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entitled 'Free Trade Area of the Americas: Negotiations Progress, but 
Successful Ministerial Hinges on Intensified U.S. Preparations' which 
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Report to the Chairman, Committee on Finance, U.S. Senate, and to the 
Chairman, Committee on Ways and Means, House of Representatives:

April 2003:

Free Trade Area of the Americas:

Negotiations Progress, but Successful Ministerial Hinges on Intensified 
U.S. Preparations:

GAO-03-560:

GAO Highlights:

Highlights of GAO-03-560, a report to the Chairmen, Senate Committee on 
Finance,  and House Committee on Ways and Means 


why GAO Did This Study:

Establishing a 34-nation Free Trade Area of the Americas agreement has 
been under negotiation since 1998. This agreement would eliminate 
tariffs and create common trade and investment rules for these nations. 
Most recently, the United States, along with Brazil, assumed the 
leadership of the negotiations. GAO was asked to analyze (1) the 
challenges for the current negotiating phase, which will include a 
ministerial meeting in Miami, Florida, in November 2003; and (2) the 
U.S.ís readiness to serve as co-chair of the negotiations and host of 
the November 2003 ministerial.

What GAO Found:

USTR, which is responsible for co-chairing the Free Trade Area of the 
Americas negotiations and hosting the November 2003 ministerial 
meeting, faces challenges to its readiness to assume these 
responsibilities. During the current negotiating phase, achieving 
improved market access for the 34 nations is paramount. It may be 
difficult, however, for participants to make ambitious offers to lower 
tariffs and other trade barriers. Another challenge involves the 
resolution of issues such as subsidies for agriculture. The resolution 
of this issue has been linked to ongoing negotiations at the World 
Trade Organization, but these talks are bogged down.  A further 
challenge is ensuring the momentum and the political will of the United 
States and Brazil to move the process forward to a timely completion by 
January 2005.

As co-chair of the negotiations, USTR also faces risks to assuring its 
readiness as host of the November ministerial. First, USTR has little 
experience in hosting a major ministerial meeting, and its staff 
remains small and is stretched thin. Second, plans for the meeting are 
at an early stage, and much remains to be done. Third, USTR is counting 
on funding that has not yet been secured. And finally, USTR is likely 
to encounter protestors at the November ministerial. Factoring security 
for the invited participants into the logistical arrangements for the 
ministerial is a prime concern. 

What GAO Recommends:

The Office of the U.S. Trade Representative (USTR) should  intensify 
preparations and regularly evaluate whether current resources and plans 
are sufficient to carry out the tasks and mitigate the risks associated 
with its responsibilities as co-chair of the negotiations and host of 
the November ministerial. These are related to USTRís (1) increased 
workload, (2) planning for the ministerial, (3) funding sources, and 
(4) security needs at the ministerial.

USTR and the Department of State generally agreed with GAO's message 
but sought amplification on certain issues.

www.gao.gov/cgi-bin/getrpt?GAO-03-560.

To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Loren Yager at (202) 512-4347, or 
YagerL@gao.gov.

[End of section]

Letter:

Results in Brief:

Background:

Progress Achieved in Certain Areas Before and After Quito, but Extent 
and Pace of Movement on Substantive Issues a Concern to Some 
Participants:

Key Challenges Exist for the Current Negotiating Phase:

Gaps in U.S. Preparations for Co-chairmanship and Hosting of Miami 
Ministerial May Pose Risks:

Conclusions:

Recommendation for Executive Action:

Agency Comments and Our Response:

Scope and Methodology:

Appendixes:

Appendix I: Comments from the Office of the U.S. Trade
Representative:

Appendix II: Comments from the Department of State:

Appendix III: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Staff Acknowledgments:

Related GAO Products:

Figures:

Figure 1: Organization of the FTAA Negotiations:

Figure 2: Political and Economic Events in South America, December 2001-
April 2003:

Figure 3: History of the FTAA Negotiations, 1994-2002:

Figure 4: Tariff Reduction Schedule under Different Base Tariff 
Scenarios, 2005-2015:

Figure 5: FTAA Time Frames and Milestones, 2002-2005:

Figure 6: Relationship Between FTAA and WTO Agriculture Negotiations:

Figure 7: Keys to a Successful Ministerial:


Abbreviations:

ATPA: Andean Trade Preference Act:

CAFTA: U.S.-Central American Free Trade Agreement:

