US-Brazilian Pact Breathes New Life into Trade - for Now ; Negotiations Are under Way in Miami over a Comprehensive Free-Trade Agreement for the Western Hemisphere

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Following September's collapse of global trade talks in Cancun, Mexico, hopes for a comprehensive hemispheric trade deal seemed all but dashed. The United States and a coalition of developing nations led by Brazil blamed each other for the debacle, and recriminations have been flying back and forth across the equator ever since.

But over the weekend, Brazilian and US officials reached an unexpected agreement in the run up to the Free Trade Area of the Americas (FTAA) summit, currently under way in Miami.

Under the agreement, the 34 nations in the Western Hemisphere, excluding Cuba, would join a basic free-trade pact, with the option of participating in some of the more controversial aspects. It's being called "FTAA light," breathing new life into the talks and avoiding the obstacles that until last week looked likely to prevent implementation of any deal before the Jan. 1, 2005, target. However, analysts agree that the accord as it stands - it could still change - does not clear up the fundamental differences between the two sides.

"The tough issues have been deferred rather than resolved," says Harley Shaiken, the director of Berkeley's Center for Latin American Studies. "For the United States on the eve of an electoral year that's just fine. And for Brazil, [a country] deeply concerned with some of these issues domestically, that's also just fine. In effect they've chosen negotiating paths that satisfy domestic political concerns and, at the same time, give the illusion of movement internationally. You've got a meeting of minds that didn't seem possible."

Until now, the US had said its multibillion-dollar agricultural subsidies and tariffs would not be on the table. Brazil retaliated by refusing to discuss such issues as protection of copyrights and patents, foreign direct investment, and transparency in government purchasing. This new agreement opens those topics for discussion.

Mr. Shaiken says the big winner is Brazil, which wants an accord tailor-made to each of the diverse nations in a region that is home to both the world's biggest economy and some of its smallest. The question is whether or not it will be a pyrrhic victory. Frustrated with Brazil's intransigence, the US is doing an end run around South America's largest economy. Robert Zoellick, the US trade representative, said he will begin bilateral negotiations with Colombia and Bolivia next year and Peru and Ecuador soon after. The US also is planning independent deals with Panama and the Dominican Republic. …