Challenges Confronting the Free Trade Area of the Americas

Donald R. Mackay (1)
Executive Director of the Canadian Foundation for the Americas (FOCAL)

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Executive Summary

The Summit of the Americas process has been ongoing since 1994. Despite notable achievements, the successful conclusion of the Free Trade Area of the Americas (FTAA) negotiations remains in doubt. The series of summits, ministerials, and technical meetings that have characterized the process since its inception have generated momentum and established a common agenda on trade and democracy and a sense of common purpose among the participating countries. However, the lengthy FTAA negotiating process has also created its own problems. The appropriate way to effectively incorporate business and civil society interests into the negotiations has been an ongoing challenge. The long process has caused fatigue, as over-stretched negotiators lose sight of the ultimate goals of the exercise. At the same time, several countries have been vigorously pursuing initiatives at the bilateral and multilateral level — leaving the objective of harmonizing trading rules in the Americas either unfulfilled or redundant.

Perhaps the most serious obstacle to the successful conclusion of an FTAA is the potential that the national interests and domestic politics of the United States will directly or indirectly derail the process. The unwillingness of the U.S. government to discipline its highly subsidized agricultural sector could mark the failure of any accommodation with the other major regional player, Brazil. For its part, Brazil has never been enthusiastic about the process and could overplay its hand by asking for more than the U.S. is prepared to offer. Mexico is more interested in protecting its preferential relationship with its NAFTA partners, the U.S. and Canada, than seriously negotiating the FTAA and has been extremely unhelpful at times. Venezuela’s President Chavez is philosophically opposed to the agreement, and Argentina’s economic mess is quickly spreading to infect other institutions in that country. In addition, the small Caribbean economies that are so dependent on tariffs for government revenue seem to have little to gain from a hemispheric trading agreement and few seem to have considered the political implications of less than universal participation in the FTAA.

Without real progress on incorporating business and civil society interests, subordinating “the national interest” to the common good, and responding to the needs of smaller economies, the dream of a hemispheric free trading area may prove difficult to realize.

[Challenges Confronting the Free Trade Area of the Americas]

1) Mr. Mackay is a career Foreign Service Officer in Canada's Department of Foreign Affairs and International Trade. He is currently on sabbatical from the government and is serving as Executive Director of the Canadian Foundation for the Americas (FOCAL).

He served as Special Advisor to the Secretary General of the Organization of American States (OAS) in Washington D.C.. Mr. Mackay was a member of the Canadian negotiating team for the North American Free Trade Agreement (NAFTA).

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July 16, 2002