WASHINGTON — The top trade officials from 34 countries agreed on a blueprint in Miami last week that appears to scale back the scope of a hemispheric trade zone and make its long-term future uncertain.
This story first appeared in the November 24, 2003 issue of WWD. Subscribe Today.
Trade ministers signed off on a declaration that set parameters and advanced the talks for the pact known as the Free Trade Area of the Americas, but the declaration was so vaguely worded and contained so many blanks that it sent a wave of confusion through the trade community.
Retailer and wholesale importers voiced concern that the U.S. might be stepping back from a comprehensive FTAA, while domestic textile representatives claimed it was another sign that countries are not willing to accept one-size-fits-all trade deals.
According to the declaration, countries can have different levels of commitment and pick and choose the areas of the negotiations in which they want to participate. How that will play when trade officials get down to negotiating politically sensitive areas such as agriculture or textiles and apparel is unclear.
The FTAA, launched in 1994 under former president Bill Clinton as an outgrowth of NAFTA, aims to create the largest trade zone in the Western Hemisphere, encompassing every country but Cuba and stretching from Alaska to Tierra del Fuego by 2005.
However, the U.S. and Brazil have been at loggerheads over the scope of the trade pact for more than a year and they did not resolve any of the major issues in Miami. Many skeptics claimed the two largest economies in the Western Hemisphere crafted an obtuse declaration in Miami in order to get an agreement and avoid another Cancún, where global trade talks imploded earlier this year because rich and poor countries could not bridge their vast differences.
The U.S. had been pushing for a comprehensive free-trade deal that would create rules covering intellectual property, foreign investment and government procurement, in addition to lowering tariffs on industrial and agriculture products. However, Brazil and many other developing countries claimed the rules covering intellectual property rights, government procurement and foreign investment should be handled in the World Trade Organization.
At the same time, the U.S. also claimed agriculture subsidies and antidumping laws should be handled in the WTO, but developing countries led by Brazil pushed aggressively for their inclusion in the FTAA talks.
“In my view, we are moving the FTAA…into a new phase,” said U.S. Trade Representative Robert Zoellick at a press briefing closing the Miami meeting last week. “We’re moving from general concepts and people talking past one another to positive realities and opportunities.”
Zoellick noted that the U.S. and Brazil developed a “common and balanced set of rights and obligations” covering topics such as market access for goods, agriculture, investment, government procurement, intellectual property rights, competition, subsidies, antidumping/countervailing duty and dispute settlement.
Zoellick also maintained the U.S. will not be willing to negotiate on agricultural subsidies within the FTAA, which is perhaps an area the U.S. will opt out of.
The U.S. will also continue to pursue bilateral agreements separately. It announced it would launch deals with Panama, Peru, Ecuador and Bolivia, in Miami.
Importers said there are a lot of unanswered questions in light of a scaled-back FTAA.
Erik Autor, vice president and international trade counsel at the National Retail Federation, said he is concerned about a “two-tiered” approach that would allow countries to opt out of certain areas in the negotiations.
“If you are talking about an à la carte approach in which countries only commit to what they want to, that raises serious concerns,” said Autor. “If you exclude whole sectors, the ability to get good market access in those issues that are on the table is diminished.”
Autor said the NRF is seeking a comprehensive agreement that covers every consumer product sold at retail, gives market access to U.S. retail companies that want to open stores in the Western Hemisphere and provides rules for protecting investment and intellectual property rights.
“You are looking at a crazy quilt of different [trade] arrangements in place today, and they are trying to meld them into a single undertaking and single agreement, which is pretty tough,” said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel. “You have to anticipate some differences, which they won’t overcome until the end.”
She said she was pleased to see a deadline for market access talks, for which her member companies are most interested, set for Sept. 3, 2004.
On the other side of the debate, Jock Nash, Washington counsel for Milliken & Co. who was in Miami for the talks, claimed the ministers signed a skeletal blueprint because “it was the only way they could keep it going for another year.”
“Theoretically, if it failed here, it would have failed entirely, so they agreed on very little,” he said. “You can’t shoehorn countries into a one-size-fits-all template that everybody wants, either in the WTO or the FTAA. It just doesn’t work anymore.”
Cass Johnson, interim president at the American Textile Manufacturing Institute, said: “When you end up with a framework document that has no dates, opt outs, no rules or regulations and weaker language, it appears you are going backward rather than forward.”
Johnson said he doesn’t expect the FTAA to get much traction next year.
“Politically, it’s a net loss except for inside the Beltway and on Wall Street,” he said. “You are treading into tricky political ground every time you put these things forward.”