AWPA Wireline - March 2004

Here is the status of major trade agreements the US Administration is pursuing.

Andean Countries and Panama

USTR Zoellick announced negotiations for free trade agreements with the Andean countries of Colombia, Peru, Ecuador and Bolivia. Negotiations will begin with Colombia and Peru in the second quarter of next year, with Ecuador and Bolivia to follow after that.

In addition, Zoelick announced negotiations for an FTA with Panama, which would complement the ongoing CAFTA.

Australia

USTR Robert Zoellick and Australian Trade Minister Mark Vaile successfully concluded the negotiation of the US-Australia Free Trade Agreement. The agreement, whose passage and entry into force will immediately remove 99% of Australian industrial tariffs on US exports and 97% of American industrial tariffs on Australian exports, is the most front-loaded, pro-manufacturing agreement ever negotiated by the US. NAM estimates that $1.8 billion in additional annual US manufactured exports could be generated by the agreement.

However, the agreement totally excludes one sector - sugar - setting, in the eyes of many, a dangerous precedent.

Central America

The Bush Administration has yet to notify Congress of its intent to sign the recently concluded US-Central America Free Trade Agreement (CAFTA) because of congressional concerns that the Dominican Republic's participation in the agreement not be included in the notification unless that country's negotiations are completed. The Agreement currently is with El Salvador, Honduras, Guatemala, and Nicaragua.

USTR attorneys were working out whether to notify Congress with regard to the Central American nations with which negotiations are complete or to wait for the US-Dominican Republic accession talks, which have one or two rounds left. Zoellick met with the Secretary of Industry and Commerce of the Dominican Republic to work on incorporating the Dominican Republic into the CAFTA negotiations.

The CAFTA faces an uphill battle this year in the Congress because labor has targeted its defeat as one of their priorities during this election year. Administration officials have acknowledged that it will be difficult to persuade lawmakers to ratify the pact during an election in which the legacy of NAFTA and other trade pacts have become hot-button political issues.

US trade with CAFTA countries is small - only $15 billion combined last year. The Administration hopes that the deal will pressure Brazil and other Latin countries into joining a 34-nation Free Trade Area of the Americas.

Chile

The Chilean legislature gave final approval to the US-Chile FTA. The agreement went into effect on Jan. 1, 2004, and will eliminate just over 80% of tariffs for both countries. Both the US and Chile predict an increase in exports as a result of the agreement.

FTAA

A key meeting of the Trade Negotiations Committee, which is made up of the vice ministers of trade of the 34 countries participating in the FTAA negotiations, was suspended earlier this month after agreement on how to move the negotiations forward could not be obtained. The participants ran out of time to reconcile thorny issues, and agreed to continue the meeting in March.

The main difference remains with Brazil, which seeks a lower level of ambition in intellectual property and other rules, while still seeking maximum access to the US market.

The National Association of Manufacturers has provided policy recommendations to USTR with respect to the Free Trade Area of the Americas. Among the principal recommendations: that the FTAA be as comprehensive as possible, and there be no more than two tiers of differing benefits.

Morocco

The US and Morocco concluded a free-trade agreement designed to remove tariff barriers and open markets to industries, farmers and consumers in other countries. The agreement with Morocco is the second the US has reached with an Arab country, the first was with Jordan in 2001.

The US exports, on average, $475 million in products annually to Morocco, a tiny percentage of overall US exports. Morocco's tariffs average around 20% on US goods entering the country. Morocco faces average tariffs on only 4% on exports to the US.

Thailand

The Bush Administration officially notified Congress that it intends to launch the negotiation of a free trade agreement with Thailand. Under Trade Promotion Authority (TPA), the Administration now will be able to enter into talks with the Thais within 90 days after the notification, or as early as mid-May.

Thailand's growing, industrializing economy still maintains significant tariff and non-tariff barriers to US manufactured goods.