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FTAA.soc/w/146
October 17, 2000


Original: Spanish
Translation: FTAA Secretariat

FTAA - COMMITTEE OF GOVERNMENT REPRESENTATIVES ON THE PARTICIPATION OF
CIVIL SOCIETY

CONTRIBUTION IN RESPONSE TO THE OPEN INVITATION


Name (s) GARY ANTONIO RODRÍGUEZ ALVAREZ
Organization (s)
(if applicable)
INSTITUTO BOLIVIANO DE COMERCIO EXTERIOR – IBCE
Country (ies)
Region (s)
BOLIVIA
ANDEAN COMMUNITY - South America

Executive Summary

TREATMENT GIVEN TO SMALLER AND VULNERABLE ECONOMIES

Since the outset of FTAA negotiations, it has been tacitly understood that the main objective being sought was trade flow liberalization as a means of attaining economic development in the different countries. Yet, once the negotiation formalities have been completed, there is nothing to guarantee that their future implementation will not widen the already broad existing gaps in economic development in such a diverse human conglomerate, unless pertinent precautions are taken.

From this standpoint, in countries such as Bolivia, there is genuine concern regarding one of the topics included in the FTAA negotiations - the treatment that will be given to smaller economies - which could become a true problem in the successful culmination of this process, which requires fulfillment of principles such as the “single undertaking” and “consensus” principles to conclude the future agreement.

Why could this evident reality become a problem?

First because of the need for definitions: What is understood as a smaller economy? How will existing asymmetries be measured? Using the customary macroeconomic variables? By the size of the populations in the countries? By the size of the domestic market, By per capital income? By productive capacity? By the degree of human development? Or will other considerations, even those of a political nature, become involved at some point?

Everything seems to indicate that this is going to be one of the most important issues to solve, since a cursory analysis of the present situation shows that more than half of the 34 countries in the FTAA project could be classified as smaller economies for one reason or another and could expect special treatment, depending on the assessment variables defined.

The countries now negotiating the FTAA are formed by nearly 800 million people distributed in several economic blocs, within which the “most developed” are outstanding: NAFTA includes 380 million inhabitants (260 million in the United States of America, 90 million in Mexico, and 30 million in Canada) and some MERCOSUR countries (Argentina and Brazil) which, together, account for nearly 200 million people.

The remaining 200 million people represent a total of 27 countries, many of which - if compared with the United States, Mexico, Canada, Brazil or Argentina - could naturally feel inclined to consider themselves “smaller economies” and, as such, demand special treatment in different aspects of the negotiations.

In any case, it is essential for the parameters to be clearly defined in advance, which would, we believe, facilitate negotiations on aspects of this issue.

Another complex aspect refers to the scope and degree of special and differentiated treatment that could be granted to the smaller economies.

In general, it could be expected that a sine qua non condition in both the FTAA negotiating process and its implementation would be to provide opportunities to facilitate the effective participation of smaller economies in the integration process as a means of improving their degree of development.

Bolivia’s experience in trade negotiations in the sphere of the Latin American Integration Association (ALADI) has taught us that, even in the worst scenarios, differentiated treatment may be expected in the sphere of tariff liberalization, with longer terms for adapting the productive apparatuses and more accelerated opening of markets to favor access of the exports from the countries with smaller economies.

These countries should also receive special conditions of a regulatory nature to facilitate their benefiting from the liberalization of markets.

In particular, the advantages should focus on truly opening up markets to exports from the small countries by eliminating tariff and non-tariff barriers and, in the short term, establishing the “early harvest” sought in the FTAA.

From this perspective, a guaranteed market will be of utmost importance to attracting export investment and development (means of creating jobs for those who need such opportunities). Related regulations, such as safeguards, rules of origin and other norms should consequently be designed in a manner that does not put countries of relatively less production and exporting capacity on the same level with others of extraordinary capacity.

Without necessarily falling into excessive outright assistance, it would be reasonable to expect economic and technical cooperation for the smaller economies. It could come from financial bodies in the region and/or from the most developed economies to enable the impact from the liberalization of markets to be absorbed optimally.

The most developed countries believe that special consideration for the small economies could be effectively given through additional grace periods or longer periods for tariff elimination. However, it would also be advisable to create a fund for technological development and support to benefit the less developed countries.

Orientation on this issue should include assurance that the smaller economies will be given equitable conditions to participate, with foreseeable and transparent rules of the game, consistent with their reality. Additionally, the necessary cooperation should be provided as an expression of solidarity to enable the small and vulnerable countries to take advantage of the opening of markets that will take place through this integration project. At the same time, they should be given the opportunity to appropriately prepare themselves to face the need to compete on an ever-increasing basis, even within their own borders.

Otherwise, integration proposed on asymmetric bases may once again concentrate trade benefits only for the most developed and best prepared countries, with the customary impact of postponing responses to the aspirations of the weakest. This scenario would in no way be beneficial to the project as a whole, since it would make it unsustainable in the long term.

In the specific case of Bolivia, a country that is subject to the differentiated treatment included in most of the integration agreements in which it participates - since it is a land-locked country of relatively less economic development - full respect for that status is to be expected.

Santa Cruz, September 29, 2000

 
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