Prime Minister Owen Arthur of Barbados, right, signs Protocol II during the CARICOM Summit in Montego Bay (1997) while other CARICOM leaders look on.
AT THE 1994 Miami Summit of the Americas, the heads of state of 34 countries in the Western Hemisphere agreed to form a Free Trade Area of the Americas (FTAA) by January 1, 2005 to progressively eliminate trade and investment barriers.
Slated to be the largest free trade area, comprising some 765 million people and a GDP in excess of US$9 trillion, it is anticipated to promote prosperity through increased economic integration, the gradual removal of tariff and non-tariff barriers to the free trade of goods, services, capital and investment and the free movement of persons throughout the Hemisphere.
Negotiations taking place within the FTAA cover nine principal areas including market access, investment, agriculture and competition policy. At the November 2003 Ministerial meeting of the FTAA, trade ministers decided on a compromise which introduced flexibility into the negotiations to accommodate the needs and sensitivities of all the FTAA countries. Vice-ministers of trade were given the mandate at the Trade Negotiations Committee (TNC) level to further define this approach and the common set of rights and obligations to apply to all 34 countries.
STALEMATE
The now publicised outcome of this meeting is that there was deadlock in the negotiations. Those of you who have been following developments on the global trade agenda may be inclined to think back to a similar scenario a few months ago, again in the ill-fated Mexico, when talks at the multilateral trading system level of the World Trade Organisation (WTO) also stalled, leaving global trade in a quandary. So why the recent fallout?
There are important parallels to be drawn from these recent developments in the WTO and FTAA negotiations that cannot and, indeed should not, be ignored when one considers the future of trade liberalisation for small developing countries like those of CARICOM. Indeed, it demonstrates that trade negotiations can no longer be looked at simply from a regional or hemispheric point of view, but is intimately linked to the developments at the global, macro level.
Ironically, reasons similar to those that blocked consensus in WTO were also at the root of the current impasse in the FTAA. Also quite ironic was the fact that the two co-hosts at the Miami Ministerial who seemingly agreed on a common vision for the FTAA just months ago, were at the root of this and the WTO division.
Unsurprisingly to most, there was impasse on the issue of agricultural export subsidies and domestic support, similarly contentious issues at the WTO Ministerial. While a Brazil-led Mercosur pressed for the reduction of farm subsidies and domestic support in the FTAA, the United States refused to entertain negotiations on these issues outside of the WTO. The position of Brazil on the issue of export subsidies and domestic support is an understandable one and one to which we can relate in light of the importance that agricultural goods have on their overall trade.
There was however some advancement in certain disciplines. In the area of services for example, there was general consensus that the General Agreement on Trade in Services (GATS) would be the base for negotiations and that a positive list approach would be used. Talks on competition policy led to near consensus that the main issues would be transparency. There was equally growing consensus on the issue of state-to-state dispute settlement provisions and that Government procurement and competition policy provisions would not be subject to the FTAA dispute settlement mechanism.
With such a fresh gridlock, notwithstanding the progress made in some areas, it is hard to tell what the future will be for this process, but two possible scenarios can already be envisaged. The first is that there will be no FTAA. Likely, countries such as the US will aspire to a multi-tracked approach with multiple bilaterals, and other less able countries or sub-groups will have to follow suit on the basis of their technical capacity and negotiating resources. The second is that there will indeed be what has become commonly known as an 'FTAA - lite', where countries will agree to some core principles and obligations, while choosing selectively which other areas they will adhere to and the level of commitments therein.
But what of the extreme scenario, that of NO FTAA? Is this to the detriment of CARICOM? Some already hold the view that as a region we are better off focusing our efforts on our home-grown version of trade liberalisation, the Caribbean Single Market and Economy. This regional framework is already lauded for its capacity to strengthen CARICOM's negotiating position in the global economy, to help create economies of scale and to provide a larger market for our products and services. But is this sufficient for CARICOM while its counterparts in Central and Latin America forge ahead with free trade agreements (FTAs) with the United States, affording them enviable market access and investment opportunities?
