New drive for Americas trade zone

US officials are ready to protect home-grown farmers

Negotiators from 34 countries are gathering in Miami to try to thrash out their differences over what could become the world's biggest free-trade area.

If the talks succeed and the Free Trade Area of the Americas comes into being as scheduled on January 2005, it would encompass 800 million people from all but one - Cuba - of the countries in the twin continent.

Collective economic output could be as much as $14 trillion a year.

But to get there, the talks have to make significant headway. And as yet, deep differences remain between many protagonists - but especially between the two co-chairs, the US and Brazil.

The two, the biggest economies in North and South America respectively, both want a deal.

Unfortunately, what they want out of it could - with a bit of bad luck - prove to be mutually exclusive.

And the circumstances redolent of previous trade talks - with tens of thousands of protesters poised to descend on Miami amid a heavy security presence - could prove worryingly prescient.

Cancun collapse

The mood has admittedly improved since September, when World Trade Organisation talks billed as make-or-break for a global trade deal went into meltdown in Cancun, Mexico.

Miami is readying a crackdown on protesters

Then, Brazil was one of three leaders - with China and India - of a newly-minted coalition of developing countries who put up a fight against the developed world.

Amid the usual blame game the G21 (as the coalition was known) said the US, Japan and Europe were pushing for new concessions on investment and services, despite reneging on the promises they had already made to the developing world.

The key sticking point was agriculture: all of the Big Three maintain varying doses of subsidies, tariffs and other barriers to protect their own farmers, and developing countries want access for what is often their main export earner.

A summit of half the countries concerned earlier this month helped draw some of the poison from the US-Brazil relationship, and now both sides are making cautiously optimistic noises.

The most important was an unwritten deal to keep agriculture for the world talks - as long as the US sticks to its promise to stop pushing for increased access for financial services and technology.

Different agendas

But that remains a far cry from the euphoria that surrounded the talks when the timetable was first laid out in Quebec in early 2001.

It's not all smiles between US and Brazilian officials

In those pre-9/11 days, just three months into George W Bush's presidency, free trade - and the FTAA - were at the top of the White House agenda.

Now things have changed, and more than a year of intense focus on Iraq has diluted the US commitment.

Presidential elections in less than a year are also a concern, and with US union opposition hardening fast, concessions may be hard to come by.

The impending election campaign could also torpedo US Trade Representative Robert Zoellick's commitment to keep the deal carved out earlier this month, and investment and services could creep back on the agenda.

Brazil would almost certainly then slap agriculture back on the table in turn. And that could spell doom for the deal.

The reality is that both sides want to keep the walls up in some areas - services for Brazil and farming for the US - perhaps for years to come.

But the problem for Brazil is it probably has more to lose.

For Brazil, already a member of the four-member South American common market, Mercosur, the massive US market is the real prize.

The US, meanwhile, is accelerating its push to sign two-way deals - known as bilateral trade agreements - with individual South American countries, and has made it clear it will continue to do so whatever happens to the FTAA.