Ambassador James Smith,

Members of the Committee,



It is a pleasure for me to be here and I look forward to the discussions we will have on the FTAA. First, let me say that the Organisation of American States is pleased to have been helpful in increasing both government and public attention in The Bahamas to this very important issue, and in explaining the many complex questions that will be the subject of the FTAA negotiations. The OAS Trade Unit remains at the disposal of the Government of The Bahamas to lend further assistance, where possible, to facilitate the effective participation of The Bahamas and the other smaller economies in the Caribbean in the FTAA negotiations. Indeed, over the next two weeks, Trade Unit staff will be in Miami supporting the Advisory Group on Smaller Economies, chaired by Jamaica, as well as the Special Committee on Electronic Commerce, chaired by Barbados.

Before we commence our discussions, it might be useful to look briefly at where we have been and where we are in the process, and at some of the challenges that lie ahead.

Three years after the Miami Summit, and based on its mandates in the trade area, the San Jose Ministerial gave us a clear blueprint and Plan of Action as to what to negotiate and how to do it. This April, the Santiago Summit reiterated the general vision, launched the FTAA negotiations, and consolidated mandates in other key areas of hemispheric cooperation. And only a few days ago, eight of the nine negotiating groups concluded their first set of meetings in Miami.

The Negotiating Group on Intellectual Property had to postpone its meeting beyond the end of September deadline set by Trade Ministers, due to the threat of Hurricane Georges in South Florida. You know all too well the effects of these mammoth storms. But problems, they say, appear even in paradise.

The negotiating groups all had a solid foundation from which to begin their work, having benefitted from the incredible amount of technical analysis that had been accomplished over the last three years, with the support of the OAS and our colleague institutions of the Tripartite Committee. In addition, during the preparatory phase, the FTAA nations were able to forge an agreement on the core principles for this endeavor. They agreed that the FTAA will be a "single undertaking" -- every participant must accept all the obligations. There are no free riders. The FTAA will be compatible with the WTO Agreements. And member countries will not to raise trade barriers against non-member countries.

With this as their guide, the focus of all the groups in these first meetings was to agree on substantively driven work programmes between now and the next Trade Ministerial, which is scheduled for Canada in the fall of 1999. Some groups were successful in going beyond this and concluded some valuable substantive discussions, even if only in a preliminary manner.

Without a doubt, this first round and successive rounds of negotiations constitute an extraordinary effort of political will. Yet, many wonder whether this ambitious initiative will survive the challenges posed by certain global, regional, and national economic and political factors. The most important factors that negotiations must overcome are the lack of ?fast track? negotiating authority in the U.S.; the unclear scope of WTO trade talks scheduled to begin in 2000; the similarly unclear scope of other ongoing and planned sub-regional, inter-regional, and bilateral negotiations; and the policy responses of Latin American and Caribbean countries to the Asian/Russian financial crises.

Let?s start with ?Fast Track?.

?Fast track? negotiating authority for the U.S. Executive Branch has both a symbolic and real impact on trade negotiations. Symbolically, ?fast track? demonstrates U.S. public support for trade liberalising negotiations. In real terms, it ensures foreign governments that they will not have to renegotiate with the U.S. Congress the agreements they reached with the U.S. Executive Branch.

While, legally, a U.S. administration does not need ?fast track? until trade talks are nearly concluded, the intense political fight for NAFTA passage in 1993 transformed ?fast track? into a measure of the credibility of the stated U.S. intention to negotiate a hemispheric free trade accord by 2005. Thus, for both symbolic and real reasons, passage of ?fast track? legislation in the U.S. is necessary, albeit not sufficient, for the progress of the FTAA negotiations at a satisfactory pace.

But, the U.S. is not the only country where the public is unsure about the benefits of free trade. In Latin America, we hear talk of "reform fatigue" and the fact that successive waves of economic reform are making it difficult to generate much enthusiasm for the FTAA. What is needed is a lively public discussion about the merits of open markets. This is not to say that trade should be sold as a cure for all our ills. But supporters of open markets should not stand idly by while free trade is offerred as a scapegoat for all our economic uncertainties.

As far as multilateral trade talks are concerned, a WTO agricultural negotiating round is set for 1999, and one for services in 2000. In addition, an influential group of countries (the European Union and Japan) wishes to broaden the WTO agenda to hold what has been called a Millennium round of all-inclusive negotiations. The WTO agenda, whatever its scope, will impact the FTAA. If the next WTO round develops at a slow pace, then this could give an impetus to the FTAA. If the round is fully engaged, however, the talks could make it harder to sustain governmental and business interest in the FTAA. This is a real concern, especially for Latin American and Caribbean nations that have very limited human and financial negotiating resources.

As has been noted on many occasions, the FTAA involves negotiations between some of the world's largest economies and some of its smallest. Smaller countries that face real human and financial resource constraints must feel prepared to participate equally with their counterparts in, say, Brazil or the United States --- countries who bring to the process virtual armies of seasoned trade negotiators. They must be provided with strong incentives and the most effective tools possible to be full participants in the FTAA effort.

The OAS is already taking steps to address this concern. Working with the World Trade Organisation and Georgetown University, the OAS Trade Unit held this year a series of training courses targeted at government officials from smaller economies. Two members of this Committee participated. These intensive sessions help negotiators from the small and less-developed countries refine the skills they will need to deal with regional and multilateral trade issues.

Another series of training courses are planned for 1999. In fact, funding for this activity is currently being considered by the Inter-American Council for Integral development, the OAS cooperation arm.

