Transcript FTAA

FTAA
Yes or No?
Team Betamax
What is FTAA?
• Free Trade Area of the Americas
• The effort to unite the economies
of the Americas into a single free
trade area began at the Summit of
the Americas, which was held in
December 1994 in Miami, U.S.A.
• Barriers to trade and investment
will be progressively eliminated
• They agreed to complete
negotiations towards this
agreement by the year 2005
History pre-1994
• In the 1960s there were several modest and humble
attempts at regional integration in South America,
Central America, and the Caribbean.
• The approach of these regional initiatives was to
lower tariffs internally while maintaining high trade
barriers against non-members. Regional initiatives
included the
• 1960 Latin American Free Trade Association
(LAFTA),
• 1960 Central American Common Market (CACM),
• 1965 Caribbean Free Trade Association
(CARIFTA),
• 1969 Andean Pact.
History pre-1994
• Many American countries experienced a debt crisis
contributing to a "lost decade" in terms of economic
growth.
• Another wave of regional trade agreements took
place in the late 1980s and early 1990s.
• Canada-U.S. Free Trade Agreement (FTA) in
1989
• Caribbean Community (CARICOM) in 1990.
• Southern Common Market (MERCOSUR) in
1991
• North American Free Trade Agreement (NAFTA)
in 1994
History pre-1994
• Latin American countries approached the
U.S. after the announcement, seeking to
negotiate their own bilateral free trade
agreements with the U.S., but the U.S.
refused to negotiate more bilateral TAs in
the region until NAFTA was implemented.
• Instead, in June 1990 U.S. President
George Bush Sr. announced the Enterprise
for the Americas Initiative with the goal of
achieving hemispheric free trade by 2000.
Summit of the Americas
(Dec. 1994, Miami)
• Preparatory phase (1994-1998)
• 34 Ministers responsible for trade
established twelve working groups.
• The results of the preparatory work
of the Groups were made available
to the public
• Four ministerial meetings took
place during this preparatory phase:
• June 1995 in Denver, U.S.A.,
• March 1996 in Cartagena,
Colombia
• May 1997 in Belo Horizonte,
Brazil
• March 1998 in San José, Costa
2nd Summit of the Americas
(Apr. 1998, Santiago, Chile)
• Heads of State and Government
participating in the Second Summit of
the Americas agreed that the FTAA
Agreement would be:
• Balanced
• Comprehensive
• WTO-consistent
• and a single undertaking
• They also agreed that the negotiating
process will be transparent and take into
account the differences in the levels of
development and size of the economies
in the Americas in order to facilitate full
participation by all countries.
2nd Summit of the Americas
(Apr. 1998, Santiago, Chile)
• They agreed that the negotiations
should proceed in order to contribute to
raising living standards, improving
working conditions of all people in the
Americas, and better protecting the
environment.
Progress Of The Negotiations
• Toronto in November 1999
• Business facilitation measures
• Buenos Aires in April 2001
• Draft text of the FTAA Agreement
3rd Summit of the Americas
(Apr. 2001, Quebec City, Canada)
• First draft FTAA agreement
• Deadlines were fixed for the conclusion
and implementation of the FTAA
Agreement.
4th Summit of the Americas
(Nov 2005, Mar del Plata, Argentina)
•
•
•
•
Growth with Employment
Jobs to Fight Poverty
Training the Labor Force
Micro, small, and mediumsized enterprises as an
engine of job growth
• Framework for Creating
Decent Work
• Strengthening Democratic
Governance
Twelve working groups
1.
2.
3.
4.
5.
6.
Market Access
Customs Procedures and Rules of Origin
Investment
Standards and Technical Barriers to Trade
Sanitary and Phytosanitary Measures
Subsidies, Antidumping and Countervailing
Duties
7. Smaller Economies
8. Government Procurement
9. Intellectual Property Rights
10.Services
11.Competition Policy
12.Dispute Settlement
FTAA Countries
Antigua and
Barbuda
Argentina
Bahamas
Barbados
Belize
Bolivia
Brazil
Canada
Chile
Colombia
Costa Rica
Dominican
Republic
Ecuador
Grenada
Guatemala
Dominica
El Salvador
Guyana
Haiti
Honduras
Jamaica
Mexico
Nicaragua
Panama
Paraguay
Peru
Saint Kitts and
Nevis
Saint Lucia
Saint Vincent and
the Grenadines
Suriname
Trinidad and
Tobago
United States
Uruguay
Venezuela
Opposition and Critics
• One of the main critics of the FTAA is
Venezuelan president Hugo Chávez, who has
described it as an "annexation plan" and a "tool
of imperialism" for the exploitation of Latin
America.
