitments could be negotiated "plurilaterally" between groups of countries, as Brazil wants, rather than being entered into on a multilateral basis that would be binding on all FTAA partners.

The US, which hosts this week's meeting, has long insisted on a comprehensive agreement that would allow for free trade and investment throughout the western hemisphere. But it has agreed under strong Brazilian pressure to consider much weaker objectives that would allow countries to opt out of significant portions of the final deal.

The objectives are set out in a draft of the proposed ministerial declaration drawn up over the weekend by the US and Brazil, which jointly chair the 34-nation talks. The FTAA involves every country in the region except Cuba.

The final US position remains unclear, however. A group of countries led by Canada, Chile and Mexico is still insisting that the ministers commit themselves to far more ambitious and specific goals for the project than Brazil is prepared to accept.

A draft text submitted by Canada and Chile says that, while countries should liberalise at a pace appropriate to their levels of development, their benefits from the FTAA should be made conditional on the commitments and trade disciplines they assume.

Brazil's negotiators have reacted angrily to that proposal, saying this week's talks could reach an impasse unless the ministers' final declaration is based on the joint US-Brazil text. But the proposals are considered by the negotiators to be a proxy for a continued US effort to push for a more ambitious agreement.

"Canada, Mexico and Chile reflect the US position," said Rubens Barbosa, Brazil's ambassador to the US, in telephone interview. "The difficulty is to know to what extent the US is going to press for the linkage [between benefits and obligations]. We do not know."

Brazil, which has long been sceptical about the FTAA, wants many issues taken out of the talks and dealt with plurilaterally or in the World Trade Organisation. In particular, it does not want FTAA rules on services, government procurement and intellectual property rights, all of which are priorities for US business.

Robert Zoellick, US trade representative, told reporters in Washington Friday that "benefits should be commensurate with obligations." But he also indicated the US might be prepared to deal with the question "pragmatically" through future negotiations rather than insisting on principle that countries would get less access to the US market if they refused to sign on in all areas.

The US is also continuing what Mr Zoellick called a second track by pursuing further bilateral trade negotiations with Latin American countries. The US is expected to announce on Tuesday that it will begin negotiating free trade agreements with Colombia, Peru and Panama.