NAFTA for the Americas: Q & A on the FTAA (Free Trade Agreement of the Americas)

Multinational Monitor, April 2001 | Go to article overview

NAFTA for the Americas: Q & A on the FTAA (Free Trade Agreement of the Americas)


What is the Free Trade Agreement of the Americas (FTAA)?

The FTAA is a proposed free trade agreement between the economies of 34 countries in the Western Hemisphere, stretching from Canada to Chile. It is effectively an effort to expand NAFTA, the North American Free Trade Agreement, to include all of North, Central and South America and the Caribbean (except for Cuba). It is an agreement that seeks to knock down barriers to increased trade and investment flows. According to U.S. proposals, at least, it would eliminate tariffs between FTAA countries within 10 years. It would also eliminate regulatory barriers that many see as protecting important worker, consumer, environmental and national interests.

Negotiations over the FTAA are now underway, with a scheduled completion date of 2005, though a completion date as early as 2003 is possible. The negotiating text remains secret, so it is not possible to know exactly what is included in the agreement. But it is clear the agreement will be modeled on NAFTA; and the United States has released a summary of its negotiating objectives for the agreement, which gives a good idea of what it is seeking to achieve in the negotiations.

Who is advocating the FTAA and outlining its content?

The United States is the country pushing most aggressively for adoption of an FTAA. The United States began the process at a 1994 Summit of the Americas in Miami, following Congressional passage of the NAFTA implementing legislation. The process gained momentum with the Santiago Summit in 1998.

The business community, in the United States and elsewhere throughout the Americas, is the social force driving the agenda forward.

Although the negotiations have remained highly secretive, corporate interests have had a structured role in the process. Business meetings, organized through Americas Business Forum, immediately precede the FTAA negotiating meetings of trade ministers. These meetings are usually hosted by the government hosting the FTAA Trade Ministerial. The business proposals generated at the meetings then serve as the template for the FTAA negotiators.

How does the ETAA relate to other trade groupings?

The FTAA would take place in the context of the World Trade Organization (WTO) rules, which permits countries to enter regional trade agreements that encourage greater liberalization of trade rules. All WTO countries must meet their WTO obligations toward all WTO member nations, irrespective of whether they take on additional obligations to particular countries in regional agreements. All of the FTAA negotiating countries are members of the WTO.

Existing important regional groupings in the Western Hemisphere include NAFTA, the Caricom grouping of Caribbean nations and Mercosur, made up of Brazil, Argentina, Uruguay and Paraguay. While the United States, Canada and Mexico would remain part of NAFTA, to the extent that the FTAA includes NAFTA provisions but extends them to the whole hemisphere, NAFTA would become less important.

Caricom and Mercosur would also probably be effectively subsumed by an FTAA. The difference is that Caricom and Mercosur are important efforts to promote regional trade and integration among developing countries, and are not modeled on NAFTA. Mercosur and Caricom's potential to evolve as alternative approaches to economic integration would almost surely be lost with an FTAA.

Brazil in particular is worried about losing regional influence to the United States as a result of the FTAA, and it has urged a go-slow approach to FTAA negotiations. One U.S. gambit in response has been to propose a free trade agreement with Chile -- the message to Brazil is to get on the hemispheric trade agreement train or be left at the station.

If the negotiating countries are already members of the WTO, why does it matter if they join another trading agreement?

The FTAA is likely to contain a number of provisions that are not included in the WTO, and which push a deregulatory agenda even beyond that embodied in the WTO. …

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