FREE TRADE AGREEMENT OF THE AMERICAS (FTAA) by ida17629

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									FREE TRADE AGREEMENT OF THE AMERICAS (FTAA)

GENERAL FACTS
In December 1994, at the first Summit of the
Americas, the 34 democratically-elected
Heads of State of the Western Hemisphere
agreed to create a Free Trade Area of the
Americas (FTAA) by 2005. The FTAA
envisions the elimination of trade and
investment barriers on virtually all goods and
services traded by member countries,                                       ADD MAP
                                                                       (IF APPLICABLE)
reducing prices for consumers and creating
new markets for producers throughout the
hemisphere. FTAA would be the world’s
largest free market, with a combined
economic output of nearly $13 trillion in 34
countries, and nearly 800 million consumers
from Alaska to the tip of South America.
(Office of USTR)

FTAA negotiations collapsed in 2005 and
have been suspended indefinitely. Opposition
from Brazil and Venezuela over subsidies and
agricultural provisions in the FTAA proposal
was the main point of disagreement. With the
prospect of a hemisphere-wide trade block
uncertain, the United States is now focusing
on bilateral trade agreements with multiple
countries in Latin America. The FTAA project
has not officially been abandoned, and it
remains to be seen if negotiations will resume.

Organizational Structure of FTAA
The initial structure for the FTAA consisted of         (Map of the Americas. Austin: University of Texas, 2003)

a vice-ministerial level Trade Negotiations
Committee (TNC) to oversee the negotiations, as well as nine negotiating groups (NG), and three
non-negotiating entities. Each NG is responsible for negotiating a portion of the overall FTAA
agreement. NGs meet regularly to negotiate the reduction of trade barriers in their issue area.
Whenever these different negotiating groups come together (most recently in Miami and Cancún),
the meetings are referred to as Ministerials. To date, there have been 8 FTAA Ministerials. NGs
were expected to develop a draft text by 2005 of their respective chapters that would serve as
the basis for the FTAA agreement. That deadline was not met, however, due to stalled
negotiations.
(Office of NAFTA and Inter-American Affairs)


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FREE TRADE AGREEMENT OF THE AMERICAS (FTAA)

GENERAL FACTS
Each of the nine negotiating groups focuses on a specific issue area. The nine issue areas are:
1) Market Access 2) Agriculture 3) Investment 4) Services 5) Dispute Settlement 6) Intellectual
Property Rights 7) Antidumping and Countervailing Duties 8) Competition Policy and
9) Government Procurement.

The Negotiation Process
In negotiating the details of FTAA, each country brings an offer to the table to be debated. Some
highlights of the most recent U.S. offer are as follows:
   About 65% of U.S. imports of consumer and industrial goods from the Hemisphere (not
   already covered by NAFTA) would be duty-free immediately upon implementation of FTAA,
   with the U.S. proposing that all Hemispheric duties on consumer and industrial products be
   eliminated by 2015.
   U.S. imports of textiles and apparel from FTAA countries would be duty-free in five years,
   provided others reciprocate.
   Immediate elimination of tariffs offered on a reciprocal basis in key sectors such as chemicals,
   construction and mining equipment, electrical equipment, energy products, environmental
   products, information technology, medical equipment, non-woven fabric, paper, steel, and
   wood products.
   About 56% of agricultural imports from the hemisphere would be duty-free immediately when
   FTAA takes effect. Other agricultural tariffs would fall into staging categories of 5 years, 10
   years, and longer; each being tailored to individual countries.
   Market access opportunities would be provided broadly across the U.S. investment and
   services sector, with markets open unless a specific exception is taken. This presumption for
   market opening—a “negative list”—is similar to U.S. free trade agreements with Chile and
   Singapore.
   Companies in FTAA countries would be able to compete for U.S. government procurement
   contracts on an equal footing with firms from current NAFTA partners. This market opportunity
   covers nearly all the goods and services purchased by 51 federal government agencies.
   (Office of USTR)

Benefits of FTAA to U.S. Businesses and Consumers
  The FTAA would expand U.S. access to markets in the Western Hemisphere. U.S. tariffs
  average 2-3%, while tariffs and other barriers in Latin America are typically much higher.
  Goods exports grew 137% to Latin America from 1990 to 2000, compared with 99% growth to
  the world; services exports grew 96% from 1990 to 2000, compared with 86% growth to the
  world.
  FTAA will increase purchasing power for working families and provide greater choice in the
  marketplace. It is estimated that the average family of four would see an income gain of $814
  per year from goods and services liberalization in the FTAA.
   (Office of USTR)


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FREE TRADE AGREEMENT OF THE AMERICAS (FTAA)

U.S EXPORTS TO MAJOR MARKETS IN THE AMERICAS 2008*

                CANADA (1)                                                     CHILE (25)
    Total Value of Exports                                      Total Value of Exports
                                       $261.14                                                         $11.85
    (billions US$)                                              (billions US$)
    Top 5 Exports                        Value                  Top 5 Exports                           Value
    Vehicles, not Railway               $45.53                  Mineral Fuel; Oil                       $3.58
    Machinery                           $41.43                  Machinery                               $2.15
    Electrical Machinery                $24.23                  Vehicles, not Railway                   $1.02
    Mineral Fuel; Oil                   $16.78                  Electrical Machinery                     $.77
    Plastics                            $11.56                  Aircraft; Spacecraft                     $.51

