U.S. Fails to Dictate Terms of FTAA

Negotiations for the Free Trade Area of the Americas (FTAA) underway in Puebla, Mexico came to a standstill last week, with negotiators from the United States refusing to budge on the key issue of agricultural subsidies. Media reports quote representatives from Brazil, Venezuela and Argentina describing the Americans as intransigent and unwilling to look for solutions to the impasse, largely because of their refusal to commit to reductions in the massive U.S. export subsidies on agricultural products.

The FTAA has been a key goal of American foreign policy since the Clinton administration, when it was proposed as a means to enhance and expand U.S. penetration of the markets of the Americas, particularly in the most populated countries. In the early 1990s, many of the countries of the region were embarking on extensive privatization and deregulation programs and American capitalists were looking to enrich themselves considerably in the process.

However, negotiations for the FTAA have hit several snags, as the Americans have failed time and again to dictate the agenda. While Canada, Mexico and some of the Central American countries have lined up behind U.S. demands, the largest South American countries have not. Leading the opposition have been Brazil and Venezuela, with Argentina, in the middle of a devastating economic crisis, also starting to raise some concerns.

At the Summit of the Americas held in Miami last November, the Americans proposed a watered down agenda for negotiations, dubbed "FTAA-lite" by the media. Under the "lite" proposal, member countries would sign a core agreement, while areas in which no agreement could be reached, such as agricultural export subsidies, would be covered by an optional agreement. The Puebla talks were supposed to result in a framework for the core agreement, so that the watered-down FTAA would still be in place by the 2005 deadline. FTAA-lite would have given the Americans virtually everything they wanted, while protecting U.S. corporate agricultural interests from giving up the export subsidies which are the only thing that make them competitive internationally.

On the world stage, the Americans are locked in a battle with the European Union (EU) over who will control world agricultural production. Within the Americas, however, the U.S. faces stiff competition on the agricultural front from both Brazil and Argentina. Both countries are able to produce agricultural commodities for export at a fraction of the cost of the U.S. Brazil has become an important rival to the U.S. in several areas, including soybeans and beef. In addition, Brazil's wheat industry is developing so rapidly that it may move from an import to export position within a decade, which would leave Argentina, currently Brazil's largest wheat supplier, with millions more tonnes of wheat to export to the same markets that the U.S. is trying to capture. Argentina is also the third largest producer of genetically modified crops (GMOs), an area in which the U.S. is trying to carve out dominance on the world stage.

The Americans were confident they could win key agricultural concessions from Brazil and Argentina through the FTAA process by offering access to the American market for their manufactured goods. They gambled a lot on the FTAA and all indications are that they are about to lose.