CIAO DATE: 10/02

A Free Trade Area of the Americas: Implications of Success or Failure for the Members of the OAS

Ongoing negotiations involving all the nations in the Americas except for Cuba are aimed at agreeing on a Free Trade Area of the Americas (FTAA or ALCA in Spanish) 'from Alaska to Tierra del Fuego' by 2005. In addition to potentially revolutionizing the economies of some of the members of the Organization of American States (OAS), an FTAA will have major political, social, and even military ramifications for the Inter-American System. Failure to agree, however, will not just leave the member states with the present status quo. It would have negative impacts in the above-cited areas. Nation states have limits on how completely they can serve the needs of their populations. Even the United States, a powerful and wealthy nation, has chosen to further its national interests by joining with other nation states in cooperative ventures. In doing so, these nation states have voluntarily surrendered some of their sovereign authority to global and regional organizations. Nations cooperate to confront issues that may go beyond their capacity to adequately deal with on their own, and sometimes they work with non-state actors to respond to these issues. Goals such as fostering regional or global economic well being, maintaining a common defense, and fighting threats such as terrorism, are examples of issues which often test the ability of one state to adequately respond acting on its own. But, in practice, states have retained the vast majority of their sovereign rights. Most, and especially the most powerful, are unwilling to surrender sovereignty in critical areas such as the national defense.

In economic areas, often more so than in other areas, states have recognized the clear benefits of cooperation. If they surrender economic autonomy in limited ways, they can strengthen their economies, benefiting their peoples and strengthening their overall ability to exercise non-economic sovereignty within the international system. The great depression of the 1930s, with disastrous results from its beg-gar- thy-neighbor protectionist policies, stands out as a clear example of the harm generated by a failure to cooperate on trade and economic issues. The move to regional economic integration within the Americas is typified by the Canada/United States Free Trade Agreement (FTA), the North American Free Trade Agreement (NAFTA), and to a lesser extent by MERCOSUR (the Southern Common Market), the Central American Common Market (CACM), the Andean Community (CAN in Spanish), and the Caribbean Community and Common Market (CARICOM).

Negotiations to create an FTAA hold out the hope of profound economic integration in the Americas that could bring equally profound benefits to the peoples and governments of the OAS members. The FTAAis the centerpiece of a larger process, the Summit of the Americas process. This larger process includes, for example, OAS agreements on fighting terrorism and supporting democracy, which of course also impact on progress for the FTAA. A failure to agree on an FTAA would not in and of itself preclude continued cooperation in other areas, but it would be a setback to economic and political prospects for the region, harming the economic development of OAS member states and probably hin-dering overall cooperation in some other areas.

While the governments engaged in the FTAA process clearly want a successful outcome, success is by no means guaranteed. As Brazilian Ambassador to the United States Rubens Barbosa pointed out, 'Like other countries, Brazil's positions in the negotiations are dictated by the defense of its national interests . . . the main concern in Brazil arises from the impression that the FTAA could fail to tackle the most sensitive and important obstacles to a truly comprehensive free trade area. . . . Brazil can only envisage the establishment of a free trade area if it is to obtain concrete and substantial access to highly protected sectors.'

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