The Inter-American Development Bank will continue to provide financial and technical assistance to borrowing members as they enter the final stages of negotiations to create a hemispherewide free trade agreement, IDB President Enrique V. Iglesias said at the Summit of the Americas held April 20-22 in Quebec, Canada.
At the summit, presidents and prime ministers from Western Hemisphere nations agreed to finish negotiations for the Free Trade Agreement of the Americas (FTAA) by the year 2005. The leaders also pledged to make democratic rule an indispensable requirement for participation in this new free trade area that would encompass 34 countries with a combined GDP of $11 trillion and 800 million inhabitants.
The IDB has supported the hemispheric trade integration process since it was launched at the first Summit of the Americas, held in Miami in 1994. Besides supplying resources for the FTAA’s Administrative Secretariat, the Bank has participated in a Tripartite Committee with the Organization of American States and the U.N. Economic Commission for Latin America and the Caribbean that has provided assistance to the negotiations in such key areas as market access, agriculture, government procurement and investments.
The IDB has also supported the FTAA’s deliberations on small economies and civil society. More recently, it created a special fast-disbursing line of credit for borrowing countries that need to beef up their trade negotiating institutions and teams.
Iglesias said the Bank would step up such efforts as Western Hemisphere nations enter the final rounds of negotiations for the trade pact, which are expected to be more daunting than the earlier ones. The IDB also plans to carry out a number of regional projects that would buttress other goals in the Summit of the Americas’ Action Plan, including democracy and good governance, poverty reduction, sustainable development and access to new technologies.
In his speech at the summit, Iglesias urged governments to strive to ensure that benefits derived from the hemispheric trade pact are shared fairly among the peoples and the countries of the Americas.
"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," he said.
Throughout history, Iglesias pointed out, economic and social progress has been linked to periods of strong growth in international trade and investment. On the contrary, countries that remained in isolation tended to suffer stagnation, strife and tyranny, with their inevitable complements of poverty, inequality and underdevelopment.
While this holds true today, Iglesias said, the FTAA alone will not guarantee prosperity for all citizens of the Americas. "The agreement will deliver the expected benefits only if it is accompanied by other effective complementary actions at the national, subregional, hemispheric and international levels," he added.
Protests and proposals. While government leaders convened behind the high walls of Quebec’s old town, thousands of demonstrators took to the streets to protest against globalization in general and the FTAA in particular. A small number of the protesters resorted to violence to try to disrupt the summit. As in other recent international events, media coverage tended to link the images of hooded, black-clad youths hurling rocks and charging at police with the story of the negotiations. Meanwhile, many more people brought together by their concerns for the environment, workers’ rights and social justice took part in peaceful rallies against what they perceive as a deeply flawed proposal.
Mindful of the political impact of that outcry, Iglesias warned that the FTAA and other Summit of the Americas initiatives will face serious obstacles unless their supporters launch intensive information campaigns to reach out to key constituencies, such as the private sector, organized labor, political parties, civil society groups and public opinion in general.
Besides undertaking efforts such as informing their citizens about the potential economic benefits of expanding trade, governments will need to prepare for the inevitable costs of opening their markets to foreign competition, Iglesias added. To that end, the IDB would be ready to help borrowing member countries design and finance industrial reform programs and social safety nets for the disadvantaged, as well as to step up investments in key areas such as education and job-training.
Many of the regional initiatives the IDB presented at the Summit of the Americas seek to address such problems. For instance, the Inter-American Teacher Training Program would aim at raising the quality of education in Latin America and the Caribbean, targeting one of the reasons for the region’s lagging performance when compared with industrialized nations and competitors such as Southeast Asia. The program would use information technologies to provide low-cost, high-quality distance training for millions of teachers. A regionwide approach could help overcome the formidable obstacles of attempting such a project at a national level, given the high initial cost of developing content and delivery mechanisms and the scarcity of qualified trainers.
Other programs in the IDB’s regional portfolio are aimed at addressing long-standing problems such as Latin America and the Caribbean’s vulnerability to natural disasters. Hurricanes, earthquakes, floods, droughts, landslides, tsunamis, and volcanic eruptions have killed more than 45,000 people and affected millions more over the past decade and have the potential for causing billions of dollars in damage and economic losses annually. The Bank, which approved $1.6 billion over the past five years in recovery financing for countries hit by natural disasters, will work with member nations to address the root causes of the region’s vulnerability to natural hazards. To that end, the IDB recently created a special line of credit for disaster prevention and mitigation to encourage governments to take a comprehensive approach to risk reduction, especially in planning for and investing in public works.
The IDB’s regional projects portfolio also seeks to tackle newer challenges. One of the issues raised by leaders at the Quebec summit was the need to ensure the widest access to technologies such as Internet as a means to strengthen democracy, stoke productivity and bridge social and economic gaps. Iglesias pointed out that the IDB has assigned a high priority to deploying new information technologies in programs involving state modernization, education reform and improving small and medium-size enterprises' capacity to compete.
On a regional scale, the IDB hopes to implement several projects designed to foster greater access to the Internet, especially in low-income rural and urban communities. One of these initiatives, the Program for the Democratization of Information, would offer underprivileged youth in participating countries training in information technology, computer skills and civic education. This initiative is based on a successful and innovative program launched in a Rio de Janeiro shantytown by a visionary Brazilian social entrepreneur, Rodrigo Baggio.
In his speech Iglesias added that the IDB would be in a position to help its member countries as they advance in the plans spawned at the Summit of the Americas, given that many of those initiatives coincide with the Bank’s main mandates. The IDB’s lending and grant-making capacity to support programs at the regional, subregional, national, subnational and local levels could total $44 billion for the next five years, he said.