SELA analyzes the evolution of US Trade Policy
nd the FTAA Process
Caracas, 16th February. The Latin American Economic System (SELA) pointed out that the process leading up to the establishment of the Free Trade Area of the Americas (FTAA) may "require patience and the willingness to improvise" on the part of the countries of the region, "considering that negotiations could well be imbued with uncertainty, at least until the U.S. Executive and Congress agree on the future course to be steered for its trade policy".
The entire situation will be determined once the Congress decides whether it will renew the fast-track authority requested by President Clinton for a number of trade agreements, among which the FTAA is of particular interest to the region.
The countries of the Latin American and Caribbean region must therefore be prepared for the only two possible scenarios. In the case that the first scenario were to be shaped, which SELA views as "overly optimistic", Clinton will have convinced the Congress to grant the fast track authority before the celebration of the Americas Summit, scheduled for April 1998. This undoubtedly would "renew the thrust of FTAA negotiations."
SELA goes on to warn that in the second scenario, where Clinton does not obtain the authorization, the United States would be able to participate in the onset of these FTAA negotiations, but the President would have to seek recourse in other trade policy mechanisms, much less appealing for the region, in the event that the agreements are implemented.
The preliminary trade agreements negotiated under the fast track modality, however, provide two clearly visible advantages: first, that they require being voted on in both houses of Congress within a period of 90 legislative days and second, they cannot be amended.
The proposals made by SELA are set forth in the report entitled "US Options for the FTAA", distributed today to its 27 member states in spite of the operational difficulties facing this organization whose headquarters in Caracas were entirely destroyed by a fire only ten days ago.
The report provides detailed insight into the trade policy debate at both the U.S. Executive and congressional level, and foresees the way this debate may evolve before drawing a number of conclusions involving the countries of the region.
According to SELA, the process of creating the FTAA "is now at a difficult and unusual crossroads". On the one hand, Latin America and the Caribbean "are seemingly prepared to approve the formal launching of the negotiations and yet, on the other hand, "the largest of the economies in the Americas, has, in the best of cases, an ambiguous internal mandate for participation in these negotiations."
SELA deems that many of the difficulties arise from the fact that the FTAA negotiations were begun "during an unstable period of US trade policy" considering that 1994 was the last time that both the executive and congress were in the hands of the same political party which ensured greater cooperation in trade matters.
SELA’s opinion is that Clinton failed to gain congressional approval for a renewal of the fast track authority at year-end 1997 because the government was "unable to find a middle ground to satisfy both a large number of Democrats and Republicans."
The Democrats called for a bill providing for negotiations on labor-related and environmental issues while the Republicans were against the inclusion of both these concerns. When the time came for voting, the government came up short by half a dozen votes to gain a majority in the House of Representatives.
SELA goes on to say that "there are good reasons to doubt that the Clinton Administration could have better luck in 1998 than in 1997." Party-related problems will certainly be on the rise considering that the 1998 congressional elections are already under way as well as the fight to win the presidential nomination for the year 2000. Another aspect to include is the impact of the Asian crisis which will certainly re-ignite protectionist trends.
Should Clinton’s fast track authority request be turned down once again, a number of trade relation agreements could be turned to, going from those that do not call for modifications in U.S. laws to the use of preferential trade as a means to exert influence.
The President of the United States could also make use of the residual authority conferred to him in 1994 vis-à-vis the Uruguay Round, allowing him to implement agreements that reduce or eliminate tariffs in certain specific sectors but which, in the case of Latin America and the Caribbean "would be very limited."
Yet another resort would be to present the agreements as formal treaties or regular legislative projects, but this would require approval by two thirds of the Senate and would be subject to amendments. Such a course would not be in the benefit of the region fundamentally because of the continuous delays resulting from congressional maneuvers.
In sum, SELA concludes that the FTAA process will require that the officials of the Latin American and Caribbean countries responsible for these negotiations be "extremely tuned in to the internal debates going on in US trade policy" not only in 1998 but in the years to come.
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SELA, Permanent Secretariat
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