Free Trade Area of the Americas - FTAA


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February 16, 2004

Original: English
Translation: FTAA Secretariat




From: Víctor Álvarez, Vice Minister of Industry, Head of the Delegation of the Bolivarian Republic of Venezuela to the Trade Negotiations Committee
To: Delegations of the countries participating in the FTAA Trade Negotiations Committee
Re: Venezuela and the FTAA negotiations
Date: San Salvador, 8-11 July 2003

At this, the Fourteenth Meeting of the TNC, it is my duty to communicate to you the concerns of the Government of the Bolivarian Republic of Venezuela regarding the status of the FTAA negotiations.

As we already explained at the Puebla TNC meeting, there is an increasing awareness and growing concern in Venezuela regarding the effects that the FTAA may have on the economy, politics, the environment, culture, labor, and human rights.

In the case of Venezuela, irrespective of the agreement that is reached, the agreement must be validated by the democratic will of our people through a referendum. The pressure to complete the FTAA negotiations and ensure that the Agreement enters into force conflicts with Venezuela’s constitutional requirement to hold a referendum. As deadlines become shorter and the number of parallel negotiations increases, our governments have fewer possibilities of designing and implementing policies and strategies to adequately respond to the wide variety of issues that are being negotiated concurrently. By the same token, the faster the pace of the negotiation process, the fewer possibilities there are for an informed and democratic debate to take place in each country on the implications of these negotiations. If to this we add the fact that the negotiations are, for the most part, conducted in secret, or that the negotiations release limited and untimely information to the public, then most of the negotiations generate pressure on an increasing number of our countries. The fast pace of the negotiations and limited time periods that Venezuela has been given in this negotiation process negate any real possibility for democratic participation in the issues under negotiation.

The only way we will be able to state that we are moving towards a democratic integration process is if the negotiation process is transparent to society as a whole. In order to have greater transparency, as well as full access for societies to all information and to public discussions on the FTAA negotiations, the timetables for the negotiations would have to be changed. These are the necessary costs of democracy. The accelerated pace of the current meetings and negotiations and the desire to conclude these negotiations by the end of 2004 makes it impossible for the negotiations to be transparent, and also prevents the various social sectors and society as a whole from being consulted before far-reaching decisions such as those involved in the current FTAA draft chapters are made.


Historically, integration focuses on the liberalization of trade and investment. Little importance is given to the free circulation of individuals and to the fight against poverty and social exclusion. In order to achieve these objectives, Venezuela and Latin America need to focus their efforts, today more than ever, on social development and in correcting asymmetries and disparities among countries. This is the only way to overcome problems related to the Special and Differential Treatment of smaller economies.

It is time to go beyond the classic problems of tariff reduction, non-tariff measures, technical regulations, and sanitary and phytosanitary measures. Nor is it a matter of negotiating more exceptions in the lists or longer tariff elimination deadlines so that smaller economies can comply with the rules of traditional integration.

Free trade will exist when we are able to successfully contend with integration barriers at their very root. A free trade area that translates into a higher quality of life and well-being for the Venezuelan people must include the following priorities on its agenda:

i) the trade imbalance that prevails in an unfair international economic order;
ii) barriers to accessing information, knowledge, and technology;
iii) disparities and asymmetries between countries;
iv) the burden of an unpayable debt; and
v) the impact of structural adjustment policies imposed by international financial organizations.
After more than a decade of state reforms leading to fast-paced and far-reaching deregulation and privatization, as well as the dismantling of public administration capacities, Venezuela and other countries of the Hemisphere are voicing the urgent need to strengthen and enable the state to respond more effectively to the many problems facing their people. The main free trade agreements being negotiated in the Hemisphere, however, propose legalizing, within the constitution, the liberalization reforms that produced many of the economic, political, and social crises that have seriously endangered governability by undermining the bases of social and political support for democratically elected governments.

Neither State hegemony nor market fundamentalism can provide Venezuela with a path toward economic and social development. Our guiding principle, rather, is “as much market as possible and State where necessary." Based on this view, we feel that the harmonization of the role of the state and market dynamics are matters that must be decided in specific contexts, in accordance with particular conditions and the democratic will of the people. No integration agreement can be expected to rid the market of this tension, in one fell swoop, in favor of the state or the market. The experiences of many countries in imposing development initiatives based on State or market hegemony showed that this is not the best way to guarantee an efficient allocation of resources, much less the maximum well-being of the whole.

