U.S. Strikes Side Deals At FTAA Talks

by Emad Mekay

Some critics said that Washington is resorting to the bilateral deals to try to isolate Brazil and other countries that have voiced concerns over U.S. economic power and that the new agreements could harm developing countries' economies.

U.S. Trade Representative Robert Zoellick announced the United States is launching free trade talks with Colombia, Peru, Ecuador and Bolivia. Talks with Panama and the Dominican Republic were announced separately later in the day.

The U.S. plan would structure talks to formally begin in the second quarter of 2004, initially with Colombia and Peru.

"Negotiating an FTA -- free trade agreement -- with the Andean countries is a logical step under the administration's promotion of competitive liberalization in the hemisphere," wrote Zoellick in a letter to Congress announcing the debut of the talks.

Ecuador and Bolivia will be included in the package of deals but their governments are still preparing domestic policy changes to ready their economies for the agreements, including changes in laws that protect workers' rights -- widely interpreted to mean relaxing those protections -- and resolving current disputes involving U.S. investors.

Zoellick also met Tuesday with five Central American trade ministers to advance the final round of negotiations for the U.S.-Central America Free Trade Agreement (CAFTA) in December in preparation for the agreement to be enacted in 2004.

Trade ministers and officials from the 34 Americas countries, except the ostracized socialist Cuba, are gathered in this beach city to forge ahead with talks towards a pan-American Free Trade Area of the Americas (FTAA).

But initial talks in this eighth round of negotiations have snagged on a disagreement between the United States and Brazil over the scope of discussions.

Washington refuses to cut domestic farm subsidies with an election year coming up, which Brazil says undercut poor farmers by pushing prices of farm goods to lower levels, and to relax its anti-dumping laws, which the South Americans say raise tariffs and other obstacles to Brazilian exports like citrus and steel.

Under the free trade deals announced Tuesday, the six countries would be required to adopt stronger protection of intellectual property rights, drop their tariffs on agricultural goods, hygiene regulations and other practices that Washington says discourage trade, like protective licensing practices or limitations on access for providers of services.

Business groups hailed the announcement. The U.S. Chamber of Commerce, which represents more than three million businesses and organizations, called the move an "economic shot in the arm for the U.S. and the Andean region" that will boost trade in the western hemisphere.

"It will create new markets for U.S. exporters and generate a broader range of business and job opportunities from Lima, Ohio to Lima, Peru," said Daniel W. Christman, the chamber's senior vice president.

Opening up the services sector in those countries would most benefit U.S. companies working in the electric power, air cargo, electronic commerce, telecommunications, banking and insurance businesses.

Although the Latin American markets are small, they could prove to be fast-growing ones for U.S. companies. Sales by U.S. services companies in Colombia alone were three billion dollars in 2000, nearly a six-fold increase from $519 million in 1992.

Civil society groups warned the deal could hurt the less developed countries in the face of the much stronger U.S. economy.

The agreements, they added, will do more to boost U.S. sales in Latin countries than increase Latin American sales in the United States because most Latin exports already enter the U.S. market duty-free.

"I am concerned that the bilateral agreements may ultimately destroy the few benefits that exist in a multilateral process," said Eric Dannenmaier of the Tulane Institute for Environmental Law and Policy at Tulane Law School in New Orleans.

Dannenmaier told the media that bilateral deals could accomplish many of the same trading goals of large economies as would region-wide agreements, like opening up foreign investment and reducing trade barriers, without the larger nations having to face coalitions of developing countries.

"If you are afraid of the FTAA, then you should be very afraid of the bilaterals," said Dannenmaier, who is attending a civil society group forum at the meetings in Miami.

The international charity organization Oxfam said the proposed rules in the bilateral agreements could erode development in the hemisphere.

For instance, cetain patent rules would reduce poor people's access to affordable medicines while unregulated opening of agricultural markets will stop governments from protecting their farmers from unfair competition and U.S. dumping, the group argues.

Oxfam's Trade Campaign Manager Phil Bloomer says existing bilateral and regional pacts, such as the North American Free Trade Agreement (NAFTA) and free trade deals with Chile and Singapore, are not good models for development and the reduction of poverty.

"NAFTA has failed the 45 million Mexicans who remain in poverty," Bloomer said. "The danger is that these new bilateral deals will extend the same bad deal to millions more."

Despite concerns from civil society and other grassroots groups assembling here in Miami, where official talks will be held Nov. 20-21, U.S. businessmen vowed to press ahead with the more comprehensive FTAA.