Whither the Free Trade Area of the Americas?

Abstract

Leaders of 34 democratic nations in the Western Hemisphere reconvened in April 1998 at the Second Summit of the Americas in Santiago, Chile and agreed to launch negotiations on a Free Trade Area of the Americas (FTAA). The Declaration of Santiago reaffirmed the commitment issued at the Miami Summit of the Americas in December 1994 to conclude the talks 'no later than 2005, and to make concrete progress by the end of the century'. Negotiations began in earnest in Miami in September 1998 and trade ministers will meet in Toronto in early November 1999 to assess the progress to date. The FTAA process has had a star-crossed history since its inception at the Miami Summit in December 1994. Each summit meeting has been followed by serious financial crises in the region. These problems have tested national resolve to sustain economic and political reforms and to move forward with new Hemisphere-wide trade liberalisation. But each crisis also has induced new economic reforms, particularly in exchange rate regimes and the financial sector, and the reforms have enabled countries in Latin America to adapt more quickly to rapidly changing developments in global markets. In sum, the challenge of integration in the Americas is great, but so is its promise. In 1999, with recession in Latin America deepening, it is easy to be pessimistic about the prospects for the FTAA. Yet medium-term prospects for the region are encouraging, in large measure due to tremendous opportunities created by a decade of economic and political reforms. The Santiago Summit got the process off to a good start. The leaders formally launched the negotiations, established nine working groups to address the broad agenda of trade issues, and agreed on administrative procedures to manage the cumbersome process of engaging 34 countries in detailed trade negotiations. In addition, the leaders made two important decisions: to hold another summit hosted by Canada in 2001 or 2002; and to assign the United States and Brazil as co-chairs of the final two years for the FTAA negotiations, giving the leading economies in North and South America key responsibility for completing the deal. The manner of setting the stage does not ensure a prize-winning play; but at least the leaders are planning for success.