Negotiations on a 34-nation Free Trade Area of the Americas have reached a crucial turning-point following the failure of senior trade officials at the weekend to make any further progress in the talks, officials from several of the countries said.
Discussions over the next several weeks are likely to determine whether a region-wide agreement is still possible this year, or whether progress can be made only in the near term with a smaller group of like-minded countries.
Talks at the weekend in Puebla, Mexico, ended without any significant progress in overcoming the differences between a US-led bloc and the Mercosur countries led by Brazil and Argentina.
A draft negotiating text prepared at the weekend shows that the positions on liberalisation of agriculture trade remain far apart. Brazil and the Mercosur countries are insisting on broad tariff reductions on farm products, and calling for the US and other advanced countries to neutralise the effects of trade-distorting domestic subsidies.
For months Brazil fought hard to win US agreement to scale down the negotiating ambitions for the FTAA on intellectual property rights, government procurement, services and investment. But it is now pushing hard for deep reductions on agricultural subsidies and tariff cuts on all merchandise trade, arguing these issues form part of the agenda agreed at the summit meeting in Miami last November.
"We need to find a mechanism to deal with the distorting nature of agricultural subsidies, whatever the type," said Regis Arslanian, director of international negotiations in Brazil's foreign ministry. He added that the US offer to cut agricultural export subsidies was negligible because "they haven't used them in years".
But a senior US trade official said at the weekend that Brazil's ambitions were unrealistic. He said farm subsidies could only be dealt with in the global trade negotiations. He added: "Frankly, if we're not going to get anywhere near significant improvement in market access for services, why should we be expected to give everything on market access for merchandise?"
While negotiators in Puebla did not talk about postponing the 2005 deadline for concluding the FTAA talks, all sides are aware that time is running out. Mr Arslanian said: "If we don't make progress in three weeks, I'll be worried."
At the Miami summit, the 34 countries agreed in principle to create a two-tiered FTAA, in which all countries would accept basic obligations and a smaller number would negotiate a more comprehensive deal. But the US official warned that if the talks remain stalled, the US might seek to push ahead with this smaller group. "There's nothing to prevent us from doing that, and I think it might be a useful stimulus for everybody."
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