CAP: Common Agricultural Policy:

CARICOM: Caribbean Community:

EU: European Union:

FTA: Free Trade Agreement:

FTAA: Free Trade Area of the Americas:

HCP: Hemispheric Cooperation Program:

Mercosur: Common Market of the South:

NAFTA: North American Free Trade Agreement:

OMB: Office of Management and Budget:

TNC: Trade Negotiations Committee:

TPA: Trade Promotion Authority:

USTR: Office of the U.S. Trade Representative:

WTO: World Trade Organization:

Letter April 11, 2003:

The Honorable Charles Grassley
Chairman 
Committee on Finance
United States Senate:

The Honorable William H. Thomas
Chairman 
Committee on Ways and Means 
House of Representatives:

Negotiations toward establishing a Free Trade Area of the Americas 
agreement among the 34 democratic nations of the Western Hemisphere 
have formally been under way since 1998. Such an agreement would 
eliminate tariffs and create common trade and investment rules for 
these nations. If completed, the Free Trade Area of the Americas 
agreement would cover about 800 million people and about $13 trillion 
in production of goods and services. Work on this agreement is the most 
significant of ongoing regional trade negotiations for the United 
States, and the Bush administration has made establishing the Free 
Trade Area of the Americas one of its top trade priorities. Indeed, the 
United States assumed leadership of the process when it became co-
chair, with Brazil, of the current and final phase of negotiations. 
This phase began in Quito, Ecuador, during the ministerial meeting on 
November 1, 2002, and will conclude with the completion of the 
agreement.

Because of the significance of the Free Trade Area of the Americas 
initiative, you asked us to update our previous work for you on the 
current status of the negotiations. In this report, we analyze the (1) 
progress made in the negotiations on creating a Free Trade Area of the 
Americas and the outcome of the Quito ministerial meeting;[Footnote 1] 
(2) key challenges for the current and final negotiating phase, which 
will include a ministerial in Miami, Florida, in November 2003; and (3) 
readiness of the United States to successfully perform as co-chair 
(with Brazil) of the Free Trade Area of the Americas negotiations 
process and host of the November 2003 ministerial. Our analysis is 
based on our past and ongoing work on the Free Trade Area of the 
Americas negotiations process.[Footnote 2]

Results in Brief:

Progress on creating a Free Trade Area of the Americas had occurred in 
a number of technical and procedural areas by the time of the November 
2002 ministerial meeting in Quito, Ecuador. For example, participants 
had defined the timetable for completing the negotiating process and 
drafted versions of the agreement text. Participants also had set 
ground rules for conducting negotiations on liberalizing access to 
their markets and dates for exchanging offers on liberalizing market 
access. At the Quito ministerial, participants reaffirmed their 
willingness to continue Free Trade Area of the Americas negotiations 
while stressing the need for a balanced outcome that provides benefits 
to all participants. The negotiators also launched a Hemispheric 
Cooperation Program to help lesser-developed countries participating in 
the Free Trade Area of the Americas talks obtain the expertise and 
resources they need to negotiate, implement, and benefit from the 
agreement. However, trade-offs did not begin, because negotiators had 
made limited progress in resolving substantive differences in the 
agreement's text and developing concrete proposals to improve market 
access.

Three key challenges are of primary concern during the current phase of 
the negotiations. First, resolution of issues such as subsidies for 
agriculture, which are important for most countries of the hemisphere, 
have been linked to ongoing global negotiations at the World Trade 
Organization.[Footnote 3] However, there is concern that global talks 
are bogged down on issues such as agriculture subsidies and that this 
situation could cause Free Trade Area of the Americas talks to slow 
down or deadlock. World Trade Organization negotiators have already 
missed several interim deadlines, including one specifically related to 
agriculture. Second, improved market access is the single most 
important goal for most Free Trade Area of the Americas participants, 
and the quality of offers the 34 nations make will set the tone for 
ongoing negotiations. Offers to significantly reduce trade barriers 
could provide momentum to the negotiations, but it may be difficult for 
participants to make ambitious offers. Third, ensuring the momentum and 
the political will of the United States and Brazil, two of the key 
participants in the negotiations, to move the process vigorously 
forward to a timely completion is a key challenge.

