Free Trade Area revives as USA and Mercosur narrow differences

The United States and South America's largest economical block are locked in a trade dispute. FTAA meeting scheduled on Nov. 17 was expected to fail, but a last minute understanding between the sides allows negotiators to be more optimistic.

U.S. and Mercosur Saturday said they have narrowed differences over how to seal an agreement on cutting North America's barriers, main trade dispute that threatens one of President Bush's top economic goals: creation of the world's largest free trade area spanning the Western Hemisphere. At a Foreign Ministers meeting in Washington, Brazil - Mercosur leading country, together with Argentina and the United States presented a joint proposal that would allow countries to opt out of some parts of any final agreement, such as rules for investment or anti-piracy protections, said Celso Amorim, Brazil's foreign minister.

In Buenos Aires, Argentine ambassador to Washington, Jose Octavio Bordon, had said in a news conference with foreign journalists that Mercosur was "working to arrive in Miami with previous agreements". Brazil's foreign minister announcement probed Bordon's declarations were correct, as the hemispheric agreement leaves the deadlock.

"I don't mean to say all the problems were resolved, but this gives us a basis to move forward,'' Amorim said in a conference call after the meeting, but refused to say what specifics were discussed. The U.S. is trying to build momentum for the trade agreement before all trade ministers gather in Miami in less than two weeks. The leaders of the countries have set a deadline of the end of 2004 to finish the accord to cut tariffs from Alaska to Tierra del Fuego, in Argentina's far South.

According to reports from Washington, a number of US companies are putting some pressure over Bush Administration not to ease demands on piracy and investment protections in order to win support from Mercosur countries. However, the trade block that joins Brazil, Argentina, Uruguay, Paraguay and Bolivia, Chile and Peru as associated states, insists on the elimination of agricultural subsidies historically implemented by USA and Canada.

Until yesterday Brazil had said it couldn't agree to new rules on investments and piracy protection without an end to U.S. subsidies. "We know the limitations that exist (in the U.S.) to having an elimination of subsidies in agriculture,'' Amorim said at a press conference in Washington last night after meeting with U.S. Trade Representative Robert Zoellick. ''We've heard it a 100 times, and finally we understand.''

That was Argentina's position on the same issues, but Brazil's change has been surely agreed with its main partner in Mercosur. Talks are entering what was to be the final stretch leading up to a Jan. 1, 2005, deadline for an agreement to tear down trade barriers between all nations in the hemisphere, except Cuba.

US strategy consists of leading individual trade agreements, such as the proposed hemisphere-wide free trade deal after talks among the 146-member countries of the World Trade Organization failed in Cancun, Mexico, in September. US main negotiator, Robert Zoellick has put much of the blame for the breakdown in Cancun on Brazil and 20 other developing countries that joined to advocate the abolition of U.S. and European farm subsidies. The countries represented at the meeting today were Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Jamaica, Mexico, Panama, Peru, Trinidad & Tobago and Uruguay.