Free Trade Area of the Americas - FTAA


Trade Negotiations

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March 9, 2004

Original: Spanish
Translation: FTAA Secretariat




From: Víctor Álvarez, Vice Minister of Industry, Head of the Delegation of the Bolivarian Republic of Venezuela to the Fifteenth Meeting of the Trade Negotiations Committee
To: Delegations of the countries participating in the TNC of the FTAA
Re: Structural Convergence Funds in the FTAA
Date: Port of Spain, Trinidad, 29 September to 3 October 2003

On the occasion of the Fifteenth Meeting of the Trade Negotiations Committee (TNC), I would like to transmit the vision of the Bolivarian Republic of Venezuela regarding the current status of the FTAA negotiations and propose concrete actions that will enable us to successfully face the challenges created by an Agreement in which a range of countries participate, countries that differ not only in their history, culture and language, but also in the size of their economies and levels of development.

The Co Chairmanship has asked two questions in an effort to build a shared vision of the current status of the FTAA negotiations:

  1. What level of ambition, if any, should be achieved in each area under negotiation while reaching a general equilibrium in the negotiations?
  2. How would your government propose achieving this objective?

Level of Ambition

The debate is focused mainly on the following:

  1. The dates for completing the negotiations; and
  2. The coverage of the agreement.

The current status of the negotiations reflects a series of points lacking definition in most of the negotiating groups, which translates into stagnation or little progress in the process.

In the view of the Government of the Bolivarian Republic of Venezuela, the lack of willingness and creativity to tackle the causes of these difficulties and the recent WTO-Cancun effect expose the unfeasibility of the proposed date for the completion of the negotiations, as well as the need to review the substance of the broad initial proposal.

Since the last Summit of the Americas, held in Québec City, Venezuela has been emphasizing the need to postpone the end dates of the negotiations and the establishment of the FTAA and to limit the issues under negotiation, as well as the coverage and scope of the same.

This proposal was ratified in the letter submitted by the delegation of Venezuela at the last Ministerial Meeting, held in Quito, and in several memoranda presented at the Thirteenth TNC, held in Puebla, and at the Fourteenth TNC, held in San Salvador. At this meeting, the delegation of Venezuela, in addition to again requesting that the date of the agreement be postponed, also noted the need to review and limit the themes currently under negotiation.

In the case of Venezuela, regardless of the agreement that is ultimately reached, it must be validated by the democratic will of our people through a referendum. It does not represent a voluntary decision of the government, but rather a mandate of Article 73 of the Constitution of the Bolivarian Republic of Venezuela that conditions approval of an agreement such as the FTAA to acceptance by our citizens through a referendum.

On repeated occasions, presidential and ministerial declarations on the FTAA have established mandates and commitments regarding transparency in the negotiation process. Transparency in the negotiation process is a sine qua non condition for civil society’s participation in the follow up of the process.

Up to now, however, transparency has been very limited. The existence of brackets, with no mention as to which countries has suggested the proposal, makes it practically impossible for the people of any given country to identify their respective government's negotiating position.

As Kenneth Valley, Minister of Industry and Trade of Trinidad and Tobago, unequivocally stated at the outset of this meeting, the FTAA negotiations are not only technical, but also carry increasingly political and social implications which, if not properly managed, will inevitably exacerbate the expressions of protest towards the FTAA. Resistance to the FTAA is on the rise in an increasing number of political and social sectors in each and every one of our countries, in response to a negotiation process about which they know very little or nothing at all.

The Honorable Minister Valley stated that:

“Beyond all the technical discussions, the fact is that trade negotiations are no longer simply the realm of the specialists. Today, trade issues are at the heart of domestic politics and foreign policy. Thus, we must acknowledge the political and social nature of the process towards a hemispheric free trade area. The certainty that we have a joint commitment and a set of common goals and objectives will help us to construct patiently, a vigorous consensus in all delicate matters.”1

Therefore, as the deadlines approach, the possibilities of our government being able to properly inform our citizens, thereby avoiding unnecessary resistance and hostility, also decrease.

The more the negotiations are expedited in this phase, the fewer possibilities there will be for fostering a democratic, informed public debate on the implications of these negotiations.

Democratic decisions require more time

Launching the FTAA assumes the revamping of the political and institutional structure of the States, which will translate into strong pressure and demands to effect key changes to the Constitution, laws and institutions. In fact, one of the general principles established at the Fourth FTAA Ministerial Meeting cleraly states this point. The principle states the following:

“All countries shall ensure that their laws, regulations, and administrative procedures conform to their obligations under the FTAA agreement.”

This being the case, the FTAA cannot continue to be negotiated as if it were only a series of trade negotiations in which only experts and specialists in the different areas of commercial and international law participate. As Minister Valley wisely indicated, democratic negotiations need to effectively incorporate all sectors of the population continent-wide, considering that every sector will be affected to some extent by the agreements being negotiated. This requires much more time than has been proposed to date.

The intent to increase the pace of the negotiations and the 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 demand for a democratic, transparent process, access to information, and the right to participate in the FTAA decision-making process stems, fundamentally, from the fact that the Agreement is much more than a limited trade agreement. On the contrary, the Agreement covers the broadest range of collective life in its institutional, political, social and cultural dimensions.

It is not enough to liberalize trade and investment in order to guarantee progress towards greater development and collective well-being. The success of the FTAA must be measured against the improved quality of life of our citizens and not only in light of increased trade and investment flows.

