Toward Free Trade in the Americas
Chapter II: Trade and Integration
Arrangements in the Americas
At the Summit of the Americas the leaders of the Western Hemisphere recognized the
important role played by the subregional trade arrangements in forging the "Free
Trade Area of the Americas." They resolved to "build on existing subregional and
bilateral arrangements in order to broaden and deepen hemispheric economic integration and
to bring the agreements together."(23)
The Western Hemisphere is a very different place in 1995 than it was a decade ago. The
countries of the region have taken a series of great leaps over the past ten years, with
bilateral and subregional trade agreements serving as vital complements to their domestic
economic reforms. In contrast to many of the agreements that countries negotiated in the
1960s, the agreements of the 1990s are based on an open and liberalizing trade regime. The
region is now poised for even greater progress through the Free Trade Area of the Americas
(FTAA).
The 1990s have seen the establishment of new trade arrangements in the region and the
revival of old ones. These changes are largely a reaction to the situation faced by much
of Latin America and the Caribbean in the 1980s, which was characterized by misguided
fiscal and monetary policies resulting in a debt crisis for some and a net outward
transfer of financial and other resources for many. In the 1990s, efforts aimed at
enhanced participation in the increasingly globalized marketplace, prompted many countries
to revive several of their existing trade and integration arrangements and adopt policies
aimed at trade liberalization through unilateral efforts to open domestic economic and
trade regimes. These unilateral trade measures facilitate the revival of Latin American
and Caribbean integration. In part, this revival was also a reaction to the perceived
consolidation of trade blocs in other regions of the world, which have "called
attention to the potential benefits of freer trade with existing partners."(24)
Meanwhile in North America, increased trade and economic linkages were built upon the
foundation of the multilateral system embodied in the GATT. The notable exception to this
was the decision of Canada and the U.S. to negotiate a special arrangement in 1965 to deal
with trade in autos and autoparts. By 1987, however, the two countries had agreed that the
sheer size and scope of bilateral trade had outgrown multilateral based trade instruments
and the Canada-United States Free Trade Agreement was negotiated and came into force in
1989. In Mexico, domestic economic reforms began with that country's decision to join the
GATT in 1986, which set the stage for all three countries to open negotiations in 1991 on
a North American Free Trade Agreement (NAFTA) that came into force in 1994.
23. Summit of the Americas, Declaration of Principles (Miami: December 1994), 3.
24. Nora Lustig and C.A. Primo Braga, "The Future of Trade Policy in
Latin America," in Integrating the Americas: Shaping Future Trade Policy, ed. Sidney
Weintraub (New Brunswick, N.J.: Transaction Publishers, 1994), 23, 17.
One might distinguish six different types of economic integration agreements:
- economic unions in which the members integrate all of their economic policies;
- common markets in which a customs union is supplemented by removal of all barriers to
factor movements between members;
- customs unions in which member countries eliminate all tariffs and non-tariff barriers
among themselves and establish a common external tariff on goods from third countries;
- free trade agreements in which member countries eliminate substantially all tariffs and
non-tariff barriers among themselves;
- preferential agreements in which access to a larger market is offered without demands
for reciprocity; and
- sectoral agreements that provide for reduced-tariff or duty-free treatment among their
members on a limited range of products.(25)
Examples of the last four types of agreements can be found in the Western Hemisphere
today. A significant number of customs unions and free trade agreements exist in the
Americas. Canada, the United States, and some Latin American countries (e.g., Venezuela
and Colombia) offer preferential non reciprocal access to their markets under various
types of programs. There are also numerous sectoral agreements, such as the AutoPact that
the United States and Canada entered into in 1965, and bilateral agreements on specific
products negotiated within the framework of LAIA (Latin American Integration Association).
25. This typology is an elaboration of the scheme presented by Bela Balassa in The
Theory of Economic Integration (Homewood: Richard D. Irwin, 1961). Balassa's typology did
not include preferential or sectoral agreements.
