QUITO, Ecuador (Reuters) - The United States, Canada and Latin America agreed to a strict timetable on Friday to negotiate a free trade zone that would span the Americas by 2005, but failed to settle festering disputes that trade chiefs said could unravel negotiations.
The one-day meeting of ministers in Ecuador's capital Quito ushered in Brazil and the United States -- the largest economies in North and South America -- as co-chairs of talks to create the Free Trade Area of the Americas, or FTAA.
The United States urged Latin America to push ahead with the pact despite political and economic woes rippling across the region, including a brief coup in Venezuela in April and a disastrous debt default in Argentina.
"I recognize that this is a time of economic, and indeed political, uncertainty in this region and indeed the world. And I know the courage of many of you taking on this task. ... But this is the time," said U.S. Trade Representative Robert Zoellick.
Under Friday's agreement, countries must present draft trade proposals outlining tariff reductions by Feb. 15. Revisions are scheduled through the next two years to reach a final accord at a summit slated for Brazil in late 2004.
Agreement on the timetable was widely expected, but ministers said it showed talks were still alive and on track.
But Brazil, which accounts for nearly half of South America's economic output, said it may never sign the free trade accord it will negotiate.
Brazilian Trade Minister Sergio Amaral said his country would be satisfied joining a free trade pact grouping Latin American nations, but excluding the United States, if the Americans refuse to make key concessions such as slashing import tariffs and farm subsidies.
"If there isn't included in this accord the removal of important (U.S. trade) barriers that affect our exporters, there is, obviously, no reason to have an FTAA. In this case, we're going to work and we're already doing it, to attempt (trade) integration within Latin America," Amaral said.
Most South American nations, which depend on farm exports, want the United States to slash some $19 billion in domestic subsidies protecting key U.S. agricultural sectors. The United States says it cannot do that until other economic powerhouses, including the European Union and Japan, follow suit.
SUBSIDY STALEMATE
Recognizing the farm subsidy stalemate, Latin American nations said they would look to the World Trade Organization to help the United States fight to lower European Union and Japanese farm subsidies. But that battle could take a very long time -- possibly beyond the FTAA's planned 2005 start date.
"It is our hope that we will be able to handle both negotiations to our common benefit as countries that are interested in liberalizing the trade in agriculture," said Brazilian Foreign Minister Celso Lafer.
Asking Latin American nations to be patient as they enter direct competition with the United States, the world's largest economy, could be a tall request. The region's masses are mostly poor, and cash-strapped governments that make money from import taxes are saddled with sluggish economies and soaring debt.
Brazil on Sunday elected former union leader Luiz Inacio Lula da Silva as president of the world's ninth-largest economy. The leftist leader has said the FTAA would end in the "annexation" of Brazil, and the country came out against the free trade zone in a recent referendum.
He will take office on Jan. 1, and officials in Quito declined to speculate whether he would toughen Brazil's already-firm stance in the FTAA talks.
Thousands of people from across Latin America protested the free trade talks, marching on the capital on Thursday and holding a rally at a Quito university on Friday. Huddled in the auditorium at around noon, the activists chanted "We don't want, and we won't be, made a U.S. colony."
"Down with the FTAA" and "Down with the World Bank" also were popular choruses.
"There isn't freedom of thought. The Yankees are forcing us to agree with them. But we feel differently (about the FTAA)," said Bolivian Indian activist Wilber Flores.
The next ministerial meeting is scheduled for late 2003 in Miami.
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