Media Center



July 2, 1995 - Denver, CO

"Beyond the technical discussions, we have to understand that in our world today trade negotiations are not any more the realm of the specialists. Today, trade issues are at the heart of domestic politics and foreign policy in every country without exception. This means that we have to acknowledge the political nature of the process towards a Hemispheric wide free trade area."

One of the key factors for succesful trade negotiations is the active involvement of the private sector. The insights of those who struggle everyday with the realities of commerce are essential to map a feasible path towards integration and free trade. I am convinced that the informed input and the ideas of the entrepreneurs from all of our countries must be an integral part of the effort to build a Free Trade Area of the Americas by the year 2005. Let me then try to present a summary of the legacy of Denver and of the challenges ahead.

The Ministers responsible of Trade achieved significant progress during this Summit. A central conclusion was that when taken as a whole, the existing free trade and integration agreements, have an overriding compatibility despite their differences in parameters, disciplines and regulations. The Hemispheric-wide liberalization effort will certainly be facilitated by the fact that there is more convergence than divergence in the sub-regional and bilateral trade agreements.

The countries represented here also agreed on the fundamental principles that should guide the route towards a hemispheric-wide free trade area. The FTAA is going to be fully compatible with the World Trade Organization framework; it will maximize market openness; it will not discriminate or raise barriers against third-parties; it will be balanced and comprehensive; and represents a single undertaking comprising mutual rights and obligations.

The process of creating the Free Trade Area of the Americas, as reflected in the Joint Declaration, would be comprised of two important phases. The first would involve fostering mutual trust, sharing information, establishing the technical needs of the process, and defining the parameters that would guide the joint effort. The second would be the actual negotiation phase, in which the fundamnetal political decisions will be taken and the actual agreements would be drafted.

To start the first phase the Ministers approved an initial work program, that is certainly an orderly and sound approach to address the key technical areas of the negotiations. The preparatory work will be handled by eight working groups on the issues of Market Access; Customs Procedures and Rules of Origin; Investment; Standards and Technical Barriers; Sanitary and Phitosanitary Measures; Subsidies; Antidumping and Countervailing Duties; and a group on Smaller Economies.

In March 1996 this groups should present their reports and five more will be established on the issues of Government Procurment; Intellectual Property; Services and Competition Policy. The general mandate for this groups is to examine the trade related measures in each of this areas and to identify possible approaches to negotiations. They will receive the support of the Special Committe on Trade of the OAS and the backing of the tri-partite technical committe of the OAS, the IDB and the ECLAC. This means that now we have adetailed methodology that guarantees that our common goal can be achieved.

And I am sure that by next spring, when the countries meet again in Colombia, the mandates assigned by the Ministers to the working groups and to the OAS will be fulfilled. The results that I just summarized confirm that we are making significant progress in areas that, although technical, are essential to conduct productive negotiations. However, many tough political issues still unanswered will have to be addressed in the coming months if we want to comply with the ambitious timetable established by the Heads of Government and State of the Americas. Let me refer to some of those issues having as background the excellent remarks given friday morning by the Minister of Trade from Canada.

How ambitious shall we be in terms of specific obligations and rights ? Should the eventual agreement include other elements different than tariffs and go beyong WTO provisions in such areas as intellectual property, government procurement, services and investment issues ? Could we agree to prohibit export subsidies in the region to member countries and in sensitive sectors such as agriculture and textiles ?

These questions are going to be at the core of the forthcoming political negotiations. Each of them demands specific answers but I have the feeling that to find those answers we need to understand them as a basket of related issues tangled together. Let me explain.

The landscape of contemporary trade negotiations goes beyond the topics strictly related to the exchange of goods. There is much more into it. Issues such as investment, government procurement, intelectual property and services, just to mention some, are going to have central role in defining the agenda and determining the outcome of the negoctiations to achieve a free trade area in the Hemisphere. And this topics have been pushed into the table basically by industrialized nations.

There is no doubt that for industrialized economies market access continues to be a relevant issue. But now the emphasys of their aspirations has moved to what some call the new issues". Paradoxically this is the result of a generalized and dramatic reduction on tariffs and barriers to industrialized countries exports in Latin America and the Caribbean. The decision by many countries to unilaterally open their economies resulted in a substantial increase in non-negotiated market access for exports coming from developed economies.