Customs Unions
- Mercosur:
- The Common Market of the Southern Cone was created on March 26, 1991, when Argentina,
Brazil, Paraguay and Uruguay signed the Treaty of Asunción. The two main instruments of
the Treaty were a four-year Trade Liberalization Program and a commitment to implement a
common external tariff by January 1, 1995.(26) Preceding the Asunción
Treaty was the signature in 1986 by Argentina and Brazil of the Acta para la Integración
Argentina-Brasileña. This new accord aimed at expanding bilateral trade among the two
countries by adopting a sectoral approach. Two other accords preceded Mercosur: the
Tratado de Integración in 1989; and the Acta de Buenos Aires in 1990. A meeting held in
August 1990 with other Southern Cone countries led to the Asunción Treaty in March 1991.
On
December 17, 1994, the presidents of the four Mercosur countries met at Ouro Preto in
Brazil to sign a document that set January 1, 1995 as the implementation date of a common
external tariff (CET) for 85 percent of the products imported from third countries. The
meeting also agreed on a number of exceptions to trade liberalization. The CET ranges from
0 percent to a maximum of 20 percent. Each country was allowed a list of exceptions which
will be phased out in five years. In fact, for each of these products, the tariff will
fall automatically every year on a linear basis until it becomes equal to the CET in 2001.
Domestic tariffs will converge to 14 percent by 2001 for Brazil and Argentina and by 2006
for Uruguay and Paraguay in the case of capital goods, and to 16 percent by 2006 for
information technology products.(27) Finally, 90 percent of goods traded
began circulating freely as of January 1, 1995.
The Common Market Council is Mercosur's policy-making body. It is composed of the four
countries' foreign and economy ministers. The Common Market Group is the executive agency
in charge of overseeing and implementing the Treaty. Mercosur also has a Secretariat based
in Montevideo, a Trade Commission and a Dispute Settlement Tribunal in Asunción.
In early 1995, Brazil increased its tariffs from 32 percent to 70 percent on 109
products exempted from the customs union. Examples include cars, audio equipment, and
consumer durables. The government of Brazil has emphasized that this increase will be in
place for one year only, just to help Brazil to overcome its internal economic
difficulties. The Common Market Council met in Asunción on April 25, 1995, and adopted a
decision that will allow Brazil to increase its exception list from 300 to 450 products
for the next year. Argentina and Uruguay are still entitled to 300 exceptions from the
bloc's common external tariff, while Paraguay has 399.
- Andean Group:
- The members are Bolivia, Colombia, Ecuador, Peru, and Venezuela. The Andean Group was
established in 1969 when Bolivia, Colombia, Chile, Ecuador and Peru signed the Cartagena
Agreement. Venezuela joined the group in 1973, and Chile left in 1976. The main objectives
of the Andean Group were to eliminate trade barriers within the Group; to create a customs
union with a common external tariff; to harmonize economic, social, and economic policies;
and to adopt a joint industrialization program.
In the early years of the process, at
the beginning of the liberalization program, intra-subregional trade increased between
member countries whose markets had few preexisting links. However, shortly thereafter the
deadlines for the fulfillment of the liberalization program and the adoption of a common
external tariff were practically abandoned. In 1987, the Quito Protocol acknowledged this
fact and modified the Cartagena Agreement by, inter alia, providing for more flexibility
in the achievement of the group's goals. In addition, a new safeguard clause and tariff
quotas were introduced.
A revival of the Andean Group began in 1989 when the Heads of State of the Andean Group
countries assumed direct leadership of the process and set up clear guidelines for the
entry into force of a free trade agreement and the adoption of a common external tariff.
In December 1991, the Act of Barahona was signed in Cartagena. It provided for the
establishment of a free trade zone by January 1, 1992, and the definition of a common
external tariff with four levels (from 5 percent to 20 percent). Since then, Colombia,
Venezuela, Ecuador and Bolivia have gradually created a free trade area. On February 1,
1995, a common external tariff (CET) was implemented by Colombia, Venezuela, and Ecuador.