                   MEXICO (2)                                               COLOMBIA (26)
    Total Value of Exports                                      Total Value of Exports
                              $151.22                                                                  $11.43
    (billions US$)                                              (billions US$)
    Top 5 Exports               Value                           Top 5 Exports                           Value
    Electrical Machinery       $24.92                           Machinery                               $2.61
    Machinery                           $22.11                  Mineral Fuel; Oil                         $.99
    Vehicles, not Railway               $13.95                  Organic Chemicals                         $.97
    Mineral Fuel; Oil                   $11.10                  Cereals                                   $.96
    Plastics                            $10.69                  Electrical Machinery                      $.94

                   BRAZIL (9)                                                     ARGENTINA (32)
    Total Value of Exports                                      Total Value of Exports
                                        $32.29                                                           $7.53
    (billions US$)                                              (billions US$)
    Top 5 Exports                        Value                  Top 5 Exports                           Value
    Machinery                            $6.66                  Machinery                                $1.90
    Aircraft; Spacecraft                 $5.55                  Electrical Machinery                      $.92
    Electrical Machinery                  $3.52                 Mineral Fuel; Oil                         $.83
    Mineral Fuel; Oil                     $2.24                 Organic Chemicals                         $.63
    Organic Chemicals                     $2.11                 Plastics                                 $..40


(Source for Data: World Trade Atlas)


*Number in parentheses next to country indicates 2008 rank as U.S. export destination

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FREE TRADE AGREEMENT OF THE AMERICAS (FTAA)

RECENT DEVELOPMENTS
Emergence of “FTAA Lite”
In an effort to avoid the collapse of the negotiations at the Ministerial in Miami in November 2003,
ministers agreed to an “FTAA Lite.” This version of the agreement allows countries some flexibility
in which issue area they choose to negotiate and undertake. Now countries can choose to
withdraw from negotiations in controversial areas. For example, Brazil may choose to abstain
from negotiations on intellectual property rights or undertake only minimal commitments, for
instance, while the U.S. could be expected to opt out of negotiations on agriculture. It has been
pointed out that this new negotiating climate may weaken incentives for concessions in the
multilateral negotiating forum and encourage bilateral agreements. Indeed, shortly after the
collapse of WTO talks in Cancún in September 2003, the U.S. announced its intent to pursue
regional and bilateral agreements with Bolivia, Colombia, the Dominican Republic, Ecuador,
Panama, and Peru, in addition to current negotiations with Central American countries. While
FTAA Lite offers the potential for developing countries to come away with more favorable
agreements, each country now must rely more on its own devices in negotiating with the
developed countries. Refusal to negotiate in one area could incur “retaliation” in another area.
(Sampson, Kristin)


Current Status
FTAA negotiations have stalled, and the United States is now pursuing bilateral trade agreements
with Latin American countries instead of a hemispheric trade agreement. The FTAA impasse
appeared to have been broken during a May 3rd, 2004 Co-Chairs meeting held in Washington,
D.C., where Brazil showed flexibility in some of the major outstanding areas, such as intellectual
property. The Ministerial Declaration from that meeting went back to the negotiators, who
attempted to hammer out the FTAA agreement at three subsequent meetings in Mexico, Panama,
and Trinidad and Tobago. The last Ministerial took place in Brazil in July 2004 with the aim of
moving forward on the final agreement before 2005.
(Beaumont, Jessica Walker)

The deadline to have negotiations concluded and the agreement signed by January 1, 2005, was
not realized. One of the main stumbling blocks continues to be Brazil’s opposition to alleged U.S.
agricultural subsidies, and Brazil’s perception that the U.S. agricultural sector under the FTAA will
remain closed to many of its key exports (citrus, sugar, and cotton being the most prominent).
Also, Venezuela has recently become a vocal opponent of the FTAA for many of the same
reasons as Brazil.




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FREE TRADE AGREEMENT OF THE AMERICAS (FTAA)

VEDP Services
The VEDP offers a number of export-related services to Virginia businesses, including group
market visits to Latin America and market research by our Global Network of in-country
consultants. These services are available to all Virginia exporters. For more information, please
visit our website: www.exportvirginia.org



ADDITIONAL RESOURCES
    Official Website of the Free Trade Agreement of the Americas (FTAA):
    http://www.ftaa-alca.org/alca_e.asp>
    US Department of Commerce, Office of NAFTA and Inter-American Affairs (ONIA):
    (202) 482-0393



WORKS CITED
Beaumont, Jessica Walker. “FTAA Lite: Victory or Failure?”. 2004. American Friends
       Service Committee. June 25, 2004. <http://www.afsc.org/ht/d/sp/i/267/pid/267>
Global Trade Information Services. World Trade Atlas. U.S. State Export Edition.
       <http://www.gtis.com/state>
Office of United States Trade Representative. Trade Facts. February 11, 2003.
       <http://www.ustr.gov/sites/default/files/uploads/factsheets/2008>
Sampson, Kristin. “FTAA Lite: Victory for People or More Bargaining Power for
       Transnationals?”. Americas Program. Interhemispheric Resource Center. December 5,
       2003. <http://www.americaspolicy.org>
United States Department of Commerce. International Trade Administration. Office of NAFTA and
       Inter-American Affairs. <http://www.ita.doc.gov/td/infrastructure/fedagncy.htm>
United States Department of Commerce. Official FTAA Home Page. <http://www.ftaa-alca.org>
University of Texas. Perry-Castañeda Library Map Collection. <http://www.lib.utexas.edu/maps>




Last Updated: September 2009



*Information provided by VEDP Fast Facts is intended as advice and guidance only. The information is in no way exhaustive and the VEDP is not a
licensed broker, banker, shipper or customs agency. VEDP shall not be liable for any damages or costs of any type arising out of, or in any way
connected with the use of, these Fast Facts.




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