Business leaders want ambitious FTAA

MIAMI, Nov. 19 (UPI) -- Leaders of U.S. industries are bully on the benefits of a hemispheric-wide free trade agreement, but were insistent Wednesday that any such deal should force all countries involved to give as much as they take.

As top diplomats battle it out in closed-door meetings trying to resolve differences within the proposed Free Trade Area of the Americas, which would create a free-trade zone encompassing 34 nations, top businesspeople met in parallel meetings to offer suggestions to leaders.

In interviews between meetings, businesspeople uniformly expressed optimism about how much they could benefit from free trade, but doubts surfaced as to exactly how liberalized trade can become through the FTAA proposal as it now stands.

"We're convinced the U.S. Trade Representative is taking seriously and committed to securing a comprehensive trade package," said Colleen Morton, vice president for the Washington-based Information Technology Industry Council.

But she is concerned with positions that other countries - in particular Brazil - are taking on key issues such as intellectual property rights.

Of great concern for Morton, and other industry leaders like here, is the new "flexible architecture" of the proposed FTAA agreement, which Brazil has insisted upon.

Essentially, the flexible FTAA would create a base agreement that all countries would sign to. After that, countries can decide if they want to further liberalize certain sectors of their economy, or simply maintain the minimum basis of free trade.

For example, Brazil is staunchly opposed to the intellectual property rights protections that the United States insists be part of any FTAA agreement. Brazil says that pharmaceutical patents would hinder its abilities to use generic drugs to treat HIV-positive patients.

"From what we're being told, we understand that the opting-out agreement won't stand," said Morton. "And we've been assured that intellectual property rights won't be dropped from the agreement."

While it seems clear that U.S. negotiators won't budge on those intellectual property rights, all public statements indicate that the flexible arrangement for the FTAA is going to be implemented.

But members of the Brazilian delegation to the FTAA talks said on Wednesday that the ability of countries to opt-out of parts of the agreement is still being included in the most recent draft proposals.

Melika Carroll, trade policy director for Intel, the computer chip maker, said that for her company the elimination of tariffs on high-tech goods is equally important as protecting intellectual property.

"The tariffs in Latin America are just too high," she said. "In Brazil, there is a 26 percent tariff on a finished PC."

If those tariffs came down, Morton said, that in itself would go a long way in protecting intellectual property.

"Look at the size of the black market (for computer products) in Latin America. That will evaporate when we can freely ship our goods to the region," she said.

For Ana Gueara, vice president of UPS Latin America, the ability for countries to opt out of certain portions of the agreement would go against the spirit of free trade.

"We don't like this à la carte arrangement," Gueara said. "It means that the countries where we're really seeking to have our investment feel safe are the very countries that will probably not give us the commitments we need."

Additionally, Gueara said, Latin American nations would lose out if countries can pick and choose what degree of liberalization they will have.

She noted that 44 percent of delivery services in the Americas last year took place in Latin America, with a value of $55 billion. That number would grow significantly, Gueara said, if a comprehensive FTAA is signed that frees trade across borders in the region.

Gueara also said that while bi-lateral trade deals -- like those the United States said on Tuesday it was going to seek with several Latin American nations -- were welcomed, they could in no way replace a full FTAA agreement.

"If we just have bi-lateral deals between the U.S. and whomever, it won't take full advantage of that South-to-South trade," she said. "Those countries will lose out. They will miss the boat on their own inter-American opportunities."

Frank Vargo, the spokesman on trade issues for the Washington-based National Association of Manufacturers, or NAM, said the week's developments so far were promising.

"Brazil has moved away from trying to shutdown the FTAA to coming back to the table," Vargo said.

Vargo said he was pleased with the push by the United States for bi-lateral trade deals in the region, but, of course, said he wanted to see a robust FTAA.

"We've added up the numbers on the bi-lateral deals, and they add up to more than 80 percent of our exports to Latin America excluding Brazil," Vargo said.

But it is exactly that big Brazilian market - with its population that comprises 40 percent of Latin America - that Vargo would like to see U.S. manufacturers tap into.

"We don't want some countries to get access to the U.S. market without giving up something as well," Vargo said. "Brazil will find itself increasingly isolated, and we don't want to see an FTAA without Brazil."

Yet it will take moves by the United States to lower its agricultural subsidies before it is likely to get the commodity-dependent countries like Brazil fully on board any trade agreements.

When asked if an FTAA that doesn't address agricultural subsidies would be considered a high-quality agreement, Scott Otteman, director of trade policy with NAM, said that it wouldn't be.

"I think if we want to have everyone else joining the party, we will have to give on that issue," Otteman said.

With the self-imposed deadline of Jan. 1, 2005, for concluding the FTAA coming up fast, industry leaders were reluctantly accepting that it is highly unlikely a deal will be reached by then.

"We want it all immediately, of course," said Morton. "But want we really want is a comprehensive agreement, and we want it put into law."