As authorized by the Act of Barahona, Bolivia maintained its national tariff schedule, and
Peru is subject to transitional arrangements whereby its trade is regulated through
bilateral agreements and its implementation of the common external tariff is gradual. A
recent decision of the Commission of Cartagena -the policy-making body of the Andean
Group- allows Peru to maintain its transitional arrangements until January 1, 1996. For
most goods, the schedule is as follows: 5 percent for raw materials; 10 and 15 percent for
semi-finished products; and 20 percent for finished goods. Although the CET cannot exceed
20 percent, there is an exception for the automobile sector with a tariff of 40 percent.
- Central American Common Market (CACM):
- Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. The General Treaty for
Central American Integration (known as the Managua Treaty) was signed in 1960, and entered
into force in 1961 for four countries. Costa Rica joined the Treaty in 1963. It provided
for immediate free trade on 95 percent of all goods. In October 1961, the Permanent
Secretariat for Economic Integration -SIECA- was established in Guatemala. SIECA along
with the Central American Bank for Economic Integration (BCIE), which is headquartered in
Tegucigalpa, Honduras, have been the main regional institutions responsible for the
administration of the economic integration efforts in Central America.
The CACM
flourished as the most advanced and successful regional integration scheme of Latin
America in the 1960s. In 1970, following the conflict between Honduras and El Salvador,
Honduras withdrew de facto by imposing tariffs on imports from Central America. Then came
almost two decades of political unrest and economic difficulties (e.g., low international
commodity prices and overvalued exchange rates) which meant that CACM survived in name
only.
The agreement was reinvigorated in the early 1990s. In a June 1990 presidential summit
in Antigua, Guatemala, the Plan de Acción Económica para Centroamérica (PAECA) called
for the revival of economic integration in Central America. Since then, the presidents
have met several times, setting the bases for a new and distinct strategy for regional
economic integration compatible with external openness. In 1992, Honduras was
"readmitted," and created, with El Salvador and Guatemala, the Northern
Triangle. This led to the establishment of a free trade area in 1993, which Nicaragua
later joined to create the Group of Four. They agreed on a common external tariff with
four sub-tariffs of 5, 10, 15 and 20 percent. These countries signed the Guatemala
Protocol in October 1993, a program aimed at modernizing the Managua Treaty of 1960. Its
main objective is the establishment of an economic union.
The five CACM members and Panama showed their commitment to integration by establishing
a new organization, the Sistema de Integración Centroamericana (SICA), which began its
work in February 1993. Early in 1995, Costa Rica and Guatemala both increased their
tariffs to try to solve their fiscal problems. Costa Rica added an 8 percent surcharge to
its initial customs tariff. The Guatemalan decision to adopt a flat rate tariff in April
was reversed ten days later. Moreover, at the 16th Presidential Meeting held in San
Salvador on March 30, 1995, the region's ministers of economy signed an agreement to
extend the tariff reductions implemented by El Salvador. As of April 1, 1995, El Salvador
has cut its tariffs on capital goods from 5 percent to 1 percent.
- Caricom:
- Antigua and Barbuda, the Bahamas (not a member of the Common Market, only of the
Caribbean Community), Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat,
St.Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago.
Suriname joined the Organization in February 1995, and will take its seat at the Guyana
summit to be held in July 1995.
The Caribbean Free Trade Association (CARIFTA) was
created in 1967 as a limited free trade agreement. It was superseded by Caricom when
Barbados, Guyana, Jamaica, and Trinidad and Tobago signed the Treaty of Chaguaramas on
July 4, 1973 to create the Caribbean Community. All Commonwealth Caribbean countries are
members of the group. In July 1989, the Heads of Government adopted several measures aimed
at stimulating and promoting economic and political integration. One of the main
objectives of the Organization is a phased common external tariff on most goods by 1998.