• As a counterproposal to this initiative, Chavez
has promoted the Bolivarian Alternative for the
Americas (ALBA), based on the model of the
European Union, which makes emphasis on
energy and infrastructure agreements that are
gradually extended to other areas finally to
include the total economic, political and military
integration of the member states.
Opposition and Critics
• On the other hand, the presidents of Brazil,
Luiz Inácio Lula da Silva, and Argentina,
Néstor Kirchner, have stated that they do not
oppose the FTAA but they do demand that
the agreement provide for the elimination of
US agriculture subsidies, the provision of
effective access to foreign markets and
further consideration towards the needs and
sensibilities of its members.
Market Access
US
LA
++ New markets & lower inputs for producers - + Lower prices & more choices for consumers +
+ Foreign investment promotes democratic
+
institutional reform
+
GDP Growth
-
FTAA Impact
FTAA Impact on Trade
Market Access – Producers (US)
Exports drive Economic Growth: 10.4% of GDP, 20% of overall growth
Latin America and the Caribbean are one of the main markets for
United States exports, as the following data illustrate:
•
U.S. exports to the hemisphere, excluding Mexico and Canada,
practically doubled from 30 billion in 1991 to 55 billion in 1999, and
represented its second most important target market, second only
to its NAFTA partners.
•
Of total U.S. exports of 695 billion dollars in 1999, Europe
accounted for 171 billion and Asia 190 billion; the Western
Hemisphere, on the other hand, accounted for 308 billion. Of that
figure 253 billion went to Canada and Mexico, and 55 billion to the
other countries of the Americas.
•
The Caribbean Basin by itself (Central America plus the Caribbean)
is the third most important market in the world for U.S. exports of
services.
Market Access – Consumers (US)
Gains per household (average US family of four) through
greater purchasing power and higher income due to
trade:
•
•
•
FTAA’s goods and services liberalization would grant an
estimated $800 per year
Two major trade agreements of the 1990s (NAFTA & Uruguay
Round of WTO) generate $1,300-$2,000 per year
If remaining global trade barriers are eliminated, as much as
$4,500 per year.
Lesson from NAFTA: Market Access (US)
Lessons from NAFTA: Market Access (MX)
Lesson from NAFTA: Institutional Reform (US)
Trade agreements serve as a magnet to attract support
among neighbors in the hemisphere for important
U.S. political and foreign policy objectives, its antidrug efforts, its immigration concerns, its emphasis
on better environmental and labor conditions, and its
efforts to profit from market-oriented policies and
democratic practices at the same time.
Lesson from NAFTA: Institutional Reform (MX)
Biggest NAFTA dividend for the United
States has been in foreign policy.
NAFTA has institutionalized Mexico’s
turn away from centralized
protectionism and toward decentralized,
democratic capitalism. The economic
competition and decentralization
embodied in NAFTA encouraged more
political competition in Mexico.
Lesson from NAFTA: Labor (US)
• Ross Perot’s “sucking sound” on US jobs &
manufacturing investment didn’t take place as
predicted.
• More than 2 million jobs created per year from
1994 through 2000 in US, low unemployment
rates
• The critics warned that NAFTA would
“deindustrialize” the United States, but between
1993 and 2001 U.S. manufacturing output rose by
one-third. Since 1993 manufacturing output in the
United States has risen at an annual average rate
of 3.7 percent, 50 percent faster than during the
eight years before enactment of NAFTA.
• The number of Americans employed in
manufacturing grew by more than 700,000 in the
first four years of NAFTA, from January 1994 to
January 1998.
Market Access
Increase in trade with FTAA (Brazil)
30%
25%
25%
20%
15%
8%
10%
5%
0%
imports from US
•
exports to US
ABREU, M. P. O Brasil e a Alca: interesses e alternativas. Rio de Janeiro: PUC, 1997 (Texto
para Discussão, 371).
