WorldCity Business Magazine

The forgettable trade pact

by Jeffrey Sparshott

The Bush administration is still eyeing free trade agreements, but the FTAA may not be among them.

Early in October I asked Rob Portman, the U.S. trade representative, which free-trade agreements he would like to see approved by Congress before mid-2007, when trade promotion authority expires for the Bush administration.

He said he would like to tie up all the deals in process. Oman negotiations had just been finished that day, and he named the United Arab Emirates, the Andean nations Colombia, Ecuador and Peru and Panama, as well as potential deals with Switzerland, Korea, Egypt and Malaysia.

“And then I don’t think we should wait for countries not willing or able; I think we should move ahead,” Portman said.

I said: “You didn’t mention the Free Trade Area of the Americas. Is that dead?”

Long pause.

“It really depends on other countries’ willingness to talk seriously about the requirements. We’re still interested. The president’s interested. We think it’s a good idea to have barriers reduced all throughout our hemisphere a common market through the hemisphere for trade. There’s a huge opportunity economically for us,” Portman said.

The FTAA would bind the Western Hemisphere’s 34 democracies with 800 million people and $13 trillion in economic output to a common set of rules covering trade and investment. “But if countries aren’t interested in pursuing that, then we need to continue to work on bilateral agreements. It takes two to tango,” Portman added, noting that he wasn’t picking on Argentina by mentioning its national dance.

Portman speaks as the trade envoy of President George Bush, and it certainly would not be appropriate to put words in his mouth. But if the FTAA isn’t dead, it’s at least past comatose. Perhaps it’s had its head cut off and frozen so scientists can thaw it out and treat it after some sort of medical discovery.

Political leaders rarely work miracles, but they do sometimes make breakthroughs. At this month’s Summit of the Americas in Argentina, Bush was scheduled to meet with Argentine President Nestor Kirchner. Following the summit, he was expected to get together with Brazil’s President Luiz Inacio Lula da Silva and then Panama’s President Martin Torrijos Espino.

The first such summit gave birth to the FTAA concept, so it would be fitting if this one could cure what ails the would-be pact. But don’t count on it. First, the United States and Brazil have made almost no progress since November 2003, when 34 trade ministers meeting in Miami signed off on a vague agreement to create a two-tier FTAA, with one level of only basic rights and responsibilities and another with more ambitious commitments. Three months later, Brazilian and U.S. diplomats met to restart talks and issued a promising report, but differences have since proven insurmountable.

Second, World Trade Organization talks are the priority of the world’s major traders. A summit is set for mid-December in Hong Kong, and that’s where energy is focused.

Third, a populist wave rippling out of Venezuela is undermining any hope of 34 Western Hemisphere nations agreeing on anything meaningful and concrete for the FTAA. That leaves the bilateral and regional deals, also a difficult prospect. The Central American Free Trade Agreement squeaked through the House of Representatives by two votes and bitterly divided Republicans and Democrats. While the pacts with Middle

Eastern countries enjoy broad bipartisan support, most Latin American countries strike the same divisive issues as CAFTA especially labor rights, textile and apparel manufacturing and production of sensitive farm goods like sugar.

During an October trip to Washington, Brazil’s foreign minister, Celso Amorim, raised the prospect of a free-trade deal among the United States and Brazil, Argentina, Paraguay and Uruguay.

“We might go faster if we put more emphasis on Mercosur,” he said, using the Spanish acronym for the four-country Southern Cone common market.

The U.S. had repeatedly rejected the idea of negotiating a free-trade agreement with Mercosur. Now?

“If it makes sense absolutely. One of the concerns I’ve heard expressed is the difficulty of addressing every concern of every country in Latin America if we’re going to pursue this aggressive [FTAA] approach,” Portman said.

That pragmatic approach appears to be the Bush administration’s tack on trade.

“I think it’s worth a try to get other countries together where we can, do it country by country and region by region as they are ready,” Portman said.