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Last Updated: Tuesday, 18 November, 2003, 06:10 GMT
Fighting for free trade?

By Stephen Evans
BBC North America business correspondent

Two years after a meeting in Quebec which opened the drive by the Bush administration for a Free Trade Area of the Americas (FTAA), talks are beginning in Miami this week aimed at bringing this promise to reality.

US Trade Representative Robert Zoellick (left) meets Brazil's agriculture minister Roberto Rodrigues
All smiles..but no clear agreement
Ministers from the whole hemisphere of America can't exactly be joyful at the prospect of success as they contemplate the creation of a free trade area from Nunavut in Canada to Cape Horn half a world away on the tip of Chile.

The aim of the talks is to set up a hemispheric free trade area by 2005 - but nobody's betting their bottom peso on success.

The idea of a tariff-free zone encompassing 34 American countries was a pet project of the older President Bush and has been embraced by the son.

Cuba is not involved - it's hard to have a free trade zone with a country with which trade is forbidden!

But it's a big jump between the will to create the organisation and actually doing it.

The collapse of the world trade talks at Cancun show how entrenched the various opposing interests are.

Brazil's concerns

Brazil, for example, is reluctant to open its markets to the United States while Washington subsidies its farmers generously.

Steel piping
Steel tariff increases hurt Brazil
Some South American countries are uneasy about letting North American companies bid to do some government work.

There are also issues over copyright protection.

American pharmaceutical companies do not want their formulas used by local producers in South America with the cheap replicas of drugs then available throughout the hemisphere.

Limited goals

So a true free trade area will not happen.

There will not be complete, tariff-free movement of all goods (let alone people) across the hemisphere in the foreseeable future.

What is much more likely is an agreement covering some goods, and then with countries opting out of the agreement on goods which particularly affect them.

The difficulty with this approach is that a free trade area where countries agree not to block or subsidise goods unless they have to is not really a free trade area at all.

How many special case opt-outs do you need before the agreement becomes meaningless?

Bush's hopes

Mr Bush, it seems, does want the area to work.

He may be smarting under the recent World Trade Organisation ruling that his tariffs on steel are illegal - which throws into question his credentials as a true lover of the free market, credentials he may want to reassert.

The talks then are likely to be real, not just a formal series of handshakes and statements leading nowhere.

But progress will not be easy or instant.

Horse-trading will be intense and may eventually produce a deal - though not in the near future, and nothing close to the existing North America Free Trade Area (NAFTA) covering Canada, Mexico and the US.

Panama v. Miami

Strangely, while there may be no common view on how the free trade area should operate, there may be easier agreement on where its headquarters should be.

The early front runner was Miami, often called the real capital of Latin America.

It has one rather strong proponent: Florida's Governor Jeb Bush, who has a friend in a very high place indeed.

But there's some resistance, particularly from countries which produce sugar and citrus fruit and which are annoyed at US tariffs blocking their exports to the biggest market of all.

For some Latin Americans, Miami is too close for comfort to the big American growers with a loud voice in Washington.

So, enter Panama, at the centre of Central America.

Beyond its good communications, it has the great advantage in southern eyes of not being Miami.

Nominations have to be in by November 20 but picking the place for the secretariat will be the easy bit.

Deciding on what the secretariat should actually do will be a lot harder

The BBC's Ian Pannell
"There is still much to be resolved about this agreement"

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13 Nov 03  |  Business

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