SYNOPSIS OF EVENT

The Second Issue Meeting of the Free Trade Area of the Americas (FTAA) Committee of Government Representatives on the Participation of Civil Society (SOC) was held in Santiago, Chile on 23 September 2003, and focused on the services negotiations.

The meeting proceeded in accordance with the agenda, attached hereto. The participants from civil society throughout the Hemisphere (see attached list) represented a variety of organizations from different spheres of civil society: non-governmental organizations, industry, labor, academia, professional associations, as well as representatives from sub-federal government. Also in attendance were several delegates from the SOC, the Chair of the Negotiating Group on Services (NGSV), as well as the representatives of several countries to the NGSV. A total of fifteen countries participated in the meeting. See attached list.

The event was held at the headquarters of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). The forum was formally opened with introductory remarks by the Chair of the SOC Mr. Luis Fernando Peredo, Mrs. Alicia Barcena, Deputy Executive Secretary of ECLAC, and Mr. Osvaldo Rosales, Director General of International Economic Affairs for Chile. The speakers emphasized the need for civil society participation in the FTAA process and the importance of the issue selected as the focus of the meeting.

The Chair highlighted the importance of carrying out these issue meetings in order for civil society to participate and learn about what is being negotiated; he reminded the participants that the objective of the issue meetings is to provide civil society with an opportunity to participate in the process through direct dialogue with the SOC. The Chair expressed the wish to facilitate the exchange of ideas with civil society and assured the participants that the submissions from the civil society representatives would be transmitted to the other FTAA entities. The Chair also reminded the participants of the Open Invitation extended to civil society to make submissions via the FTAA official web site at www.ftaa-alca.org

The Deputy Executive Secretary of ECLAC, Alicia Barcena, reported that ECLAC was proud to host the meeting in its headquarters in Santiago and that it intends to establish a space for dialogue between SOC members and civil society representatives. She pointed out that the FTAA is a vast project that faces huge challenges given the asymmetries in terms of the size and level of economic and social development of the countries involved in the negotiations. Ms. Barcena stressed that the enormity of this challenge is such that, as ECLAC has repeated on several occasions, the possibilities of the FTAA being translated into real benefits for all its members will largely depend on how these asymmetries are addressed. In acknowledgement of the asymmetries already existing among the countries, she emphasized the importance of developing countries having the necessary freedom to adopt active investment and production diversification policies. Ms. Barcena concluded by pointing out that this was the only way to reinforce the fragile production structures of many economies and, at the same time, foster new, sustainable and dynamic comparative advantages.

The Director General of International Economic Affairs for Chile, Osvaldo Rosales talked about the characteristics of the FTAA process and the need to understand what it is not and what it cannot deliver. He stressed that FTAA was not a development strategy nor a political model and it cannot be expected to solve international crises or macroeconomic instability or income inequality. FTAA can, nevertheless help countries to gain market access for their exports and this is why Chile is very interested in the negotiations. Mr. Rosales also emphasized the importance of services, especially high-tech services, to the FTAA economies, including natural-resource based economies like Chile, and the need for implementing competitive policies in this sector. He addressed the issue of regulatory sovereignty, and how Chile retained its ability to regulate its respective sectors in the USA-Chile FTA and other FTAs. Special mention was given to public health services and services related to education and culture. He also referred to the importance of transparency in the negotiations and to civil society participation highlighting that Chile has made a proposal to create a consultative committee for civil society participation in the FTAA to ensure the effective integration of labor, business and non-governmental organizations into the initiative.

Negotiations on Services in the FTAA: What is it all about?

Presenters:

• Mr. Hillary Deveaux, Chair of the Negotiating Group on Services,

• The civil society representative, Mr. Claudio Lara from Consumers International.

Mr. Hillary Deveaux described his role as the Chair of the NGSV and congratulated Chile as one of the countries that has made an effort to educate the public and prepare them for the FTAA. He referred to the importance of the thematic meetings as a means of providing civil society with a better understanding of the issues being negotiated.

Mr. Deveaux assured the participants that the NGSV regards the submissions made by civil society as very important, and assured the participants that the NGSV has considered the concerns of civil society submitted in response to the open invitation. He emphasized the importance of services as one of the most important areas of the FTAA negotiations, as it has become a substantial and growing component of world trade. The NGSV Chair described how services are traded, how trade in services differs from trade in goods and identified for the group, the goals of services liberalization. The NGSV Chair also provided the participants with a brief report on the state of the FTAA services negotiations, highlighting the following issues: differences in levels of development and size of economies, modalities for services liberalization and WTO-plus elements of the FTAA chapter. (please see attached presentation of the NGSV Chair).

Mr. Claudio Lara discussed three main issues in his presentation:

• Progressive liberalization, what does this mean?

