The FTAA: Rising Stock or a Hedged Bet?

 
The latest round of the Free Trade Area of the Americas (FTAA) negotiations, which began in Miami at the First Summit of the Americas in 1994, took place in Buenos Aires this April. Officials at the Sixth Trade Ministerial accepted draft chapters from each of the nine negotiating groups and instructed them to eliminate as much of the bracketed text as possible by the next Ministerial in October 2002. They also approved some recommended business facilitation measures, especially customs procedures.

The negotiating groups have been meeting in Panama since March 2001 with the support of the FTAA Administrative Secretariat and will move with it to Mexico City in March 2003. The chairmanship of the negotiations rotates every 18 months; it is now held by Ecuador.

At the Third Summit in Quebec (late April 2001), the heads of state reiterated that the FTAA negotiations should conclude in January 2005 and enter into force no later than December of that year. They endorsed the trade ministers' support for more transparency and increased contact with civil society, as well as the creation of a Technical Committee on Institutional Issues (TCI). The TCI will draft the FTAA's purposes and objectives, preamble, scope and coverage of obligations, exceptions, and its relationship with the WTO and other regional agreements. It will also recommend institutions that may be required to implement the agreement's provisions.

Key to the ultimate success of the negotiations will be whether the Bush administration can win Trade Promotion Authority (fast track) from Congress. Such authority would allow the administration to submit a negotiated agreement to Congress for an up or down vote, without modifications. Senator Max Baucus, chairman of the Senate Finance Committee, has submitted a TPA bill that would not commit parties to improved labor and environmental standards; rather, the US would have to seek dispute resolution for a trading partner's "sustained or recurring failures to enforce" labor and environmental laws to secure trade advantage. Another measure to grant TPA is also pending. It is too early to make a judgment on sentiment for either of these bills in both houses of Congress.

Some observers speculate that the Latin American countries are hedging their bets on the FTAA by pursuing stronger regional economic blocs. For example, Venezuelan President Hugo Ch�vez has said that he would like the Andean Community to have closer economic ties with MERCOSUR. MERCOSUR is the largest and most dynamic of the regional economic groupings. It has already accepted Bolivia and Chile as associate members and it has framework agreements with the Central American Common Market and the Andean Community. But as Argentina struggles through its fourth year of recession and pursues a formal trade complaint against Brazil in the WTO, MERCOSUR itself is showing signs of strain. Chile and the United States are also continuing talks to sign their own free trade agreement. If the FTAA negotiations were to fail, the push to expand and strengthen these and other regional economic agreements would likely intensify.

Observations
Despite the obstacles it faces, the FTAA process keeps advancing, meeting milestones and setting goals for the successful completion of its work. It has met with surprisingly little opposition or, for that matter, gotten much publicity at all. Admittedly, the hard part is now beginning as the negotiations become more specific. Entrenched economic interests, corporations and unions will seek a political shield from the bright glare of competition, maintaining that their interest is in the national interest.

Nonetheless, the process has its own momentum. The feeling among the negotiators is that the time is right, and that if an agreement is not achieved one may not be possible for a long time to come. The first test will be the market access negotiations. The modalities for these negotiation must be in place by April 1, 2002 and the negotiations themselves must begin by May 15, 2002. If no substantial progress is made in this area, it will be a sign that meeting the January 2005 deadline is in question.

At Quebec, the Summit leaders endorsed the trade ministers' decision to take the unprecedented step of releasing to the public the entire draft (heavily bracketed) text of the agreement, which is made up of chapters submitted by the various negotiating groups. The text was published in English, Spanish, Portuguese and French on the official FTAA web site. It is also available through the office of the US Trade Representative (USTR), the State Department and the OAS trade unit. A copy of the index is provided below for those who want to get a flavor of its contents but do not have time to access the full text. The USTR has also released the US government position on each of the nine negotiating groups.

www.ftaa-alca.org - www.ustr.gov - www.state.gov - www.sice.oas.org - www.americascanada.org

