Date: Sat, 6 Apr 1996 07:49:41 -0600
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>>> Item number 9768, dated 96/04/05 00:00:55—AL
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Subject: NAFTA & Inter-American Trade Monitor

Cartagena: Looking toward the Free Trade Area of the Americas

NAFTA & Inter-American Trade Monitor, Vol. 3 no.7, 5 April 1996

As business executives and trade ministers of 34 American nations met in Cartagena, Colombia on March 21, diplomatic maneuvering escalated to include a shouting match over intellectual property rights that ended only with the intervention of armed security guards. Hot button issues ranged from intellectual property rights to labor and environmental concerns, and included basic disagreements on how and how fast to move toward the agreed goal of establishing the Free Trade Area of the Americas by or before 2005.

The most explosive verbal fireworks came at the Americas Business Forum, a parallel meeting of 1,500 private business representatives from various countries of the hemisphere, held immediately before the official ministerial meeting. When an argument over intellectual property rights escalated to a shouting match with Argentine charges of U.S. imperialism, security guards were called to quell the disturbance.

The Business Forum reached agreement on calls for movement toward FTAA, decreased protectionism, and benchmarking and quality standards for government performance. The Business Forum also recommended that the United States adopt the metric system and repeal the Helms-Burton restrictions on trade with Cuba, saying that the latter could render the free trade agreements and the expansion of their liberalisation ineffective. The United States is the only country in the hemisphere that does not use the metric system, complicating movement toward common standards.

Heated discussions at the official trade ministerial meeting included an argument between U.S. Trade Representative Mickey Kantor and Mexican Commerce Secretary Herminio Blanco over U.S. insistence that a new working group on government procurement include an analysis of the impact of corruption on international trade. Ministers went into closed door sessions to hammer out the language of the final declaration.

In the end, the trade ministers agreed to establish four new working groups on government procurement, intellectual property rights, services, and free competition. Terms of reference (the description of the tasks assigned) for the working groups on government procurement and intellectual property rights ended up substantially weaker than the language proposed by the United States. The original seven working groups, established at the first trade ministers meeting in Denver in 1995, focus on market access, rules of origin and customs procedures, investment, technical regulations and barriers to trade, sanitary and phytosanitary rules, subsidies and anti-dumping, and small economies. A twelfth working group on dispute resolution will be formed in 1997. The ministers rejected proposals to establish study groups on labor and environmental concerns.

In a move of particular significance to agriculture, Chile and Colombia won language expanding the focus of the anti-dumping work group to examine how subsidies may have indirect anti-competitive effects on international commodities trade. The United States agreed to allow the working group to identify and make recommendations on domestic agricultural supports, in addition to farm export subsidies.

The trade ministers' final declaration also welcomed the contribution of the Americas Business Forum, specifically recognizing the importance of the role of the private sector and its participation in the FTAA process.

Hemispheric labor ministers, led by Argentina's Caro Figueroa, asked that the FTAA incorporate a social dimension that guarantees, at a minimum, respect for fundamental labor standards, including collective organization and bargaining, prohibition of child labor and forced labor, and non-discrimination in the workplace, advocated establishing a dialogue between government, business and labor to facilitate this goal. United States proposals for labor and environmental working groups or, at the very least, study groups, were not accepted.

The final declaration expressed appreciation for the declaration received from the Tenth Inter-American Conference of Ministers of Labor, but conceded only that the ministers recognize the importance of the further observance and promotion of worker rights and the need to consider appropriate processes in this area, through our respective governments. In a compromise reached after intensive negotiations, the FTAA vice ministers will consider establishing a study group on environmental issues only after they receive a report from the World Trade Organization's Committee on Trade and Environment in December 1996.

The United States and Brazil represented opposing viewpoints on the pace and path of movement toward FTAA, as they have since the beginning of the process. As the largest country of the South and a partner in the Mercosur trade alliance, Brazil has advocated movement toward FTAA through alliances between regional trading blocs, gathering strength in the South to confront the NAFTA alliance and the United States. The United States, on the other hand, seems to favor a strategy of gradual accretion of nations and blocs to NAFTA. The Organization of American States official with special responsibility for FTAA matters, Miguel Rodriguez Mendoza, a Venezuelan, advocated a third path that would involve a hemisphere-wide round of negotiations similar to the Uruguay Round talks that culminated in the creation of the World Trade Organization.

Brazil generally advocates a slow approach to the FTAA, while the United States representatives pushed for more rapid progress toward hemispheric trade integration, despite internal U.S. political opposition to free trade and the Clinton administration's inability to obtain the fast-track negotiating authority necessary to allow it to negotiate accession of Chile to NAFTA. The final declaration of the ministerial meeting directed vice ministers to make an assessment of when and how to launch the FTAA negotiations and to make recommendations to us on these issues before the 1997 Trade Ministerial Meeting. Adoption of this language represented a rejection of U.S. proposals that would have committed the trade ministers to decide at the next trade ministerial meeting when and how to launch comprehensive FTAA negotiations, and would have directed vice ministers to make specific recommendations on the most appropriate 'paths' [to] facilitate construction of the FTAA.

Smaller countries complained that Brazil and the United States have effectively hijacked the FTAA process. Compromises on some U.S.-Brazilian differences were worked out during a bi-lateral meeting in Brazil just prior to the conference, and the subsequent five and one-half hour flight to the trade ministerial meeting. With the support of the United States, Belo Horizonte, Brazil was selected as the site for the 1997 trade ministerial meeting.

Final Cartagena Declaration on FTAA, INSIDE U.S. TRADE, March 22, 1996; U.S.-Proposed Revision of Cartagena Ministerial Declaration, INSIDE U.S. TRADE, February 23, 1996; Hemispheric Trade Ministers Reach Agreement on FTAA Declaration, INSIDE U.S. TRADE, March 22, 1996; Jay Mazur, Free Traders Still Aren't Listening, JOURNAL OF COMMERCE, March 20, 1996; Kevin G. Hall, OAS Official Says Poverty Must Be Addressed in Hemispheric Trade Talks, JOURNAL OF COMMERCE, March 27, 1996; Estrella Gutierrez, The Third Route to the FTAA, INTERPRESS SERVICE, March 15, 1996; Yadira Ferrer and Humberto Marquez, Business Forceful in Backing Integration, INTERPRESS SERVICE, March 20, 1996; Humberto Marquez, Four New Working Groups to Design the FTAA, INTERPRESS SERVICE, March 21, 1996; Tom Brown, Latins and U.S. Renew Commitment to Hemispheric Free Trade, REUTER, March 22, 1996; Kevin G. Hall, Mexico May Lead Way for Hemispheric Trade Bloc, JOURNAL OF COMMERCE, March 26, 1996; Kevin G. Hall, Hemisphere's businesses Press for Basic Reforms, JOURNAL OF COMMERCE, March 21, 1996; Kevin G. Hall, Trade Leaders Take Off Their Gloves in Cartagena, JOURNAL OF COMMERCE, March 22, 1996.