BRINGING the FTAA home to Jamaica’ was the title of an article written by the deputy chief of mission at the US Embassy, and published in the Gleaner on March 23, 2002.

The article was well composed, emphasising many of the salient factors that will influence the success of this monumental undertaking to create a US$13-trillion market of 800 million people in 34 countries.

Unlike human beings, all countries are not created equal and this reality should have received greater prominence in the article, given that some 23 countries, or 67 per cent of the 34 resident in the hemisphere are considered small economies by whatever various measures are applied.

“Costa Rica left its Central American neighbours behind when it chose to be the first among them to abandon high tariffs and import substitution policies. This is a notable ‘small economy’ success.” Indeed, Costa Rica has been the beneficiary of many enlightened policies, including abolishing its army and investing the savings in the national education system. It is also noteworthy that Jamaica applied the Caricom Common External Tariff (CET) in full on January 1, 1991, and reduced it over five consecutive years ahead of its Caricom partners.

Any attempt to compare the size and economic strength of the gargantuan industrialised countries to the North and South of the Caribbean Sea with the 14 Caricom micro states, must comprise a significant degree of differentiation. This fundamental principle has been proclaimed since the inception of the free trade movement in 1994 at the Summit of the Americas, yet, there are still certain countries that are overtly opposed to this basic argument. For years the Hemispheric Working Group, now called the Consultative Group on Smaller Economies, has expounded this logic that finally received recognition at the VI Business Forum of the Americas in Buenos Aires in April 2001.

At the press conference in Buenos Aires, USTR Robert Zoellick in commenting on the Ministerial Statement resulting from the forum, stated “you will also find in the Ministerial Statement a commitment to help smaller economies of the region take part in this negotiation. And I think this was one particularly important element of our discussions. And this relates particularly with the Caricom countries, which, as you may know, are 14 countries, some of which are quite small. And they, as a group, make clear that part of the challenge in moving forward was simply having the capacity to have people negotiate, and to be able to take part in all these chapters of work. And so to help move this process along in my meetings with a number of the smaller countries, not only the Caricom, but also countries in Central America, over the past couple of days I talked about how some of our AID programmes can help develop this capacity”.

The area that is to be vigorously negotiated is the transition period from 2005 before final acceptance of the tariff reductions by Caricom states. Up to April 2001, there was no agreement yet on the phase-out of tariffs. Negotiations were to start in May 2001. According to USTR Zoellick at the press conference, “first off, the free trade area is supposed to eliminate all tariffs and the phase-in can run up to 10 to 15 years under the ones I know about, for example NAFTA. That’s what’s to be negotiated, but that’s a reasonable framework of 10 to 15”.

Comparing the relative level of development of Mexico and the US that both negotiated a 15-year transition for certain sectors under NAFTA, there is an argument to propose that Caricom should be granted 20 to 25 years, with predetermined objectives and timelines to be achieved. As the WTO limits such transitions to 10 years, a waiver would be necessary but given the grounds this should not be beyond the realm of possibility.

The primary recommendation of the Costa Rican delegation dealing with small economies at the forum, expresses these sentiments well: “The Central America and Caribbean countries must be classified as small economies, or with less relative development, and be treated in a differential manner. This might imply longer terms and temporary exceptions to comply with specific commitments. This issue must be managed in a transversal way with the other groups.”

USTR Zoellick’s answer to another question adds further definition to the method of dealing with small economies.

Questioner: “On the question of small economies, you mentioned technical assistance is needed to help them get up to speed. Should there be special or differential treatment for small economies in terms of their commitments to the FTAA?”

Zoellick replied: “I think what the text reflects and the discussion reflected is a recognition that this issue should be examined case by case. And clearly that would involve aspects like phasing in some of the reductions of barriers. When we talked about this in the context of another proposal we made, which was how to use the committee on the smaller economies, we also suggested that people might want to develop criteria. The problem of doing classifications is some big countries are very poor, and some small countries are actually in better condition. Take Caricom for example, that includes Haiti, which is much bigger than Barbados, but much poorer. Barbados, which is much smaller but relatively has higher incomes. So those are the problems you are dealing with.”

Questioner: “Does case by case mean product by product or country by country?”

Zoellick answered: “It could be both.”

It should be observed that Caricom is negotiating as a single entity.

The Gleaner article maintains that “one of the most common myths concerning trade and development is that free trade somehow disadvantages poor countries. This could not be farther from the truth. Free trade is a powerful force for development. Development is about creating conditions that make individuals as free as possible to realise their own innate potential”.

We add that free trade alone is not the panacea for all that ails the world, including our hemisphere. If the depressing information provided by President Fidel Castro at the recent Monterrey conference is accurate, and we have no reason to believe it is not, “The revenue of the richest nations that in 1960 was 37 times larger than that of the poorest is now 74 times larger. The situation has reached such extremes that the assets of the three wealthiest persons in the world amount to the GDP of the 48 poorest countries combined”. This makes the theory of free trade and development seem to be somewhat more than a “myth”.