Hendrix, Steven E.

Mann, Julie

English

University of Miami School of Law

University of Miami Law SchoolInstitutional RepositoryUniversity of Miami Inter-American Law Review7-1-1997Essay on the Free Trade Area of the AmericasSteven E. HendrixJulie MannFollow this and additional works at: http://repository.law.miami.edu/umialrPart of the International Trade CommonsThis Article is brought to you for free and open access by Institutional Repository. It has been accepted for inclusion in University of Miami Inter-American Law Review by an authorized administrator of Institutional Repository. For more information, please contact library@law.miami.edu.Recommended CitationSteven E. Hendrix and Julie Mann, Essay on the Free Trade Area of the Americas, 28 U. Miami Inter-Am. L. Rev. 697 (1997)Available at: http://repository.law.miami.edu/umialr/vol28/iss3/11ESSAY ON THE FREE TRADE AREA OF THEAMERICASSTEVEN E. HENDRIX*JULIE MANN**The formation of the Free Trade Area of the Americas(FTAA) was the primary initiative to emerge from the 1994Summit of the Americas. Consequently, the United States andthirty-three other nations affirmed their commitment to promot-ing prosperity through economic integration and free trade in thehemisphere. This commitment-to create the FTAA and to takeaction in such areas as eradicating poverty and discriminationand conserving the natural environment-drives the regionalstrategy of the U.S. Agency for International Development(USAID).USAID's primary role in supporting the creation of theFTAA is to assist smaller-economy countries to make progresstoward resolving critical market issues which impedes environ-mentally sound and equitable free trade in the hemisphere.Eliminating impediments to market access for goods and serv-ices among the countries will enable smaller-economy countriesto participate fully and successfully in the FTAA and will alsofoster economic integration in the hemisphere. Free trade andeconomic integration are critical factors for supporting economicgrowth, raising living standards, improving working conditions,and protecting the environment." Steven E. Hendrix is a legal advisor with the U.S. Agency for International Devel-opment. Until January 1997, he was working directly on the Hemispheric Free Trade Ex-pansion Activity in connection with the office of Broadly-Based Economic Growth, LatinAmerica and Caribbean Bureau... Julie Mann is an Information Dissemination Specialist for the U.S. Agency forInternational Development and works with the Hemispheric Free Trade Expansion Ac-tivity.INTER-AMERICAN LAW REVIEWIn an effort to promote free trade and economic integration,USAID has been programming technical assistance to expandhemispheric trade and export-led growth for many years, and theHemispheric Free Trade Expansion (HFTE) project builds onthat experience. To achieve this strategic objective, the USAIDLatin America Bureau's Office of Regional Sustainable Develop-ment is collaborating closely with the Office of the U.S. TradeRepresentative (USTR) and with U.S. and Latin American part-ners to identify trade-related market issues that support thecreation of the FTAA. HFTE activities, which are designed tohave substantial catalytic impact in the hemisphere focus onfour key-issue areas. These key-issue areas/intermediate resultsare:1. Trade Liberalization2. Trade and Labor/Management Relations3. Trade and Market Access4. Trade and the EnvironmentSeveral conditions must be met in order to successfully im-plement the FTAA. First, it is a sine qua non that the tradingpartners have harmonized trade policies. Here, it is the objec-tive of the first intermediate result, trade liberalization, to bringthe smaller countries into compliance with the trading regimesof their larger potential partners. Equally important to the long-term viability of the FTAA is the perceived benefit to all partiesin all participating countries. The perception that free tradeonly benefits the more prosperous members of the society mayundermine broad social and political support for the FTAA, par-ticularly among the poorer population of large and small coun-tries. Addressing this concern is the third intermediate result,trade and market access. Likewise, the second and fourth in-termediate results, trade and labor/management relations andthe environment, deal with the problematic perception amongthe more prosperous participants of the FTAA, such as theUnited States, that other participants in the FTAA can and willgain an unfair competitive advantage by lower labor and envi-ronmental standards. Such a perception may threaten supportfor the FTAA in the United States (witness the NAFTA debate).Therefore, it is critical to the ultimate success of the FTAA thatthese issues be addressed concurrently, systematically and com-prehensively. Hence, a single, integrated strategic objective is[Vol. 28:3ESSAY ON FTAAthe appropriate vehicle to address these issues.HFTE's primary focus will be to work with smaller countriesto introduce the necessary trade-enhancing reforms for comph-ance with the World Trade Organization (WTO) standards