As co-chair of the negotiations, the United States faces several risks 
to its readiness to ensure the successful conclusion of the final phase 
of Free Trade Area of the Americas negotiations. First, the Office of 
the U.S. Trade Representative, which handles the negotiations, has 
assumed the increased responsibilities associated with chairing the 
Free Trade Area of the Americas negotiations without a significant 
addition in staff. Second, the co-chair arrangement with Brazil is a 
novel situation that could involve additional time and effort for the 
U.S. Trade Representative. Third, certain aspects of the current U.S. 
plans for hosting the Eighth Free Trade Area of the Americas Trade 
Ministerial in Miami in November 2003 pose risks, including acquiring 
expertise in hosting a ministerial, working on planning the ministerial 
with the host city, arranging financing, and ensuring the security of 
ministerial participants. Failure to mitigate similar risks ultimately 
caused serious logistical and security problems at the last major trade 
ministerial hosted by the United States, the 1999 Seattle World Trade 
Organization ministerial.

In this report, we recommend that the U.S. Trade Representative 
intensify preparations and promptly and regularly evaluate whether its 
current resources and plans are sufficient to carry out the tasks and 
mitigate the risks associated with co-chairing the Free Trade Area of 
the Americas negotiations and hosting the November 2003 ministerial 
meeting.

In commenting on our draft report, the U.S. Trade Representative and 
the Department of State agreed with our overall message. However, the 
U.S. Trade Representative asked us to amplify on the steps it has taken 
to address the challenges ahead for the Free Trade Area of the Americas 
negotiations and upcoming November 2003 ministerial in Miami and 
stressed that it believes plans for hosting the ministerial are at an 
appropriate stage of development. The Department of State addressed the 
issue of its assistance to the U.S. Trade Representative by saying that 
it is trying to be as helpful as it can within the constraints of its 
resources. We have noted these positions in the report and added new 
information about several specific steps that the U.S. Trade 
Representative and State have taken to bolster U.S. readiness. 
Nevertheless, we maintain our basic findings and recommendation that 
U.S. preparations should be intensified and plans be kept under regular 
review.

Background:

Building on a decade of expanding trade and investment ties and 
increasing economic integration in the region, the leaders of 34 
countries in the Western Hemisphere pledged in December 1994 to form a 
Free Trade Area of the Americas (FTAA) no later than 2005. The 
agreement would progressively eliminate barriers to trade and 
investment. The FTAA involves a diverse set of countries,[Footnote 4] 
from some of the wealthiest (the United States and Canada) to some of 
the poorest (Haiti) and from some of the largest (Brazil) to some of 
the smallest in the world (St. Kitts and Nevis). The large disparities 
in size and economic development in the hemisphere mean that countries 
come to the negotiating table with different and sometimes widely 
divergent interests and goals. For example, the United States seeks 
broad improvements in trade rules and market access, while the smaller 
economies seek assurances that their economies will not be overwhelmed 
by larger ones. Many nations are participating in certain aspects of 
the negotiations as subregional groupings such as the Caribbean 
Community (CARICOM)[Footnote 5] and the Common Market of the South 
(Mercosur)[Footnote 6] to facilitate their participation in FTAA talks.

Between December 1994 and the formal launch of negotiations on March 
1998, the FTAA negotiators agreed on several principles to guide them: 
(1) All decisions would be reached by consensus; (2) The final FTAA 
agreement would be consistent with the rules and practices of the World 
Trade Organization (WTO); (3) The final agreement would be able to 
coexist with other subregional free trade and customs union 
agreements[Footnote 7] such as Mercosur and the North American Free 
Trade Agreement (NAFTA)[Footnote 8]; (4) Special consideration would be 
given to differences in levels of development and sizes of economies; 
and (5) An eventual FTAA agreement will be implemented as a single 
undertaking. A single undertaking implies that the FTAA is a package 
deal that must be accepted in its entirety by each signatory country in 
order for the country to benefit from the agreement's provisions. It 
also means that "nothing is agreed until everything is agreed," meaning 
that concluding the agreement could involve trade-offs across chapters 
of the proposed FTAA text agreement to achieve the desired balance.

Additionally, the negotiators agreed to the overall structure, scope, 
and organization of the negotiations, including establishing nine 
negotiating groups on particular areas. (See fig. 1.) The nine 
negotiating groups are (1) Market Access; (2) Agriculture; (3) 
Services; (4) Government Procurement; (5) Investment; (6) Intellectual 
Property Rights (IPR); (7) Competition Policy; (8) Dispute Settlement; 
and (9) Subsidies, Antidumping, and Countervailing Duties.[Footnote 9] 
The completed FTAA agreement is to include trade rules, which each of 
the nine designated negotiating groups is currently working to 
establish; market-opening schedules; and a general text to cover 
overarching and institutional issues.