The objective is therefore not to limit the regulatory actions of States to pave the way for economic liberalization by irreversibly adopting mandatory international agreements. It is not enough to liberalize trade and investment in order to guarantee progress towards greater development and collective well-being. Without specific mechanisms aimed at significantly reducing disparities between the different regions, countries, and production activities, free competition between non-equals can only lead to the strong becoming stronger and the weak weaker.


The call for a reduction in protectionist policies and the massive subsidies granted by the main industrialized countries cannot become a widespread demand to liberalize trade in agricultural products. For many countries in Latin America and the Caribbean, agriculture is crucial for the survival of the nation itself. The living conditions of millions of peasants and indigenous populations would be catastrophically affected should a flood of imported agricultural products enter their countries, even in cases where no subsidies exist. Agricultural production is much more than the production of a good. Rather, it is a way of life. It is the cornerstone for the preservation of cultural alternatives, a means of using the land, and a way of defining modalities for relating to nature. Furthermore, it is directly linked to the critical issues of food sovereignty and safety. It cannot be treated, therefore, as would any other economic activity or product.

Article 303 of the Constitution of the Bolivarian Republic of Venezuela decrees: “The State shall promote sustainable agriculture on the strategic basis of comprehensive rural development, and shall thus guarantee food safety for the population, which is understood as the sufficient and stable availability of foodstuffs at the national level and the timely and ongoing access to foodstuffs for consumers. Food safety must be achieved by developing and favoring domestic agricultural production, which is understood to be the product of agricultural, livestock, fishing, and aquaculture activities. Food production is in the national interest and essential to the social and economic development of the nation. To this end, the State shall dictate the financial, commercial, technology transfer, landholding, infrastructure, labor training and other measures necessary to attain strategic levels of self-sufficiency. Moreover, the State shall promote initiatives within the framework of the national and international economy to compensate for the inherent disadvantages of agricultural activity.”

In light of the above, the situation of the FTAA negotiations on agriculture constitutes one area of extreme concern to Venezuela.

At the outset of the 1998 negotiations, the San José Ministerial Declaration clearly established the goals for the negotiations on this important production sector, which include: “to eliminate agricultural export subsidies affecting trade in the Hemisphere”, and "to identify other trade-distorting practices for agricultural products, including those that have an effect equivalent to agriculture export subsidies, and bring them under greater discipline.”

In the same document, the FTAA Ministers also agreed by consensus that “the negotiations will begin simultaneously in all issue areas. The initiation, conduct, and outcome of the negotiations of the FTAA shall be treated as parts of a single undertaking which will embody the rights and obligations as mutually agreed upon.”

Nevertheless, since the beginning of the negotiations on the texts of the draft Agreement, some countries have expressed their reticence to negotiate FTAA subsidies for agricultural exports and state aids that distort trade and agricultural production, including the measures having equivalent effect to export subsidies.

The insistence on this position, which is, in every respect, contrary to the principles and objectives set forth for the establishment of the FTAA, the principles and objectives that we share and that encouraged us to participate in the negotiations, was the driving force behind a significant debate at the most recent Ministerial Meeting, held in Quito. In the Quito Ministerial Declaration, countries finally recognized “the importance of agriculture for the economies of the region, the integral and non-discriminatory treatment of which in the FTAA negotiations will contribute to generating employment, reducing poverty and fostering social stability”, and thereby reaffirmed “the hemispheric commitment to the elimination of export subsidies affecting trade in agricultural products in the Hemisphere and to the development of disciplines to be adopted for the treatment of all the other practices that distort trade in agricultural products, including those which have an equivalent effect to agricultural export subsidies”, indicating in particular, that “our respective evaluation by country or group of countries, of the results in the market access negotiations in agriculture in the FTAA will depend on the progress we can reach in other subjects that are part of the agriculture agenda.”

In April of this year, the Trade Negotiations Committee ratified the proposal at its Puebla meeting, where it instructed the Negotiating Group on Agriculture to "intensify its discussions on all issues on its agenda, in particular those related to export subsidies and to all the other practices that distort trade in agricultural products, including those that have an equivalent effect to agricultural export subsidies, without any exceptions and without prejudging the outcome, in accordance with the mandates of the Ministerial Declarations of Buenos Aires and Quito.”

Given the progress of the negotiations since November of last year, one could deduce that some countries insist on not making a commitment to not reintroducing export subsidies, working to regulate loan conditions and guarantees, as well as agricultural export insurance programs, and to decrease and discipline domestic aid for the agricultural sector.