• Beyond the services agreement in the WTO

• Issue of regulation, what is the type of regulation that will be decided on?

He stressed that importance for consumer protection regulations to be developed, along with the obligations being developed in the Chapter and the need for impact assessment studies to be developed incorporating the position of different institutions from the civil society. He stressed the importance of taking into account the differences in size and development of the countries participating in the process and the need to safeguard regulatory sovereignty, particularly in areas of health, education and cultural services. Specifically, he proposed the following points:

1. An extensive evaluation of GATS Art. 19 before proceeding in the FTAA negotiations
2. Incorporation of an “emergency clause” in service agreements.
3. Incorporation of special provisions to protect consumers where the provider decided to suspend the provisions of services.
4. Exclusion of government procurement from negotiations.
5. Exclusion of public services, education and health from negotiations.

Remarks on the FTAA services negotiations in general:

Comments were made by representatives from academia, labor, industry, health interests, and representatives of sub-federal government.

Concerns were expressed regarding the “mercantilization” of basic services, such as education, health, cultural services, etc, that is treating them as any other tradable merchandise. Some participants supported the exclusion of these services from negotiations to preserve the regulatory ability of the State and the implementation of active policies to promote their development. A Chilean government representative made the remark that liberalization of services does not mean the loss of regulatory sovereignty.

Others expressed the view that services liberalization would contribute to the FTAA’s goals of fostering economic growth and opportunity, raising living standards, promoting regional integration, and strengthening democracies. They stated that services trade and investment liberalization will be beneficial to all countries in the hemisphere - large and small, developed and developing - and serve as a multiplier to increase competitiveness across entire economies. Services are the basic building blocks of a market economy, including telecommunications, legal services, accounting services, efficient distribution services, financial services, and audiovisual services.

With respect to public health, the view was expressed that access to health services is an essential right, and should therefore be identified for special treatment under the Chapter or for exclusion. One organization expressed concerns about trade agreements raising the costs of providing basic services and therefore limiting access to consumers. It also expresses the view that trade agreements will make small economies dependent on big pharmaceutical multinational firms and the need to protect local production in developing countries.

Issues were also raised with respect to telecommunications and labor issues.

Some civil society representatives raised the concern that the transfer of technology accompanying foreign direct investment was not appropriate. Other participants expressed the view that the growth of services-related firms and investment contributes to new and enhanced infrastructure development, creation of new jobs, transfer of technology, know-how and employee skills-training, and the creation of enterprises and citizens capable of competing successfully in the countries of the Hemisphere and the global economy.

Some participants called for the gradual implementation of measures that allow greater regulatory flexibility to governments, and requested support for the revision of commitments and the possibility of withdrawing commitments.

A request was made for proactive responses to the civil society submissions.

Concerns were raised by some participants regarding the number of FTA’s being concluded without sufficient participation from civil society. It was expressed that without the participation of civil society, these agreements would not adequately reflect the concerns of civil society. These civil society representatives called for greater information about negotiations, greater transparency and funding for programs to educate local populations on the implications of the FTAA. Some organizations advocated a referendum to approve the final version of the FTAA.

Other delegates also reported on their satisfaction with their own national experiences with respect to establishing mechanisms to promote dialogue with civil society and the dissemination of information to the public.

Regarding the modalities for service negotiations, some participants favored a positive list approach because it would give small countries more time to prepare to compete, while others supported a negative list with only limited exceptions and with the standard being one of openness and non-discrimination across all sectors.

Several participants also remarked on the importance of the service negotiations taking the four supply modes into account.

Specific issues related to services were identified for discussion, namely, professional services and cultural industries.

Professional services:

Presenters:

• The government representative: Liliana Honorio, FTAA Director, Ministry of Foreign Trade and Tourism (MINCETUR), Peru.

• The civil society representative, Elias Arze, Colegio de Ingenieros de Chile.

Liliana Honorio’s presentation considered the issue of the movement of natural persons, specifically with respect to the current situation in the region and the debate in the WTO and the FTAA. Participants considered the importance of the international movement of persons.

Mr. Arze spoke on the theme of professional services, specifically on the experience of getting mutual recognition of titles and professional qualifications for engineers in Chile and Canada under a MOU to effectively implement the provisions of the Chile-Canada FTA. He stressed the problems they encountered and how they have tried to solve them, especially those due to the federal character of Canadian government which requires the approval of provincial authorities. These agreements provide for diverse fundamental elements for the improvement of the delivery of cross border professional services, such as:

• Education as a foundation for the development of professionals

• The continual updating of professional skills incorporating new trends and changes in technology

• The training of professional in language as a tool to facilitate trade in services.