An agreement was signed with Chile in January 1995 to prepare preliminary studies that
will analyze the prospect for a free trade agreement.
26. Roberto Bouzas, Mercosur and Preferential Trade Liberalisation in South America:
Record, Issues and Prospects (Buenos Aires: Latin American School of Social Sciences, May
1995), 4.
27. The Economist Intelligence Unit, Country Report: Brazil, 1st Quarter
1995. London: 1995, 23.
Free Trade Agreements
- North American Free Trade Agreement (NAFTA):
- United States, Canada, and Mexico. The goal of negotiating a free trade agreement
between the three North American countries grew out of a number of factors. Canada and the
United States, partners in the single largest trading relationship in the world,
successfully completed a bilateral FTA in 1988 that included goods, services, and
investment, but did not deal in depth with intellectual property. For its part, Mexico had
gradually come to be the third-largest trading partner of the United States, and had since
the mid-1980s pursued a policy of economic and trade reform during the administrations of
Presidents de la Madrid and Salinas. The three countries also shared a view that the size
and scope of economic and commercial ties in North America essentially required a unique
agreement, one that could be customized to fit the specific circumstances of the region.
The
negotiations were launched in Toronto, Canada on June 12, 1991, and were completed
fourteen months later on August 12, 1992 in Washington, D.C. The agreement was signed on
December 17, 1992. It was supplemented in 1993 by the negotiation of "side
agreements" on labor, the environment, and safeguards. Following the approval of the
three countries' respective legislatures, NAFTA and its side agreements came into effect
on January 1, 1994.
NAFTA is a comprehensive free trade agreement. In addition to establishing a five or
ten-year schedule for the elimination of tariff barriers on most goods,(28)
it covers trade in services; provides protection for investment and intellectual property;
applies rules to government procurement and the operation of government enterprises; and
contains highly developed systems for the settlement of disputes. The agreement
liberalizes market access conditions in a number of important sectors critical to the
continued development of North America's infrastructure, such as in transportation,
telecommunications, and financial services. It facilitates the movement of business people
and professionals among the three countries.
The agreement contains an accession clause and the three original members formally
launched accession negotiations with the government of Chile on June 7, 1995, in Toronto,
Ontario.
- Group of Three:
- Colombia, Mexico, and Venezuela. On June 13, 1994, Colombia, Mexico, and Venezuela
signed the Group of Three economic treaty which entered into force on January 1, 1995.
Trade between Colombia and Venezuela will still be governed by the Andean Group Agreement.
The Group of Three agreement calls for the total elimination of tariffs over a 10-year
period. Exceptions are particularly important in the agricultural sector. Unlike most
trade arrangements among Latin American countries, the Group of Three goes beyond tariff
provisions, and deals with such matters as intellectual property rights, services,
government procurement, and investment.
- Bilateral agreements with Chile:
- Chile has negotiated a series of free trade agreements with Mexico (implemented on
January 1, 1992), Venezuela (implemented on July 1, 1993), Colombia (implemented on
January 1, 1994) and Ecuador (implemented on January 1, 1995) that provide for trade
liberalization in respect of trade in goods with some limited provisions with regard to
maritime transportation. The agreements share a common structure although provisions in
certain cases are customized to fit particular circumstances. Each contains well developed
mechanisms for the settlement of disputes and the administration of the agreements, as
well as clear timetables for the elimination of almost all tariffs and non-tariff
barriers. Disciplines on trade-related measures are well developed and each also contains
timetables for the further elaboration of such measures, as in the case of safeguards. The
agreements do not cover other issues, such as trade in services, investment, protection of
intellectual property rights or the harmonization of technical standards, although Chile's
agreements with Colombia and Ecuador do contain some provisions in respect to sanitary and
phyto-sanitary measures.
