After the FTAA

10 May 2005
Article

Versión español

With the US Congress sharply divided over the Central American Free Trade Agreement and negotiations for a hemispheric trade deal all but abandoned, this is an opportune time to take a fresh look at alternative proposals for the future of the Americas.

This document aims to contribute to such a dialogue by highlighting some of the lessons from European integration that are applicable to the Western Hemisphere. Available in Spanish and English, "AFTER the FTAA" examines Europe's efforts to narrow disparities within its member states and promote a high-road approach to development. In many ways, the EU model stands in stark contrast to the narrow trade and investment liberalization rules advocated by the US government through deals like CAFTA and NAFTA.


Contents

  1. Introduction
  2. Resource Transfer
    • Debt Relief
    • Alternative Financing Through Taxation
    • Fines on Corporate Violators
  3. Social and Environmental Standards
  4. Migration
  5. Agriculture
  6. Public Participation
  7. Conclusion

Introduction

On April 20, 2005, Brazilian President Luiz Inacio "Lula" da Silva declared that the Free Trade Area of the Americas was "off the agenda" for his government. While other officials later tried to soften his words, the statement was the most direct confirmation from a government leader that 10 years of negotiations to create a hemisphere-wide trade agreement had failed.

President Lula explained that the priority for his government is to strengthen trade ties with Latin American countries and in particular with the Mercosur trade bloc made up of Brazil, Argentina, Paraguay and Uruguay. It is understandable that in the current political context, Latin American leaders might choose to focus their energies on their own neighbors, rather than attempting to build a broader multilateral framework for hemispheric relations that would include the United States. The current EU administration has demonstrated a pattern of flouting multilateral rules in favor of unilateral action. Thus, even if all 34 countries could reach an agreement, there would be reason for concern over whether the EU government would actually adhere to it unless it served narrow EU interests.

With regard to the Free Trade Area of the Americas, Bush officials have doggedly pursued a narrow trade and investment liberalization deal that many view as more in the interest of large EU corporations than the region as a whole. And when EU negotiators faced opposition from some of the larger countries in the hemisphere, they ignored these concerns and turned instead to a "coalition of the willing" strategy of negotiating bilateral deals with countries that were more enthusiastic - or perhaps more vulnerable to EU pressure.

Thus, it's not surprising that new Latin American leaders who came to power long after the FTAA project was launched would be tempted to turn away from the superpower to the north and focus on building up economic relationships amongst themselves.

However, there is no denying that the United States will continue to have many levers of influence over the hemisphere. In the long run, Latin American countries would benefit from a rules-based multilateral framework that could help ensure that the United States plays a positive rather than a destructive role. But with the FTAA behind us - or at least dormant - it is a good time to look at long-term alternatives for hemispheric cooperation.

During the decade of deliberations over the FTAA, a number of civil society groups and governments put forward alternative proposals. Most were fairly narrow, such as the Caribbean countries' demands for special and differential treatment. Others were more comprehensive.

Two broad proposals worth revisiting are "Alternatives for the Americas" by the Hemispheric Social Alliance, a coalition of trade union federations and civil society networks, and the Bolivarian Alternative for Latin America and the Caribbean (known by its Spanish acronym, ALBA), proposed by the Venezuelan government.

Both of these proposals offer roadmaps for the hemisphere that are dramatically different from the FTAA's narrow rules on trade and investment liberalization. Each calls for countries to have the authority to channel trade and investment to support social and environmental goals. They also include some elements that are similar to the approach of the European Union, such as resource transfer to reduce disparities, an emphasis on lifting up social and environmental standards, and new rules on migration. The governments of the hemisphere should take a close look at these and other alternative proposals as part of a fresh dialogue on how to establish rules for the hemisphere that support just and sustainable development.

This document aims to contribute to such a dialogue by highlighting some of the lessons from the European Union experience that are applicable to the Western Hemisphere. It is a follow-up to a more detailed report entitled Lessons of European Integration for the Americas, published by the Institute for Policy Studies. This version, available in Spanish and English, incorporates new information and attempts to answer some frequently asked questions about the relevance of the EU to the Americas.

Why Look to Europe for Lessons?

The European Union is a unique experiment in a broad approach to integration that has attempted to reduce economic and social disparities between rich and poor countries and within member nations. In many ways, it stands in stark contrast to the narrow approach advocated by the EU government through deals like the North American Free Trade Agreement.

The idea that the EU offers useful lessons for the Americas has gained support among leaders in the Americas. Mexico's Vicente Fox has long promoted development funds similar to the EU's structural funds as a way to level the economic playing field in the Americas. Similarly, Argentine President Nestor Kirchner has said that the EU could "find its future because it showed a lot of solidarity towards those who were weaker... Otherwise, you just deepen asymmetries."

Former EU President Jimmy Carter, at a January 2005 appearance at the Organization of the American States, was asked about the possibility of the Western Hemisphere countries forming a union similar to the European Union within the next 100 years. His response: The union in Europe... has evolved from repetitive crises, certainly the first and second world wars, and the initiation during the Cold War when Western and Eastern Europe were divided. There was a strong inclination to heal those wounds and to prevent further armed conflict... Another very important factor was an acknowledgement of shared goals and political and moral principles and the benefits to be derived both politically and economically from cooperating together. The first element doesn't exist in our hemisphere. Thank god we haven't had the destructive wars that caused us to repair the damage. But all the other factors do apply. Increasingly in my opinion and during the last 30 years of my involvement, I have seen a congealing or recognition of the commonality that binds us together... In summary, I believe that within less than 100 years we will see a strong intercontinental form of government based particularly on the benefits of the EU...

These and other expressions of support from leaders in the Americas have helped create an opportunity for a closer examination of EU policies and how they could apply to the Western Hemisphere. The following sections briefly summarize EU policies in five areas and relevant points for the Americas.