Figure 1: Organization of the FTAA Negotiations:

[See PDF for image]

Notes:

Current chairs of the various FTAA entities are in parentheses. The 
general objectives of each negotiating group and the Trade Negotiations 
Committee appear in italics.

The venue for the negotiating group discussions is Puebla, Mexico.

[A] The Tripartite Committee, which provides technical support to the 
negotiations, is comprised of the Organization of American States, the 
Inter-American Development Bank, and the United Nations Economic 
Commission for Latin America and the Caribbean.

[B] The Administrative Secretariat supports the FTAA ministers, the 
Trade Negotiations Committee, negotiating groups, and other FTAA 
entities.

[C] SPS stands for sanitary and phytosanitary measures. These measures 
are taken to protect human, animal, or plant life or health.

[End of figure]

Until November 2002, the chairmanship of the entire negotiating process 
rotated in approximately 18-month cycles, with the beginning and end of 
each cycle marked by a ministerial meeting. Ecuador served as chair for 
the most recent cycle of negotiations, which began in April 2001 and 
ended with the November 1, 2002, FTAA ministerial in Quito, Ecuador. 
Brazil and the United States assumed the co-chairmanship of the FTAA 
process at the conclusion of the November meeting and are expected to 
remain in that role until the FTAA negotiations conclude in January 
2005. Handling the negotiations as well as the co-chairs' 
responsibility for the U.S. side is the U.S. Trade Representative 
(USTR). In between ministerials, the FTAA negotiations are overseen by 
the vice ministerial-level Trade Negotiations Committee (TNC). The FTAA 
Administrative Secretariat, located in Puebla, Mexico, is the entity 
responsible for providing logistical and administrative support to the 
FTAA.

The Quito FTAA ministerial meeting took place during an uncertain 
economic and political period for the region. Countering perceived 
threats to U.S. security became a central focus of the Bush presidency 
in the wake of the terrorist attacks of September 11, 2001. The U.S. 
economy had already slowed by the time the terrorist attacks occurred 
and has performed unevenly since then. As for Latin America, it faces 
poor economic conditions and political instability (see fig. 2). 
Moreover, the International Monetary Fund expected regional output to 
fall in 2002 by 
0.6 percent, in part due to the economic crisis in Argentina. In 
addition, several countries elected new leaders in 2002, and the 
leaders have placed a priority on confronting domestic issues such as 
rising poverty. Finally, political instability in countries such as 
Venezuela, and ongoing violence in Colombia continued. This uncertainty 
has caused some hemispheric leaders to question the economic and social 
impacts of market-oriented reform. On the other hand, the need to 
increase exports has become even more imperative to Latin American 
countries' growth and development.

Figure 2: Political and Economic Events in South America, December 
2001-April 2003:

[See PDF for image]

[End of figure]

Although the single most important goal for most FTAA participants is 
improving market access to other nations' markets, achieving 
substantial liberalization will be difficult. Barriers to trade remain 
high: The tariffs of many FTAA participants are generally twice as high 
as the average U.S. tariff of 4.8 percent. Moreover, several indicators 
suggest trade within the region is lower than it could be. 
Intraregional trade within several regional subgroups remains 
relatively low (7.1 percent of total trade in CARICOM and 10 percent in 
the Andean Community[Footnote 10] versus 46.9 percent in NAFTA). 
Certain nations, such as Brazil, export significantly less as a share 
of national income than other nations with similar-sized economies 
(13 percent versus 28 percent in Mexico). In addition, tariff revenue 
is an important source of government income for many FTAA nations 
(56 percent of total government revenue in the Bahamas and 43 percent 
in the Dominican Republic, versus just 1 percent in the United States 
and Canada).

Progress Achieved in Certain Areas Before and After Quito, but Extent 
and Pace of Movement on Substantive Issues a Concern to Some 
Participants:

Before the Quito ministerial, FTAA participants had succeeded in laying 
a technical foundation for an eventual FTAA agreement by making 
progress in defining the remaining negotiating timetable, consolidating 
the draft text, and establishing the ground rules for liberalizing 
market access. (See fig. 3.) At Quito, negotiators achieved a number of 
positive procedural and political outcomes, such as confirming the 
schedule for upcoming market access negotiations and other negotiating 
meetings; reaffirming the political willingness to go forward; and 
launching a program to help developing nations negotiate, implement, 
and benefit from an FTAA. However, procedural progress on market access 
was not generally matched by substantive agreement on text-related 
issues, and some key deadlines were missed or only met by postponing or 
avoiding difficult decisions.