• The harmonization of code of ethics among countries

• Non-discriminatory treatment among professionals

General Remarks on Professional Services:

Some civil society representatives expressed the view that as in the case of NAFTA, they expect that the FTAA will benefit the countries that participate. One participant cited the opportunities that FTAA would create for professional services firms involved in architectural, engineering, and other design services, international consultancy, legal and financial advisory services. In the area of services, some participants commented that there are many opportunities for small and developing countries and invited all countries to open their doors and facilitate regional trade in services. Other participants expressed concern with respect to liberalizing trade in professional services and suggested that the professional services sector in the participating countries would suffer as a result of liberalization.

Cultural Industries:

• The government representative: Luis Pablo Niscovolos, Deputy Director for Multilateral Economic Negotiations, Ministry of Foreign Affairs, International Trade and Religion, Argentina.

• The civil society representative, Paulo Slachevsky Coalition for Cultural Diversity - Publishers of Chile (Coalición Chilena para la Diversidad Cultural - Editores de Chile)

Luis Pablo Niscovolos discussed the difficulty of defining cultural industries and considered how countries could take reasonable measures to protect their culture and heritage, specifically referring to the debate in the WTO. One option highlighted was not to exclude cultural industries, but to address particular sensitivities through the commitments undertaken.

Paulo Slachevsky suggested that local cultures are loosing their identities, and asserted that the global market is not geared towards the development of culture. Mr. Slachevsky stated that market access provisions should not apply to cultural industries and recommended the use of discriminatory provisions with respect to culture and education. He asserted that the future of local cultural and education policies should not be limited by the FTAA or any bilateral trade agreement.

General remarks on Cultural industries and the FTAA:

Some civil society representatives expressed the view that the provisions of trade agreements should not apply to culture, and furthermore, that local culture should not be left to compete without protection from the government. The concern regarding the asymmetries between participating countries was raised once again in this regard. Certain civil society representatives were not pleased about the consideration of culture as one topic within the issue of the entertainment industry, holding that this would devalue its role in the development of society as a whole. It was therefore established that culture would represent a contribution of the integral development of each country, reflecting its identity and image through various forms of expression, through the creation of cultural industries and not only through trade.

Other civil society representatives expressed the view that the FTAA negotiations should ensure coverage of all service and sub-service sectors, including audiovisual services and other services containing cultural content. The audiovisual sector is an important economic force, creating jobs, promoting tourism, and helping to pay for the build-out of expensive e-commerce networks. They argued that cultural diversity and trade are mutually reinforcing, since diverse cultural traditions and values are reflected in film and television industries throughout the hemisphere, and trade finances production of new films and enables diversity. The measures provided for in the draft text in the services chapter, provide sufficient flexibility to governments to protect local culture while providing market access and certainty in the rules of trade. These representatives suggested that the way forward was to pursue greater cooperation and joint ventures between cultural actors in the hemisphere, citing specific examples of workshops around the Hemisphere and collaborations on feature films and TV programs between U.S. industry and industry in Mexico, Brazil, Chile, Argentina, and Venezuela, tailored to local and regional audiences. This will require greater openness and the removal of barriers to trade.

Some civil society representatives expressed their concern regarding their perception of the lack of information being made available to the public and the failure of governments to fund programs designed to educate the public and disseminate information related to the FTAA process. Others mentioned the willingness of civil society representatives to participate in the negotiations on matters related to the cultural industries sector, provided that this is done within a framework of fair and equitable negotiations.

Still other participants suggested that a separate chapter should be negotiated dealing specifically with issues related to culture.

Roundtable Discussion:

During the Roundtable discussion, government and civil society participants spoke on a variety of topics that are reflected in the written submissions attached. These can be summarized as follows:

• The existence of a variety of national and regional civil society consultation mechanisms in countries participating in the FTAA, which may be appropriate to different countries’ needs and reflect their levels of development (e.g. public meetings may be used more frequently as a communication tool in countries where there is not widespread internet access).

• Concerns regarding the effect of the FTAA on the distribution of wealth in participating developing countries.

• The lack of participation by civil society in the FTAA process.

• The need to develop further mechanisms for greater consultation and the expression of different contributions received from civil society.

• The establishment of a special FTAA committee that would include civil society representatives. The delegation of Chile presented a proposal for the creation of a Consultative Committee on Civil Society, upon the entry into force of the FTAA, whose main task would be to develop information systems for civil society, as well as facilitating dialogue among the various entities. The possible composition, guidelines, as well as coordination with FTAA entities were included.

Prior to the close of the issue meeting, it was announced that a third issue meeting focusing on the issue of intellectual property rights would be held in the Dominican Republic in the first quarter of 2004. A fourth civil society issue meeting will be held in the United States in the second quarter of 2004, on the topic of industrial and consumer goods market access, with a special session on small- and medium-sized business.