In addition, only last week we concluded, in Jamaica, a symposium on international investment agreements and their implications for the Caribbean countries, which we executed in conjunction with the UNCTAD Secretariat and the University of the West Indies. A high-level representative of the Bahamas Ministry of Economic Development participated in the symposium. Next month, we will hold a conference on the challenges and opportunities of the FTAA in Suriname, and a seminar on dispute settlement in Venezuela. For next year, the OAS Trade Unit hopes to intensify training programmes in the member countries.

The OAS Trade Unit also will continue its considerable support to the FTAA Advisory group on Smaller Economies, chaired by Jamaica, and will begin to provide assistance to the newly formed Special Committee on Electronic Commerce, chaired by Barbados.

We also need to think about what the relationship will be between the FTAA and the existing sub-regional agreements. The FTAA must somehow bring together the economies of the Americas under a single agreement while preserving, in some form, existing alliances. Much effort has been expended crafting such accords as CARICOM, MERCOSUR, NAFTA, and the Andean Community. And the FTAA, in large part, owes its existence to the success of these integration efforts. Sub-regional deepening and widening is one way of advancing hemispheric integration. However, this approach has its risks, which can be countered only through the negotiation of bilateral and sub-regional treaties with mutually consistent rules and standards.

Inter-regional negotiations also will have an important influence on the evolution of the FTAA. The EU has been actively seeking negotiations with several countries and sub-regions of this Hemisphere. For regions such as MERCOSUR, which have a high proportion of their trade with the EU, these negotiations are a high priority. As a practical matter, if those negotiations are real and intense, then the pressure and capacity to fully engage in hemispheric talks will not be present. Furthermore, engagement with the EU could be stimulated by a protracted absence of ?fast track? authority in the United States.

A key attraction of the FTAA is its potential to provide business with a uniform set of rules for trade and investment activities in the Hemisphere. If the FTAA is to fulfill this promise, then its relationship to sub-regional and bilateral accords must be firmly established.

Of course, global economic conditions certainly will influence the pace of the FTAA process. Unfortunately, the transition of the FTAA to the negotiations phase is occurring just as the Asian/Russian financial crisis is providing fuel to critics of globalisation.

If the deterioration of economic conditions in Asia and the Russian Federation aggravate and exert a contagion effect on other regions of the world and on the American economy, Western Hemisphere economic and trade priorities could be affected, including the possibility that the FTAA negotiations reduce their priority in the national agendas of some of the most important actors.

We are not yet in danger of going back to the days of high tariffs and tight state-control. But severe macroeconomic difficulties will make it hard to move beyond the status quo, or at least "lock-in" the progress of the last ten years through a hemispheric accord. When people feel pain but see no gain, a backlash is always a danger.

This brings us to the need for support for the entire Summit process. Just as governments and their private sectors should support the FTAA, they also should get behind the mutually-reinforcing Summit initiatives aimed at strengthening democracy, protecting the environment, reducing poverty, eliminating corruption, ensuring labor rights, and stopping the flow of narcotics. National publics must see the capacity of countries to benefit from free and open economies with strong institutions. As I have said on other occasions, the trade agenda cannot advance unless we understand the combination of economic, social and political forces needed to make integration a concrete reality.

Ladies and Gentlemen,

The challenges that FTAA countries face as we proceed with this ambitious undertaking are many. Yet this does not mean there is no cause for optimism. In fact, there are very important benefits to be derived from the FTAA talks. Even at the negotiations stage, the talks have positive collateral uses and spin-off effects on economic policy, private sector behaviour, networking, and expectations.

1. First, the FTAA talks help to give both a sense of direction, and a sense of urgency to policy reform. The shared objectives in all different negotiating areas provide a strategic orientation for all countries and have a positive feedback on national priorities.

2. Second, through this process, more than 800 trade officials are involved in a continuing dialogue. For many countries, this increased communication and trust among trade officials, plus the technical assistance provided in support of the process, amounts to a major programme for trade and regulatory reform under common principles and standards.

3. Third, the FTAA talks are reinforcing the political will and motivation of countries to deepen and widen their sub-regional integration arrangements.

4. Fourth, the FTAA process is producing greater transparency and mutual self-awareness about barriers to trade and investment among the participating countries, including pressure to ensure timely implementation of WTO commitments.

5. Fifth, the enthusiastic engagement of important segments of the business communities of all countries through the Business Fora of the Americas and innumerable other activities generated by the FTAA is improving business networking and helping to identify and exploit new trade and investment opportunities.

6. Finally, the FTAA has been increasingly capturing the interest of many sectors of civil society and developing an ever widening basis of support for the FTAA and for the Hemispheric vision and objectives.

In conclusion, it is heartening that countries like The Bahamas are becoming more active in trade policy discussions on a regional and global basis. Without a doubt, the forces of globalisation and internationalisation of economic policy will continue to be critical factors in the development of all countries. This being the case, national interests can only be pursued by direct participation in the fora in which such issues are considered.

It is especially encouraging that The Bahamas has adopted a higher profile in the FTAA process, most recently taking on the vice-chairmanship of the Negotiating Group on Services. Services are part of the ?new agenda? in trade policy terms and addressing the issue will be a complex undertaking. This reflects the strong commitment of The Bahamas to the FTAA and underscores its efforts to make the FTAA a reality.

While presenting all countries with a challenge, the FTAA is a particularly complex endeavour for the smaller economies of the Hemisphere. The OAS has recognised this fact from the outset of the process and has devoted much time and resources to helping countries address such issues. Ambassador Smith, the OAS stands ready to continue to provide assistance to the Government of The Bahamas in the trade area, as well as to other Caribbean countries that may request it.

Thank You.