- Other Western Hemisphere free trade agreements include the following agreements and
negotiations in progress:
- Mexico-Central America: Accord with Costa Rica, implemented on January 1, 1995;
negotiations in progress with Nicaragua to be followed by negotiations with El Salvador,
Guatemala and Honduras;
- Mexico-Bolivia (implemented on January 1, 1995);
- Colombia and Venezuela-Central America (in progress);
- Chile-Mercosur (negotiations in progress);
- Andean Group-Mercosur (negotiations in progress); and,
- Chile-Peru (negotiations in progress).
28. Most tariffs were eliminated long before the end of this phase-in period. Tariffs
between Canada and the United States will be eliminated by 1997, as already established
under the bilateral FTA between these two countries. For a small number of items, tariffs
will be phased out over a period of up to 15 years.
Preferential Agreements
There are several preferential trade agreements in the Western Hemisphere. They are
summarized below.
- Caribbean Basin Initiative (CBI):
- The beneficiaries of this program are: Antigua and Barbuda, the Bahamas, Barbados,
Belize, British Virgin Islands, Costa Rica, Dominica, the Dominican Republic, El Salvador,
Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Montserrat, the Netherlands
Antilles, Nicaragua, Panama, St. Kitts and Nevis, St. Lucia, St. Vincent and the
Grenadines, and Trinidad and Tobago.
Together with the Andean Trade Preferences Act
(ATPA), the CBI provides (after NAFTA) the second-most preferential access to the U.S.
market. Both of these two programs extend duty-free treatment to nearly all products
imported from the beneficiary countries, other than those on an enumerated list. Countries
agree to maintain certain standards in areas such as intellectual property, investment,
and workers rights, which are criteria for CBI eligibility. The CBI has eliminated U.S.
duties on all qualifying products except textile and apparel, petroleum, canned tuna,
footwear, certain leather goods, and certain watches and watch parts. Textiles and apparel
are the single largest U.S. import from the beneficiary countries and, though they are
ineligible for tariff preferences, these goods nevertheless benefit from favorable quota
treatment. The program came into effect on January 1, 1984. It became a permanent program
in 1990 through the Caribbean Basin Economic Recovery Act (CBI II). Panama lost its status
in April 1988 and regained it two years later. Nicaragua was not a member at the outset
but is now included.
Since the negotiation of NAFTA, the CBI beneficiary countries have urged that the
United States extend "parity" to them. The U.S. Congress is currently
considering a bill that would achieve this end by extending NAFTA-like tariff treatment to
all products not currently covered by CBI. In receiving enhanced benefits, the countries
agree to strive for modified criteria, including high standards in investment and
intellectual property, which are proposed to be reviewed every three years.
- Andean Trade Preference Act (ATPA):
- Bolivia, Colombia, Ecuador, and Peru. This preferential program took effect in 1991. As
described above, ATPA is very similar in structure to the CBI. The United States provides
duty-free treatment to certain exports of the four members for a ten-year period. Articles
which are eligible are the same as those under the CBI (except for rum).
- Canadian-Caribbean Agreement (Caribcan):
- Anguilla, Antigua and Barbuda, the Bahamas, Barbados, Bermuda, Belize, British Virgin
Islands, Cayman Islands, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts and
Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago, and Turks and
Caicos Islands are the beneficiaries. This program came into effect in June 1986. Caribcan
aims at facilitating trade, development assistance and industrial cooperation between
Canada and the Commonwealth Caribbean countries. Canadian duties are eliminated on all
products from the beneficiaries except textiles, clothing, footwear; certain luggage and
handbags products; leather garments; lubricating oils; and methanol. Under Canada's
General Preferential Tariff, all Caribcan beneficiaries are eligible for reduced tariff
rates for certain Caribcan exceptions (i.e. all exceptions barring textiles, clothing and
footwear).
Caribcan coverage offers stable duty-free access, and the program is not
restricted by a time limit.
- Caricom-Venezuela:
- Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica,
Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad
and Tobago. This agreement was signed in October 1992, and provides for duty-free access
for some imports from Caricom countries into Venezuela. After a five-year period,
negotiations are to begin to make the trade agreement reciprocal.
