U.S. and Brazilian trade negotiators plan to meet later this month, hoping to revive moribund talks to create a hemispherewide economic zone.
The New Year was supposed to ring in a new Free Trade Area of the Americas (FTAA) and a deeper World Trade Organization agreement, but both failed to make end-of-year deadlines.
“The progress that was made [at the WTO] was life support,” said Gary Hufbauer, senior fellow at the Institute for International Economics (IIE), a Washington think tank that supports trade liberalization. “With the FTAA, it is in a deep freeze.”
The Bush administration is hoping for an FTAA thaw, and progress toward a sweeping, hemispherewide pact that would cover 34 nations with 800 million people and $13 trillion in economic output.
Richard Mills, spokesman for U.S. Trade Representative Robert B. Zoellick, said Mr. Zoellick contacted his Brazilian counterpart in November, and the two sides subsequently agreed to have negotiators meet late this month.
Brazil and the United States met in the first half of 2004 but canceled several meetings in the second half of the year when it became apparent they could not bridge their differences. Brazil failed to schedule a hemispherewide gathering originally planned for the end of 2004.
“We will continue to work toward progress on the FTAA in 2005. Our challenge will be to translate the mandate from Miami into specific negotiations,” Mr. Mills said. Trade ministers meeting in Miami in November 2003 outlined a compromise agreement, but have been unable to fill in details.
The United States and Brazil may need progress on two separate fronts before they can close the hemispherewide deal. First, countries throughout the Americas will be closely observing the Central American Free Trade Agreement as it moves through Congress, probably in the first half of the year.
The proposed pact — with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and possibly the Dominican Republic — faces strong opposition, and failure to pass it would damage the FTAA’s prospects.
The United States and Brazil also need progress at the WTO.
The Bush administration insists that agricultural subsidies should be handled at the broadest level so that U.S. farmers reduce subsidies at the same pace as farmers in the European Union, Japan and elsewhere.
Brazil won’t budge on other issues until the agriculture question is settled.
“Making progress on the WTO helps us in other negotiations and in particular the FTAA,” Mr. Mills said.
The WTO’s 148 members signed off on an outline to reduce agricultural subsidies and create new rules governing trade at a July meeting in Geneva.
“In July … we succeeded in making significant progress in some of the areas that had been most divisive among members in the past, most notably agriculture,” WTO Director General Supachai Panitchpakdi said last month.
“The challenge ahead of us is to negotiate greater levels of specificity.”
WTO members hope to near an agreement before a ministerial meeting in Hong Kong in December, though no formal deadlines have been established to complete the talks.
“We expect to see significant progress during 2005 in the run-up to Hong Kong,” Mr. Mills said.
A “good” WTO agreement would boost world economies by $520 billion and lift some 144 million out of poverty over the next 12 years, according to a World Bank study.
But rich and poor nations have repeatedly clashed over terms for a new pact. Brazil leads a group of developing nations, including India and China, that had risen as the main opposition to U.S. and EU trade proposals.
The IIE’s Mr. Hufbauer said that standoff had ended. “That’s the progress in 2004,” he said.