|
Derestricted
FTAA.TNC/inf/123
February 16, 2004
Original: English
Translation: FTAA Secretariat
FTAA - TRADE NEGOTIATIONS COMMITTEE
VENEZUELA
MEMORANDUM
| 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.
FREE TRADE AREA OR AREA FREE OF POVERTY AND SOCIAL EXCLUSION
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.
AGRICULTURE: MUCH MORE THAN A SECTOR THAT PRODUCES GOODS
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 RIGHTS1
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.
FUND TO CORRECT ASYMMETRIES AND DISPARITIES
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. |
countries
