The next stage in the expansion of freer trade is getting underway this month in Santiago, with the formal launch of negotiations towards a 34 nation Free Trade Area of The Americas (FTAA).

Canada has a real stake in these negotiations. In parallel with widespread political liberalization, Latin America has witnessed a sea change in the direction of economic and trade policy over the past two decades from economies based on a closed, import substitution model to a model much more open and market-oriented. This shift is best illustrated by the example of tariffs, which have fallen from an average of forty percent in 1980 to eleven percent today.

Over the past decade, Canadian exports to key Latin American countries have benefitted greatly from this more open and market-oriented approach to trade policy. Stagnant or growing only slowly through much of the 1980s, Canadian export growth to selected larger Latin American markets has been strong throughout the 1990s.

Trade and investment liberalization is a motor for sustained economic growth and development. The political and economic reforms in Latin America that have fuelled this decades-strong growth are not, however, irreversible. The creation of an FTAA should at least ensure that the region does not retreat from its welcome commitment to the principle of open markets.

FTAA negotiations may also provide a jolt of energy to broader multilateral talks in the World Trade Organization, which is set to begin negotiations on agriculture in 1999 and services in the year 2000. There is also the possibility of even broader negotiations to start the same year (a WTO “Millennium Round”).

The FTAA negotiations are one of four pillars of the Santiago Plan of Action. The other pillars deal with education, democracy and human rights, and the eradication of poverty. Miami has been selected as the site for the first three to four years of FTAA negotiations. Canada has been selected as the first Chair of the Trade Negotiations Committee, which will oversee the work of nine separate working groups on: market access; investment; services; government procurement; dispute settlement; agriculture; intellectual property rights; subsidies, antidumping and countervailing duties; and competition policy. A separate committee is being set up to hear the views of business, labour, environmental, and academic groups.

THE CHALLENGE FOR BUSINESS

Business commitment to the FTAA negotiations throughout the hemisphere is strong. In March, over 1,500 senior business leaders from across the Americas met in Costa Rica at the IV Business Forum for the Americas, where they provided government leaders a range of advice and recommendations on how to bring about a successful FTAA. Governments understand full well that without business support for the FTAA process, it will be difficult to stimulate the broader public support necessary to carry through the FTAA to a successful conclusion.

BCNI President and Chief Executive Thomas d’Aquino addressed participants at the Business Forum, stressing the need for business leaders to articulate to their broader publics the social and environmental benefits of rules-based trade and investment liberalization, in addition to the positive impact of liberalization on economic growth.

He pointed out that fears of the undesirable consequences of globalization (trade and investment agreements are often seen as the “instruments” of globalization) needed to be addressed head on: 1) by exposing unfounded fears, such as those suggesting a “race to the bottom” for environment and labour standards as a consequence of trade and investment agreements; and 2) by ensuring that broader hemispheric economic integration proceeds hand-in-hand with stronger social integration.

NEW TECHNOLOGY, NEW NEGOTIATING PROCESS

The FTAA will be negotiated at a time when the full influence of one of the most powerful new technologies of our time, the Internet, is beginning to be felt. It is somewhat ironic that this new technology, developed by businesses in a largely deregulated sector, is at present used in discussions about trade and investment liberalization most effectively by individuals and groups which often are hostile to further trade and investment liberalization.

Canada’s business community, and indeed business communities throughout the Americas, will need to harness the communicative power of the Internet in a much more sophisticated way than they have done in the past. This will be important not only to explain the benefits of trade and investment in the context of the Americas, but to address the arguments of those who make constant use of this exciting new technology to preach the evils of a more open and competitive world.

CANADIAN BUSINESS AND THE FTAA

The enthusiastic business participation in the Team Canada Mission to Latin America earlier this year, and the impressive growth in Canadian exports and foreign direct investment are adequate testimony that Canadian business sees strong and growing opportunities throughout the Americas. An FTAA can serve as a useful trade policy bulwark to the ultimate objective of continued trade and business development (and thereby to sustained economic growth and development throughout the region).

The FTAA negotiations are just beginning. As a mid-sized economy, Canada has long known the benefits of an early and sophisticated commitment to complex trade and investment negotiations. Now is the time for Canada’s business leaders, individually and collectively, to highlight for their own government and indeed for governments throughout the Americas, the key elements which need to be included in any agreement for it to be assured of ultimate success.