Without specific mechanisms aimed at achieving a significant reduction in the disparities among the different regions, countries, and production activities, free competition among unequal parties can only lead to the strengthening of the largest countries with higher levels of development and still further weaken the smallest economies and countries with a lower level of development.

Overcoming this challenge demands the creation of effective mechanisms, such as the Regional Integration Funds proposed by various delegations, or the Compensation and Structural Convergence Funds proposed by other delegations at the last meeting of the TNC, held in El Salvador. This effort also requires more time than that being proposed.

Inequalities in the Levels of Development

The negotiations of the Free Trade Area of the Americas started out against the backdrop not only of abysmal differences in the sizes of the economies, but also of extraordinary differences in the levels of development.

One of the key goals of a successful integration project, as demonstrated by the experience of the European Union, is to ensure that integration allows for concrete steps to be taken towards significantly reducing these huge inequalities.

This requires firm commitments to be made—with procedures that guarantee their fulfillment—so that the implementation of the Agreement can make an effective contribution to reducing these inequalities.

The issue of the vast inequalities with which the FTAA negotiations process started has been recognized time and again in the documents issued at Presidential Summits and Ministerial Meetings. The Quito Ministerial Declaration states:

“We reaffirm our commitment to take into account in designing the FTAA, the differences in levels of development and size of economies in the Hemisphere, in order to ensure that these economies participate fully in the building of, and benefits resulting from, the Agreement…”

The measures that have been discussed under the issue of "preferential treatment" or under the category of "smaller economies" neither pave the way for nor provide guidelines for policies that could effectively contribute to a significant reduction in these vast differences. It is not really a matter of large and small economies, but of highly distinct economic structures.

The measures concentrated on so far have been limited to strengthening the countries’ technical capacity to tackle the FTAA negotiations, but no decisions have yet been made regarding the necessary and urgent measures that must be applied in order to reduce and eliminate the profound imbalances that exist among our countries.

If action is not taken to improve social conditions and the conditions of production, highly unequal countries will be treated as equals and forced to compete under the same rules despite their relative backwardness and weaknesses.

It is therefore indispensable, if we are to comply with the FTAA’s commitments and regulations, that we move from technical assistance measures and extensions of deadlines towards the creation of the structural convergence mechanisms and funding necessary to correct the asymmetries and disparities between those countries currently involved in negotiating the agreement.

There is much more that can and must be done within the framework of the Hemispheric Cooperation Program. Only pursuing technical assistance measures as a means of ensuring that countries are in a position to participate in the negotiations does not adequately address the divide which separates the different countries negotiating the FTAA.

Neither technical assistance for the negotiations and adaptation of the agreement nor time periods of several years resolve those problems.

This issue is of particular concern, in light of the fact that the “General Objectives and Principles” of the negotiation of the Agreement stipulate that “The rights and obligations of the FTAA must apply to all countries." Intrinsic in this is the demand for a certain principle of reciprocity among economies and economic agents that are vastly unequal.

An agreement with equal conditions for all among vastly unequal economies can only benefit the strongest at the expense of the weakest countries.

For progress to be made in reducing these vast inequalities, it is of paramount importance that we embrace the challenge and assume firm commitments, which will necessarily demand a significant transfer of resources from the more developed to the less developed countries.

For the smaller economies and less-developed countries, the real possibility of taking advantage of the opportunities generated by a Free Trade Area does not depend solely on tariff-reducing measures. It will also depend on investments for the improvement of the conditions in their productive and social environment, as well as on changes in prevailing competition conditions in the main markets of the Hemisphere. These markets still contain enormous barriers to our exports.

The sincere will to resolve the issues regarding developing countries’ access to different markets must necessarily be translated into the correction of the disparities among countries and changes in the unfavorable competition conditions that still prevail in the main markets, in which support policies for production, contingent protection measures, as well as demanding technical barriers that prevent access by weaker countries still prevail. And free trade, understood in these terms and practiced under unequal conditions, only benefits countries with higher levels of industrialization and development.

From our perspective, a Free Trade Area will represent an opportunity for all, if and only if the most developed countries in the Hemisphere share the political, economic, and financial costs of opening spaces for the productive efforts of the smaller economies and the less-developed countries.

The creation of structural convergence funds to finance infrastructure and services projects in support of production is an essential mechanism for reducing the asymmetries among countries.

This is a basic condition for ensuring that a free trade area does not become a space in which the countries with serious deficiencies in their production apparatus are forced to incur excessive costs that affect the competitiveness not only of their exports, but even of the part of their production destined for domestic markets. Once the agreement enters into force, the level of protection enjoyed by domestic production that enabled the sector to remain active and generate the jobs that our citizens need will steadily decline.

We wish to emphasize that a free trade zone is not created solely by eliminating tariffs. Structural, legal, institutional and economic convergence is vital to ensure that the FTAA is a win-win situation. A free trade zone that opens up the opportunities promised for everyone will depend on the level of solidarity attained. It is time to think seriously about creating these Structural Convergence Funds.


We therefore propose that the Consultative Group on Smaller Economies be transformed into a Negotiating Group for the Treatment of the Differences in Size of the economies and Levels of Development. This Group must receive a clear and precise mandate for the formulation of provisions and mandatory agreements referring to special and differentiated treatment for smaller economies and less-developed countries.

Among these measures, this Negotiating Group must prepare a concrete proposal on the FTAA Structural Convergence Funds as a mechanism that contributes to the common objective of creating a free trade area that represents a win-win alliance, a real opportunity for all, regardless of the size of our economies and our level of development.

1 See Kenneth Valley, “ The Opening of the XV meeting of the FTAA trade area of the Americas (FTAA)”.

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