However, tight deadlines have been set for the negotiations on the elimination of agricultural subsidies, which has forced us to make a significant effort to meet these deadlines. Yet, despite the practical difficulties created by the various tariff nomenclatures and the availability of data on ad valorem equivalents of specific, complex, and composed tariffs of some countries, we have met these deadlines in a timely manner in order to show our willingness to negotiate agriculture issues.

The situation as described clearly shows a significant imbalance in the negotiations and projects that the negotiations will culminate on an unequal footing, due to the continued stalemate on the key aspects indicated herein. This type of imbalance is unacceptable. It is unacceptable that agricultural negotiations are exclusively limited to tariff elimination.

In effect, some countries spend tens of millions of dollars annually to support their exports and agricultural production, causing significant distortions in the prices of agricultural products on world markets. With these prices, effective access to the markets of those countries is blocked or hampered, even with the elimination of tariff barriers. Furthermore, our own domestic markets are subject to unfair competition, and we lose markets for agricultural products in developing countries, products that we could otherwise export or produce with greater benefits.

Our countries lack the financial resources that developed countries have to support agriculture. Instead, we have policy instruments to palliate the perverse effects of international price distortions, instruments which we are being asked to eliminate in the market access negotiations. A significant element of the poverty and marginalization in our countries is focused on the rural populations that subsist on agriculture or agriculture-related activities. People living in these areas are in effect punished most severely by the imbalance existing initially in the agricultural negotiations and will be even more so if the most harmful aspects are excluded from the negotiations.

The food safety enjoyed by developed countries in the Hemisphere, which is today denied to developing countries by wanting to limit the room for manoeuvre of our policies, is the fruit of fifty years of policies systematically supporting agriculture with the consequent price distortions on world markets. Even today, should these supports cease, the playing field would still not be level. The infrastructure and production and technological apparatus that have been established and operational through the outlays of these policies still leave us at a disadvantage.

It is only the huge contrast in the size of the economies throughout the Hemisphere that burdens us with a disadvantage. Meanwhile, the size of our markets means very little for the expansion of agriculture in developed countries. Only a fraction of the increase or re-routing of exports towards our countries implies a price disturbance and the destruction of the possibility of support for a significant part of our population.

If developed countries do not wish to eliminate subsidies and measures of equivalent effect, or substantially diminish and discipline internal aids for fear of losing their world markets outside the Hemisphere, and if they propose to do so only after appropriate negotiations at the multilateral level, they cannot ask us to give them greater access to our markets in the Hemisphere. In the interests of fairness, the only option is to negotiate market access for agricultural products in the same multilateral forum. Once we are fully aware of the true scope of the agreements reached by the agricultural powers of the world on the elimination of subsidies and measures with equivalent effect, and on the reduction and application of disciplines to their internal aids, we can responsibly determine to what extent we can grant greater access to our markets.


Intellectual property is another area in which the opposing interests of large transnational corporations and the poor countries of the South, particularly peasant and indigenous populations, are most clearly expressed.

There has been a huge increase in what is considered as patentable, thus blurring what was the borderline between invention (patentable) and discovery (non-patentable). Similarly, as a result of the transformations in technology, particularly the recent developments in biotechnology, and in response to the demands of that industry, a vast array of new opportunities has opened up in the area of intellectual property.

These conceptual and ideological changes regarding intellectual property have gone hand in hand with the creation of new legal and institutional instruments, both at the national and transnational level, aimed at protecting intellectual property.

Contesting what were called “trade-related issues", a broad-based regime was established to cover each of the main areas of intellectual property. These negotiations were conducted in extremely asymmetrical conditions between the countries of the North and those of the South. Despite the initial resistance shown by many southern countries, the northern countries were able to impose a mandatory and global intellectual property protection regime as per their demands, based on the proposals formulated by pharmaceutical transnationals.

In the asymmetrical relations existing today among industrialized countries in the north and south, the advantages of the latter lie specifically in the scientific and technological areas. The international system in place to define and protect intellectual property currently tends towards accentuatuating this imbalance. It protects the areas in which the strongest countries enjoy advantages, while it basically leaves the countries and peoples of the south without any protection in the area in which they have a distinct advantage: that of the genetic diversity of their territories and the traditional knowledge of the peasant and indigenous populations.

