TRADE-AMERICAS:
The FTAA 'Chess Game' Begins

Mario Osava


RIO DE JANEIRO,  (IPS) - The decisive phase of negotiations for the Free Trade Area of the Americas (FTAA) is now underway, with the elucidation this week of the differences between Brazil and the United States, the two countries co-chairing the process that is to conclude by January 2005.

The two-day visit of U.S. Trade Representative Robert Zoellick, ending Wednesday, was an opportunity to see that the differences ”are really more a question of emphasis,” according to Brazil's Foreign Minister Celso Amorim.

But the two countries hold divergent positions on numerous issues. Zoellick rejected the proposal for ”four plus one” negotiations between his country and the four members of Mercosur (Southern Common Market - Argentina, Brazil, Paraguay and Uruguay), stressing that Washington's priority is the hemisphere- wide FTAA.

Amorim, however, pointed out that a bilateral accord would not replace or annul the FTAA, but Mercosur would be interested in making progress in certain areas that would be more difficult to coordinate amongst the 34 countries involved in the ”Alaska-to- Tierra del Fuego” trade talks.

One such area involves improving access to each other's markets, said the Brazilian official. Another point of contention is that the United States wants to keep farm trade negotiations within the arena of the World Trade Organisation (WTO). The Latin American countries are insisting that the United States move to eliminate its agricultural tariffs.

Likewise, Brazil would prefer to keep patents, public acquisitions and services under WTO auspices, thereby excluding from the FTAA context these matters that are of great interest to the United States.

After meeting with several Brazilian ministers and Vice- President José Alencar, Zoellick commented that difficulties do exist, but negotiations can move forward with Brazil, ”a vital partner in the hemisphere” with which the United States aims to expand relations in all areas.

Many of the points of disagreement between Brasilia and Washington are ”moves in the chess game” of the various trade negotiations that overlap each other, like the talks between Mercosur and the European Union and those within the FTAA, says Cristina Pecequilo, international relations professor at the Ibero- American University Centre in Sao Paulo.

What is in play between Brazil and the United States is the market and the strategic weight of South America, given that the Caribbean and Central America are already consolidated as areas of U.S. influence, Pecequilo told IPS.

To that extent, the FTAA ”is not inevitable,” nor is it indispensable to Brazilian interests, as some groups in the country argue, she said.

Brazil is looking to confirm its South American leadership role through its own dialogue with neighbouring nations, an effort that has intensified this year with leftist Luiz Inácio Lula da Silva in the presidency.

The recent elections of Nestor Kirchner as president of Argentina and of Nicanor Duarte Frutos as president of Paraguay strengthen the Brazilian bid to pursue a South America-focused process of trade and political integration.

Duarte said during his Wednesday visit to Brasilia as president- elect that ”the priority is to strengthen Mercosur” and that the bloc should ”think twice, three times,” before signing on to the FTAA.

One of Zoellick's moves in the chess game of trade negotiations was to announce that his country is willing to completely open its clothing and textile markets over the next five years, to speed up the implementation of the FTAA, slated for late 2005.

Pecequilo commented that the announcement is an enticement that could deepen divisions within Brazil's private sector as one of the industries that would benefit most from hemisphere-wide trade integration is textiles, because this Brazilian sector is competitive and is seeking greater access to U.S. markets.

Vice-president Alencar owns Brazil's largest textile manufacturer.

The FTAA could favour all nations of the Americas because it is in the interest of consumers to have access to better-quality products at lower prices, Alencar said after meeting with Zoellick.

The U.S. official underlined to Agriculture Minister Roberto Rodrigues that Brazil's agri-business would profit from three actions by the United States if the FTAA moves forward: reduction of export subsidies, rapid cuts in tariffs and cooperation in sanitary rules for imports.

The agricultural sector in Brazil and throughout Mercosur is determined to reject any agreement that does not lead to substantial cuts in subsidies and trade barriers that stand in the way of farm exports reaching the major markets of the industrialised North -- the United States, Europe and Japan.

Zoellick's dialogue with the Brazilian ministers and Lula's meeting with U.S. President George W. Bush -- set for Jun. 20 in Washington -- ”de facto inaugurate the FTAA game,” says Pecequilo.

The attention the United States is dedicating to Brazil reveals that it recognises the country's status as a regional power whose support is indispensable for the success of the FTAA, she added.

POINTS OF BRAZIL-U.S. DISCORD ON FTAA:

- FARM SUBSIDIES: Brazil wants to negotiate subsidy cuts within the FTAA. The United States will only negotiate this matter within the WTO, and only if the EU and Japan also reduce farm subsidies.

- ANTI-DUMPING RULES: Brazil wants to include them in the FTAA because they represent a major U.S. barrier. The United States says it is a matter for the WTO.

- SERVICES: Brazil resists opening its market to certain services. The United States wants to speed up liberalisation of services markets.

- TARIFF CUTS: Brazil says they should be the same for all countries in the FTAA. The United States has proposed different levels for different regions, with the Caribbean and Central America benefiting most, and a more gradual approach for Mercosur.

- FTAA TIMELINE: Brazil has agreed to the negotiation and implementation schedule but continues to push for postponement. The United States wants to accelerate talks in order to meet the agreed 2005 deadline.

- MERCOSUR: Brazil wants to maintain the bloc's identity and its deeper integration. The United States aims to dilute regional agreements within the FTAA.

- FTAA FORMAT: Brazil defends the ”single undertaken” approach, in other words, the FTAA would be implemented only after all points are agreed. The United States wants to implement in parts, as agreements are reached on different areas.


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