Date set for pan-American trade zone

The FTAA would be the world's largest free trade zone

Trade ministers from 34 American countries meeting in Buenos Aires have pledged to clinch an ambitious pan-American free trade agreement by 1 January 2005.

The Canadian Minister for International Trade, Pierre Pettigrew, said they agreed that the Free Trade Area of the Americas (FTAA) would come into effect by the end of that year.

I honestly believe that international trade negotiations will never be the same

Pierre Pettigrew, Canadian for International Trade

The BBC South America correspondent says the agreement represents an extremely ambitious free trade pact, aiming to cover the whole hemisphere - with the notable exception of Cuba.

So far, however, it represents little more than a declaration of intent, and further negotiation over the small print of any final deal will be needed, our correspondent says.

The United States had been pushing for the pact to be agreed by the end of 2003. But Brazil, supported by Argentina and the other countries in the South American trading bloc Mercosur, closed ranks to prevent that.

Significant concession

Brazil has said it wants the FTAA to be an option, not destiny. It wants to hold parallel talks with the European Union, with whom it trades more than the United States.

I think what you'll see over the months and years is a competition in trade liberalisation

Robert Zoellick, US trade representative

In a significant concession to labour, environmental and consumer groups who oppose the free trade area, the ministers agreed to publish the draft text from which they will negotiate a final agreement.

Chile's Trade Minister said the countries had also agreed to include labour and environmental standards, but not to link them to trade sanctions.

Any agreements reached will also have to pass the test of a vote in national parliaments.

Latin American countries want sharp reductions in US agricultural subsidies as a condition for a free trade pact - something which is expected to get a rough ride in the US Congress.

US farmers oppose negotiations on domestic subsidies in the FTAA, because it would not require other developed countries like the European Union and Japan to make similar cuts.

Scepticism

Brazil and other Latin American countries also oppose US proposals that would require countries to pledge they would not relax their labour and environmental laws to attract investment.

Many groups in Brazil say that there should be a national referendum before the country commits itself to an Americas free trade area.

The White House faces pressure from Democrats to include labour and environmental provisions in trade pacts, but many developing countries fear they could become trade barriers.

Officials are trying to hammer out guidelines for the FTAA, which would link more than 783 million people who produced more than $11,400bn in goods and services in 1999, generating about $2,700bn in cross-border trade.

The talks took place against a backdrop of protests from from activists, who oppose the economic and social models that many American countries have adopted.

Such systems of growth have, they say, worsened the plight of developing countries and widened the gap between the rich and the poor.