Moving
Forward with the Free Trade Area of the
Americas
Notes for an address to the Canadian Council
of the Americas
by Hon. David Kilgour, Secretary of State
(Latin America & Africa)
November 26, 1999, Palliser Hotel, Calgary
It is a pleasure
to meet again with the Canadian Council of
the Americas. When I talk to members of this
organization, I know I’m preaching to
the converted. We share enthusiasm for our
blossoming relationship with the Americas.
You appreciate the business opportunities
in this hemisphere of 800 million people with
a combined GDP of U.S. $10 trillion. Many
of you are already out there in the pampas,
mountains or jungles of Latin America blazing
new trails for Canadian business.
Hemispheric
integration is moving forward and some of
the people in this room are part of it.
That is why we can all be pleased with recent
progress in the long road toward a Free
Trade Area of the Americas by 2005.
Earlier this
month, Canada concluded its 18-month chairmanship
of the FTAA negotiations with a meeting
in Toronto of trade ministers from the 34
participating countries. We as Canadians
can be proud of our leadership in advancing
the negotiating process. We have come a
long way from its initial stages at the
Santiago Summit of the Americas and the
meeting of trade ministers in Costa Rica,
both in spring 1998.
Business
Facilitation Measures
This month’s meeting of trade ministers
produced a 32-point declaration discussing
progress so far and setting out a map of
where to go from here. Most significantly,
agreement was reached on a package of business
facilitation measures that will have a positive
impact on companies doing business in the
Americas – not in 2005, but starting
in 2000. These measures will simplify customs
clearances, and also make rules and regulations
more transparent. This is tangible progress
and a key benchmark.
The meeting
also produced a strongly worded hemispheric
message to send to the WTO talks in Seattle
next week, calling for the elimination of
agricultural export subsidies and other
trade distorting practices. It is a sign
that the countries of the Americas can speak
with a common voice on key international
trade matters.
There was
also agreement in Toronto to continue engaging
civil society in the process at the hemispheric
level. Not all countries have been as enthusiastic
as Canada and the United States about involving
civil society. Increasingly though, there
is recognition that if the FTAA is to be
successful, citizens must be engaged in
the process. We recognize that trade policy
does have a social dimension and there are
genuine concerns in various quarters about
the impact of globalization. If we are to
move the process along, we must be prepared
to engage in frank and honest discussion.
When my colleague Trade Minister Pierre
Pettigrew met with representatives of civil
society in Toronto, he was joined by a number
of other trade ministers from the hemisphere
who increasingly recognize the need for
this dialogue.
Perhaps most
important of all, however, is that contained
in the 32-point declaration produced by
the trade ministers are clear directions
to negotiators on where they would like
to go next. Ministers specifically mandated
their officials to develop a draft text
of an FTAA agreement for the next trade
ministers’ meeting in a year and a
half. This is an exciting prospect. In January
negotiators will begin this work, with the
resumption of meetings in Miami of the nine
FTAA negotiating groups, covering a range
of sectors and issues. Also meeting will
be the three special groups addressing broader
issues – civil society, electronic
commerce, and smaller economies. Canada
is now handing over the chair of negotiations
to Argentina for the next 18 months, but
we have left a solid institutional foundation
firmly in place. Argentina hosts the next
meeting of trade ministers in Buenos Aires
in April 2001 – setting the stage for
the third Summit of the Americas to be held
shortly afterwards in Quebec City.
Reconciling
Diverse Interests
The FTAA is an ambitious project, but a
very important one. For business and trade
relations to flourish throughout the hemisphere,
clear, consistent, predictable and transparent
rules are a must. Strengthening the rules-based
trading environment is the object of this
exercise. It’s not easy. The 34 democracies
of the hemisphere include rich and poor,
small and large, developed and developing
– from the enormous United States to
small Caribbean island nations. Reconciling
the interests of such diverse countries
requires genuine sensitivity and willingness
to compromise. Canada has been sensitive
to the particular needs of its neighbours.
