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  Félix Peña

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 U.S. Argentina monitor - Americas Program | Mayo de 2004

A negotiation that is losing its course

What appeared as an interruption of the Puebla meeting held in February finally seems to have been a failure. Several informal meetings, oriented to facilitate the conclusion of the second part of the meeting were unsuccessful.

What is certain is that the FTAA negotiations are facing difficult times. Hardly anyone believes today that the negotiations will conclude at the end of this year, as was originally foreseen. Perhaps this demonstrates that not all countries involved have obtained enough domestic support to undertake the kind of commitment necessary to commit to the FTAA in the terms set out in Miami in 1994. It may also mean that the architecture outlined in Miami last November was overly ambitious, as was the original plan.

June 2005 appears now as a reasonable time to conclude negotiations. Three reasons allow us to expect it, even though some analysts consider it too optimistic.

The first reason is that a sensation of movement rather than paralysis could be perceived in Geneva, at the end of the recent meetings on the agricultural issue. It seems possible to obtain substantial progress, and even to conclude the WTO negotiations, if not at the end of this year at least by the middle of next year. The steps taken by the negotiators between now and June could eventually confirm this relatively more optimistic scenario.

The second reason is that, once the elections in the United States are over, the hemispheric negotiations could receive a new political push. Such a push appears to be fundamental to insert the negotiations within the framework of the necessary strategic vision, which to date seems to be missing. The preparation of the next summit of the Americas could offer the opportunity for the insertion of trade negotiations within a wider strategy, in accordance with the profound political challenges observed today, especially in South America.

And the third reason is that, in all likelihood, all the principal actors would like to see negotiations progress before the expiration in mid-2005 of the present mandate given by Congress to the President of the United States through the Trade Promotion Authority. Many analysts consider that an extension would only be possible if the negotiations at the WTO and the Hemisphere were well oriented and at an advanced stage.

But recent failures in the FTAA negotiations have made a basic problem obvious. More than a question of terms it seems to be a question of direction. The belief that strategic objectives had been established for good, first in Miami in 1994 and then again in November last year, now seems unfounded. Which objectives are sought? What is the imaginable and possible architecture for hemispheric free trade? How can it be achieved in a reasonable time frame? Is it possible to combine within the same framework such different interests and realities, such as on one hand the largest world economy and on the other hand, for example, Haiti?

There is a reality that cannot be ignored. An ample network of preferential agreements between almost all countries throughout the Americas already exists. The agreement between Mercosur and the Andean Community, and the possible agreement between the United States and the Andean countries, would practically complete it. A significant exception is, precisely, the one that should be faced as a priority: that of Mercosur with the United States.

It is perhaps time to state the essential, and within FTAA it is already clear that an understanding between Mercosur and the United States is essential. It is the missing part in the continental puzzle. It should have been obvious from the beginning of the process. Perhaps not admitting it shows a lack of practical sense, particularly on the part of U.S. negotiators.

Perhaps when FTAA was first envisioned, the fact that there has never been a unique pattern in the history of regional preferential agreements was disregarded. There are only precedents and the need to fit an agreement within the very lax framework of GATT's Article XXIV of 1994 and GAT's article V. Each agreement has been tailored according to the realities involved. The free trade agreement between the United States and Australia, that does not include the possibility for investors to have access to the investment dispute-settlement mechanism, is an example.

Perhaps if the "4 + 1" negotiation was faced directly, as was the original idea of Mercosur, it would move in the direction of hemispheric integration. It would imply an acceptance by the United States of the political value that the consolidation of the strategic idea of Mercosur may have in South America.

Should this approach prevail, a format similar to the one prevailing in the Mercosur-European Union negotiation could be the result. That is, a free trade agreement consistent with the commitments assumed at the WTO that would open the way to additional negotiations that would allow the broadening of the stock of preferences and rules in light of the Doha results.

Simultaneously with the conclusion of the first stage of the "4 + 1" agreement, other multilateral agreements oriented to the convergence of the preferences and rules included in the present free trade hemispheric network could be negotiated. For example, an issue - among others - that would require hemispheric convergence would be rules of origin.

Following this realistic methodology, the objectives originally foreseen for FTAA could be gradually achieved in approximately ten years. It would not be the ideal route but it would be a possible and reasonable one.

A failure to progress in hemispheric free trade does not seem to benefit anyone. In particular, it would not favor an atmosphere of cooperation among all the countries of a region that is facing increasing political turbulence.

Félix Peña es Director del Instituto de Comercio Internacional de la Fundación ICBC; Director de la Maestría en Relaciones Comerciales Internacionales de la Universidad Nacional de Tres de Febrero (UNTREF); Miembro del Comité Ejecutivo del Consejo Argentino para las Relaciones Internacionales (CARI). Miembro del Brains Trust del Evian Group. Ampliar trayectoria. |

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