6 - Lessons from the Free Trade Area of the Americas for APEC Economies

Summary

INTRODUCTION: THE FREE TRADE AREA OF THE AMERICAS

The proposed Free Trade Area of the Americas (FTAA) has larger economic dimensions than any of the numerous subregional agreements in the Western Hemisphere or the individual bilateral free trade agreements (FTAs), grouping thirty-four of the thirty-five countries in the region that together comprise about 870 million people and constitute over one-fourth of the world's GDP (around US$14 trillion) and one-fifth of the world's trade. However, it also has important political dimensions. The FTAA has been viewed as the means to unite the Hemisphere economically, and to solidify political ties between the English-speaking and the Spanish- and Portuguese-speaking nations of the region. For this reason, the FTAA process was launched in 1994 within a broad social and political agenda (the Summit of the Americas) that is absent in the case of other subregional trade arrangements. However, even this political endorsement from the outset at the highest level has not proved enough to allow the FTAA negotiations to be brought to a successful conclusion as they were envisaged.

This paper will review the launching of the FTAA, its challenges and innovative features and the mechanics of the negotiating process, along with the reasons why the FTAA negotiations faltered and the lessons that might be learned from the FTAA experience by the members of APEC.

Placing the FTAA in a historical context, it should be recalled that the idea of a region-wide FTA was not new in the Americas in the early 1990s, having been first proposed by Simon Bolivar — the liberator of the countries of the Andean region — more than 200 years earlier. The idea was sidetracked in the nineteenth century by the independence movement of the former Spanish and Portuguese colonies and by territorial disputes. Towards the end of the twentieth century, U.S. President George H.W. Bush relaunched the concept of hemispheric free trade, under the label “Enterprise for the Americas Initiative”. In turn, this initiative was sidetracked during the debate over ratification of the North American Free Trade Agreement (NAFTA), which came into force in January 1994.