One of the
key principles of the negotiations is that
the final agreement must be adopted as a
"single undertaking" by all countries.
This means that countries cannot pick-and-choose
among the various chapters or provisions
of the agreement. Rather, they must accept
it on an "all or nothing" basis.
It seeks
to maximize market openness through a balanced
and comprehensive agreement. In some areas,
it will chart new territory, and yet it
will be consistent with the rules of the
WTO. While the FTAA and WTO are separate
processes, they cannot work at cross purposes.
The FTAA includes some areas not currently
under the WTO, such as a common investment
regime, government procurement, and competition
policy. It therefore is breaking new ground.
To a trading
nation such as Canada, it is essential to
have open markets throughout the hemisphere.
Today one in three Canadian jobs depends
on trade. Now 43 per cent of our GDP consists
of exports – a significantly higher
percentage than in any other G-8 country
– and up from only 30 per cent just
five years ago. Since 1993, our trade performance
had exceeded domestic growth by nearly two
to one. A very significant number of the
more than 1.9 million new jobs created in
Canada since 1993 have come from export
growth. Every billion dollars of exports
sustains about 11,000 Canadian jobs. Trade
then is the key to our economic wellbeing.
Canada has a particularly important stake
in the successful negotiation of the FTAA.
Regional
agreements such as the FTAA help to build
on and lock into place the accomplishments
and momentum of trade liberalization in
recent decades. Much progress has already
been made through unilateral measures as
well as sub-regional trade agreements. It
is now important to extend the benefits
to the hemisphere as a whole.
Co-existence
with Sub-Regional Agreements
Around the time that FTAA negotiations began,
I was asked whether smaller regional trade
blocs are a bridge or a barrier to hemispheric
economic integration. My answer then was
the same as it is now – Canada firmly
is on the side of those who believe that
sub-regional trade blocs are an important
bridge – not only to an FTAA, but to
improved hemispheric relations in general,
and a better global trading environment.
We advocate the "co-existence"
of the FTAA with sub-regional agreements
because they are stepping stones to regional
integration and a more open multilateral
system.
Given Canada’s
own successful experiences with smaller
free trade agreements, why should my answer
be different? First in 1988 we concluded
the two-way Free Trade Agreement with the
United States. Then in 1993 with NAFTA we
added Mexico. Canada had hoped to include
Chile in NAFTA, but when the U.S. Administration
failed to win fast-track authority for this
from Congress, Canada concluded its own
bilateral free trade agreement with Chile.
We have also made advances in our relations
with other sub-regional trading blocs, including
MERCOSUR, Central America, the Andean Community
and CARICOM.
These sub-regional
trading blocs are not only proliferating
in the Americas, but ties are being built
between these different communities. Most
important to the larger objective, they
serve as a learning process for smaller
countries, stripping away decades –
in some cases centuries – of protectionism
and inward-looking development policies.
Not only do negotiators from individual
countries gain technical expertise through
the process of working out sub-regional
arrangements. These agreements also help
smaller countries begin the adjustment process
to more open economies. Obviously trade
liberalization has a bigger impact on a
small country such as Trinidad, with 1 million
people, than on a large country such as
the United States with a domestic market
of 260 million.
We cannot,
however, allow the development of sub-regional
trade blocs to become a pretext for slowing
down the FTAA process itself. Sub-regional
blocs must be seen as stepping stones to
hemispheric integration, but not as the
final goal.
In our own
experience, for example, Canada learned
from the process of negotiating dispute
settlement mechanisms with the United States
in the FTA of 1988. These mechanisms have
worked well, and are one of the reasons
why our bilateral relationship has been
so successful, even though we are dealing
with an economy ten times our size. Canada
is able to share this knowledge with other
countries that have similar concerns. We
know first hand how important it is that
smaller economies are not held hostage to
the whim of larger ones. Indeed, the FTAA
process provides many opportunities for
sharing Canadian expertise.
