"Special and Deferential Treatment" for Small Economies in the FTAA

  
The question of how small economies fit into the FTAA has been recognized as a crucial aspect of the negotiation process since its inception. Currently, the discussion involves determining what types of special and deferential treatment (S&D) are needed to accommodate small economies to the trade regime agreed to in the overall FTAA. As the technical negotiations progress toward their final stages, the basic issue of trade and development is a central focus for a significant number of the 34 countries involved in negotiations. They are showing increasing concern about how their economies will fare in the final negotiations and are seeking some sort of protection. Measures such as longer periods to phase in their obligations as well as the need for large amounts of technical and developmental assistance are being discussed, and what was originally seen as a peripheral issue is quickly becoming a "b�te noir" for negotiators at the USTR. Ambassador Richard Bernal of Jamaica continues to be the leader of the movement, since the Caribbean states are among those most affected. However, the anxiety is spreading to some of the strongest economies in South America, which have shown signs of weakness of late.

To get a sense of the impact and import of this issue, it is instructive to see how it has been handled in the WTO negotiations. The S&D question was passed on to the Committee on Trade and Development by the WTO's Trade Negotiations Committee after Doha. The July 17 meeting of this group was suspended due to lack of agreement on the issue and the procedures to deal with the many tough questions and proposals being raised by developing countries. The group was supposed to report back to the Trade Negotiations Committee by the end of July, but this deadline was extended to the end of the year. Developing nations would like to push the S&D questions into 2003 and keep the momentum of the other negotiations moving. The hope is that by letting S&D discussions lag, the progress on other issues will be a carrot that will allow a better outcome on questions of phasing in the agreement and the amount of development assistance necessary. In addition, the developing countries don't want S&D issues to "leak' into the other negotiations. They prefer that they remain isolated (as they currently are in the FTAA process).

The Committee on Trade and Development specifies two particular objectives to report to the General Council of the WTO. According to Bridges trade news, these are: "firstly, to identify those S&D provisions that are mandatory/non-mandatory, consider the legal implications of making non-mandatory provisions mandatory, and identify those provisions that Members consider should be made mandatory. Secondly, Members are to examine additional ways in which S&D provisions can be made more effective and to consider how developing country Members can make better use of S&D provisions." This complicated language masks the real issues of timing and development assistance that make most developing economies nervous. These countries feel that they are becoming part of a globalized trading system without any ability to adapt their economies to the new demands. The same argument can be seen from the perspective of the objections raised by the US textile industry and the state of Florida agricultural sector during the recent Trade Promotion Authority debates.

S&D is part of the overall question of the relationship between the Summit of the Americas process and the FTAA negotiations. Trade negotiators have sought to isolate trade from the other areas of the Summit. In contrast, civil society groups opposed to the FTAA have tried to show the intimate connection between trade and development models in their nations. It would be wise to keep an eye on the tensions growing within the FTAA process as well as how they might be linked to political questions of approving the FTAA in many fragile local economies. Many parallels can be drawn with the current WTO impasse on the same issues.