The Globe and Mail
March 5, 2001
By Mark MacKinnon

OTTAWA -- With the Summit of the Americas less than seven weeks away, evidence is building that negotiations toward a hemispheric free- trade area are coming unglued.

"The whole thing is fraught with uncertainty," said Sylvia Ostry, an international trade expert at the University of Toronto who is following the negotiations.

"Whether or not there will ever be a deal -- that itself is in question."

First came a worsening of relations between Canada, the No. 1 promoter of a free-trade area of the Americas (FTAA), and Brazil, the crown jewel of the new markets the deal would open. They've been in a trade fight over aerospace subsidies and allegations of mad-cow disease.

Then came a renewed trade spat over softwood lumber between Canada and the United States, one of its key allies in pushing the deal, that left Trade Minister Pierre Pettigrew shaking his head about having to "reinvent the wheel" with the new U.S. administration.

There's also a growing group of protesters opposed to a new free- trade deal -- including many of the same forces that eventually killed the Multilateral Agreement on Investment -- preparing to turn April's Summit of the Americas in Quebec City into a replay of the 1999 World Trade Organization meeting in Seattle.

Those meetings degenerated into a running street battle between protesters and police, with little of substance being accomplished at the negotiating table.

But the strongest evidence of problems, observers say, is found in the draft texts written by nine groups negotiating the framework for the proposed hemispheric trade deal that would encompass the 34 countries in North and South America.

Those texts have yet to be made public, but one person who has seen them described them as having so much "bracketed text" -- areas where the countries couldn't agree -- that they look like "Swiss cheese." Some of the biggest hurdles still to be cleared include: Some Caribbean states derive the majority of their income from import tariffs. Losing those would require the introduction of an income tax system, and they're pushing for aid in setting them up. Mr. Pettigrew has said he would not sign a deal with an investor protection mechanism like the North American free-trade agreement's controversial Chapter 11, which allows corporations to sue countries and, in some cases, get laws overturned. However, there's enormous pressure from the corporate sector to have a Chapter-11 equivalent.

Brazil is reticent about losing its sphere of influence in South America, and is dragging its feet. The government is also extremely upset over how Canada has used the World Trade Organization to force it to change its export-subsidy policies, and is wary about entering into further trade pacts that don't take into account the different needs of the developing world. There is disagreement over whether there should be labour and environmental standards included in the pact. The hemisphere's environment and labour ministers are meeting separately from the trade ministers and are said to be working on separate agreements. This will be the cause that many of the tens of thousands expected to protest the Quebec City meeting will cite for their action.

The biggest determining factor in moving these negotiations along will be whether U.S. President George W. Bush can secure "fast-track" negotiating authority from Congress. His predecessor, Bill Clinton, who sought to see labour and environmental clauses sewn into the FTAA, never could.

If Mr. Bush gets fast-track authority -- which would allow him to hammer out a deal that Congress could vote for or against, but not amend -- the pace of negotiations would pick up immediately and Brazil will be forced to play along or risk being left out of an enormous market. Few are more anxious to see that happen than Canada. With the possible exception of fellow true believer, Chile, the Canadian government is far and away the most enthusiastic about the potential of the trade pact. Canada and Chile are even pushing to have the time line for an FTAA moved up to 2003 from 2005.

But the prospect of a deal has generated little excitement among Canadians. An election came and went, Mr. Pettigrew noted, without the FTAA generating the kind of passionate debate the 1988 North American free-trade agreement with the United States did -- in part because there's much less at stake. About 94 per cent of the goods from FTAA countries already enter Canada duty free, and this deal is more about opening markets to Canadian companies.

"The [North American] FTA was like putting a great big Wal-Mart next door to do all your shopping at," said Michael Hart, who helped negotiate the 1988 deal and now is with Carleton University's Centre for Trade Policy and Law. "This is just another Mac's Milk." Mr. Hart, like Ms. Ostry, believes a deal to be unlikely by 2003 or 2005. More likely, he says, would be a series of bilateral pacts like the one signed between Canada and Chile. "In terms of actually achieving this -- I don't think it's something I can take seriously. They're not ready," he said.

Mr. Pettigrew, however, is optimistic. He just spent a week promoting the deal in the United States, Central America and the Caribbean. While the Americans share some of Canada's enthusiasm for a hemisphere- wide trade pact, smaller nations are wary of what being the junior partners in this massive pact would mean.

Mr. Pettigrew says his motives for promoting the deal are two-fold. On one hand, an FTAA would help Canada lessen its reliance on the United States, where we will still send more than 80 per cent of our exports. At the same time, he sees the deal, which will have a clause requiring that all partners be democracies, as a way of propping up unstable governments in places such as Colombia.

"It's my deep conviction that trade leads to development, development leads to democracy and democracy leads to better human rights," Mr. Pettigrew said in a recent interview from Montreal, where he was meeting with the "civil society" movement set to protest at Quebec City. Winning over those already digging in for the protest may be the hardest sales job of all. Few of the protesters share Mr. Pettigrew's idealism about free trade, and most of them see the FTAA as giving primacy to corporations over citizens.

Some 3,000 to 5,000 RCMP officers -- billed as the largest police presence in Canadian history -- will be on hand for the summit, a number that will likely be dwarfed by those committed to making sure the deal never happens.