Free Trade Area Of The Americas Essay ⋆ Business Essay Examples ⋆ EssayEmpire

The Free Trade Area of the Americas (FTAA) was an attempt to create a multilateral institution with the objective of reducing and eliminating the many trade barriers that existed between all American countries. It was also an attempt to emulate the North American Free Trade Agreement (NAFTA) that had proven quite successful for the countries that signed it. This was supposed to be the first step to creating a common market, similar to the one achieved by the European Union during the second half of the last century. It would try to harmonize all the commercial policies of each of the countries of the continent.

Initially 34 countries signed the agreement; nonetheless, controversial aspects of trade, such as intellectual property rights and agricultural subsidies, made impossible the conciliation between all parties. In fact, some countries, like Venezuela and Cuba, decided to criticize it and oppose it, trying to create their own alternatives as counterpoise. The initial talks began in 1994, with the Summit of the Americas in Miami supported by the United States, but it was in 2001 in Quebec, in the Summit of the Americas, when the discussion of the agreement became broader and the resistance of ant globalization activists caught the attention of the public. Despite the relative advance in negotiations and the release of a draft in Buenos Aires in the same year, there were no further agreements because some member countries felt themselves at serious disadvantage, as they were producers of commodities, especially agricultural goods.

The FTAA was not the first initiative for economic integration of the American states. Since the 1960s, there were already in place many economic agreements such as the Andean Community of Nations (CAN), the Common Market of the South (Mercosur), the Caribbean Community (CARICOM), and NAFTA itself, as the main examples of the process of creating agreements of economic cooperation. One of the objectives of FTAA was to merge these agreements in one single system of trade, with the suspension of barriers, tariffs, and taxes and the homogenization of all markets, using the European Union (EU) as an conceptual model. Additionally, the Doha Development Round of the World Trade Organization (WTO) revealed many aspects that were not included in previous negotiations, with particular attention to social issues.

The United States decided not to negotiate into the FTAA these controversial topics, along with the problem of internal aid and subsidies policies in the agricultural sector, in a process called Single Undertaking, in defense of its national interests. This generated discontent in many countries, who rejected this deterioration of rights and duties. Moreover, the United States demanded strict laws in the regulation of intellectual property and copyright. With the exception of Brazil, the rest of the states were at a disadvantage if anyone decided to negotiate separately and directly an agreement with the United States, which would jeopardize the future of an FTAA.

This consequence was more evident in the Quito Ministerial Summit of 2002. Despite the release of a second draft, the differences between the United States and the rest of the countries made it inappropriate to continue with negotiations. Mercosur, with the leadership of Brazil and Argentina, decided to postpone their entrance into the FTAA. They would accept an agreement only if the United States abolished its agricultural subsidies and guaranteed free access to all of its market, with consideration of the needs, capabilities, and sensibilities of possible members; finally, there were attempts to find a solution to these controversial issues in the WTO resolutions of the Doha Round.

According to the original schedule, the approbation and launching of FTAA was supposed to be in 2005, but delays and the indisposition of the United States to change its agricultural policies and its position on intellectual property—jointly with the emergence of opposition against U.S. free trade policies of countries turned socialist, like Venezuela and Bolivia—led to the failure of the Mar del Plata Summit in Argentina in 2005, and the agreement on FTAA was far from becoming a reality. Of the total states present at the summit, 26 nations scheduled a new meeting in 2006 to resume negotiations and release the final agreement, but that meeting never took place.

In 2004 Venezuelan president Hugo Chavez along with Evo Morales from Bolivia and Fidel Castro from Cuba launched the Bolivarian Alternative for the Americas (or ALBA) as an offset of FTAA. Its main objective was the creation of energy and infrastructure agreements and the inclusion of other aspects like military and political integration. Due to the impossibility of signing the FTAA without discarding its agricultural policies, the United States decided to create bilateral trade promotion agreements (TPAs), making one with Central American countries and signing one with Peru in 2007, and negotiating similar agreements with Panama and Colombia.

Bibliography:

M. Álvarez, FTAA & FTA with United States (Universidad Externado de Colombia, 2004);
Clavijo, “Growth, International Trade and Institutions: Reflections about FTA-FTAA Negotiations,” Borradores de Economía (Banco de la República, 2004);
Devlin and L. J. Garay, From Miami to Cartagena: Nine Lessons and Nine Challenges of FTAA (IADB, 1996);
Maya Ochoa and J. M. Restrepo, “Will FTAA Bring Income Convergence?”’ Ecos de Economía (EAFIT, 2003);
Fernando Pioli, Tomás Castagnino and Martín Cicowiez, Estrategias de integración comercial en el hemisferio: el ALCA y la ALADI como opciones de política para la Argentina [Strategies of Commercial Integration in the Hemisphere: the ALCA and the ALADI as Political Options for Argentina] (Centro de Economía Internacional, 2007);
Razeen Sally, Trade Policy, New Century: The WTO, FTAs and Asia Rising (Institute of Economic Affairs, 2008).

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