USAID LAC Trade Update -
October 2004

A. Trade Negotiation Update

The fourth round of talks between the U.S. and the
Andean countries on the Free Trade Agreement (FTA)
was held Sept. 15-17 in Puerto Rico.

The U.S. met with representatives of the individual
nations (Bolivia, Colombia, Ecuador and Peru) as well
as the Andean group as a whole to address trade
capacity building (TCB) needs in preparation for a
potential FTA agreement. Areas of TCB assistance
covered included civil society outreach, customs, and
business development.

International Trade Patterns Shift

International trade patterns have changed in two
significant areas since 1985, according to a June report
from the World Trade Organization (WTO). They
are: a) Growth in the services trade no longer outstrips
growth in goods; and b) Agriculture trade has shifted
towards processed products and away from
commodities.

The report runs in the face of perception that commercial
services trade is growing faster than trade in goods.
“Indeed trade in commercial services expanded faster
than goods trade in the second half of the 1980’s, but
thereafter the report is mixed,” according to the WTO
report.

Between 1990-2003, trade in commercial services and
goods grew by about six percent per year and therefore
the services’ share of international trade remained at
about 20 percent over the period. “Overall there is no
indication that the services categories in general have
increased their share in international trade,” according to
the report.

The fastest growing sectors are industrial products
(e.g. manufactures) and new services (computer and
information, financial, insurance, telecommunications and cultural/recreational). Sectors growing slower than the
average included transport, agricultural goods and mining
products.

Agriculture Institute Calls for “Redefintion”

The Inter-American Institute for Cooperation on
Agriculture (IICA) recently called for closer relations
with its 34 member countries. It further said it should
undertake a “process of renewal, reflection, redefinition
and evaluation” to ensure that its work programs are
consistent with national objectives.

The first step is to enter into a dialog with national
authorities, the private sector, academia and civil society,
said IICA Director General Chelston Brathwaite.
“The fundamental change is that we now listen more
carefully to the countries and only do…what they truly
need. We ….cannot go to the countries with
preconceived notions or ‘one size fits all’ proposals,”
he said in the recently published report, A 21st Century
Model for Technical Cooperation.

Sound Local Economies Necessary for FTA to
Work

Governments cannot hope to reap benefits of open trade
if they fail to secure macroeconomic stability,
infrastructure improvements and the existence of sound
institutions, according to the World Trade Report 2004.

“These things go hand-in-hand. Failure or neglect in one
areas spells disappointment in others,” said WTO
Director-General Supachai Panitchpakdi in the report.

He said that cooperation should not be forced upon
governments where there is no shared perception of
common interests. He added, “Nor should efforts to
cooperate serve as a surrogate for getting on with what
needs to be done at home.”

B. TCB Resources

The Case for CAFTA by Dan Griswold and Dan
Ikenson – The two trade experts from the Cato Institute
argue that the Central American Free Trade (CAFTA)
does promote freedom, development and higher
standards in a region of vital importance to the U.S.

USAID is completing its annual survey on Trade
Capacity Building (TCB) to update the TCB database.

C. Upcoming Events

October 18-22 – Fifth round of U.S. Panama FTA
negotiations (Panama City, Panama)

October 18-19 – Synthesis Workshop on Global Horticulture Challenges will be held at the University of California, Davis. The workshop will develop guidelines for a nine-month regional assessment project in horticulture.

October 22-23 – A Conference on Ending Hunger: Heifer at 60 will be held in Little Rock, ARK.

October 25-29 – Fifth round of U.S. - Andean FTA
negotiations – (Guayaquil, Ecuador)

October 25-26 – Annual Cumbre Centro-Americano:
Financing Growth in a Time of Integration – LatinFinance
will sponsor the “invite only” conference that brings
together private and public sector leaders with direct and
indirect investors.

November TBD – Sixth round of U.S. Panama FTA
negotiations (Washington, DC)

December 6-8 – The 28th Miami Conference on the
Caribbean Basin: An Integrated Third Border will be held
at the Inter-Continental Hotel in Miami Beach, FL. The
future of the FTA, the Caribbean Single Market and
Economy and international security measures will be
discussed.