Negotiating our Way Through the FTAA

One of the guiding principles of the World Trade Organisation (WTO) is that member countries determine their terms of trade amongst themselves.  Over the years, countries within certain geographic regions have come together for the purpose of trade and have formed what are known as trade areas. The European Union and CARICOM are examples of trade areas.  An emerging trade area that is of particular interest to us here in Jamaica and the Caribbean is the Free Trade Area of the Americas (FTAA)

The aim of the FTAA is to promote unrestricted or ‘free’ trading between countries within North America, the Caribbean, Central America and South America.

The Implications of ‘Free’ Trade

Leading up to the full implementation of the FTAA, which is scheduled for January 2005, participating governments will seek to arrive at an arrangement that will ensure that the level of their imports is in line with their exports. They will be seeking to ensure that if there is an imbalance, it will be in favour of their exports to other countries. 

As you can appreciate, some countries will naturally be in a better position to embrace the FTAA than others because of available resources.  Consider the case of the member countries of CARICOM.  The trade balances of CARICOM with the United States of America show that the region collectively bought approximately US$ 13 billion more worth of goods from the US than it sold to that country between 1992 and March 2002.  During that same period, only Trinidad and Tobago sold more goods to the USA than it purchased. 

What this means is that when all trade barriers have been removed, economies which are already in a bad position could become substantially worse. However, we can be certain that we can offset our disadvantages to a great extent by focusing on productivity and efficiency, in both goods and services. 

How each country will fare will depend on our negotiating ability.  Among the areas that have to be considered is the need for special treatment for small  developing countries. Let’s face it – we are not all of equal capabilities. We cannot pretend that the playing field is level. And because it is not, we have to find a way to ensure that the smaller economies will not be in a worse position with the advent of free trade.

How Can Our Countries Address these Imbalances? 

• We have to get our houses in order. Determine the products and services for which we have the greatest comparative advantage and seek to strengthen our capabilities in those areas.

• We need to lobby for the reduction/removal of trade-distorting subsidies and existing barriers on competitive exports, especially by those countries which can most survive without this.

• We need to improve our technical capabilities in order to equip ourselves with the ammunition that we will need when we present our case.  For example, when our goods are being prevented/restricted entry on the grounds of “health” reasons, our scientists and other technical support team should be able to offer substantial evidence if research proves otherwise.

In our negotiations, we must be careful in how we define our terms. What are our tradeables? Is it just goods that we produce? Can we include services? What about the intangibles such as intellectual property?. We must ensure that all of our bases are covered. One of our greatest resources is our people.  We have to find a way to negotiate the inclusion of our workforce as a “tradable” resource and demand that the free movement of people throughout the hemisphere be included in the proposed terms.  

While we would not deny that the benefits of free trade are substantial, in order to ensure sustainable development of our individual economies, especially the lesser developed countries, we must not, like fools, rush in.  We must take the time to consider the implications, put the necessary measures in place so that in the long run, we all will benefit.