In contrast, countries with a lesser degree of development still have a long list of pending complaints and grievances related to the access of their goods to the bigger and wealthier markets in the Americas. This is particularlly true in such sectors as agriculture, light manufactures, textiles, energy and basic industries. The mixture of administrative barriers, subsidies, quotas and high tariffs for many of those products has a special relevance for Latin America's trade interests. I am not implying that the so called new issues" are not of the interest for the region. For example, access to technology and technical knowledge is essential for any developing country.

What is interesting here is that the success of the negotiations will depend on the symmetry and the balance with which the two sets of issues are treated. This means that market access and the new issues" negotiations must be seen as articulated and linked. Progress in the core interest of industrialized nations will require simultaneous and equivalent concessions and commitments on the side of market access.

The extent in which the Free Trade Area of the Americas can deepen the WTO commitments will be determined by the willingness of both sides to acknowledge the integral nature of the negotiations and by their disposition to understand fundamental interests of all the parties involved.

The second big group of questions has to do with the approach, or the path, to move from a web of coexistinting sub-regional and bilateral agreements to a Hemispheric-wide common regime for free trade.

In the Americas we have over 26 finalized agreements and several ones are being currently discussed. The concurrence of all these efforts to open markets and integrate economies in Latin America raises the question of how will the process of liberalization in Latin America and the Hemisphere proceed ?

A detailed comparative analysis, done by the Trade Unit of the OAS, suggests that, in general, the different agreements are compatible with GATT and have a technical proclivity towards harmonization and convergence. Therefore the issue is more political than technical.

Furthermore, at the political level we are approaching a pivotal moment. The countries and the different integration agreements in Latin America are confronted with three basic choices. First, they can follow the path of convergence on a wider sub-regional scheme, probably under the leadership of MERCOSUR; second, they can apply for accession to NAFTA; and third, all the countries and agreements can collectively build a new Hemispheric-wide free trade arrangement.

I fully agree with Minister MacLaren when he says that although we shall naturally build upon the liberalization already achieved, we cannot expect to arrive to a Free Trade Area of the Americas by passively waiting for the agreements to spontaneously converge or by just adding accesion after accesion to any of the existining schemes.

As I see it, the most desirable outcome is the option to deliberately and actively pursue a new agreement negotiated jointly on a Hemispheric wide scale. This alternative has the ability to offer a bigger market; promote a more transparent environment; and reduce diversion of investment and trade flows.

Even accepting the theoretical desirability of the Hemispheric-wide approach, the ultimate decision of Latin America will depend significantly on its perceptions of long-term intentions of the bigger players.

When NAFTA was signed, many Latin American countries bet on a fast and generalized opening of the treaty to other willing partners. The message received then was that the alternative was increasingly "bigger-NAFTA". Unfortunately, it became evident that that approach was unfeasible.

MERCOSUR is now exerting a gravity pull inside the region as intense as the one shown by NAFTA two years ago. In the space of a few months, Chile, Bolivia, and the Andean Pact started discussions to explore their potential accession to the treaty. Obviously this is not incompatible with a future Free Trade Area of the Americas, but with a limited institutional capacity to handle trade negotiations it will be hard to focus Latin America on a hemispheric approach without strong assurances by the NAFTA members that they are seriously engaged in and pushing for a Hemsipheric approach.

The very positive results achieved in this Trade Ministerial meeting in Denver certainly will help to foster confidence and encourage hope.

Whatever final decision is taken, the challenge for the next decade is to guarantee the continuity of the liberalization process in the Americas and do it in such a way that it does not become discriminatory to other regional partners or incompatible with the efforts to expand global trade.

But beyond all this technical discussions, we have to understand that in our world today trade negotiations are not any more the realm of the specialists. Today, trade issues are at the heart of domestic politics and foreign policy in every country without exception. This means that we have to acknowledge the political nature of the process towards a Hemispheric wide free trade area.

Therefore, we have to manage with infinite sensibility and care the expectations, the rythms and the priorities of all the parties involved.

The certainty that we have a joint commitment and a set of common goals will help us significantly to patiently construct a vigorous consensus in all this delicate matters. What happened here in Denver proves that we can agree on critical issues and move forward. We have to continue with the same attitude. Not rushing but without pause.