“FTAA will stretch from Alaska to Argentina.
This accord marks a watershed in the history of the hemisphere ... The
so called lost decade of Latin America is fading... The region has freed
itself from dictatorship and debt, and embraced democracy and development.”
U.S. President William J. Clinton, December
1994
1st Summit of the Americas in Miami, Florida
TABLE OF CONTENTS
Introduction
What is FTAA?
U.S. Perspective
on NAFTA, Fast-Track Authority, and FTAA
What is Fast-Track Authority?
1998 U.S. Congressional Fast-Track
Vote
Mexico in the Post-NAFTA
Era
Mexico’s Banking Reform
Will NAFTA Lead To Dollarization
in Mexico?
Chile’s Reaction
to the Lack of NAFTA Expansion and FTAA
Chilean Trade Agreements in
the 1990’s
Chile and NAFTA
Chile and the Asian Pacific
Economic Cooperation (APEC)
Chile-European Union Relations
Chile-MERCOSUR Relations
MERCOSUR Favors Regional
Integration First
What is MERCOSUR?
Courting Both U.S. And Euorpean
Trade
Argentina’s Changing Foreign
Trade Policies (1983-99)
MERCOSUR Trade- The Catalyst
of Uruguayan Politics
Conclusion
Introduction
Elections
in the United States, Mexico, Chile, Argentina, and Uruguay in 1999-2000
offer the potential of changing current discussions to implement
economic integration of the Western Hemisphere under the Free Trade of
the Americas Agreeemtn in 2005. Will the new administrations that
are elected in these countries reject current goals for FTAA? Will
they favor discussions with the World Trade Organization (WTO), an organization
created in 1995 to permanently replace the General Agreement on Tariff
and Trade (GATT)?1
When U.S.
President George Bush launched the 1990’s with a new trade overture entitled
Enterprise for the Americas Initiative (EAI), Western Hemisphere leaders
hoped that the decade would mark a new era of free trade. Proposed
in June 1990, EAI’s goal was to build upon the democratization and debt-restructuring
of the 1980’s. It specified the creation of a Free Trade Area of
the Americas (FTAA) encompassing all nations in the Western Hemisphere.
As the first step towards this goal, the United States signed a free agreement
with Canada and Mexico in 1992. The North American Free Trade Agreement
(NAFTA) was ratified and implemented in January 1994. By the end
of that year, all the leaders of the Western Hemisphere met in Miami at
the First Summit of the Americas. It was a momentous occasion, the
first encounter in 35 years.2 The
purpose of the meeting was to set goals for creating FTAA by 2005.
Specific negotiations for FTAA were to be worked out at the 2nd Summit
of the Americas, scheduled for 1998 in Santiago, Chile.
At
2nd Summit of the Americas, it became apparent that U.S. President Bill
Clinton lacked the power to negotiate FTAA. The social and economic
changes brought about by NAFTA had generated intense political debate in
the United States during the 1992, 1994, and 1996 elections. President
Clinton’s Fast-Track Authority expired and it was not renewed by U.S. Congress.
Without Fast-Track, the details of any treaty negotiated by the Clinton
Administration were subject to negotiation by the U.S. Senate. The
countries with which the U.S. negotiated could not be assured that their
terms would not be amended and changed. This situation caused a general
lack of confidence in Latin America and brought FTAA negotiations to a
stand-still.
What is
generally not understood is that President Clinton’s Democratic party denied
him Fast-Track Authority. This point is important to understand,
especially in light of the November 2000 U.S. Presidential elections.
Between 1999-2000, Mexico, Chile, Argentina, and Uruguay will also hold
Presidential elections. The changes in leadership resulting from
these elections will change the mood of the FTAA negotiations. For
one thing, the balance of power in the United States between the Republican
and Democratic parties may change and the next elected U.S. President may
be able to regain Fast-Track Authority. Secondly, elections in Mexico,
Chile, and Argentina may bring leadership changes. Entering the 21st
century, each of these new administrations will face serious economic decisions
regarding their nation’s trade policies. The question will be whether
they continue interest in FTAA.
While FTAA
negotiations have slowed down due to the lack of U.S. Fast-Track Authority,
many changes have taken place that have created and strengthened new emerging
trade blocs. In the interim, Latin American governments have proceeded
to make their own trade alliances with Mexico, Chile and Brazil leading
this trend. Mexico and Chile have both promoted Pacific Rim trade
by joining APEC (Asian Pacific Economic Cooperation). Mexico also
joined the Grupo de Tres Agreement with Colombia and Venezuela and it is
currently negotiating a potential accord with the European Union (EU).
