The Free Trade Area of the Americas (FTAA) was conceived in principle in December 1994 at the inaugural Summit of the Americas held in Miami. At the second Summit, held in Santiago, Chile, in April 1998, the Leaders of the 34 democratic countries in the Americas launched the negotiations toward a hemisphere-wide free trade area.
The proposed FTAA is an integral part of the larger Summit of the Americas process. The FTAA complements Summit objectives of strengthening democracy, promoting human rights and finding ways to address a range of social and economic issues through hemispheric cooperation. The FTAA is perhaps the most visible element of the Summit process, but its principal objectives of growth and development through enhanced economic integration are ultimately intended to reinforce the Summit’s broader objectives. Canada hosted the Third Summit of the Americas in Quebec City in April 2001, and continues to play a significant role in the broader Summit process.
Nine FTAA negotiating groups were established in 1998, with mandates from Ministers to negotiate in specific substantive areas: market access; investment; services; government procurement; dispute settlement; agriculture; intellectual property rights; subsidies, anti-dumping and countervailing duties; and competition policy. In addition, a consultative group and two committees were created to address horizontal issues related to the negotiations: smaller economies; civil society and electronic commerce; and, later, a committee was established to address general and institutional issues. The negotiating groups and these other FTAA entities are scheduled to meet throughout the year except for the electronic commerce group. Annual meetings of FTAA trade Ministers are held to review progress, and take decisions, including on detailed guidance to negotiators. The eighth such meeting was held in Miami on November 20, 2003.
The FTAA negotiations hold the potential to create the world’s largest free trade area, with over 845 million people and a combined gross domestic product of more than $19.2 trillion. In addition to liberalizing trade in goods, the FTAA holds the potential to secure improved market access commitments in the services sector and to establish stronger investment protection measures throughout the hemisphere.
The International Policy Statement (IPS) reaffirms Canada’s commitment to the FTAA. Outside of the WTO Doha Round, a potential FTAA is the best avenue to secure the broadest possible benefits for Canadian business in the hemisphere. Specifically, the FTAA presents an opportunity to generate additional export-related growth by removing impediments that prevent or dissuade Canadian exporters and investors from trading throughout the region.
The FTAA will build on Canada's existing free trade ties with the United States, Mexico, Chile and Costa Rica, and its expanding links elsewhere in the hemisphere, allowing Canada to take full advantage of emerging hemispheric markets. The FTAA will moreover co-exist with pre-existing agreements, such as the North American Free Trade Agreement (NAFTA). This means that Canada's trade with the United States and Mexico will continue to be governed by the NAFTA, and the FTAA would substitute in these relations only if all three parties agreed. Excluding our NAFTA partners, two-way merchandise trade with the FTAA countries totalled $18.9 billion in 2005. With respect to investment (excluding our NAFTA partners), in 2004 the stock of Canadian direct investment in these countries exceeded $60.6 billion, representing approximately 13.5 percent of Canada’s total outward investment. Canada’s services exports to the FTAA countries (excluding our NAFTA partners) continue to grow. In 2003 our services exports exceeded $2.7 billion.
At the November 2003 Ministerial meeting, Ministers agreed on a more flexible, compromise negotiating framework for the final phase of the FTAA negotiations. Known as the two-tier approach, all 34 countries are to negotiate an integrated set of common rights and obligations in each of the existing nine subject areas (first tier). In addition, interested countries may negotiate more ambitious liberalization on a plurilateral basis (second tier). Ministers tasked negotiators to develop the scope and modalities for the common set, as well as the procedures for plurilateral negotiations.
Following the Miami Ministerial meeting, negotiators attempted to implement the new negotiating framework agreed to by Ministers, but consensus was not within reach. As a result, formal negotiations have been suspended since February 2004. Over the past year and a half, the Co-Chairs from the U.S. and Brazil have made several attempts to work out a compromise that would overcome the remaining differences concerning the implementation of the new negotiating framework. To date, the Co-Chairs have yet to reach a breakthrough. As a result, the January 2005 deadline for the completion of the FTAA negotiations was missed.
The Government of Mexico organized an informal meeting in Puebla, Mexico (the site of the temporary FTAA Administrative Secretariat) on August 25, 2005 for all participating countries to discuss the operation of the Secretariat. Although it was not a decision-making forum, most participants called for the resumption of negotiations and for the FTAA Co-Chairs, the U.S. and Brazil, to convene a Trade Negotiations Committee (TNC) meeting before the November Summit of the Americas in Mar del Plata, Argentina. As a follow-up, Canada and several other countries sent letters to the Co-Chairs requesting the resumption of formal negotiations. The letter reaffirms Canada’s commitment to the FTAA process and our support for the efforts of the Co-Chairs to reinvigorate the negotiations.
At the November 2005 Summit of the Americas, the majority of countries expressed strong support for the resumption of formal negotiations of the FTAA in 2006. While consensus was not reached on a specific date for the formal resumption of negotiations, the Summit Declaration reaffirmed Leaders’ commitment to a balanced and comprehensive FTAA Agreement and called for trade officials to continue their discussions in 2006.