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FTAA.soc/civ/59
July 5, 2002

Original: English – Spanish
Translation: non FTAA Secretariat

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

CONTRIBUTION IN RESPONSE TO THE OPEN AND ONGOING INVITATION


Name(s) Ricardo A. Vanegas
Organization(s) Corporacion Bucaramanga Emprendedora (CBE) : Franco y Alfredo
Country Colombia

Financial Global Process Inside A Global Market Process: The Next Challenge

In 1992, European Monetary System (EMS) fell into bankruptcy because of several speculative operations performed by both local and international financiers. This shock to the system delayed European Union launch, nevertheless chancellors agreed on convergence criteria that leaded towards Euro, Central Bank Of Europe and a formidable new economy whose barriers made other countries to join its neighbor. The Americas could face a similar task if a free trade area is not getting along with certain swap instruments and financial policies, the damage for some Latin American states would not be easy to get over, but the answer is not a law against equity movements.

Some general suggestions and directives based on market, professional, corporative and the author’s comments are showed below:

    * As a first view, there are two common currencies through the area: Eastern Caribbean dollar and US dollar.

    * Such currencies have helped to enforce commerce among those guest nations; there is no external exchange rate.

    * The former flows on several countries from the West Indies, the latter flows on USA (continental and associated   territories), Panama, Ecuador and some countries from Central America are on their way to employ US Dollar as domestic cash. Some economies are experiencing monetary integration while commercial integration.

    * As an economic fact, if it is our main interest to speed up this trading block in order to succeed as a whole market, we will achieve such goal with a few internal exchange rates and not nowadays’ mixture.

* It is well known by the members of this community how strong dollar is compared with other currencies inside Americas, though it would be risky deploying this as a common currency during a recessive, depressive or an uneven cycle within USA economy, the best of all scenarios would be a new common coin.

* The role of central banks as mint or green houses would not disappear, as it could eventually happen if all national authorities embrace an already issued bill.

*  GAAP (General Accepted Accounting Principles) must be general and widely applied as stated in relation to banking and financial sector, foreign trade needs fundamentals from Basle Committee regarding this matter.

*  Several sub-economies within the area are ruled mostly by commercial banks assisted by governments, that is, there is no equity or treasury markets scattered by the market itself. Investment and Development banks, on a way or another, lend funds to exporters; but even in this case regulations entangle the thorough process.

*  Some laws and agreements should arise to release money flows among FTAA members, the idea behind this statement will improve goods and services interchange by decreasing some unhandy and bureaucratic costs.

*  A regional financial unity is the key to our endeavors. Speculators are plenty of resources able to cause harm to FTAA by filling economies with uncertainty and high degrees of volatility; portfolio investment ought to have first class surveillance not conservative restrictions and limitations, otherwise there is no value added.

More than a trading block FTAA should evolve toward an economic union, because the Global Process demands integration of minor economies, thus, survive and compete. Furthermore, world markets tend to reward those players able to play in group, to be financially orthodox and to have efficient and fair financial markets; it would not be worth it going on FTAA without managing equally methods, procedures, levies, taxes, and additional technical regulations referred to international trade and money flows.

It is compulsory and mandatory the fact to ease and relax commercial conditions inside the Americas’ agreement.

Finally, some states have to foster and endow internal financial markets of democracy as a remarkable instrument warranting access to every investor. Foreign trade is driven by two general principles: reciprocity and cooperation,which might not work unless speakers of the house endorse two basic protocols: an economy whose engine be free enterprise and the right of all the people to reach wealth.

 
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