And yet, in a world beset by economic slowdown and turbulence, political fragility and growing social challenges, no tool is likely to have greater success in regalvanizing growth and prosperity than a successful FTAA negotiation. Despite their differences, the countries of the Americas have never been more firmly committed to promoting such a deal, or to helping smaller, poorer nations cope with the consequences. Many of the widely publicized differences over the FTAA are more tactical than strategic. And many elements that seem to be obstacles to a deal, like the absence of U.S. congressional fast-track approval for trade negotiations, may not be obstacles at all.
Those were among the main conclusions of a panel of distinguished economists and trade experts who met at TIME's behest in Miami to consider the prospects for the FTAA. Despite many question marks surrounding the negotiations in the short term, there was a strong tone of optimism among most panelists about prospects for the deal and its beneficial effects in a faltering economic climate. There was also a firm conviction that the countries of the hemisphere are more strongly committed to the free-trade process than they often appear to be. "It is very important to distinguish substantive difficulties from political will," noted Charlene Barshefsky, who served as U.S. Trade Representative — chief trade negotiator — during the Clinton administration. "If the political will is there, then the substance will be completed within whatever time frame the political will dictates," she said.
While fully aware of the difficulties, Barshefsky, now a visiting public-policy scholar at the Woodrow Wilson Center in Washington, argued that the FTAA talks reflect "a convergence in our hemisphere along the lines of market economics, democracy, shared ideals and common aspirations." She was hopeful about the will of the Bush administration to support the FTAA process, and even try to push it faster by agreeing to put such controversial U.S. practices as antidumping legislation on the table for improvement. And she downplayed the divergences among countries on a bulky, draft version of the trade agreement with the observation that "countries don't put in serious proposals without being awfully certain that what they put on the table is going to lead ultimately to the final agreement."
Most of all, perhaps, Barshefsky was optimistic on account of the widespread consensus that renewed economic growth is vital to the region — and that free trade is the best and fastest way to that growth. This view got strong endorsement from Andrés Velasco, Sumitomo professor of international finance and development at Harvard's John F. Kennedy School of Government and a former adviser to Chile in free-trade talks with the U.S. "Growth is the key question facing Latin America today," Velasco said. Analyzing the ways that developing nations could achieve more rapid growth, he said a "great bet for the next decade" was to "integrate yourself into a richer area" — precisely the path of the FTAA. "You import the institutions and procedures of that richer area, and then you grow. That works," he said, citing such cases as Portugal, Ireland and Greece in Europe, "countries that have caught up very quickly to the income of that area." The economic success of Mexico in the wake of the NAFTA accord also proves the case. "There is a very tight link between the growth prospect for Latin America, the payoff associated with reform and FTAA success," Velasco said. "It is the big chance Latin America has for jumping on the fast-growth bandwagon."
The need for new vehicles for growth is great, according to Kenneth Courtis, the Canadian-born vice-chairman for Asia of the Goldman Sachs International investment firm. "We are not in a U.S. slowdown. We're in an OECD slowdown," he said, referring to the 30-member association of advanced industrial nations. Europe, the U.S. and Japan are all losing momentum; that could put at risk economic and political stability in parts of the Americas and set back the entire process of globalization, which Courtis credited with providing much of the economic progress of the 1990s. "There's little sign yet in the leading indicators that we have a bottom coming soon. It's become a rough landing."
"It's important to build a momentum to move ahead," Courtis said, "because if you don't, we risk losing a lot of what we spent 20 years building. We're in a new game, and basically that new game can be played only if Brazil and the U.S. join and drive this process." If they do, and the FTAA is realized, Courtis said, it would lead to a substantial increase in investment in Latin America, higher growth, lower inflation and, over time, much better fiscal positions for the whole region. "It creates a self-reinforcing dynamic on the upside." To get there, he added, "people have to be given an assurance that they'll be able to gain from these changes, and the means and the time to adjust."
Courtis's assessment drew a mixed response from Herminio Blanco, who was Mexico's trade minister from 1994 to 2000 and is now a consultant in Mexico City. For one thing, Blanco agreed emphatically that the FTAA is a powerful engine for prosperity. "Who could have thought in 1991, when we were negotiating NAFTA, that we would become the second customer and second supplier of the U.S.?" he asked rhetorically. "For Mexico, NAFTA has meant more than 1 million jobs." In the interim, Mexico has negotiated free-trade agreements with 12 other countries in the hemisphere, as well as with Europe. Blanco sees these not as impediments to the FTAA but rather as a reason why there is a "good chance" of securing the hemispheric deal. "Through these bilateral negotiations, countries are getting trained, let's say, for the FTAA," he said. "There is a free-trade mood in the hemisphere, and I believe the best for everybody, including Mexico, is to have one agreement in the whole of the hemisphere." In addition, he added, summits such as the Quebec City meeting are more useful than people imagine in helping push bureaucrats toward making deals to please their bosses.
Blanco was skeptical about the likelihood that the U.S. Congress would give up such powerful weapons as its punitive anti-dumping laws and agricultural subsidies to secure a trade deal. And he was adamant that Mexico and other nations would not accept the inclusion of environmental and labor guarantees in any free-trade pact, and that they should not. These, he said, amounted to protectionism by other means, aimed at countries with lower standards of living. Even though Barshefsky believes labor and environmental agreements are politically necessary for the U.S., she agreed to the extent that these should not be used to create a "debtor's-prison mentality: we won't trade with you until you get those standards right." But she also pointed out that so far, negotiators have been highly creative in making deals that did not add new burdens to trading partners but instead left the onus on them to enforce their own labor and environmental standards. The same could be true, she implied, in the FTAA.
That too, however, required political will. On that topic, the most skeptical panelist was the dean of U.S. economic experts on Brazil, Albert Fishlow, senior economist at the investment firm Violy, Byorum & Partners and head of the Center for the Study of Brazil at Columbia University in New York City. While Brazil has committed itself to the FTAA process, he said, there are few grounds for assuming that the country will be interested in speeding up the trade negotiations. Brazil is scheduled to preside with the U.S. over FTAA trade meetings in 2003 and 2004, so Brazilian officials "don't want to see their position of leadership cut" by accelerating the process. Moreover, Brazil is intent on negotiating a trade deal between the European Union and the Mercosur trade group that it leads, "which it can then use as the basis for negotiating in the FTAA." On the other hand, Brazil's desire to complete a free-trade area in South America before joining the FTAA has been weakened by economic turmoil in the region, especially in Argentina. Taken together, Fishlow said, "there's not going to be a real opportunity for any kind of significant advance" in Quebec City. But, he added, "I do not believe we will see a rejection in Latin American countries of the commitment to free trade."
Fishlow was joined in his skepticism of a quick free-trade fix by Velasco, who observed that U.S. enthusiasm for a deal also remained dubious, especially given congressional reluctance to grant fast-track authority to the White House to negotiate without subsequent legislative amendment. That drew the boldest proposal of all from Barshefsky, who in November 1999 successfully concluded a U.S.-China trade agreement that had previously dragged on for 13 years. Fast tracking, widely seen as a totem of U.S. trade commitment, was not absolutely necessary, she said, and had not been a factor in the China deal. "It may be desirable, but it isn't necessary," she added. What is more important is to present the U.S. Congress with "a tangible deal," which draws support from U.S. interest groups that can influence legislators. "Would we have got fast-track authority to do a China deal? Never in a million years," she said. "But the China deal passed by a substantial margin"
"Just make up your mind one way or another and do it," she said, "and the rest of the world will adjust."