Market Access
FTAA X FTA EU
8%
7%
7%
6%
6%
5%
Brazil (increase in trade)
5%
Argentina (increase in trade)
4%
4%
Brazil (increase in GDP)
3%
Argentina (increase in GDP)
2%
2%
1%
1%
0%
1%
0%
FTAA
•
FTA EU
PEREIRA, L. V. Análise comparativa dos ganhos de integração: Alca e União Européia.
Fundação Getulio Vargas, 1997 (Relatório de Pesquisa da FGV para o MICT).
Market Access
Millions
Brazilian Trade Balance
$5,000
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
-$
$4,344
$3,470
$1,473
$883
exports
no barriers at all
•
imports
agricututal subsidize & other exceptions
CARVALHO, A., PARENTE, A. Impactos comerciais da Área de Livre Comércio das
Américas. Mimeo, 1998.
Other Issues
US
+
+
+
+
+
Market Access
Agricultural Subsidies
Labor
Intellectual Property
Environmental Issues
LA
+
+/-
Agricultural Subsidies
• Leveling off tariffs vs. Broad reduction
• Lose WTO bargaining position
• Food quality and safety
• Protection from unseen market conditions
• Food dependence
• Purpose for Protection of Agriculture
• Cheaper than social costs of supporting unemployed
farmers
• Societal roles of farmers/ Positive externalities of farming
• 1 out of 3 acres devoted to exports
• 90,000 people employed by Florida orange market
• Since NAFTA
• 33,000 farmers have gone out of business
• Prices have fallen (Corn- 33%, Wheat 42%, Soybeans
34%)
Labor
Since NAFTA
• Replacement jobs paid $5,200 less on average in wages and 14% less
in health insurance and other benefits
• A study by the Bureau of Labor Statistics showed that of the full time
employees who lost their jobs between 2000 and 2003, 35% are still
unemployed (in 2004).
• IRS information printed in the New York Times
• Total Adjusted Gross Income on returns fell 5.1% from 2000 to 2002
• After adjusting for inflation, income of all Americans fell 9.2% from
2000 to 2002
• These are meant to show the effect that NAFTA had on labor. NAFTA
was between 3 nations; how different will it be with the FTAA? What
countries are going to benefit?
• America cannot compete with the $4 a day wage in Mexico, much
less with the $3 a day wage in Brazil or the $1 a day wage in
Honduras and Haiti. Such a shift from Mexico to poorer nations is
anticipated in a remark by General Electric’s chief of Mexico
operations: “Mexico still has a lot to offer. But two of its advantages
— low cost labor and cheap currency — are gone.” It’s on to the
friendlier — and cheaper — shores of Brazil and Ecuador.
Labor (US)
Trade creates more and better jobs:
• Manufacturing exports support more than 1 in 6
manufacturing jobs (5.2 million)
• Agriculture exports support 926,000 jobs
• Services account for 8 out of every 10 jobs
• Jobs supported by goods exports pay 13-18%
more than the national average
Lesson from NAFTA: Labor (MX)
Intellectual Property Rights
• WTO TRIPS- Agreement on Trade Related Aspect of
Intellectual Property Rights
• Requires that countries patent/copyright any
genetic material and/or biological goods produced
in their country. (Developed countries argue this is
essential to create incentives for R&D)
• US wants to expand TRIPS in the FTAA to protect
any goods that use the patented genetic material or
biological goods.
• Promotes Innovation by protecting new property
• Protects existing patents from piracy
• Protection of property is essential for free trade to
be beneficial to all companies
IP - Opposition and Critics
• One of the most contentious issues of the
treaty proposed by the United States is
with concerns to patents and copyrights.
Critics claim that if the measures proposed
by the US were implemented and applied
this would prevent scientific research in
Latin America, causing as a consequence
more inequalities and technological
dependence from the developed countries.
IP - Opposition and Critics
• On the issue of patents, some critics of the FTAA,
such as Canadian nationalist Maude Barlow,
have accused the US of attempting to patent
Latin America-made inventions.
• Barlow wrote: "This agreement sets enforceable
global rules on patents, copyrights and
trademark. It has gone far beyond its initial scope
of protecting original inventions or cultural
products and now permits the practice of
patenting plants and animal forms as well as
seeds. It promotes the private rights of
corporations over local communities and their
genetic heritage and traditional medicines."
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