SMALL ECONOMIES
Additionally, CARICOM has been consistent in drawing attention to the issue of special and differential treatment (SDT) for smaller economies as a "fundamental tenet of the FTAA" and negotiators have insisted that it be given meaningful expression in all nine negotiating groups. Indeed, there has been appreciation of the particular position of smaller economies, and official texts of the negotiations to date have referred to the recognition of size and levels of development. However, in the absence of a more extensive and ambitious negotiating arrangement, gains made by the smaller economies of CARICOM will undoubtedly be jeopardised. Allowances for longer transitional periods, certain exemptions, and less extensive market access commitments which CARICOM holds so dear will certainly be more difficult to attain, thereby rendering the already un-level playing field even more inequitable.
CARICOM would have to be very selective and pragmatic in the bilaterals it chose to conclude. A bilateral FTA with the U.S. (its most likely partner), in the absence of the FTAA, no doubt jeopardises traditional trading arrangements governed by the Caribbean Basin Initiative (CBI). Albeit, these preferences were originally slated to give way to new trading provisions under the FTAA, the nature of a new U.S.-CARICOM bilateral would undoubtedly require more liberal market access commitments from CARICOM.
As all the other CBI beneficiaries are already negotiating, or have concluded negotiations, with the U.S. it would perhaps be in CARICOM's interest CARICOM to negotiate within the FTAA, rather than at a bilateral level. This however begs the question: does the US want to conclude a bilateral with CARICOM anyway? The U.S. negotiators have already adopted a stance which is worrisome for CARICOM, as they steam ahead intent on concluding bilateral FTAs, at all costs.
In November last year, the U.S. trade representative announced plans to negotiate FTAs with a host of Andean nations (with the exception of Venezuela) and a separate one with Panama, which are expected to formally begin in the second quarter of 2004. This was seen as an aggressive approach by the Bush administration to fast-track trade liberalisation throughout the Hemisphere, with fears that these would undercut the FTAA process. These fears have now been heightened and confirmed by the recent announcement, subsequent to the impasse in Puebla, of the commencement of FTA negotiations with some 13 countries, which along with the U.S., have been named the G-14 or the 'Group of 14'. This seemingly insignificant appellation mirrors the alliances in the WTO of 'them' versus 'us', where the developing countries spearheaded by the likes of Brazil, were named the G-21. At the WTO, we were unable to stand openly with our developing country partners in the G-21, but can CARICOM afford not to align itself to this G-14, particularly as it includes two of our major trading partners, the US and Canada? This is but one of the many questions CARICOM will have to ask itself as we wait anxiously for the dust to settle in future FTAA talks.
CONCLUSION OF DISCUSSIONS
The final decision of Puebla was to suspend talks and return to that same location in early March where they will conclude discussions on the common set of rights and obligations, and procedures for plurilateral negotiations.
In this short period, our regional negotiators will have their work cut out for them. They will need to use this time, with the help of the private sector, to determine and prioritise their options, while weighing the implications that these will have on our collective livelihoods. A consultative process will be necessary for negotiators and private sector, as well as civil society, to determine how we envision these common rights and obligations and what respective stakeholders believe themselves capable of undertaking.
We will need to determine together, what negotiations we are capable of entering into at a plurilateral level (should that be our only available option) that will complement our own sectoral and developmental interests. The PSOJ has established consultative committees representing a cross-section of private sector interests to critically assess the implications of this agreement. Although the official process might be at a hiatus, the work undertaken is still crucial and useful and must continue, as, whatever the platform may be for an eventual trade agreement (FTAA or not), the issues will be the same. The private sector will have to prepare for whatever transpires, while diligently developing and enunciating positions and concerns. The PSOJ applauds the progress made to date and endorses the suggested model of an FTAA-lite, with 'core' principles and selective plurilaterals.
While we hail the work that our negotiators have done to date and their unceasing efforts to translate our business interests into concrete negotiating positions, we urge our Jamaican and Caribbean businesses, exporters, manufacturers to continue to explore the possibilities that exist for us with our key trading partners. What is sure is that in the meantime, efforts at implementing the CSME will need to be hastened as we rehearse for the roles we will play in the global trading arena.
Contributed by the Private Sector Organisation of Jamaica
