Regional
Trade Blocs: Building Bridges to FTAA
Comments to Council of the Americas - Washington
Conference
by David Kilgour, Secretary of State (Latin
America & Africa)
May 11, 1998
Are regional
trade blocs a bridge or barrier to the goal
of a larger Free Trade Area of the Americas?
Canada is
firmly on the side of those who believe
regional trade blocs are an important bridge
– not only to an FTAA, but to improved
hemispheric relations in general, and to
a better global trading environment. The
objective we must always keep in mind is
freer trade in the Americas.
Canada has
pursued regional trading arrangements and
bilateral agreements at the same time as
we have pushed forward in hemispheric and
global arenas. We advocate the "co-existence"
of the FTAA with regional and sub-regional
agreements because they are stepping stones
to regional integration and a more open
global multilateral system. The different
tracks of our policy are by no means mutually
exclusive. They are complementary.
Our first
bridge we built was to the United States
– the planet’s largest economy,
and already by far our largest trading partner,
a longstanding friend and ally. There are
very few secrets in Washington. Today let
me share with you one of Washington’s
best kept secrets – the NAFTA is working.
Trade between Canada and the U.S. has more
than doubled in the ten years since we implemented
our bilateral FTA. Our two-way trade is
now more than one billion dollars a day.
The increase alone in U.S. exports to Canada
in 1997 over 1996 was greater than U.S.
exports to countries like China, France
or Italy.
Our next
bridge, NAFTA in 1994, added Mexico to the
relationship, and was an expression of Canadian
desire to reach out to Latin America. With
NAFTA we faced and are meeting the challenge
of reconciling the interests of nations
with vastly different economies. Again,
this experience has provided many lessons
that will serve us in the next seven years
as we move toward the FTAA.
For our next
bridge, Canada hoped to include Chile in
NAFTA. We refused to be held back when the
U.S. Congress declined to give the Administration
fast-track authority to negotiate a wider
agreement. Instead, Canada concluded by
itself a bilateral free trade agreement
with Chile, largely based on the NAFTA model.
Our bridge to Chile gives us a significant
link with South America, which is a major
market for us.
We have intensified
discussions with MERCOSUR aimed at reaching
a Trade and Investment Cooperation agreement
with it. Recently Canada signed a memorandum
of understanding on trade and investment
with Central America, and we have begun
a dialogue with the Andean Community. Of
equal importance is our historical relationship
with the CARICOM countries, ties that we
continue to build.
Canada’s
experiences with regional trade arrangements
have been overwhelmingly positive, and we
support them as long as they are consistent
with a future FTAA. My Brazilian colleague,
Under-Secretary Graça Lima, will
no doubt agree, given the success of the
MERCOSUR arrangement. So not only are sub-regional
agreements proliferating throughout the
Americas, but more importantly bridges are
being built between the different regional
trading blocs.
Why –
one could ask – go through the extra
steps of building regional trade blocs?
Why not bring the countries of the Americas
together and hammer out a single agreement
with the same rules for everyone? And how
do we arrive at an FTAA anyway? These are
good questions, because the ultimate goal
is to bring all countries of the hemisphere
into a common agreement. But we must not
confuse the goal with how we get there.
A page of history trumps a volume of logic.
Regional
trade blocs are a learning process for all.
Canada has gained many valuable experiences
from the FTA and NAFTA. I point to the dispute
settlement mechanism that Canada negotiated
with the United States in the FTA of 1988.
It has worked, and it is one of the major
reasons why our bilateral relationship has
been so successful even though Canada’s
relationship is with an economy ten times
our size.
That brings
us to another key reason why regional trade
blocs are a desirable – some might
say necessary – bridge to a hemispheric
FTAA. The 34 nations involved in the FTAA
process are of varying sizes of economies.
How does Trinidad, for example, with 1 million
people trade freely with Brazil with 160
million, or the United States with more
than 260 million? Regional trading blocs
have provided a means for smaller and less
developed economies to open up and face
the competition of international markets
in stages and within larger entities.
Canada has
long been a champion of the smaller economy
countries and we understand their concerns
about their ability to participate in the
FTAA negotiating process. As chair of the
Trade Negotiations Committee, Canada will
work closely with the Consultative Group
on Smaller Economies and will listen attentively
to its views. We are also providing technical
assistance to improve the negotiating capacity
of smaller economy countries in the hemisphere.
We know that the FTAA is a large undertaking
for these countries and it will require
special provisions in the implementation
phase. Canada is prepared to consider, on
a case-by-case basis, the special needs
of smaller economies. At the end of the
day, however, all countries must have the
same rights and obligations.
How then
do we see the road ahead? What challenges
do we still need to face? One of the major
ones is the lack of fast-track authority
for the U.S. Administration to negotiate
the FTAA. Another is persuading our respective
civil societies that freer trade is a winning
proposition. I say this knowing that many
of you, especially from the business community,
strongly support the FTAA and are applying
all the pressure you can to obtain fast-track
authority as soon as possible. The present
lack of fast-track authority must not stop
us from moving forward in a seven-year process.
It is an obstacle, but not an insurmountable
one. Americans though must ask themselves
why an entire hemisphere would engage in
the complex negotiations of the FTAA when
the commitment of the largest economy is
in doubt. Canada, and probably every other
country in the Americas, wants to see fast-track
approved early in the talks. No one wants
to negotiate twice.
Canada is
proud to chair the Trade Negotiations Committee
over the next 18 months. As chair, Canada
is developing a "Chairman’s Paper"
which will be distributed within days to
governments throughout the hemisphere. It
will outline our proposed work plan for
the coming 18 months and will be the focus
of our discussions at the first trade negotiations
committee meeting in Buenos Aires on June
17th and 18th of this year.
As chair
in the first critical months, one of our
major goals will be to get the message out.
We must ensure that the private sector is
kept informed on the issues and progress
achieved. It is essential that public opinion
be brought with us. Canada has taken a proactive
approach in engaging our own civil society
in the FTAA process, and we have consulted
with many groups. We have found that, in
the end, we have the same goal – a
strong, vibrant economy and good jobs for
our people. As chair, Canada will do whatever
it can to ensure that the Committee on Civil
Society – which we welcome – is
successful in its mandate to engage constructively
our own civil society on FTAA issues. This
includes business, labour, environmental
and academic groups. In the months leading
up to Santiago, our government undertook
a number of forums and public consultations
across the country with civil society. This
spirit of consultation must continue.
Our efforts
are about more than trade. At Santiago and
in other discussions, we have committed
to address improving education and training,
eradicating poverty and building democratic
institutions.
The FTAA
process has already borne fruit. It has
brought about cooperation in the hemisphere
to an extent that didn’t exist previously.
Since the talks began, there has been an
unprecedented exchange of information and
data on trade regulations, regimes, and
market access. Trade talks are breaking
out everywhere. The FTAA process has spurred
regional trade talks and vice versa. Do
not the different discussions build on and
reinforce one another?
Regional
trade blocs build stronger and more vibrant
economies in the region. The development
of trade blocs is preparing a hemisphere
of trade-savvy professionals to negotiate
the wider agreement. They help to educate
professionals of smaller economy countries
for the negotiations that lie ahead with
the FTAA and WTO.
Canada is
excited about its future as a member of
the hemispheric family. The next trade ministers
meeting, hosted by Canada, will be pivotal
in the success of the FTAA process.
Prime Minister
Chrétien summed up our evolving relationship
with the hemisphere in his remarks at the
closing of last month’s Summit of the
Americas in Santiago. "It is clear,"
he said, "that we are becoming something
more than amigos. We are becoming una gran
familia."
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