- Caricom-Colombia:
- Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica,
Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad
and Tobago. This agreement was signed in July 1994. It provides for the immediate
elimination of Colombian duties on goods covering 86 percent of the Colombian imports from
Caricom. Another 4 percent will be included by January 1998. Further negotiations will
include the liberalization of the remaining Colombian tariffs and the trade concessions
that the largest Caribbean countries will give to Colombia in reciprocity.
Sectoral Agreements
(Regional Scope and Partial Scope Agreements)
- Latin American Integration Association (LAIA): (29)
- In 1960, the Latin American Free Trade Association (LAFTA) was established by the Treaty
of Montevideo. The main goal of this Treaty was to remove trade barriers among the member
countries over a period of 12 years. However, this proved to be both controversial and
difficult. By the end of 1978, the 11 signatories agreed that a restructuring of the
Association was needed. The Treaty of Montevideo of 1980 set up LAIA as a successor to
LAFTA. Its objective is to increase "bilateral trade among the member countries and
between member countries and third countries through bilateral and multilateral
agreements, with the goal of eventually achieving regional free trade."(30)
LAIA members are Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay,
Peru, Uruguay, and Venezuela. LAIA integration mechanisms are more flexible than those of
LAFTA. They are based on a sectoral approach: regional scope agreements covering all
members of the Association; and partial scope agreements which are trade agreements giving
preferences on some specific products, signed by sub-groups of members, normally two
countries. Sometimes partial scope agreements are wider in scope and are called economic
complementation agreements.(31)
There are currently 32 partial scope
and economic complementation agreements in place, half of which have been signed in the
1990s. (32) In June 1994, the LAIA Council of Ministers approved the
Interpretative Protocol of Article 44 of the Montevideo Treaty of 1980 allowing members
that have granted preferences to third countries the right not to have to apply the MFN
clause and to extend these preferences to the other LAIA members provided negotiations are
launched to compensate LAIA members. Mexico ratified this Protocol, and invoked it in
September 1994, with regard to its obligations to LAIA members in respect of its
membership in NAFTA.
29. Besides the LAIA agreements, there exists another major sectoral in the Western
Hemisphere, the Canada-U.S. AutoPact. This bilateral agreement was signed by the two
countries in 1965, and provides for duty-free trade in automobiles and automotive parts.
It is significant not only for the amount of trade that it covers — the automotive
sector is now the largest segment of the world's largest bilateral trade relationship
— but also for the precedent that it set. This was the first significant departure
that either the United States or Canada took in the post-war period from the rule of
multilateralism. Both U.S. and Canadian negotiators cited the positive experience with
this agreement when they began their bilateral FTA negotiations in 1986. The AutoPact was
incorporated in the Canada-U.S. Free Trade Agreement.
30. World Trade Organization, Regionalism and the World Trading System
(Geneva: WTO, 1995), 35.
31. For instance, Chile has signed a number of economic complementation
agreements with other LAIA members. These agreements, such as the Mexico-Chile free trade
agreement, are much wider in scope than the traditional partial scope agreements.
32. Economic Commission for Latin America and the Caribbean, Desenvolvimiento de los procesos de integración en América latina y el Caribe, 19.