Prior to the TRIPS negotiations, more than 50 countries had no legal patent protection regimes in place for pharmaceutical products. This meant that their domestic markets could be supplied with generic drugs at prices far below those offered by companies holding the patents. According to the National Working Group on Patent Laws, the comparison of drug prices in India with prices in countries with pharmaceutical patent protection shows that prices are 41 times higher in the former. India’s pharmaceutical industry is a fluorishing sector, with more than 20,000 companies producing high-quality drugs that are accessible to hundreds of millions of people with low income levels and, in addition, playing a key role in job creation. This has started to change rapidly and radically in India and in the rest of the world. The TRIPS agreement of the World Trade Organization obliges all countries—after a grace period for the “least developed” countries—to establish patent regimes that guarantee the strict protection of intellectual property.

As a result of the monopolistic rights accorded through TRIPS, pharmaceutical companies can eliminate competition and charge prices that are beyond the financial reach of millions of people. A number of studies have shown that the introduction of patents will leave in its wake not only significant price increases, but also a drastic reduction in consumption. Large segments of the population would be excluded from access to commercial drugs. A case in point is Egypt: the introduction of drug patents led to five- to six-fold price increases in comparison to non-patented drugs. Small- and medium-sized pharmaceutical companies will also tend towards bankruptcy and large transnationals will increase their monopolies.

Currently, 80 percent of the patents on genetically modified foods are held by 13 transnationals, and the 5 largest agrochemical companies control virtually the entire global seed market.

As a result of the patents obtained on various life forms, and due to the appropriation/expropriation of peasant/community knowledge by the large seed and agrochemical transnationals, rural production patterns are changing rapidly on a global scale. Peasants are becoming increasingly less independent and more dependent on buying the costly inputs of transnationals.

The “freedom of trade” increasingly imposed by these transnational interests on the peasants around the world is leading to a reduction in the genetic variance of the major food crops. Reduced genetic diversity, associated with a more engineering-oriented view of agriculture and based on the extreme control of each phase of the production process—with genetically manipulated seeds and the intensive use of agrochemicals—drastically reduces the inherent adaptation and regrowth capacities of ecosystems.

A product of this global, legal regime of biopiracy is the vast array of patents based on the unrecognized expropriation of knowledge and/or resources of others.

As has been seen in the spectrum of critical issues for the present and future of humanity that are being affected by intellectual property agreements, the latter is one of the most dynamic areas of concentration of power and highlights the inequalities that characterize the current tendencies of globalization towards hegemony.

Against this dramatic backdrop, Venezuela proposes that the new ways in which intellectual property agreements are structured and consolidated cannot endanger the lives of the majority of the world`s population, or undermine the possibility of survival of peoples and communities throughout the world that defend the right to choose cultural alternatives to total commercialization, as well as the rights of our peoples to have access to quality drugs and food, at a low price.


During the Puebla TNC, held from 8 to 11 April, Venezuela presented a document emphasizing the need to discuss the feasibility and advisability of including the issue of compensation funds in the FTAA negotiations as a means of significantly reducing, in one way or another, asymmetries in levels of development between countries and between the production sectors involved. This mechanism must have specific social and economic objectives, well-defined deadlines, and monitoring mechanisms.

This mechanism must be initially established in such a way as to allow for existing asymmetries in the region to be measured and discussed in the Consultative Group on Smaller Economies (CGSE). No consensus has been reached in the CGSE that would help to begin discussions on the asymmetries in the levels of development of the countries. Venezuela therefore proposes initiating the discussion based on the reasoning that establishing a concrete definition of “smaller economy” will facilitate the formulation of one or more strategies to overcome the obstacles created by existing asymmetries.

Venezuela believes that, given the comprehensive nature of the contents of the FTAA Agreement, insofar as trade agreements and national legislation are concerned, as well as the key role that hemispheric economic relations play in most of the economies involved, in terms of trade and capital flows, consideration must be given to indicators that facilitate the presentation of asymmetries mentioned. In this way, the treatment accorded in the FTAA to differences in the levels of development and sizes of the participating economies, in addition to being a high-priority issue for the reasons mentioned above, should include:
• The creation of instruments within the FTAA, through which “developing” countries not only have access to the Area, but also are able to improve their production and competitive conditions, thereby reducing the disparities that characterize their domestic economies and the large gap that separates them from the larger, developed economies in the Hemisphere.
• A clear definition regarding the economies that will receive special and differential treatment. Although the FTAA negotiations to date have repeatedly referred to differences in “the levels of development and the size”, the term used to identify the beneficiaries of this treatment is “smaller economies”, which refers to the economic size of the participating countries, without defining the criteria that will be used for this purpose.
• An identification of special and differential treatment for not only each economy in its entirety, but also sectors therein, in such a way as to ensure that this treatment is accorded to the neediest regions and sectors. In this way, the resources allocated to reduce the disparities would be linked directly to the pertinent intra-national areas, thereby ensuring increased efficiency and transparency, as well as less of the red tape that is usually associated with allocating resources from the aforementioned mechanisms.
Since the start of the negotiations for the creation of the FTAA, and even during the preparatory stage of those negotiations, the need to address the disparities that characterize the group of countries participating in the process has been repeatedly emphasized in various agencies and at various levels of negotiation.