FTAA - Free Trade Area of the Americas
Draft Agreement

Index
Chapter on Agriculture
Section One: General Provisions
Section Two: [Market Access] [Tariff and Non-Tariff Measures]
Section Three: Export [Subsidies]
Section Four: Other Measures and practices that Distort Trade [and Production] in Agricultural Products
[Section Five: Sanitary and Phytosanitary Measures]
Section Six: [ Institutional Issues ]
Annex 1: Product Coverage - WTO Agreement on Agriculture
Annex 2: Definition of Export Subsidies
[Annex 12.2.1] [Rules for the provision of Export Credits for Agricultural Products]
[Annex 12.2.2] [Disciplines for Monitoring the Provision of Food Aid]
[Annex 12.2.2.1] [List of Food Aid Transactions]
[Annex 12.2.2.2]
[Annex 13.2.3.1] [[Domestic Support:] Measures [and practices that Distort Production and Trade of Agricultural Products] Exempted from [Reduction] [Elimination] Commitments [for Countries that are not Small Economies]]
[Annex 13.2.3.3. Illustrated Reduction Timetable of Global Measurement of Support in the FTAA
 
Chapter on Government Procurement
[Article I. Aims]
[Article II. General Rights and Obligations:]
Article III. [[Principles of] National Treatment [and] [,] [Most Favored Nation Treatment] [and Special and Differential Treatment]] [Non-discrimination]
Article IV. [Offsets] [Prohibition of Compensatory Measures]
[Article V. Rules of Origin]
Article VI. Denial of Benefits
[Article VII. Scope of Application]
[Article VIII. Modalities of procurement]
[Article IX. [Thresholds and] Valuation [of contracts]]
[Article X. Exceptions]
Article XI. Publication of Laws and Regulations
[Article XII. Designation of Contact Points]
[Article XIII. [General Principles Governing] Procurement Procedures]
[Article XIV. Application of Procurement Methods]
[Article XV. Selective Tendering]
[Article XVI. Limited Tendering]
[Article XVII. [Principles of] Publicity [for inviting tenders]]
[Article XVIII. Publication of invitation [to tender]]
[Article XIX. Invitation to participate in a Supplier List under Selective Tendering Procedures]
[Article XX. Time Periods for responses to inviting tenders]
[Article XXI. Shorter Time Periods]
[Article XXII. [Tender Documentation] [Tender conditions]]
[Article XXIII. Qualification of Suppliers ]
[Article XXIV. [Prequalification] Registers [of Suppliers]]
[Article XXV. [Pre]Qualification and Registration Procedures.]
Article XXVI. Application of Technical Specifications
[Article XXVII. Submission, receipt [and] [,] opening [of] [, evaluation and awarding contacts under] tenders]
[Article XXVIII. Criteria for assessing bids]
[Article XXIX. Negotiation Disciplines
[Article XXX. Criteria for awarding of contracts]
[Article XXXI. Awarding of the Contract]
Article XXXII. Information regarding the awarding of the contract
[Article XXXIII. Publication of the Award]
[Article XXXIV. Confidential Information]
Article XXXV. Review and Appeal Procedure
[Article XXXVI. Dispute Settlement]
[Article XXXVII. Technical cooperation and assistance]
[Article XXXVIII. [Special and Differential Treatment and Transitions] [Treatment of the Differences in the Level of Development and Size of Economies]]
[Article XXXIX. Administration of the Agreement]
[Article XL. [Amendments] [Modification to coverage]]
[Article XLI. Privatization
[Article XLII. Systems for implementing the Agreement]
[Annex V.1 Rules of Origin]
[Annex VII.1. Entities]
[Annex X.1. [Exceptions] [Types of Procurement]]
[Annex XXV. 3 e) Information Requirements for Qualification Procedures]
[Annex ___: Definitions]
 
Chapter on Investment
Article 1: Scope of Application
Article 2: National Treatment
Article 3: Most-Favored-Nation Treatment
Article 4: Exceptions to National Treatment and Most-Favored-Nation Treatment
Article 5: Standard of Treatment
Article 6: Fair and Equitable Treatment
Article 7: Performance Requirements
Article 8: Key Personnel
Article 9: Transfers
Article 10: Expropriation and Compensation
Article 11: Compensation for Losses
Article 12: General Exceptions and Reservations
Article 13: Dispute Settlement
Article 14: State-to-State Disputes
Article 15: Investor-State Disputes
Article 16: Basic Definitions
Article 17: Transparency
Article 18: Commitment Not to Relax Domestic Labor Laws to Attract Investment
Article 19: Commitment Not to Relax Domestic Environmental Laws to Attract Investment
 