Figure 3: History of the FTAA Negotiations, 1994-2002:

[See PDF for image]

[End of figure]

Progress Made on Defining Timetable and Text:

Since the formal launch of FTAA negotiations in 1998, the 34 
participating countries have laid a technical foundation for concluding 
an FTAA agreement by setting a final deadline for completing the FTAA 
as well as establishing interim milestones to ensure steady progress 
toward that goal. By November 1999, the nine negotiating groups had 
prepared annotated outlines of chapters of an agreement. By April 2001, 
the negotiating groups had produced a draft text containing proposed 
trade rules on diverse subjects ranging from agriculture to competition 
policy. This draft was 
435 pages long, and it contained a compilation and consolidation of 
proposals for legal text received from FTAA participants. Participants 
described its production as marking important progress, because the 
draft laid the necessary groundwork and participants have agreed to use 
the draft as the basis from which negotiations will proceed. In 
addition, in publicly releasing the text, ministers responded to public 
calls for greater transparency (openness) and sought to build public 
understanding of and support for the FTAA.

In the 18 months leading to the Quito ministerial, the nine FTAA 
negotiating groups made progress in consolidating the draft text. 
Decision-makers clarified their policy choices by removing redundant 
language and consolidating similar proposals. For example, they 
shortened the intellectual property rights chapter from 106 pages to 53 
pages. Moreover, the Technical Committee on Institutional issues, a 
special drafting committee created by the TNC for that purpose, 
submitted a draft text on general institutional issues. This draft text 
covers such topics as the purposes, objectives, and principles of the 
FTAA agreement as a whole; the scope and coverage of the FTAA's 
obligations; and the institutional bodies that will provide political, 
administrative, and technical oversight for an FTAA. However, much of 
the text in the draft chapters remains within "brackets," denoting lack 
of agreement among participants. This lack of substantive movement is a 
concern to some observers, given that only 
20 months remain until the January 2005 deadline for concluding an 
FTAA. Resolving these disagreements will require considerable work and 
hard bargaining to turn the accumulation of proposals currently on the 
table into a mutually agreed-upon, legally binding document. As we 
noted in our March 2001 report, the sheer scope and complexity of the 
trade rules contemplated will make this work difficult.[Footnote 11]

Ground Rules for Liberalizing Market Access Established:

A key goal of the Quito phase of FTAA negotiations was to set the 
ground rules ("modalities") that would apply to negotiations on opening 
markets among FTAA members. These negotiations will be conducted in 
five of the nine FTAA negotiating groups: Agriculture, Government 
Procurement, Investment, Market Access, and Services. For example, FTAA 
nations needed to establish the starting point from which reduction of 
tariffs would begin (base tariff rates) and the time periods that would 
be used to progressively eliminate tariffs (phaseout periods). In order 
to speed the pace of liberalization, the United States sought to attain 
agreement to negotiate tariffs downward from existing (that is, 
currently applied) rates, rather than the higher rates that the WTO 
allows. Ministers set an April 1, 2002, deadline for the five groups 
negotiating market opening to finalize recommendations on ground rules. 
Although most of those groups met this deadline, several presented the 
TNC with multiple options for consideration, rather than recommending 
one. For example, in the area of tariffs, the market access group noted 
that several options for base tariff rates had been proposed, including 
use of currently applied rates and use of WTO bound rates. (Bound rates 
are legal limits on tariff rates, and WTO members have agreed not to 
apply tariffs that exceed these rates. These rates are generally higher 
than currently applied rates).

With so many options to choose from, attaining consensus on the ground 
rules by the vice-ministerial-level TNC proved difficult. With a May 
15, 2002, deadline for launching negotiations on market access looming, 
an April meeting of the Trade Negotiations Committee was unsuccessful 
in finalizing agreement on ground rules. The meeting was reconvened on 
May 12-13, 2002, and resulted in issuance of some of the required 
decisions, including the following on tariffs:

* All tariffs are subject to negotiation.

