"FTAA Lite:" Victory for the People or More Bargaining Power for Transnationals?

Kristin Sampson | December 5, 2003

Until the early close of the recent Ministerial in Miami, the FTAA had been negotiated as a “single-undertaking,” meaning that the final agreement was to be an all-or-nothing package creating binding disciplines in nine areas: market access; agriculture; services; investment; government procurement; intellectual property; competition policy; subsidies, antidumping, and countervailing duties; and dispute settlement. However, in an effort to avoid the collapse of the negotiations, ministers agreed to an “FTAA lite.” This version of the agreement allows countries some flexibility in which disciplines they choose to negotiate and undertake. The Ministerial Declaration notes: “Taking into account and acknowledging existing mandates, Ministers recognize that countries may assume different levels of commitments… In addition, negotiations should allow for countries that so choose, within the FTAA, to agree to additional obligations and benefits.” [italics added]

Many opponents of the FTAA see this change of course as a victory. Now countries can choose to withdraw from negotiations in controversial areas. 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.

Countries throughout the hemisphere have expressed concern that the political and economic climate is not right for a trade agreement as far-reaching and comprehensive as the one envisioned by the current U.S. administration. At the San Salvador mini-Ministerial in July 2003, the Chilean delegation noted that growing unemployment and poverty in Latin America had led to deepening dissatisfaction with economic reforms. Even in the United States, plans for further liberalization have drawn mounting opposition from domestic agriculture, organized labor, environmentalists, ecumenical groups, and concerned citizens. Civil society protests against neoliberal economics throughout the hemisphere bear witness to this growing discontent, whether directed at the WTO, FTAA, or the privatization efforts of individual governments.

While on its surface this apparent setback to Washington’s agenda seems to be a victory for opponents of a free trade agreement that favors corporations over citizens, early optimism should be tempered. FTAA lite is essentially a shift to plurilateral agreements under the umbrella of a larger treaty, as a result of countries being able to pick and choose negotiating areas. While this offers developing countries, in particular, the opportunity to avoid politically controversial commitments it also waters down incentives for developed countries to open their markets to developing country goods. This new negotiating climate may allow the U.S. to pursue a more intense divide and conquer strategy, weakening incentives for concessions in the multilateral negotiating forum and encouraging bilateral agreements.

Part of the successful derailing of the WTO meeting in Cancun resulted from diverse countries uniting in opposition to the United States--within the context of single-undertaking negotiations. The requirement of an all-or-nothing outcome provided a greater incentive for developing countries to unite and greater pressure for developed countries to negotiate fairly--or perhaps more fairly than otherwise. The reality is such that if you are a small, developing country it is an invaluable advantage to have larger, more economically robust allies--like Brazil, India, or China.

Shortly after the collapse of WTO talks in Cancun, the U.S. announced its intent to pursue regional and bilateral agreements. Now, after FTAA lite, the U.S. has announced that negotiations for bilateral agreements will be launched with Bolivia, Colombia, the Dominican Republic, Ecuador, Panama, and Peru, in addition to current negotiations with the Central American countries. Is this apparent retreat evidence of Washington’s weaker position? Or, are we witnessing actions in international trade that are analogous to the U.S. decision to act unilaterally against Iraq when multilateral, diplomatic means proved unpalatable?

Whether one likes it or not, the United States is a major economic, political, and military player in today’s world and as such, has many sticks and carrots at its disposal. Additionally, politically powerful U.S. industries are pushing for access to Latin America--on favorable terms. The Andean nations, which have been targeted for the first round of bilateral negotiations, are rich in natural resources and biodiversity, and have large service markets yet to be privatized--all areas of particular interest to U.S. sectors. In addition, these countries are not major exporters of commodities that have proved to be sensitive in the U.S. political arena, like citrus or steel. Finally, Washington’s ongoing “war on drugs” is concentrated in the Andean region and the U.S. has expressed interest in expanding its military presence in the area. Bilateral trade agreements could lend support to future military cooperation.

However, strong opposition to the FTAA and neoliberal policies in general, has been intensifying in countries such as Bolivia and Ecuador. Commitment to privatization of water resources in Bolivia already cost one president his job and the opposition parties in Ecuador have made it clear that trade liberalization would be a flashpoint for severe political conflict. Liberalization is politically costly in Bolivia and Ecuador because civil society has created a broad-based, well-organized opposition movement.

Now that the FTAA is no longer being pursued as a “single undertaking” and the U.S. is pursuing bilateral trade agreements in the Americas, each country is on its own in negotiating the commitments it will undertake with each of the other countries. Now, more than ever, it will be crucial for each country to have a strong, broad-based, domestic opposition movement. It is not enough to concentrate resistance efforts in the handful of “major players.”

FTAA lite is anything but a lightweight. While there is 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. Reservations will be matched with counter-reservations, which could make the whole process largely irrelevant, or may force politically or economically weak countries to make major concessions for access to developed countries’ markets and foreign investment.

Vigilance on behalf of opponents coupled with increased efforts in citizen education and mobilization will be necessary for countries to effectively resist heavy-handed pressure in negotiations with Washington.

Kristin Sampson is a research associate with the IRC Americas Program.

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Published by the Americas Program at the Interhemispheric Resource Center (IRC, online at www.irc-online.org). ©2003. All rights reserved.

Recommended citation:
Kristin Sampson, “'FTAA Lite:' Victory for the People or More Bargaining Power for Transnationals?,” Americas Program (Silver City, NM: Interhemispheric Resource Center, December 5, 2003).

Web location:
http://www.americaspolicy.org/commentary/2003/0312ftaaactivist.html

Production Information:
Writer: Kristin Sampson
Editor: Laura Carlsen, IRC
Layout: Tonya Cannariato, IRC