Chapter on Market Access
Annex
[Chapter on] Tariffs and Non-Tariff Measures
Section One. General Provisions
Section Two. Tariffs
Section Three. Non-tariff measures
Section Four. Other measures
Section Five. Institutional provisions
[Chapter on] Safeguard Measures]
[Part I. Hemispheric Safeguards] [Part I. FTAA Safeguards]
[Part II. Global Safeguards]
[Part III. Procedures and Common Provisions]
[Part II. Global Safeguards]
[Chapter on] Origin Regime
1) Originating Goods
[2) Specific Requirements of Origin]
3) Treatment of Accumulation
4) Qualification of Specific Types of Goods and Materials
5) Operations that do not Confer Origin
6) Direct Shipment, Transit, and Transshipment
[7) Invoicing Carried Out by Third Parties]
[8) Differential Treatment]
[9) General Provisions]
[10. Definitions]
[11) Consultation and Modifications]
[Annex to Article 1.3 Specific Rules of Origin
[Annex to Article 1.4 Net Cost
Section A - Definitions
Section B - Calculation of net cost
[Chapter on] Customs Procedures
Section A. General Principles [and [Obligations]]
[B. {Other} Customs Procedures related to the Entry of Goods]
[Section B. Other Customs Procedures related to the Entry of Goods]
[Chapter on] [Customs] Procedures related to Rules of Origin
Declaration and Certification
[Administration of the Rules of Origin]
3. Verification [and Control] of Origin
4. Sanctions
[ 5. Technical Cooperation ]
[6.1 Institutional Arrangements]
[Chapter on] Standards and Technical Barriers to Trade
Article 1. Scope and Coverage
[Article 2. Objectives and General Principles]
[Article 3. Standards]
[Article 4. Technical Regulations]
[Article 5. Conformity Assessment]
Article 6. Metrology
Article 7. Transparency Requirements and Information Systems
Article 8. Technical Cooperation and Assistance
[Article 9. Special and Differential Treatment]
[Article 10. Committee on Technical Barriers to Trade]
[Article 11 Consultations and Dispute Settlement]
[Article 12. Definitions]
 
Technical Barriers to Trade
Chapter on Subsidies, Anti-Dumping and Countervailing Duties
Part I - Antidumping and Countervailing Measures
Article 1 - General provisions
Article 2 - Determination of Dumping
Article 3 - Determination of Injury
Article 4 - Definition of Domestic Industry
Article 5 - Initiation and Subsequent Investigation
Article 6 - Evidence
Article 7 - Provisional Measures
Article 8 - Undertakings
Article 9 - Imposition and Collection of Duties
Article 11 - Duration and Review of Definitive Duties and Undertakings
Article 12 - Public Notice and Explanation of Determinations
Article 14 - Action in Behalf of a Third Country
Article 15 - Developing Country Members
Article 17 - Consultation and Dispute Settlement
Article 18 - Public Interest
Article 19 - Elimination of Antidumping Measures
Antidumping and Countervailing Duty Measures
 
