News Releases

Apr 22, 2001

President of IDB outlines the multiple conditions needed to ensure that the FTAA contributes to the broader Summit goals of Prosperity, Democracy, and Human Development in the hemisphere

Quebec City, Canada - Inter-American Development Bank President, Enrique V. Iglesias, today observed that the Free Trade of the Americas (FTAA) process has made much progress since being launched by our Heads of State in the Miami Summit of 1994. In the third Hemispheric Summit here in Quebec City Heads of State will see that the FTAA process has generated a draft bracketed text of an agreement, established dates to initiate product and sectoral negotiations for trade liberalization, agreed to finish overall negotiations by January 2005 and to seek national ratification of the FTAA agreement by the end of that year.

Mr. Iglesias also commented that the FTAA process has broken historic new ground in transparency through its recommendation to Heads of State that the bracketed text be released to the public and by setting out strengthened FTAA mechanisms for on-going communication with civil society about the negotiation process itself and hemispheric integration. These decisions " will set out an important example of how to enhance transparency in future trade negotiations in the hemisphere and the world", he said.

Our Hemispheric Summit initiative strives to promote a strengthening of democracy, economic stability and prosperity with poverty reduction, social justice and equity. Mr. Iglesias remarked that there is wide recognition that economic growth is an essential ingredient for achieving this important goal. Moreover, history has shown repeatedly that without growth in our countries all these broader social goals of the Summit would be put into jeopardy.

The President of the IDB observed that "the FTAA is not an end in itself but rather a tool to stimulate sustained growth and accompanying institutional change which in turn will support the countries of the hemisphere in their efforts to develop a better life for all their citizens in an environment of peace and democracy". Experience has shown that trade can contribute to achieving growth, employment, development, peace and democracy through supporting economic expansion, modernization and increasing interdependence. Indeed, much of the world’s economic and social progress has been linked to periods of strong growth in international trade and investment and it is the geographic areas and countries which have been relatively less touched by these forces that have tended to stagnate, be plagued by undemocratic political processes, conflict, economic instability and unemployment with consequent backwardness, poverty and extreme inequality.

The promise of the FTAA is the stimulation of a more rapid spread of new trade and investment in the hemisphere than could be expected under current world commercial relations. This will be done through the establishment of a consensual and regionally designed framework of mutual rights and obligations, which will reciprocally open markets among our 34 countries and establish institutional arrangements with predictable rules governing commercial interaction. Mr. Iglesias noted that "through our governments’ deliberate efforts to improve regional policy cooperation in the hemisphere, the forces of globalization can be potentially harnessed to better serve our nations’ interest in achieving the international competitiveness, growth and prosperity that is essential to support and sustain the ambitious social development objectives of this Summit."

Mr. Iglesias emphasized the word "potential" because he said that "an FTAA alone will not guarantee prosperity for all our citizens. The FTAA will deliver the expected benefits only if accompanied by other effective complementary actions at the national, subregional, hemispheric and international levels".

Iglesias said that the first and foremost action is the responsibility of our individual governments whose policy must condition the forces of trade and investment in order to channel their fruits to the benefit of society as a whole".

First, a good and sustainable FTAA agreement will require a good negotiation by each and every member of the FTAA process. Hence Iglesias said that "countries must technically prepare themselves for a complex and difficult sectoral and product trade negotiation to ensure that the FTAA agreement exploits national opportunities for more and better trade as well as provides the space for necessary and socially responsive adjustments of firms, sectors and their labor forces. This will moreover require effective coordination with the private sector, labor and civil society more generally".

Second, he emphasized that "national policies and institutions must respond now and over the prolonged phase-in period of the FTAA with mechanisms to support industrial reconversion and social safety networks for the disadvantaged as well as invest in education and good governance to ensure that all citizens will have the opportunity to benefit from the opportunities for socio-economic modernization that an FTAA will offer. Countries also must protect a sustainable macroeconomic environment conducive to competing in an FTAA and the world economy more generally."

Meanwhile, Mr. Iglesias highlighted the need for deepening subregional integration because these regional schemes are clearly a building block for a more dynamic FTAA as they facilitate competitiveness and attend to neighborhood issues that cannot be effectively dealt with in a forum of 34 countries with diverse interests and circumstances.

President Iglesias also highlighted the need for collective solidarity in an FTAA. "The collectivity of governments in the FTAA must give the highest commitment to achieving a real effective balance in the agreement, which includes attention to the fact that capacities to negotiate and exploit the opportunities of trade are extremely uneven in the hemisphere and especially difficult for smaller economies." He said particular attention must be given to ensuring that the FTAA advance the long delayed cause of opening up sectors in which developing countries like those in Latin America and the Caribbean have a comparative advantage –e.g., agriculture, food processing, textiles, basic metals, etc.– and disciplining trade distorting practices in key markets. He said that only by guaranteeing these opportunities will the developing countries of the hemisphere be in a condition to advance the opening up of other areas where the most developed member countries of the FTAA have clear advantages and interests.

In the opinion of Mr. Iglesias, the FTAA partners also must support institutional arrangements that monitor and support an equitable distribution of benefits in an FTAA and the Summit process more generally. Inevitably these institutional arrangements must include facilitation of resources to support capacity building, social adjustments and industrial reconversion.

Finally, he observed that advancing the agenda of international forums such as the WTO and ongoing efforts to improve our international financial architecture to minimize financial volatility also are an important part of the equation for a successful FTAA.

Clearly, for the FTAA to contribute to the promise of a more prosperous, peaceful, democratic, and equitable hemisphere work must be done at many levels. Mr. Iglesias said that we all must work together for this goal and he stressed that the Inter-American Development Bank stands ready to accompany its member countries in this historic task.

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