TO: Quito Committee

FROM: Victor Mennotti, International Forum on Globalization (U.S.)

RE: WTO-FTAA LINKAGES AND OPPORTUNITIES

DATE: 9/12/02

Nothing has captured the attention and focused the collective energies of social movements in the Americas like the growing hemispheric campaign against FTAA. How this relates to the organizing opportunity of the World Trade Organization's September 2003 Ministerial in Cancun, Mexico, is a question whose answers will have nothing less than global impact.

Before this happens, leading critics of FTAA need to consider what currently prevents the finalization of an FTAA, we see the differences between the US and, mainly, Brazil. The negotiating themes of biggest conflict between the two are:

• Agriculture (including Export Subsidies);
• Anti-Dumping;
• Market Access;
• Intellectual property
• Investment.

In my opinion, these negotiating themes will most likely be addressed in WTO, not FTAA.

One reason is that may be impossible for US and Brazil to agree on these issues without other WTO members at the table, i.e., the US is unlikely to reduce farm subsidies unless the EU goes along as well. Another reason is that Brazil's trade negotiator has always openly displayed his country's strategy of preferring to address these issues in the WTO, where they enjoy more leverage by teaming up with other nations. He actually compares the dynamics of multilateral trade negotiations with the US to being in the boxing ring with Mike Tyson, where the more people there are in the ring the less a nation like Brazil will be punished by the most powerful puncher (the US) because Brazil can find better protection, or combine forces, because there are more people who are also trying to avoid "taking heavy blows."

Then there is today's new context in which hemispheric negotiations must take place:

• Brazil's strongest partners against US negotiating power (Venezuela and Argentina) are now highly unstable governments. This makes Brazil weaker, and perhaps even less willing to negotiate seriously.
• Brazil's upcoming elections, where Worker's Party candidate Lula leads in the polls, causing other candidates to also talk tough on FTAA, in turn prompting the Financial Times to editorialize last Friday to calm the nerves of Brazil's foreign investors. Lula calls FTAA "not a policy of integration, it's a policy of annexation." There is also a recent piece from a Brazilian business newsletter which admits that Lula's anti-FTAA rhetoric is "gaining more force in Brazil." Of course, what happens by election time is hard to say; US bond-rating agencies have already downgraded Brazil because of Lula's lead in the polls, possibly frightening away some of Lula's mainstream support.
• Recent US trade decisions taken by (albeit by various parts of) the US government:

B. US timber tariffs (against Canada, which is taking US to WTO)

1. US farm farming subsidies (the Farm Bill flies in the face of Doha committments, and what the US knows Brazil wants from FTAA)
2. Passage of Fast Track legislation (where the House version forbids

Of course, all of this could change. The US could back down from protecting these industries, as it has done so often in the past. What is clear is that the politics (especially in Brazil and US) are changing, protectionism is on the rise, and all that makes WTO as the more likely venue where this agenda will advance.

This does NOT mean that we should ignore or let up in our resistance to FTAA, because things are indeed moving there. FTAA is a critical venue to build momentum for other fora like WTO. Even more importantly, FTAA has captured the attention of Latin American social movements as a political concept more than WTO has (witness the still-low-level of engagement of LA groups in WTO organizing internationally, as compared to FTAA). So, as a matter of effective political education and mobilization, we should absolutely continue to advance our free trade critique via FTAA organizing.