In this respect, in the Buenos Aires Ministerial Declaration of 2001, it was stated that: "We reaffirm our commitment, embodied in previous Ministerial declarations to take into account, in designing the FTAA, the differences in the levels of development and size of the economies of our Hemisphere to create opportunities for the full participation of the smaller economies and to increase their level of development. We recognize the broad differences in the levels of development and size of the economies in our Hemisphere and we will remain cognizant of those differences in our negotiations so as to ensure that they receive the treatment that they require to ensure the full participation of all members in the construction and benefits of the FTAA”.2 The same Ministerial Declaration also states: “We reiterate the importance of cooperation to enable the strengthening of the productive capacity and competitiveness of those economies.”3

Furthermore, the Declaration issued at the following Ministerial Meeting (Quito, November 2002) reasserts: “We consider that the establishment of the FTAA, through increased trade flows, trade liberalization and investment in the Hemisphere, shall contribute to growth, job creation, higher standards of living, greater opportunities, and poverty reduction in the Hemisphere. For this to be possible, the establishment of the FTAA shall promote the application of policies oriented to economic development, promoting the generation of employment and the effective operation of labor markets in the Hemisphere.”4

The existence of large disparities between the countries, and in many cases within them, is a major challenge facing the FTAA and makes addressing these disparities one of the most burning issues in the negotiations. If the disparities are not given priority in the negotiations, the mere functioning of the FTAA could further accentuate the differences that characterized the situation prior to the implementation of the Agreement.

Although the establishment of the Consultative Group on Smaller Economies (CGSE) in 1998 and the creation of the Hemispheric Cooperation Program (HCP) in 20025 are both initiatives undertaken to respond to the existence of profound inequalities in the FTAA, it is clear that they fall short of addressing the problem properly, starting with the fact that to date, special and differentiated treatment has still not been sufficiently extended to the economies which, without being “smaller”, are characterized by a low average level of development and/or by the existence of regions or sectors that require special support in order to be able to successfully handle the hemispheric free trade the FTAA will bring about.

In light of the above considerations, it is essential that the FTAA process see a redoubling of efforts to address the national, regional, and sectoral disparities, by drawing up proposals and defining actions that go beyond what has been discussed so far. It is in this context that the creation of the Production Development Fund (PDF) is being proposed for consideration. Beyond the specific modalities according to which the establishment of the Fund could be approved, the creation of a mechanism with the general objectives outlined in this proposal is essential if the FTAA is to effectively contribute to the development of production and competitiveness of the participating countries and thereby raise the living standards of most of the population in those countries.

Víctor Alvarez R.
Vice Minister of Industry
Head of the Delegation of Venezuela

1 The documents of Edgardo Lander make a significant contribution to supporting the Venezuelan delegations' position on industrial property: “Los derechos de propiedad intelectual en la geopolítica del saber de la sociedad global” (Intellectual Property Rights in Geopolitics in Global Society) y “Notas sobre los procesos de negociación de acuerdos de libre comercio en América Latina hoy” (Notes on Free Trade Agreement Negotiating Processes in Latin America Today").

2 FTAA: Sixth Trade Ministerial Meeting. Ministerial Declaration. Buenos Aires, Paragraph 5, Argentina, 7 April 2001.

3 Idem, Paragraph 6

4 FTAA: Quito Ministerial Declaration. Seventh Meeting of Ministers Responsible for Trade in the Hemisphere, Paragraph 12, Ecuador, 1 November 2002.

5 This Group was established at the Fourth Trade Ministerial of the Americas held in San José, Costa Rica, 19 March 1998. According to paragraph 13 of that Declaration, the Group’s functions are to: a) follow the FTAA process, keeping under review the concerns and interests of the smaller economies; b)bring to the attention of the TNC the issues of concern to the smaller economies and make recommendations to address these issues.

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