Remarks by Cesar Gaviria Trujillo at the 26th Washington Conference on the Americas

Good Morning, Ladies and Gentlemen. I am delighted to be with you today to discuss recent developments in the Americas. We live in times when our perceptions of the state of the world are shaped by strong impressions and dramatic events. The same is true in the Americas, and, indeed, in each of our countries where there is little left to compare with our recent pasts. Yet, the recent failed coup in Paraguay not only stirred things up in that country. It also acted as a powerful reminder, for many, of what we have left behind, and of the road we have yet to travel before the specters of the past can be buried once and for all.

In the midst of all this, I have come here today to share with you some of my thoughts about the progress that has been accomplished in the Hemisphere in the last two years since the Summit of the Americas, and to reveal to you that, despite a heavy blanket of daily news about domestic problems, there is indeed a healthy free trade process that is proceeding apace. As the novelty of Free Trade in the Americas has moved away from the front pages of our newspapers into the reports of the technical groups responsible for nurturing the process, substantial work is being carried out to lay the groundwork for far reaching decisions by 2005.

Personally, I remain decidedly optimistic about the prospects for our Hemisphere. There are many reasons that strengthen my outlook. First, I believe that the changes that have reshaped Latin America in the last ten years are fundamental and here to stay. Second, last's month's meeting in Cartagena, Colombia generated more forward momentum in the trade talks. Finally, the successes on other regional issues will continue to contribute toward facilitating further negotiations on trade.

At this time, I would like to review the latest developments emanating from last's month's Meeting of Foreign Trade Ministers in Colombia. As you know, the Cartagena Trade Ministerial marked the third milestone on the path toward a Free Trade Area of the Americas or FTAA. The first, naturally, was the Miami Summit of December 1994, when the Heads of State and Government of 34 countries in the Western Hemisphere agreed on the ultimate objective of building the FTAA. That meeting was followed a scant six months later when the Trade Ministers met for the first time, in Denver, Colorado, with the stated goal of giving further form and direction to the objective agreed upon by the leaders.

In between the Denver Trade Ministerial and the Cartagena gathering, a lot was accomplished at the technical and senior officials levels. The Denver meeting succeeded in launching what has been referred to as the preparatory process of the FTAA negotiations. At that meeting, the Ministers established seven working groups to deal with areas of particular interest to all the participating countries ranging from market to phytosanitary standards and technical barriers to trade.

These working groups organized their activities in such a way as to fulfill the following inter-related tasks: I) to collect and disseminate information on trade and trade-related matters; ii) to find areas of commonality and divergence in the various trade regimes; and iii) to identify the elements that could be the subject of agreement at the hemispheric level. The work carried out by the different working groups has proven to be of critical importance to the FTAA process. They are helping to increase knowledge and transparency in the functioning of trade rules in all the participating countries, thus building the foundation for future FTAA negotiations.

To date, they are significant accomplishments by the working groups. To cite but a few examples, the Working Group on Investment has succeeded in moving forward towards the establishment of a common investment framework by deciding to concentrate, in the near future, on the key elements that could be included in such a framework. Issues being examined by this Working Group will be presented shortly in an OAS document that inventories the Hemisphere's investment regimes.

A massive amount of work is also being undertaken by the working groups dealing with market access and rules of origin. With the help of the Inter-American Development Bank (IDB), they are putting together an ambitious and comprehensive data base that will include information on trade flows within the hemisphere, as well as on tariffs and non-tariffs barriers. A comparable effort is being made by the Organization of American States (OAS) regarding antidumping and countervailing duties laws and regulations, technical barriers to trade and other trade-related disciplines. All this information will be needed before the actual negotiating process could start.

Although we have significant achievements, much more remains to be done. We are at the beginning of a process that no doubt is ambitious in its objectives and complex in its implementation. The negotiation of a free trade agreement among all the countries is a major undertaking. A lot of imagination will be required to deal with the variety of situations and the differences in size and level of development of the various participating countries. Much energy and political will needs to be deployed.

In this sense, the Trade Ministerial succeeded in moving the FTAA process forward. The Cartagena Meeting was instrumental in giving the FTAA process a more structured form, and in keeping the preparatory work of the negotiations on track. Moreover, the meeting served to highlight the political commitment of all the participating countries to construct the FTAA by the year 2005, and to make concrete progress towards this end by the end of the decade.

