The outcome of last week's meeting in Miami of 34 western hemisphere trade ministers gave free trade advocates little to cheer about. It is true the gathering, which was supposed to lay out the road map for completing the Free Trade Area of the Americas (FTAA) by December 2004, did not collapse in acrimony, like the World Trade Organisation's September meeting in Cancún. Agreement was reached in Miami, however, only because the assembled ministers decided not to grapple with any of the real issues at stake.
Worse yet, the ministers in Miami took a huge step backwards when they decided their goal was no longer a single trade arrangement uniting all 34 countries with a common set of rules and procedures. Instead, each FTAA nation would now have to accept only a minimal list of yet-to-be-established obligations, and would then be free to negotiate whatever arrangement it wishes with any other country or group of countries in the hemisphere. This scaled-down format is widely referred to as ``FTAA-lite''.
The US, the hemisphere's economic colossus, was the country best positioned to make the session more productive. But George W. Bush's administration, unwilling to offend any political constituencies, failed to offer a single concession on the issues that mattered most to Brazil and the rest of Latin America. It insisted that agricultural questions had to be resolved in the (now stalled) global WTO talks.
Brazil responded by demanding that issues of importance to the US -- including rules affecting investments and intellectual property, and restrictions on trade in services and government purchases -- also be struck from the FTAA agenda. Its delegates, well aware of the limited support for an FTAA in Brazil, were mostly interested in trimming the scope of negotiations. In this, they found common ground with the US, which was eager to avert an outright breakdown of negotiations.
Canada, Chile and Mexico, which already have free trade pacts with the US, objected to watering down the FTAA plans - but offered no substantive proposals to bridge the US-Brazil divide. Meanwhile, most other countries were lining up to negotiate bilateral deals with the US.
The final agreement in Miami largely reflected Brazil's wishes. Yet the Brazilians may turn out to be the big losers. If the US completes all the bilateral agreements it has pledged to pursue, Brazil and its Mercosur partners will be sitting on the sidelines (along with Venezuela, Cuba and Haiti), while other Latin American nations secure preferential access to the US. Even if Mercosur negotiated its own deal with Washington, it would still leave the US at the centre of all trade and investment flows in the hemisphere.
This ''hub and spoke'' arrangement would give Brazil far less influence on regional economic matters than would a unified free trade arrangement.
But the US will end up losing as well. First, it will not get the access it wants to Brazil and the Mercosur markets. More important, an FTAA-lite will do little to advance the US agenda in inter-American relations. It will not establish a foundation for an economically integrated hemisphere. Nor will it serve as a substantial anchor for Latin America's market reforms or its democratic gains. A strong FTAA is the best opportunity for the US to join Latin America in a genuine, multilateral partnership. A weak agreement will reinforce traditional patterns of hemispheric relations, which have never been productive for the US or Latin America.
Fortunately, there is still time for repairs. The best opportunity may come in January, when the heads of state of all 34 FTAA nations are due to assemble again in Mexico. Although trade is not on the agenda, it would be the right time for the hemisphere's leaders to get the FTAA negotiations back on track.
The writer is president of the Inter-American Dialogue.
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