thateach country has agreed to meet. HFTE will pay particular at-tention to Caribbean and Central American countries that do nothave the resources to draft and implement reforms and that alsohave difficulty attracting donor assistance due to their individualsmall size and relatively low level of economic importance. Inaddition to assisting small-er countries, USAID, in collaborationwith the USTR, will identify other priority countries and tradeareas requiring assistance and will contribute funding to otherU.S. agencies to provide the technical assistance to undertakethe necessary reforms. USAID will also support advisory assis-tance from the private sector, when appropriate, to introducenongovernmental reforms.Agricultural assistance is an important issue in LatinAmerica where most small-sized economies remain heavily de-pendent upon agriculture. Because of the important role thatagriculture plays in their economies, some of these countries willundoubtedly face serious sectoral adjustment problems thatcould threaten their continued participation in the FTAA processif these problems are not promptly addressed. Through HFTE,USAID is focusing on clarifying the role the agricultural sectorwill play in the construction of the FTAA, identifying food andagricultural trade issues, analyzing policy alternatives, andraising the level of public understanding about the issues.Furthermore, USAID is playing an important role in the ad-vancement of workers' rights in developing countries. Whiletrade ministers have agreed that each country must abide by therecognized standards of workers' rights in their own country, thecapacity of many developing countries is inadequate to regulateand to implement such standards. Hence, the problem is wors-ening. By proceeding on these trade-related labor matters on aparallel, but separate, track to the construction of the FTAA,USAID is in a unique position to identify and to begin to resolvecritical issues in these countries.Market performance equity issues, as they relate to agricul-tural export markets, agricultural technology markets, capitalmarkets, and land markets, are another distinct focus of HFTE.19971INTER-AMERICAN LAW REVIEWSince these principal markets will undergo major structuralchanges with the reduction of tariffs and investment barriersunder the FTAA, USAID is concerned with ensuring that small-and medium-sized businesses are able to participate fully inthese markets. By supporting continued access to the inputmarkets of land, labor, and technology to maximize participationby small- and medium-sized businesses, USAID seeks to obtainbroad-based economic growth, but to avoid widespread labordisplacement that could result in substantial increases in desta-bilizing rural-to-urban migration and increased migration to theUnited States.Trade and the environment are sensitive issues which mustbe addressed in order to minimize the risk of trade-related envi-ronmental policy issues compromising progress in the construc-tion of the FTAA. In the past decade, USAID has significantlyassisted developing countries to introduce environmentallysound policies and to adopt environmentally sound technologies.USAID provides this assistance through its support to the non-governmental organization community and its collaboration withthe U.S. Environmental Protection Agency. By proceeding withthese trade-related environmental matters, USAID is in aunique position to support the identification of the key environ-mental issues and to begin to work on the solutions immediately.In fact, USAID has already begun this effort to clarify specifictrade related environment issues.USAID's role through HFTE is a catalytic one, and the suc-cess of the HFTE program relies heavily on the successful repli-cation of its activities. USAID and its partners will identify theimportant trade issues in selected countries and trade subre-gions and appropriate solutions will be developed for demon-stration. The completion of a successful demonstration, which isthen replicated on a wider scale by market forces, public sectorintervention, or other donors, denotes evidence of progress to-ward issue resolution. Thus, the fundamental performance indi-cator is the number of trade-related equity and environmentalissues advanced toward resolution in at least one-third of thecountries within a targeted subregion.The dissemination of results and information from HFTEactivities throughout the hemisphere is essential to achievebroad impact and to ensure that progress is made toward resolv-ing key market issues in the hemisphere. To address the need700 [Vol. 28:31997] ESSAY ON FTAA 701for far-reaching information dissemination and to ensure that allprogrammatic information will remain available long afterUSAID-funded activities have ceased, USAID is linking its de-velopment partners through a Lotus Notes information system,which contains all relevant program documentation. In addition,this information system will be accessible to all partners, cus-tomers, and stakeholders through the World Wide Web.

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