Free Trade Area of Americas is NAFTA on a grand scale

<a href=www.stltoday.com>SLDispatch, By REPPS HUDSON Post-Dispatch updated: 05/22/2003 06:06 PM

January 2005 is the date that trade negotiators for 34 Western Hemisphere nations have set to create the massive framework for the Free Trade Area of the Americas, from the tip of South America to the Arctic Circle.

"The FTAA is the big game," Assistant Commerce Secretary William H. Lash III said during a luncheon Wednesday at the Frontenac Hilton attended by representatives of small and mid-sized businesses, which are interested in expanding trade with Latin America.

The concept is similar to the North American Free Trade Agreement between the United States, Canada and Mexico - but on a grander scale.

The key to getting the FTAA framework ready for congressional approval is bilateral trade talks with Brazil, Lash said. Discussions are continuous, he said, "like a floating crap game" held in various sites throughout the hemisphere.

Brazil is South America's largest nation and economy, with 170 million people and a gross domestic product of $1.32 trillion. The 34 nations involved in the FTAA talks have a combined 800 million people and a total gross domestic product of $12 trillion.

The GDP of the NAFTA nations is $9.6 trillion, with 400 million people.

Now, Lash said, the focus is on cementing a trade pact between the two largest economies in the hemisphere: Brazil and the United States.

"You don't bully Brazil. You educate them," Lash told about 50 people at the luncheon, part of World Trade Week.

He said the United States and Brazil, with other nations following the talks closely, can be expected to hammer out a trade pact that will lower tariffs and other trade barriers over roughly a 10-year period. It will be patterned along the lines of NAFTA, which dropped barriers among the three participating nations.

While NAFTA continues to be a sore point with some environmental, human rights and labor groups, many economists and politicians say it is raising the overall standard of living for residents of the three countries.

Much of Latin America south of Mexico is being grouped into three customs unions or trade zones: the Central American Free Trade Agreement (Honduras, Guatemala, El Salvador, Costa Rica and Nicaragua); Mercosur (Argentina, Brazil, Paraguay and Uruguay), and the Andean Community (Bolivia, Colombia, Peru, Ecuador and Venezuela).

Lash, who is assistant secretary for market access and compliance, is a lead administration official in the effort to ensure that U.S. trading partners live up to their trade-pact commitments.

He said when Brazilian and U.S. negotiators resolve their differences, other Latin American countries, which already have begun to harmonize their trade policies through the regional agreements, can be expected to get on board.

He said Congress could ratify the pact as soon as 2005 under the new up-or-down trade promotion authority, or fast-track trade authority.

Congress gave the administration the power to negotiate trade agreements without later amendment during the ratification process. This authority gives other nations more confidence when they negotiate pacts with the United States, Lash said.

Key among the issues separating the United States and Brazil, Lash said, are protectionist measures for citrus fruits and juices and for sugar. They are global commodities, but both countries have vested interests that want to keep out citrus and sugar imports. Another big issue is intellectual property rights, particularly regarding compact discs, DVDs and computer software.

During a panel discussion on doing business in Latin America, Stewart Dahlberg, manager of the one-man department of export sales for J.D. Streett & Co. Inc., told how he spent hours searching the Internet and using the Commerce Department Web site to locate niche markets. His company, a privately held oil-products wholesaler, has been in business since 1884. But in recent years, it has begun to search for markets abroad.

Dahlberg said he spends a lot of time preparing for sales trips, and he worries over the details that can spell success - or failure.

"I don't want to travel without getting something back," he said.

If the Free Trade Area of the Americas materializes, Dahlberg said, it will be good for his business. At present, among his biggest concerns are the exchange rate and tariffs. He said not being able to speak Spanish or Portuguese is not a problem. He always asks for payment or a letter of credit "up front."

"The scariest part is losing someone (a former business partner) and never knowing why," Dahlberg said in an interview.

Sponsors of the trade meeting included the Commerce Department, Missouri's Office of International Trade, the World Affairs Council, the Regional Chamber & Growth Association and the University of Missouri at St. Louis' Center for International Studies, as well as US Bank and Webster, St. Louis and Southern Illinois universities.

Reporter Repps Hudson: E-mail: rhudson@post-dispatch.com Phone: 314-340-8208