Chile has aggressively pursued trade in Asia, especially Japan. It
also signed agreements with the EU and MERCOSUR in 1996. MERCOSUR,
a trade bloc composed of Brazil, Argentina, Uruguay and Paraguay is in
the process of rapidly to integrating its members’ economies and begin
negotiating its own treaty with the EU. As the dominant economic
force in MERCOSUR, Brazil has proposed the creation of SAFTA (South American
Free Trade Association). This would unite MERCOSUR with other Latin
American countries and compete with NAFTA.
In
this fluctuating trade environment, Mexico and Argentina have proposed
dollarization plans that tie their economies to U.S. Federal Reserve Bank
policies. Both the Mexican and Argentine proposals underscore the
omnipresent role the U.S. economy plays in Latin America. Thirty
years ago, it would have been unthinkable for Argentina or Mexico, two
countries with long histories of nationalism and anti-U.S. sentiment to
even consider dollarization. These proposals suggest that in the
absence of Fast-Track Authority, current Latin American leadership in countries
such as Mexico, Argentina, and Chile continue to move ahead with policies
that attach their economies to the U.S. economy and the global market.
They do so using a variety of formats to achieve this goal including NAFTA,
dollarization, and FTAA. While it may appear at first glance that
the various signed agreements with the EU decrease U.S. influence in Latin
America in fact, trade statistics in this article demonstrate that the
U.S. remains the top exporter to the region.
| What is FTAA? |
 |
 |
If created, FTAA would represent the world’s largest
free trade zone in the world. It would be comprised of between 750-800
million people with a GDP of approximately $10 trillion.3
According to William Price, Vice President of the Americas Council, this
market represents a great export opportunity for the U.S. economy.
In his words, “it is a huge market for everything from cellular telephones
to industrial machinery. U.S. trade with Latin America and the Caribbean
is already growing faster than with any other part of the world. U.S. exports
to Latin America have increased by more than 100% since 1990 and are growing
about twice as fast as exports to the rest of the world. The U.S. sells
more to Brazil than to China; more to Central America than to Eastern Europe
and the former Soviet Union combined; more to the 14 million people of
Chile than to the 900 million people of India.”4
Signing of the North American
Free
Trade Agreement (NAFTA) by
Presidents
Carlos Gotari de Salinas, George
W. Bush
and Prime Minister Brian Mulroney
and
their respective Trade Ministers.
1992.
Courtesy of the National
Archives, Washington, D.C.
|
The North American Free Trade Agreement (NAFTA)
was originally conceived as the first step towards integrating one Western
Hemisphere economy under FTAA. The treaty was negotiated in 1991,
based on previous U.S.-Canadian free trade accords and U.S. President Bush’s
Fast-Track Authority. In 1992, Canadian Prime Minister Brian Mulroney,
U.S. President George Bush, and Mexican President Carlos Salinas de Gotari
signed NAFTA with the understanding that the legislative bodies
of all three countries would ratify this accord without making any additional
changes. When Bill Clinton entered office in January 1993, he inherited
the task of overseeing the ratification and implementation of NAFTA.
Following approval by the U.S. Senate, NAFTA was formally implemented in
January 1994. |
In December 1994, the President Clinton
joined the other leaders of the hemisphere in Miami, Florida to discuss
expanding NAFTA to the rest of the Hemisphere under FTAA. According
to Jaime Garcia, Peru’s former Vice Minister of Industry, “the FTAA
negotiating agenda was nearly identical to the issues covered under NAFTA.
The structure of the North American accord showed up even in the design
and structure of negotiations. .... The NAFTA experience was obligatory
for all of us involved in FTAA.”5
The end result of the conference was an agreement
that FTAA would be created by 2005. As Rene León, El Salvador’s
Ambassador to the United States noted, the Hemisphere’s leaders felt the
need for “a comprehensive agreement that addressed economic issues beyond
trade and tariffs. Things like services and intellectual property
are important components to any agreement.”6
To negotiate these details, it was agreed that the Trade Ministers of the
Western Hemisphere would meet to develop the overall work plan for FTAA.
They met four times between the Miami and Santiago conferences including:
Denver, USA (June 1995), Cartagena, Colombia (March 1996), Belo Horizonte,
Brazil (May 1997), and San Jose, Costa Rica (March 1998). At these
meetings the Trade Ministers agreed to create 12 negotiating groups that
would meet in Miami for three years starting September 1998.7
These groups would address issues including market access, investment,
services, government procurement, dispute settlement, agriculture, intellectual
property right, policy, subsidies, anti-dumping and countervailing duties
and competition policy.8
The 2nd Summit of the Americas was organized
in Santiago, Chile in April 1998. Expectations of a significant FTAA
treaty were not to be forthcoming from this event. Economic chaos
in Asia had weakened the global economy and hampered enthusiasm for a new
trade agreement. By this date, it was also clear that President Clinton
lacked Fast-Track Authority. In other words, he could not guarantee
that the U.S. Senate would not modify any accord he signed. He explained
to Latin American leaders at the summit that he was trying his best to
“persuade our Congress that walking away from what I believe to be a colossal
opportunity with Chile and the rest of our partners in Latin America is
neither the best way to lift labor standards nor to preserve the environment.”9
In light of Clinton's lack of Fast-Track Authority,
the agenda of the 2nd FTAA meeting was changed to focus on other areas
of hemispheric concern such as education and anti-poverty programs.
