Remarks: Jonathan Fried
Fried, Jonathan, Law and Policy in International Business
Thanks very much. I will try to stay within the time limit. It is a bit awkward for me to have accepted this invitation. I very much appreciate the opportunity to see my friends, but I was not invited to perform a professorial role, nor was I even invited to be here in a legal capacity. As a member of the Inter-American Juridical Committee, we have done quite a bit of work on reforming institutions and reforming the judiciary in particular. There is literature available, but, ironically, I was invited here to provide a trade negotiator's perspective on institution building. That sounds like a contradiction in terms because we are usually seen as dyed-in-the-wool mercantilists, who are out to beggar thy neighbor to get maximum advantage for ourselves, and give up as little as possible in return.
Let me try to bust that myth a bit because I think--from at least a Canadian perspective--looking at not only our past in the free trade agreement with the United States and more particularly the NAFTA, but looking ahead to the Free Trade Area of the Americas negotiations --which is currently chaired by Canada--I would like to offer you the proposition that trade negotiations today and these multi-lateral trade negotiations in the hemisphere in particular are about institution building--not as an end in itself, but rather as a means to an end. That end, for trade negotiators at least, is economic growth.
I will not bore you with the negotiator's details of a negotiation that is just starting. It is off to a good start, having been formally launched by heads of government in Santiago at the most recent Summit of the Americas in April. Nine negotiating groups have been formed. By the end of this month they all will have met in a central location in Miami. Vice ministers who carry on the supervision for trade ministers on a day-to-day basis will meet again in Paramaibo, Surinam, in December to take stock of progress.
Let me instead just try to summarize what the negotiations are about and then try to draw some lessons about institution building. First, the negotiations encompass continuing discussion on pretty traditional trade barriers: tariffs, quotas, and import restrictions, border measures that really impose administrative burdens rather than lower the costs of moving things across borders. In fact, for many goods, the International Chamber of Commerce estimates that just the transactional costs of getting goods cleared through customs averages about ten percent of the total selling price of goods, so there is still quite a bit of work to be done.
Looking at it in a different way, the average time for clearing a product through U.S. or Canadian customs is about six hours. In Brazil it is about six days. So, as I say, there are still some pretty traditional border-oriented trade negotiations to be done.
But, secondly, as I know John Jackson has always reminded his students, as we lower tariff barriers, we have to be increasingly concerned with the so-called non-tariff barriers, the technical standards, the sanitary restrictions that really, although motivated by good intentions, can sometimes serve as unnecessarily restrictive barriers to trade.
Third, consistent with the multi-lateral trade agenda in Geneva at the World Trade Organization, we are in the Free Trade Area of the Americas process trying to address trade in services, regulation that affects foreign investment and intellectual property. So we have an opportunity to move forward in some of the areas that are the generators of economic growth for most of the economies in the hemisphere.
Fourth, I think consistent with the Attorney General's observations in his written paper about the importance of correcting the imperfections in the market where necessary, we are looking at the relationship between cross-border trade and competition. We are looking at government procurement as an engine of economic activity as well. …