Media Center



May 26, 1998 - Hall of the Americas, OAS, Washington, DC

It is with great pleasure that I welcome you to this conference on multilateral and regional trade issues. Together with the Center for Latin American Studies at Georgetown University, the Organization of American States has organized this event as part of a research and training program on trade issues. This program brings the OAS and Georgetown University together with the World Trade Organization in a joint effort to promote understanding and effective participation in trade negotiations in the countries of Latin America and the Caribbean. Funded through the Inter-American Council for Integral Development and with the active participation of the OAS Trade Unit, this program combines the generation of scholarly papers such as those to be presented over the next two days with two intensive training programs for government officials- one in English and a second in Spanish.

These papers will address the key issues on the current trade agenda. This conference is especially timely for the countries of the Americas, as negotiations toward a Free Trade Area of the Americas (FTAA) were launched last month at the Second Summit of the Americas, in Santiago de Chile. Discussions will touch upon the relationship between regional arrangements and the multilateral trading system, an issue of critical importance to the countries of the Western Hemisphere, where regionalism has flourished in recent years. Another issue of great importance to the FTAA negotiations that will be examined are the measures embodied within trade agreements to address the particular concerns and needs of the smaller economies. Institutional issues, including dispute settlement mechanisms, will also be discussed, and naturally, a considerable amount of time will be devoted to analyzing the specific trade and trade-related issues on which the actual trade negotiations will be centered, such as market access, rules of origin, investment and competition policies, trade in services, intellectual property rights, and last but not least, labour and the environment.

I would like to comment on a few of these issues as they relate to the Free Trade Area of the Americas (FTAA). First, I would like to mention the relationship between the FTAA and the multilateral trading system. One of the primary principles that will guide the negotiations is that the FTAA will be consistent with the WTO. While the need for consistency should be self-evident, as nearly all the FTAA participants are members of the WTO, it is remarkable, and perhaps unprecedented, that this issue be given such formal preeminence from the outset of the negotiations. More specifically, the need for consistency between the FTAA and the WTO will have an important impact on the content of the FTAA agreement. In order to comply with the GATT/WTO rules on regionalism, the FTAA will have to encompass "substantially all" trade among its members, may not raise barriers to trade with outside sources and must be fully operational within ten years of the signing of the agreement.

By designing the FTAA in a manner that is consistent with the WTO, countries will ensure that the agreement serves as a stepping stone rather than as a stumbling block to multilateral trade liberalization. The fact that countries in the region have been unilaterally liberalizing their economies since the mid-1980s, and that the existing subregional arrangements -- such as NAFTA, the Mercosur and the Andean Community -- have reinforced this trend, should give further assurances that the FTAA will not distract these countries from their multilateral obligations. After all, these countries have been practicing what is commonly known as "open regionalism" whereby trade liberalization among members of a subregional arrangement is pursued simultaneously - and sometimes due to overall trade liberalization.

Second, the FTAA may go beyond the WTO. Consistency with the WTO does not mean keeping the agreement within the limits of the understandings reached at the multilateral level. In fact, almost by definition, a regional agreement of the nature envisaged by the FTAA participants, whose aim is to eliminate barriers to trade and investment, needs to go beyond the WTO, at least in some areas. A case in point is market access, where the FTAA will imply the removal of all tariffs or other barriers to trade among the participants --- a goal not yet achieved in the multilateral arena. In other areas, like competition and investment policies, the FTAA will address issues not yet fully dealt with by the WTO.

Third, the participation of the smaller economies in the FTAA should be emphasized. This is perhaps the most critical of all issues as the FTAA encompasses countries of disparate sizes and levels of development. The FTAA will be a unique endeavor to liberalize trade and to integrate the economies of thirty-four countries that vary in terms of size and territory, population, and natural resource endowments. For example, Brazil's GDP, which is not the largest in the region, is more than one-hundred times that of Jamaica, which is not the smallest. Bringing together in economic alliance countries as distinct as, for example, Bolivia and Barbados, Canada and Chile, and Guatemala and Grenada will not be a simple task. Although reciprocal agreements between large and small countries, almost unheard of in the past, are becoming more and more common, the underlying challenges to ensure the full participation of the smaller economies in the negotiations as well as the implementation of the agreements, remain.

The case can be made that the smaller economies of the Western Hemisphere stand to gain from participating in the FTAA. Not to do so may isolate them from the markets which now constitute the majority of their trade. Moreover, they would not be able to gain from the trade and particularly from investment liberalization dynamics that are expected to result from the FTAA. At the same time, the benefits to be accrued from participation may be substantial. Prominent among these is the fact that the smaller economies will be legally entitled to enter their most important markets - those of the United States and Canada - by means of a binding regional agreement rather than relying on the fragile unilateral preferential arrangements now in place.

This being said, a number of measures will be needed to take into account the particular needs and concerns of the smaller economies and to enable these countries to fully take advantage of these opportunities. These measures may need to go beyond declarations of good will. They may not need to be agreed upon at the initiation of the negotiations, but should result from the negotiations themselves. Rather than set out principles that may imply overall exceptions from the agreement, the measures should be designed in a manner that will allow the smaller economies more flexibility in the implementation of general rules and disciplines. This could be done by providing them with the necessary assistance -- including technical assistance and material support to meet their commitments.

The fourth item that I would like to discuss is the complexity and variety of the issues that will be incorporated in the negotiations. The FTAA will address a number of traditional and nontraditional trade issues. Together with issues such as tariff and nontariff barrier reductions, rules of origin and customs procedures, the negotiators will have to tackle issues such as competition policy, which has never been the subject of a multilateral agreement, and for which only the European countries have implemented a common regional approach. The difficulties in negotiating an investment agreement should not be underestimated, as was recently evidenced in the discussion on a multilateral investment agreement conducted by the OECD countries. Even issues such as government procurement, notwithstanding the fact that it is covered in a plurilateral WTO agreement, will pose distinct challenges to the countries of this region.

To negotiate specific agreements on these issues is both a political and technical undertaking. Countries will require a great deal of human and material resources to prepare for these negotiations, as in many cases they will be charting unknown territory. Fortunately, the preparatory process leading to the launching of the negotiations has already set the groundwork. Countries have developed, with the support of the Tripartite Committee institutions - the IDB, ECLAC and the OAS - a considerable amount of information on the rules and policies currently in force in the Western Hemisphere on the various issues under negotiation. However, much remains to be done. We, at the OAS, are fully committed to supporting the FTAA process as we see the FTAA as a vehicle to strengthen trade and economic links among the countries of the Americas and to set up a new framework for inter-American cooperation. This will make a significant contribution to the well being of the citizens of the Americas.

The deliberations and discussions that will be undertaken in this conference will certainly help clarify the issues and will help us to move towards this goal. I am confident that the expertise and experience of the panelists and participants in this project will help spur a fruitful dialogue on the challenges and opportunities facing trade negotiators at both the regional and multilateral level that will help to inform the participants in the FTAA as they move forward to eliminate the barriers to trade and investment among the countries of the Americas.

Thank you very much.