NEW YORK (Dow Jones)--With less than a week before diplomats touch down in Miami for a crucial Americas-wide free trade summit, the region's two largest protagonists are talking again - but still haven't agreed on much, if anything.
Brazilian Foreign Minister Celso Amorim and U.S. Trade Representative Robert Zoellick huddled in Washington over the weekend, trying to jump-start stalled talks aimed at ushering in a Free Trade Area of the Americas spanning 34 countries by January 2005.
The meeting between the FTAA co-chairs came ahead of a week-long FTAA summit beginning Sunday in Florida, and almost two months after a major rift between Brazil and the U.S. exploded into full view at global trade talks in Cancun.
"Both countries tried to move a bit toward each other. The U.S. made it clear it's at least willing to listen to proposals Brazil put on the table while Brazil made it clear it wants Miami to be a success," Eric Farnsworth, vice president of the Council of the Americas, a U.S. business group lobbying in favor of FTAA, said of the Washington talks.
The two governments painted different pictures of the closed-door talks, however, which were convened at the last minute and included representatives from 14 smaller countries in the Western Hemisphere.
Brazil's Amorim told reporters afterward that the mini-summit was "positive." He also suggested, according to some press reports, that the U.S. and Brazil have agreed to negotiate a slimmed-down version of FTAA that would focus on slashing import tariffs while hammering out thornier issues at the World Trade Organization.
The USTR's Zoellick, who has been pushing for a more comprehensive FTAA, declined to talk with journalists following the meeting. In a briefing afterwards, though, a U.S. official said "it's probably premature" to speculate that an `FTAA Lite' is increasingly likely.
That means there's still no clear negotiating framework for the FTAA negotiations, nearly nine years after talks to knock down trade barriers from Alaska to Patagonia were first launched.
At this point, Brazil still appears determined to keep the issues of intellectual property rights, government procurement contracts and foreign investment rules off the negotiating table if the U.S. doesn't agree to scale back subsidies to domestic farmers.
Judging by the mixed support for FTAA at home, Brazilian President Luiz Inacio Lula da Silva doesn't seem to have a lot to lose politically by maintaining a tough negotiating line.
Although exports are becoming an increasingly important cog in the Brazilian economy, local business leaders, some of whom are afraid of being overwhelmed by cheap imports, haven't been particularly vocal boosters of free trade outside of the agricultural sector. Lula's left-leaning government, meanwhile, retains a mix of free trade advocates and old-school socialists who fear U.S. economic " annexation."
"Lula wants a delicate balance between them," said Christopher Garman, a political scientist in Sao Paulo with the business consultancy Tendencias, of the competing political forces at home.
Some trade experts say that U.S. business, for its part, wouldn't be particularly interested in an Americas-wide free trade pact if only tariffs are addressed.
President George W. Bush also may be reluctant to anger the domestic agricultural, textile and steel sectors by rolling back protectionist measures ahead of November 2004 presidential elections - especially with opposition Democratic hopefuls already painting free trade as a drain on U.S. jobs.
Democratic presidential candidate Joe "Lieberman's the only one saying much positive about free trade," Jeffrey Bader, a former USTR official at the business consultancy Stonebridge International, said of the crowded field of politicians trying to displace Bush.
That has some predicting that rather than settling for a lighter FTAA, the White House might prefer to pursue more bilateral pacts in the region. That would allow the U.S. to circumvent Brazilian pressures and avoid having to make any big concessions ahead of the elections.
The Bush administration, which already has a pact in place with Mexico, clinched a free trade deal with Chile earlier this year and hopes to wrap up an accord with five Central American countries by December. It also has announced plans to explore possible bilateral agreements with Colombia and the Dominican Republic - and some think Peru could be next in line.
"You could have various bilaterals cooking on the stove at various temperatures," said Charles Gillespie, a partner at Scowcroft Group, an international business consultancy, and a former U.S. ambassador to Chile and Colombia.
-By Mike Esterl, Dow Jones Newswires; 201-938-4026; mike.esterl@dowjones.com
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