BRASILIA, Brazil (Reuters) - Talks to create an Americas-wide free-trade zone have never been so tough and could well miss a year-end deadline as all sides wait for better terms in 2005, analysts said on Friday.
A lack of consensus between the 34 nations throughout the hemisphere involved in the talks led to the cancellation of a meeting this week in Puebla, Mexico.
Nations may still reach a minimal accord by year end to keep talks alive but wait for a better bargaining climate after the U.S. presidential election. No one wants to be blamed for the impasse after 10 years of talks, analysts said.
"It's as if there was a corpse in the room and no one wanted to be the first to point it out," said Paulo Nogueira Batista, an economist at the Getulio Vargas Foundation, a Brazilian economic think tank.
Negotiations to build the world's largest free-trade zone have run into difficulties in recent years as top South American players Brazil and Argentina elected left-leaning governments. The right-wing government of President Bush, meanwhile, hardened the U.S. bargaining position.
Brazil, the largest member of South America's Mercosur trade bloc, has demanded greater access to U.S. agricultural markets for its competitive farm exports before it exposes local industries to strong U.S. firms.
U.S. negotiators, keen to protect domestic industries like orange juice and sugar in an election year, have yet to come up with a proposal on farm tariffs, quotas and export subsidies that is acceptable to Brazil.
"The political winds are not in favor of doing this now," said Mario Marconini, director of the Brazilian Center for International Relations in Rio de Janeiro.
FTAA 'A LA CARTE'?
Mercosur -- which also includes Uruguay and Paraguay -- and the United States tried to get around the impasse last year with an FTAA "a la carte" which would feature a basic accord and optional extra accords on top of that.
A February meeting in Puebla, Mexico, failed to hammer out the accord. Mercosur nations faced a U.S.-led group of 14 nations keen to expand existing U.S. trade deals.
Mercosur nations have since balked at U.S. demands in areas including government procurement and services.
The U.S. stance could soften in 2005 when votes are not at stake. U.S. Democratic presidential candidate John Kerry, who supported the North American Free Trade Agreement, has said he will review the nation's trade policies.
The key to whether nations can reach some form of minimal deal is likely to be access to agricultural markets.
Brazil faces pressure from its powerful agricultural industry to get any kind of minimum deal out of the United States to help beef, soy and orange juice producers.
Brazil has dropped anti-dumping and domestic farm subsidy demands and taken them to world trade talks as part of its effort to move talks along.
If world talks fail to solve these issues by year-end, all sides may get an honorable way out of the FTAA deadline.
Brazilian Foreign Minister Celso Amorim last week said talks had come close to an accord. Negotiators are set to next meet again in Puebla in April.
Nogueira Batista was pessimistic. "I don't believe an FTAA (accord) will come out this year," he said.
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