The results of the Cartagena Trade Ministerial can be summarized in five main points. First, the Ministers decided to give early consideration to the path and timing of the FTAA negotiations. Specifically, they mandated their Vice-Ministers to discuss possible "approaches" to the construction of the FTAA, as well as the "timing and means" of launching the negotiations, and to make concrete recommendations in this regard before the next Trade Ministerial, which will be held in Belo Horizonte, Brazil, during the second quarter of 1997. This has so far remained an open question, and one that is critical to the entire FTAA process.

Although countries have committed themselves to negotiating the FTAA, they have made no decision regarding the road to be followed to achieve this goal. In fact, a divergence of views prevails among the participating countries from the progressive convergence of the different subregional agreements, presumably through intra-group negotiations to a distinct, hemispheric-wide agreement. It is clear that any decision in this regard will have great political significance, as it will set the course for formal FTAA negotiations.

Second, the Ministers clarified some of the issues regarding the participation of the smaller economies in the FTAA process. They agreed that all the working groups should take into account the particular situation of these countries, and seek "ways to provide opportunities to facilitate (their) integration...and increase their level of development". The need to provide technical assistance to the smaller economies in order to ensure their full participation in the entire FTAA process was also highlighted by the Ministers. For all practical purposes, this decision implies that the concerns of the small economies should be somehow reflected in all areas of the negotiations. Third, the Cartagena Ministerial enlarged the mandate of the Vice-Ministers. In addition to identifying and examining trade-related measures in order to prepare for the negotiations, the Vice-ministers were requested to consider, and to approve, trade and investment measures that could be implemented immediately. In fact, the Vice-Ministers emerged from the Cartagena meeting as a major player in the whole FTAA process. This could be considered as a step forward in the "institutionalization" of the FTAA process.

Fourth, the preparatory process of the negotiations was strengthened. In addition to the existing seven working groups, five new ones were established to deal with areas of great importance to the future FTAA. Of these, four (competition policy, trade in services, intellectual property rights, and government procurement) will start functioning immediately. The fifth working group (dispute settlement mechanisms) will become operative after the next Trade Ministerial, but the OAS was asked, by the Ministers, to begin the analysis of the mechanisms being used in bilateral and subregional trade agreements in the Hemisphere. It was also decided to create a study group on trade and the environment (once the issue is considered by the WTO Ministerial Meeting in Singapore).

The widening of the FTAA process will certainly add to its complexity. Each of the new subject-areas is a challenge in its own right. These are, for the most part, new areas. In the case of trade in services, the lack of reliable data on most service transactions is well known; and negotiations in this area will be difficult as they relate to government policies and regulations. On the other hand, no international or regional agreements exist in the field of competition policy; and intellectual property rights and government procurement are two areas where the political sensibilities run very high.

Finally, it should be underlined that the Cartagena meeting also marked the beginning of a more active participation of the business community in the building of the FTAA. The Business and Commerce Forum that was held immediately before the Ministerial meeting was widely attended by company representatives and officials of business associations from most countries in the Western Hemisphere. The Forum was structured in such a way that it facilitated the discussion of a variety of issues of particular relevance to the FTAA process. The main conclusions of the private sector' s deliberations were presented to the Ministers for their consideration, and this set a precedent that will surely be followed in the future.

A more active participation of the private sector will greatly influence the FTAA process. At the aggregate level, general support of the FTAA by the business community could help to keep it moving, as it would create a supportive environment for trade and investment liberalization measures at both the national and hemispheric levels. More specifically, it is expected that at least some of the proposals put forward by the private sector -at the Cartagena Forum and subsequently- would contribute to the identification of those "concrete measures" which all countries have agreed to implement before the end of the decade.

The Organization of American States decided early on to support the integration of the Americas. The mandate was clear from Miami; and, the OAS is not only prepared but also actively engaged in support of the member states to carry it out. To date, the Organization of American States has assisted the FTAA process through three mechanisms:

1) The Tripartite Committee -- consisting of the OAS, the Inter-American Development Bank and the UN Economic Commission for Latin America -- is providing technical assistance to the working groups formed in Denver. The OAS is working most closely with four of the groups -- investment; subsidies, anti-dumping and counter-vailing duties; standards; and smaller economies.

2) The OAS Special Committee on Trade which was founded in 1993 to bring together high-level trade officials from the member countries to address the trade needs of the hemisphere. This group met in conjunction with the vice ministerial in Bogota and presented a document to the Trade Ministers which included a compendium of the Western Hemisphere trade agreements, prepared by the OAS Trade Unit, and a paper on Rules of Origin, prepared by the IDB.