Building
on Already Strong Relationships
NAFTA has made Canadian companies more aware
of commercial opportunities in Latin America
and the Caribbean. By developing products
and services for the Mexican market, companies
have developed greater expertise applicable
to Latin America more generally. It makes
sense to build on relationships that are
already strong.
Let’s
look, for example, at Calgary-based Alternative
Fuel Systems Inc. This company over the
next decade will convert Mexico’s entire
public vehicle fleet of more than 100,000
micro buses and taxis from gasoline to compressed
natural gas. Those of you who have experienced
the smog of Mexico City will appreciate
how this will improve pollution levels.
While improving the environment, this company
is also creating 400 to 500 new jobs for
Canadians. The company’s vice president,
Arie van der Lee, says NAFTA has played
an important part in removing trade obstacles
and allowing such projects to move forward.
NAFTA has
made a big difference to Canada’s trade
with Mexico, our largest trading partner
in Latin America. Canadian exports to Mexico
rose by nearly 25 per cent in 1998 alone;
they have risen fully 127 per cent since
NAFTA began nearly six years ago. Trade
has expanded in both directions, and Canada
is now Mexico’s second-largest export
market after the United States. Canadian
investment in Mexico quadrupled between
1993 and 1998. What we have achieved in
Mexico with NAFTA, we can also achieve in
the rest of the Americas with the FTAA.
As business
people and others interested in our expanding
trade with the Americas, there is a direct
role for you in the process. Our consultations
with the business community have been many-faceted.
The Fifth Americas Business Forum was held,
of course, in Toronto as a lead-up to the
trade ministers’ meeting. About 1,000
business people from 26 countries of the
Americas attended. Since the First Americas
Business Forum in Denver in 1995, the ABF
has met on four occasions, immediately preceding
FTAA Trade Ministers Meetings. Recommendations
from each of these forums have added important
perspectives to the FTAA process.
Convincing
Canadians of the benefits of globalization
is an important challenge. To be successful,
Canadians generally must be involved in
the process. Trade Minister Pettigrew has
talked of putting a "human face"
on globalization. This means recognizing
that economic and social policies are two
sides of the same coin. Canada has long
advocated the benefits of free trade while
guarding against the negative effects of
a global economy. Globalization can become
a "virtuous circle" where economic
gains generate social benefits. At the same
time, human development is essential if
we are to provide the workers geared to
the new knowledge-based economy. In a sense,
the FTAA is partly about managing the impacts
of globalization.
Consulting
Civil Society
The FTAA Committee of Government Representatives
on the Participation of Civil Society was
a Canadian initiative aimed at making the
process more transparent and broadening
public understanding and support for the
FTAA. Many written submissions have already
been made to the committee from members
of civil society. It was decided at the
ministerial meeting in Toronto that this
process of consultation should continue.
It is important that constructive comments
be considered from a broad spectrum of society,
including the business community, labour,
environmental and academic groups.
The Canadian
government has also initiated comprehensive
consultations of its own with the Canadian
private sector and other concerned members
of civil society. A project of the scope
of the FTAA will affect Canadians in many
ways. Before Canadians will support it,
they must be assured that fundamental interests
and values will be respected, such as protection
of the environment, labour standards, human
rights, and other social concerns.
Your engagement
is vital to the growing public debate on
the merits of trade liberalization. Many
of you already have positive experiences
with hemispheric trade. I hope that in sharing
them you will inspire others. You can add
believability to this message. Make your
voices heard, and speak out for trade liberalization
at every opportunity.
I call on
you then to redouble your efforts in shaping
the future of this hemisphere.
Earlier this
year, Colombian author and Nobel Literature
Prize Winner Gabriel García Márquez
expressed this view for the new millennium:
"Do not expect anything from the 21st
Century; it is the 21st Century that expects
everything from you. It is a century that
does not come ready-made, but rather ready
to be forged by you, and it will only be
as glorious as the limits of your imagination."
In the next
century, the rest of the Americas will become
an even more important part of our lives,
as the neighbourhood draws closer. As business
people already engaged in the Americas,
your leadership and inspiration in forging
the next century is absolutely vital.
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