Can the United States and Brazil Spur Free Trade in the Americas?

Cancun versus MiamiComing only nine weeks after the spectacular collapse of world trade talks at the WTO Cancun meeting in mid-September, pundits predicted that the Free Trade Area of the Americas (FTAA) Miami Ministerial in November would surely end

Cancun versus Miami

Coming only nine weeks after the spectacular collapse of world trade talks at the WTO Cancun meeting in mid-September, pundits predicted that the Free Trade Area of the Americas (FTAA) Miami Ministerial in November would surely end in similar disaster.  Cancun's aftermath was characterized by bitter acrimony and finger-pointing between the United States and Brazil, the two FTAA co-chairs charged with leading the regional free trade negotiations among 34 countries in the Western Hemisphere to conclusion by 2005. The acrimony was precipitated by a North-South clash of interests at Cancun, with a G-21 group of developing countries spearheaded by Brazil and India refusing to negotiate from WTO draft compromise texts that sought to address, among other topics, agricultural reform and U.S. and other developed country subsidies on a global basis.  Few believed that the chasm which separated the two hemispheric heavyweights could be bridged to forge a common vision for regional free trade in the Americas by the time trade ministers were to meet again in Miami.  Indeed, a preparatory meeting of FTAA Vice Ministers in Trinidad and Tobago in late September only highlighted the wide gulf, on the one hand, between the position of the U.S., Canada, Mexico, Central American and Andean countries in favor of a comprehensive FTAA covering all negotiating areas, and, on the other hand, the desire of Brazil and the other Mercosur countries (Argentina, Paraguay, Uruguay) to completely remove sensitive subjects such as government procurement, services rules and intellectual property rights from the purview of regional negotiations.  It seemed that a collision course was set, both figuratively and literally, since anti-globalization groups had proclaimed that tens of thousands of protestors would shut down the Miami meeting in a confrontational Seattle 1999 redux.

Yet contrary to most expectations, the trade ministers in Miami reached agreement on a common vision for the FTAA negotiations a full day in advance of the scheduled conclusion of the talks.  Protestors did not materialize in the predicted numbers.  And at the closing press conference, rather than trading recriminations, United States Trade Representative Robert B. Zoellick and Brazilian Foreign Trade Minister Celso Amorim spoke of "personal chemistry" and conjured metaphors of dancing to the same tune.

How can this seemingly abrupt turnaround between Cancun and Miami be explained?

The delicate compromise Declaration agreed to at Miami by the 34 trade ministers can be viewed as a pragmatic success and perhaps the only politically achievable one, in light of the alternative of no agreement and a probable collapse of the FTAA negotiations officially launched by Heads of State at the Miami Summit of the Americas in 1994.   The fact that agreement was reached at all, as well contours of the agreement -- which is essentially a general framework intended to guide the negotiation of specific details over the course of the next year - can only be understood if one looks at the dynamics of the Bush Administration's three-level trade strategy of simultaneous multilateral, regional, and bilateral trade liberalization crafted by USTR Zoellick.

Competitive Liberalization:  A Three-Level Trade Policy Strategy

The "competitive liberalization" strategy is intended to move the U.S. trade agenda forward concurrently on multiple fronts - globally in the WTO, regionally through negotiations such as FTAA, and bilaterally through a series free trade agreements (FTAs) with individual countries in Asia, Africa, the Middle East, Latin America and elsewhere - so that blockage in one forum does not preclude progress in opening markets and establishing rules of commerce in other areas.  The competitive liberalization strategy is designed to maintain domestic political momentum for free trade, by assembling dynamic coalitions of business and manufacturing interests, farmers and consumers in support of particular agreements.  At the international level, it also creates policy pressure on recalcitrant nations at the bargaining table, with the prospect that "won't-do" countries will be disadvantaged in lucrative U.S. markets vis-à-vis "can-do" competitors who are willing to negotiate state-of-the-art FTAs with the United States.  

Recent outcomes on the multilateral chess board of the WTO and the bilateral chess board of individual FTA initiatives created a matrix of pressures that explain both the positive outcome of the Miami Ministerial (a common Declaration among 34 countries of vastly different sizes, levels of development and economic interests) and its broad contours (a general framework for negotiations that meets competing demands for both comprehensiveness in the trade topics covered, and flexibility in the commitments undertaken by individual countries).

Multilateral Moves

Multilaterally, the highly visible breakdown of the Cancun WTO Ministerial was a setback for the U.S. trade agenda in light of America's key role, along with the European Union, in launching the Doha Round 22 months earlier.  Whereas the United States came to Cancun prepared to negotiate with very serious and ambitious proposals, many others sought to use the talks as a platform for rhetoric and unilateral demands, precipitating the collapse. With the global economy faltering, the dim prospects for reviving multilateral negotiations in the near-term raised the economic and political importance of avoiding another collision over the regional trade agenda in Miami, particularly for the United States as the host country of the meeting.