3) And third, the Trade Unit of the OAS, which I formed last year to provide analysis on hemispheric trade and integration. In addition to working with the Tripartite Committee and the Special Committee on Trade, the Trade Unit provides briefings to public and private sector groups on the FTAA process, publishes a bimonthly newsletter with factual information on government and business trade activities in the hemisphere, and is building an Internet resource on trade agreements. Much of this information can be useful to the private sector as they conduct business in the Hemisphere and involve them more actively in the FTAA process.

In these three ways, the OAS is putting its weight behind the FTAA process and looking at the broader issues on integration which were part of our reality before the Miami Summit and will be with us well beyond the 2005 completion date of the FTAA.

I would also like to discuss what we must do in the years ahead to adopt a strategy of collective action and domestic policy that will enable us to consolidate our gains and move ahead toward the Free Trade Area of the Americas. And let me re-emphasize that I do not envision building of the FTAA to be mainly an economic undertaking. It is one of the most ambitious political projects that our hemisphere has undertaken. The most urgent tasks are:

First, to preserve the political will of the countries and their governments

In this respect, the constructive role played by the OAS in coming to support of Paraguay's President Wasmozy was a convincing demonstration of the power of collective action in support of political stability in our Hemisphere. In support of democracy, the OAS will also play an increasingly comprehensive and ambitious role in three directions. The OAS will continue to seek resolution of conflicts that threaten democracy in the hemisphere. The organization will work to anticipate and dismantle pressures that can eventually undermine democratic institutions; and, in response to the request from Member States strengthen democratic institutions and processes through technical assistance to municipalities, electoral bodies, regional political fora, and national human rights bodies.

Second, to honor the commitments made at the Miami Summit in the area of social and environmental policy

For instance, the search for the right mix of policies that foster sustainable development will also receive substantial support within the framework of the OAS. In the next few months leading up to the upcoming Bolivia Summit, the OAS will consider several proposals including the creation of a new Unit for Sustainable Development and a new hemispheric plan of action, which will include proposed reforms in the legal field focusing on the environment.

The fight against poverty in Latin America and the Caribbean can no longer be postponed. The problems in this area are reaching crisis proportions. Yet, despite the increased allocation of resources to social expenditure in the region, the target population -- the poorest -- have not seen substantial improvement in their condition. In the area of social development, the OAS is moving forward to address the deeper structural problems as well as the constraint on effective policy formulation and implementation.

A third urgent task confronting the Hemisphere is to strengthen our democracies and combat threats to them in the form of corruption, drug trafficking, and terrorism

In this arena, recent action by the member states of the OAS has demonstrated unequivocally their commitment to address a whole range of hemispheric concerns. On one hand, there is the Inter-American Convention on Corruption which is of great importance to the business community throughout the region. On the other, the Specialized Conference on Terrorism, held in Lima in April, is a convincing expression in favor of democratic resolve in the struggle against a phenomenon that sows destruction and death among the population, creates a feeling of collective panic, and seeks to bend and subject the will of all people.

Attainment of these objectives will strengthen the foundation on which we have built so far. It is pointless to move forward in trade matters if democracies are crumbling because of corruption, or if people are rising up against free enterprise because they mistakenly blame it for the inability of their governments to carry out social policies intended to improve the standard of living of the poorest sectors.

The OAS will be actively involved in seeking solutions to the issues that either directly affect the trade negotiations or contribute positively to the environment in which these trade negotiations take place. The number of questions and matters that transcend the frontiers and the jurisdiction of national bodies and authorities is constantly on the rise. Topics such as those connected with human rights, corruption-related crimes, and drug trafficking or money laundering, as well as the environment and sustainable development to cite just a few, are becoming increasingly international in scope, and more and more countries are becoming involved in both the generation and the resolution of these problems. As the political forum of the Hemisphere, the OAS is once again playing an important and growing role as a facilitator and promoter of collective action wherever it can to assist its member states to formulate solutions that make sense back home.

In closing, the economic integration of the Americas will reshape the social, political and cultural context within which all citizens can pursue their dreams and improve the lives of future generations. There is no doubt that this great enterprise would not have been possible just a few years ago at a time when only a few nations shared a political and economic goals. Today, it is not only possible, but actually occurring. With the full support of each of our organizations, the process toward a Free Trade Area in the Americas will continue to expand.

Thank you.