Chapter III
Commonality and Divergence in
Existing Arrangements
One of the key tasks assigned by the leaders in Miami to the Special Committee on Trade was the preparation of a comparative analysis of existing trade arrangements in the Americas. The "compendium", in its preliminary phase, meets this objective. It examines eight agreements or arrangements: the Uruguay Round Agreement, the Southern Cone
Common Market, the Andean Group, the Central American Common Market, the Caribbean Common Market, the North American Free Trade Agreement, the Group of Three (Mexico, Colombia and Venezuela), a group of four Bilateral Free Trade Agreements between Chile on the one hand
and Mexico, Colombia, Ecuador and Venezuela on the other. (33)
This Chapter is based on information contained in the compendium of Western Hemisphere
trade arrangements being prepared by the OAS Trade Section, whose main findings are
summarized. The Chapter is divided into four sections. The first is a general section
covering broad issues such as type, scope and objectives of the agreements, their basic
administrative and executive structures, accession and withdrawal provisions and dispute
settlement. The second section is devoted to an examination of the terms of
liberalization, provisions relating to market access and regulation of trade. It includes
an examination of safeguard measures, trade remedies, technical and agricultural standards
related measures and rules of origin. The third section is devoted to issues such as
services, government procurement, the regulation of state enterprises, competition issues,
foreign investment and intellectual property provisions. The fourth and final section
examines four sectors (energy, autos, textiles and clothing, and agriculture) in which
various agreements provide for special approaches.
33. Other agreements such as LAIA and others mentioned in Chapter III will be analyzed
at a later stage.
General Considerations
- Scope:
- Excepting the WTO (multilateral), the agreements fall into two general categories: four
are customs unions and three are arrangements leading to free trade areas. One of the four
customs unions (Mercosur - 1991) is a fairly recent agreement while the Andean, Caribbean
and Central American arrangements have longer histories. Each of the earlier agreements
have had to be modified to fit changing circumstances. The ability of the agreements to
adjust to new conditions is one of their central features. In certain cases, trade
liberalization for example, adjustments have had to be made to respective schedules in
light of members' inabilities to meet certain original, or even modified, deadlines. In
other cases, the adjustments have been made so that the agreements could enter into new
territory such as the adoption by the Andean Group of a well developed set of intellectual
property provisions.
The free trade agreements, on the other hand, are fairly recent in
vintage. NAFTA is the most comprehensive and served as a useful model for the negotiation
of the Group of Three agreement, which nevertheless, reflects the special interests of its
constituent members.(34) The Chilean bilaterals, while sharing a number
of common traits are essentially designed to address specific bilateral liberalization
objectives, and are focused on liberalization of trade in goods. NAFTA, on the other hand,
is the only true "generic" agreement where the obligations contained in the
various Articles are binding on all of the "Parties." In NAFTA, derogations or
exceptions to the obligations are contained in various Annexes or reservations schedules.
NAFTA also incorporates by reference the obligations of the Parties under the GATT and any
successor agreements. In addition, while a number of the agreements have elements that
might be described as WTO-plus, the NAFTA is the only agreement that goes far beyond the
WTO in such areas as investment, services and government procurement.(35)
There are significant differences with respect to institutional development among the
agreements. Some agreements, such as the Andean Group, Caricom and the Central American
agreements are significantly more developed in this respect than other agreements such as
Mercosur or NAFTA. In the case of the former agreements, one encounters Secretariats that
are fully established with defined work programs and which serve as central points of
contact for information or further elaboration of the agreements themselves. On the other
hand, agreements such as NAFTA or the Group of Three have adopted a minimalist approach to
institution building which makes obtaining information on the agreements and commercial
opportunities more difficult. By and large, the provision of such information, not to
mention the further elaboration of the agreement itself, remains a responsibility
primarily of national governments working in concert.
NAFTA is the only agreement without a geographically defined accession clause, and to
which all countries of the Hemisphere could theoretically adhere. Membership in all the
other agreements is subject to geographical or other limitations at the subregional level,
none of which could theoretically encompass the entire Hemisphere. There are thus certain
practical difficulties, barring amendments being made to the agreements in question, in
achieving hemispheric free trade by the expansion in the membership of existing
arrangements to other countries, with the exception, as noted, of NAFTA.
34. In certain circumstances, Colombia and Venezuela are governed by their respective
obligations under the Andean Group, for example in the area of trade in goods. Those
obligations are brought forward into the Group of Three agreement by reference.
35. The Central American Agreement, for example, has made some progress
with respect to the adoption and harmonization of common technical standards that could be
considered to be WTO-plus.
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