Chapter on Dispute Settlement
1. [Article 1. Definitions
18. Article 2. Scope of Application
22. [Article 3. Principles
26. Article 4. General Provisions
40. Article 5. Choice of Forum
50. Article 6. Request for Consultations
55. Article 7. Consultations
65. Article 8. Cases Involving Perishable [Agricultural] Goods [and Other Cases of urgency]
68. [Article 9. Intervention of the Commission -- Good Offices, Conciliation and Mediation
73. [Article 10. Consolidation of Procedures
75. [Article 11. Good Offices, Conciliation and Mediation
83. [Article 12. Initiation of Conciliation Proceedings
85. [Article 13. Establishment of a List of Conciliators
88. [Article 14. Constitution of Conciliation Commission
90. [Article 15. Amicable Settlement
92. [Article 16. Functions of Conciliation Commission
94. [Article 17. Procedure
97. [Article 18. Report
100. [Article 19. Termination
102. Article 20. Request for the Establishment of the Neutral Panel
107. Article 21. Establishment of a Neutral Panel
119. Article 22. Roster of Panelists
126. Article 23. Qualifications of Panelists
130. Article 24. Establishment of the Neutral Panel
145. Article 25. Terms of Reference of the Neutral Panel
151. Article 26. Model Rules of Procedure
160. [Article 27. Procedures for Multiple Complainants
164. [Article 28. Multiple Parties Complained Against]
165.[Article 29. Third Parties
172.[Article 30. Representatives of the Parties to the dispute
175. [Article 31. Withdrawal or Settlement
177. Article 32. Expert Advice
183. [Article 33. Groups of Experts
185. [Article 34. Provisional Measures
193. [Article 35. Initial Report
199. [Article 36. Jurisdiction of the Neutral Panel
205.[Article 37. Final Report
217. [Article 38. Clarification or Interpretation of the Final Report
223. Article 39. Implementation of the Final Report
231. [Article 40. Appellate Body
233. [Article 41. Constitution of the Appellate Body
238. [Article 42. Appeal Procedure
245. [Article 43. Adoption of the Decision of the Appellate Body
249. [Article 44. Procedures for Appellate Review
251. [Article 45. Nature of Final Decision
256. Article 46. Non-implementation of the Final Report and Suspension of Benefits or Other Obligations
272. [Article 47. Damages
275. [Article 48. Strengthening of the FTAA Agreement
278. [Article 49. Responsibility or Compensation.]
279. Article 50. [Confidentiality] [Transparency]
284. Article 51. Calculation of Time Periods
287. [Art. 52. Special Procedures Involving Member States with Different Level of Development
290. [Art. 53. Effective Access
293. [Article 54. Interpretation of the FTAA Agreement in Judicial or Administrative Proceedings
297. [Article 55. Private Rights
299. [Article 56. Alternative Dispute Resolution Between Private Parties
304. [Annex XX. Nullification and Impairment
308. [Annex XX. Supplementary Rules of Procedure to Article XX (Rules of Procedure)
331. [Annex XX. Preliminary Proceedings
335. [Annex XX. Remuneration and Payment of Expenses
 
Chapter on Services
Article 1: Scope [of Application]
Article 2: Sectoral Coverage
Article 3: Most Favored Nation Treatment
Article 4: Transparency
Article 5: Denial of Benefits
Article 6: National Treatment
Article 7: Market Access
Article 8: Definitions
Section on Other Issues Related to the Above (as Determined by Each Country or Group)
Annex 1 - To the Report of the Negotiating Group on Services Issues for Further Discussion

Chapter on Intellectual Property Rights
I. General Provisions and Basic Principles.
II. Intellectual Property Rights
Trademarks
Geographical Indications - Appellations of Origin
Copyright and Related Rights
Protection of Folklore
Layout-Designs of Integrated Circuits
Patents
Relationship between the Protection of Traditional Knowledge and Intellectual Property, as well as Relationship between Access to Genetic Resources and Intellectual Property
Utility Models
Industrial Designs
Plant Varieties
Undisclosed Information
Unfair Competition
Anti-competitive Practices in Contractual Licenses
III. Enforcement
IV. Technical Cooperation
 
Chapter on Competition Policy
1. Competition Law
[2.[ Regulatory Policies and Practices, [Legal] [Official] Monopolies, State Enterprises [and State Aids] ]
3. Institutional Provisions
4. Mechanisms for Cooperation and for Exchange of Information
5. [Dispute Settlement]
6. Technical Assistance and Information Dissemination
[7. Transitional Measures
8. Definitions

• The published text is not legally binding because it is still under negotiation.

• The text is subject to modification as negotiations progress. In the Buenos Aires Declaration, the ministers instructed the negotiating groups to intensify efforts to resolve existing divergences and reach consensus, with a view to eliminating the brackets from draft texts.

• The translations of the texts into the different languages may contain inaccuracies, which will be corrected in the course of the negotiations.