Trade Conference Expectations Sag

Billed as an effort to form the world’s biggest common market and secure prosperity for the Western Hemisphere, the Free Trade Area of the Americas pact is looking more like The Incredible Shrinking Treaty.

Fearful of acrimony and failure at a summit here this week, negotiators from 34 member countries have stripped out controversial elements, from farm subsidies to commitments to honor intellectual property rights. It is widely assumed that a final agreement to put all countries in the region except Cuba under a single trade regime will not be as comprehensive as many negotiators had once hoped.

What is emerging is a design-your-own menu of trade practices rather than a binding program for reducing tariffs and removing barriers to investment.

Plans call for a draft treaty to come into force within 14 months, but more than 5,000 blanks remain in the blueprint for creating a common market that would encompass 800 million people.

The Brazilian co-chairman of the Miami summit, Adhemar Bahadian, told reporters that negotiators “don’t have to reach an agreement” here on disputed subjects such as subsidies, copyright and opening government contracts to foreign bidders. His words signaled lowered expectations for the summit, which runs through Friday, and a recognition that heated debate would only divide the conference delegates, thwarting a declaration of objectives for future sessions.

That happened with the World Trade Organization meeting in Cancun, Mexico, in September, when Brazil led a group of about 20 developing countries in a revolt against perceived bullying by the United States, especially on agricultural subsidies. The WTO meeting broke up without an agreement or instructions on how to proceed toward a global trade forum.

“There’s the danger of what happened in Cancun happening here anyway,” said Dennis Olson, a delegate from the Institute for Agriculture and Trade Policy, a Minneapolis-based group that focuses on protecting rural communities and the environment. “If the United States doesn’t start negotiating [on farm subsidies], other countries will decide the United States is demanding the right to dump in their markets while preaching to them about benefits of free trade.”

Several of Brazil’s allies from the Cancun summit have begun direct trade negotiations with the United States, securing considerations on an individual basis that the FTAA’s biggest member is loath to grant the whole region.

On Tuesday, U.S. Trade Representative Robert B. Zoellick announced the start of negotiations with the Andean nations of Colombia, Peru, Bolivia and Ecuador -- the kind of offstage deal-making some see as undermining the broader negotiating effort.

Delegates to workshops that are proposing treaty language to government ministers here warned that such negotiations could distract from the broader aim of reducing poverty.

“NAFTA has failed the 45 million Mexicans who remain in poverty,” Phil Boomer, trade specialist with the relief agency Oxfam International, said of the decade-old North American Free Trade Agreement. “The danger is that these new bilateral deals will extend the same bad deal to millions more.”

Zoellick denied that bilateral talks were detracting from the FTAA, saying they are necessary because “different countries have different willingness and interest to move toward state-of-the art trade agreements.”

Cutting side deals with amenable partners such as the Andean four, Chile, Central American nations and the Dominican Republic also pressures Brazil, the biggest economy in the Americas after the United States and the most strident holdout, to relax some of its own protections, said Robin Rosenberg, deputy director of the North-South Center at the University of Miami.

Despite the slimming down of the agenda here, “people forget that there is a common political and strategic vision,” and that any trade bloc proclaimed in the Americas is going to give the region considerable clout against Japan and the European Union, he said.

Another hard decision put off here will be which of eight candidate cities will get the permanent headquarters of the new trade organization and the thousands of jobs that will be created. Summit officials said Brazil has been put in charge of analyzing the proposals and making recommendations at the next round of talks in that country next summer. Miami has been lobbying hard at this forum, with Gov. Jeb Bush telling international business leaders that his state’s largest city “would love to maintain its ‘Gateway to the Americas’ status.”

Bush administration officials continue to put a brave face on the forum, insisting they remain committed to a comprehensive agreement.

“No one here is talking about retreating in any significant or substantive way from the goals that have been set by the 34 nations,” said Ross Wilson, senior U.S. negotiator.

Zoellick and Brazilian Foreign Minister Celso Lafer decided at a meeting in Leesburg, Va., this month to allow countries to opt out of trade obligations they find objectionable. Reduced compliance would be balanced by lowered benefits, the ministers decided, although the mechanics of that arrangement have yet to be defined.

Countries with small economies appear likely to secure exemptions from the treaty’s timetable for reducing tariffs and other protections. Ramesh Chaitoo of the Caribbean Regional Negotiating Machinery, a Barbados-based trade forum, said that different treatment wouldn’t devalue the treaty but simply reflect realities.

“All negotiations are like that. You ask for the world and you settle for Mars,” he said. “Still, the negotiators know there is a bottom line, a core, that you won’t go beyond. We’ll just have to wait and see what that is.”