However, as Charles Jainarain, head of the Summit of the Americas Center
at Florida International University in Miami noted, the problem was that
“those issues don’t resonate with either the general public or the business
community.”10 The event was not the
success it had once been predicted to be. To avoid public embarrassment,
Genaro Arriagada, Chile’s special envoy organizing the summit simply told
the media, “the message that we must carry is that relations of the hemisphere
are much more than the theme of Fast-Track. Trying to deflect responsbility
for the failure of the summit, he explained, "When one speaks of the totality
of work we’re doing, they understand that Fast-Track is a North American
problem.”11
Following the Santiago Summit, the 12 FTAA
negotiating groups began meeting as scheduled in 1994. At the June
1998 meeting in Buenos Aires and at subsequent FTAA gatherings, the issue
of U.S. Fast-Track Authority continued to be raised. Expressing his
frustration at the Buenos Aires meeting, Argentine Foreign Minister Guido
Di Tella stated that, “if we don’t have Fast-Track by the end of 1998 or
early 1999, this process is going to begin to get bogged down.”12
By December 1998 Paramaibo meeting, Chilean delegate Mario Matus articulated
the obvious conclusion that “the work consists in determining reasonably
what we can do now.”13 To date, this
work has consisted of unsuccessful talks regarding tariff reductions.
The discussions have been stalled by Brazil’s desires to eliminate non-tariff
barriers before tariff reductions in an effort to strengthen MERCOSUR.14
Only two areas of progress were made towards
achieving FTAA goals during the 1998-199 negotiations. The first
wass customs facilitation. This included streamlining procedures for clearing
low-value goods and special treatment of express shipments. Agreement
on this issue was a boon to international package express companies such
as DHL Worldwide, Federal Express and United Parcel Service. The
second was a promotion to get more non-governmental organizations (NGOs)
to participate in the FTAA negotiation process. Several countries
including Mexico and Chile have published a request asking NGOs to assist
them with outreach efforts to create a new civil society and inform the
public about FTAA. This is a significant change for Latin America,
a region where it has not been traditional to request civil participation
in policy matters.15
Next
Section
U.S. Perspective
on NAFTA, Fast-Track and FTAA
Notes
1 Kevin G. Hall, "FTAA Talks Refocus
on Regionalism," Journal of Commerce, 7 Dec. 1998. For more on this
organization see the WTO webpage, World Trade Organization <http://www.wto.org>
2 Fidel Castro was the exception as he did
not attend the Miami Summit.
3 U.S. Chamber of Commerce, FTAA
Background (Washington, D.C.: June 1998).
4 The Americas Council, the U.S. Chamber
of Commerce and other U.S. business lobbying groups are particularly concerned
in alerting Congress that the U.S. business interests may loose competitive
advantage if Canada and the European Union negotiate preferential trade
agreements with the region. Testimony of William T. Price, Vice President,
Washington Operations, Council of the Americas Before the Subcommittee
On Trade House Committee On Ways And Means, 4 March 1999.
5 Douglass Stinson, “Building Blocks,” Latin Trade, January 1999, 44.
6 Ibid.
7 Americas.Net, The Road to the Summit:
From Miami to Santiago, 1999 <http://www.americas.net/indexdocs/eng/f3esummit.html>
8 U.S. Chamber of Commerce, FTAA
Background (Washington, D.C.: June 1998) and Jason Webb, “34 Nations
In Americas Seek Free Trade Zone,” Washington Times, 18 June 1998.
9 “In Chile, Clinton Seeks Patience
On Free Trade,” CNN, 16 April 1998.
10 Kevin G. Hall, “Crises Dim Prospects
For Americas Free Trade,” Journal of Commerce, 5 Feb. 1998.
11 Ibid.
12 Jason Webb, “34 Nations In Americas
Seek Free Trade Zone,” Washington Times, 18 June 1998.
13 Kevin G. Hall, "FTAA Talks Refocus
on Regionalism," Journal of Commerce, 7 Dec. 1998.
14 Henry A. Kissinger, “Expand Free
Trade to All Western Hemisphere,” Los Angeles Times, 27 April 1997.
15 National Wildlife Federation, Invitation
for Comments on the FTAA Issued by the Committee of Government Representatives
for the Participation of Civil Society, United Nations Economic Commission
for Latin America and the Caribbean (ECLAC), Washington, D.C, October 1998
< http://www.nwf.org/international/trade/cgrinvit.html>
