The FTAA that is in Brazil’s Interest*

Since 1994, the Brazilian government has been actively participating in the negotiations involving 34 countries in the Hemisphere, with the aim of creating a Free Trade Area of the Americas (FTAA). Today President Fernando Henrique Cardoso is the only head of state who has participated in all three meetings of the Summit of the Americas, the first when he was still President-elect, on the invitation of the Brazilian President at that time, Itamar Franco.

At the 3rd Summit of the Americas, held in Québec, April 20- 21, the presidents confirmed the organization of the work to be done during the final phase of the negotiating process, as well as the goals for the next two years. The terms of reference for the negotiating groups were established, as were a detailed timetable for the negotiations and the fact that Brazil and the United States will co chair the negotiations during the final phase of the hemispheric process.

During almost seven years of FTAA negotiations, the Cardoso administration has been able to envisage attaining a legacy of achievements that would safeguard Brazilian national interests by ensuring: a) inclusion of the principles which will set limits for the negotiations (consensus, balanced benefits, single undertaking); b) establishment of terms of reference for the negotiating groups, in order to ensure the inclusion of all topics that are in Brazil’s interest (such as agriculture, antidumping, etc.); c) a calendar for the negotiations and implementation that provides adequate time for the necessary adjustments to take place in the most vulnerable sectors of the Brazilian economy; d) preservation of Mercosul in the FTAA negotiation process; and e) consistency with WTO rules.

In the final phase of the process, to begin in November 2002, Brazil will occupy a strategic position by coordinating the work as co-chair of the negotiations, together with the United States, which will put us in a good position to safeguard Brazil’s national interests and those of Mercosul. The principles and the negotiating strategy that have guided the position of the Brazilian Ministry of Foreign Relations throughout the process will preserve ample room for maneuver so that in 2005, under a new President and administration, Brazil will make the decision concerning whether or not to join a future FTAA agreement.

Throughout the Cardoso administration, Brazil has sought to preserve and consolidate Mercosul, while making efforts to maintain the negotiating schedule as originally established. In the final phase of the negotiations, the same level of commitment will characterize the establishment of a future timetable for the gradual and progressive implementation of an FTAA (which at this time is still hypothetical) so as to allow for appropriate preparations to be made in certain sectors of the Brazilian economy that may still be vulnerable to foreign competition.

Therefore, the image conjured up by some analysts, of Brazil as a country that is reluctant to assume trade commitments, while constituting an obstacle to the negotiating process or even being against free trade, is not consistent with reality. In fact, such positions would contradict the philosophy of our staunch commitment to free trade, which have already been enshrined through our experience with Mercosul and in our proposal for an integrated South American trade area. In any case, from an initially defensive tactical position, Brazil has evolved in the last three years towards a positive definition of national and sub-regional goals in the hemispheric negotiation process, clearly presenting the limits and conditions for this ambitious undertaking.

In November 2002, when Brazil and the United States assume their roles as co Chairs of the negotiations, the Cardoso administration will be near its end. In January 2003, a new government will take charge of the negotiations and assume the responsibility of reaching a decision, in consultation with the citizens of Brazil, regarding the final terms of the future FTAA agreement. Starting now, the continuity of the negotiating process will depend primarily on the necessary Presidential Trade Promotion Authority (TPA, formerly known as “fast-track authority”) to be granted to the U.S. President by the U.S. Congress. Without knowing the extent and characteristics of this authority it will be difficult, under the Cardoso administration, to advance the market access negotiation process (e.g. the elimination of tariff barriers) or in the area of rules (such as antidumping) and other legislative and regulatory measures (the most noteworthy being agricultural subsidies and related domestic support measures).

With regard to the outcome of the negotiations, the Brazilian government, concerned with safeguarding Brazil’s national interest, has always stated that an FTAA acceptable to Brazil and Mercosul should include: a) the elimination of tariff barriers and the transformation of all specific customs duties into ad valorem tariffs; b) effective access to markets by means of a gradual but continual reduction of all non-tariff barriers (i.e. quotas, phytosanitary measures, etc.); c) discipline in the application of defensive trade measures (e.g. safeguards, antidumping) that affect Brazilian agricultural exports to the United States as well as other sectors that have been traditionally been subjected to selective protectionism (i.e. steel products, footwear, etc.); d) a precise understanding that mechanisms that provide for unilateral trade sanctions must not be used; e) the elimination of trade-distorting mechanisms (such as export subsidies) and the disciplined application of domestic subsidies that affect the setting of domestic and foreign prices; and f) harmonizing the FTAA negotiations with those of the WTO, in order to adjust the advances achieved within the scope of the Hemisphere to the efforts that will be undertaken in multilateral agreements.

Another topic on which the Brazilian negotiating position has been consistent and firm has had to do with the inclusion of labor and environmental protection standards within the scope of the FTAA. Brazil has no objection to references to these principles, but it cannot accept any linkage between these principles and trade sanctions or obligations that could be used as protectionist measures, thus restricting the access of Brazilian products to markets in the Hemisphere, particularly those in North America.

None of the positions advocated so far by the current Brazilian government, in the various negotiating groups, have reduced the wide range of options the future government will face, beginning in January 2003, as it decides on the plans it wishes to develop and carry out for Brazil during the rest of the decade. In Québec, President Cardoso stated the minimum requirement he considers essential for an FTAA that will be in Brazil’s interest.

At the end of 2004, Brazil and the other countries of the Hemisphere will have to make sovereign assessments concerning whether the results achieved by then will be consistent with their national interests. If these minimum requirements are not met, it will be very difficult to count on the support of the Brazilian people and the future government. Until then, Brazilian negotiators will work, as they have done since the beginning of the negotiations, towards the construction of an FTAA that will lead to an outcome that is beneficial for Brazil’s interests.

*Article by Rubens Antônio Barbosa, Brazilian Ambassador to the United States