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U.S., Brazil give and take on hemispheric free trade

(Tuesday, Nov. 11, 2003 -- CropChoice news) -- Paul Blustein, Washington Post, 11/09/03: Brazil said it moved yesterday toward breaking an impasse with the United States that threatens to derail one of President Bush's most cherished trade goals: a free-trade zone encompassing 34 countries in the Western Hemisphere.

Under the proposed compromise, member countries could opt out of parts of the agreement they found objectionable. That approach may resolve a dispute that has flared between the United States and Brazil, South America's largest economic power, over how broad the agreement should be.

Celso Amorim, Brazil's foreign minister, disclosed the proposal after an all-day meeting at the Lansdowne Resort & Conference Center in Leesburg. Sixteen of the 34 countries that agreed nine years ago to establish a Free Trade Area of the Americas were represented.

The compromise, Amorim said in a conference call with reporters, provides "a good basis for a successful meeting in Miami," where ministers from all 34 countries are scheduled to meet Nov. 17 to 21 to set the parameters for final negotiations. Previously, the Miami meeting was shaping up as a potential debacle for the free-trade cause, much like the World Trade Organization meeting in Cancun, Mexico, in September that broke up with no agreement on how to advance negotiations for a global trade agreement.

Amorim emphasized that "not all the problems are resolved," but he presented the compromise as a proposal advanced by himself and U.S. Trade Representative Robert B. Zoellick.

Until now, the United States has maintained that the FTAA, like the North American Free Trade Agreement, should not only phase out tariffs on trade among member countries but also include rules on issues such as cross-border investment and protection of copyrights and patents.

To Washington's dismay, Brazil has insisted that the agreement should be limited largely to tariff reduction and other measures to improve market access for trade within the hemisphere. The Brazilians are frustrated that the United States refuses to include its farm subsidies in the FTAA negotiations. The compromise would "recognize that different countries are prepared to take different commitments in different areas," Amorim said.

A U.S. official who briefed reporters before Amorim's conference call did not mention the compromise, saying only that meeting participants had engaged in "a lot of sharing of ideas" that helped them understand each other's positions better.

But asked about the idea of an agreement in which some countries could opt out of certain parts, the official said: "What we're trying to get now is as comprehensive an agreement as possible. So I think it's premature to get into that kind of speculation."

Brazil has become an outspoken leader in the developing world, complaining that the United States and other rich nations preach free trade but shelter some of their politically powerful sectors, especially agriculture, from market forces. A bloc of countries led by Brazil was instrumental in breaking up the WTO talks, citing as their main reason the reluctance of the United States, European Union and Japan to eliminate farm subsidies. Such subsidies are blamed for causing overproduction and falling prices for many crops, hurting farmers in poor countries.

Brazil is also carrying its attacks on farm subsidies into the FTAA debate, but the United States insists that the subsidies can be cut only as part of a WTO agreement that includes Europe and Japan.

Efforts over the past several weeks to compromise had ended with U.S. officials chastising Brazil for an "unwillingness to engage" and Brazilian officials angrily denouncing American "threats."

In response to Brazil's opposition, Zoellick had stepped up warnings that the United States would strike NAFTA-like accords with "can-do" countries, giving them preferential access to the U.S. market, while leaving Brazil and other "won't-do" countries out in the cold if they block regional or global agreements.

The compromise may not play well with some of the Bush administration's allies in the business community, who are eager for an agreement that provides legal protections to their overseas operations throughout the hemisphere.

But many trade experts and policymakers have become increasingly convinced that the only way to forge broad agreements among large numbers of countries is to give some of them the right to opt out of certain portions. With 146 members in the WTO, which requires consensus to reach agreements, concluding a global trade accord has proven especially unwieldy.

Amorim said that Brazil would object strongly if the agreement penalized countries -- by limiting their market-access benefits, for example -- if they exercise their rights to opt out.