* Tariffs will be phased out over four time periods--immediate, no more 
than 5 years, no more than 10 years, and more than 10 years. Tariffs 
with shorter phaseouts will decline more rapidly, whereas tariffs 
placed in longer phaseout categories will be reduced at a slower pace.

* Tariff reductions will generally be linear. This means that tariffs 
will be lowered in equal amounts per year until they reach zero.

* The base tariff will be notified by October 15, 2002. (CARICOM was 
given until December 14, 2002).

Regarding nontariff issues, for services, the United States secured 
agreement that FTAA market access offers should be based on current 
laws and regulations and on international obligations or existing or 
improved opportunities. This means that offers will start from the 
status quo in terms of market access. For investment, the United States 
secured agreement that only exceptions to liberalization would be 
negotiated (known as a "negative" list approach).

However, the modalities package could not be finalized because of a 
disagreement over base tariff rates. In particular, CARICOM members 
argued that they could not agree to use current tariff rates as the 
base from which liberalization would begin, citing their dependence on 
tariff revenues and the vulnerability of their economies' undiversified 
agriculture sectors to imports. Because FTAA negotiations decisions 
require all
34 participating nations to agree, the effect of the CARICOM objection 
was to defer a decision on base tariff rates.

After considerable efforts to cajole Caribbean nations into agreement, 
in late August 2002 the TNC finally agreed that, as a rule, the base 
tariff would:

be the current tariff rates.[Footnote 12] The implication of this 
decision is that the actual lowering of most tariffs should begin 
immediately upon implementation of an eventual FTAA, rather than being 
delayed, as illustrated in figure 4. This is a significant change from 
the way tariff negotiations are negotiated in the WTO and should result 
in meaningful increases in market access as soon as the FTAA agreement 
is implemented.

Figure 4: Tariff Reduction Schedule under Different Base Tariff 
Scenarios, 2005-2015:

[See PDF for image]

Note: As the dotted line indicates, if tariffs were being phased out 
over 10 years for a product currently subject to a 15-percent bound 
rate and a 10-percent applied rate, and the 15-percent bound rate were 
used as the basis for phasing out that tariff under the FTAA, no tariff 
reduction would occur for the first 3 years after the agreement entered 
into force. The tariff rate also would be higher under the 15-percent 
bound rate in years 4-10 than it would have been if a base rate of 10 
percent had been used.

[End of figure]

However, CARICOM was granted an exception to using the current tariff 
rates, which will allow it to use the higher WTO bound rate for a 
limited list of mainly agricultural goods.

Some Progress Made on Other Issues:

In addition, during the months leading to the Quito ministerial, 
negotiators made some progress on other issues. Specifically, the 
negotiators agreed to hold regional outreach seminars for private 
interests such as environmental, consumer, and business. The first 
regional seminar for such "civil society" groups was for North America 
and was held in Mexico. (Other regional seminars for Mercosur and the 
Andean countries were scheduled but have been postponed due to regional 
economic crises and funding constraints, respectively.) Recognizing 
their responsibility to take the needs of smaller economies into 
account during the negotiating process, FTAA governments also adopted 
guidelines that direct participants to assess their needs on a case-by-
case basis. Also, the United States began required consultation and 
advice procedures, including those required by Trade Promotion 
Authority (TPA) legislation.[Footnote 13]

Some Substantive Goals Not Fully Realized:

Despite technical progress in consolidating the bracketed text and 
setting ground rules, the Quito phase of FTAA negotiations did not 
result in major movement in terms of substantive trade-offs. Much of 
the text remains in brackets, signifying lack of consensus. Negotiators 
made little real progress in resolving the many substantive differences 
among FTAA participants that we identified in our September 2001 
report.[Footnote 14] In addition, although FTAA ministers set a goal to 
begin market access negotiations on May 15, 2002, negotiations on 
specific market access commitment schedules did not begin at all during 
the phase ending at Quito on November 1, 2002.[Footnote 15]

Instead, market access negotiations are now anticipated to begin in 
earnest after the presentations of initial offers in early 
2003.[Footnote 16]

Finally, the ground rules that were established for negotiations on 
topics such as services, investment, and government procurement leave 
important questions unanswered. For example, the services negotiating 
group had recommended that the TNC decide whether negotiations on 
services would proceed from a top-down or negative-list approach 
(whereby only exceptions to liberalization are negotiated) or, 
alternatively, from a bottom-up or positive-list approach (whereby only 
specifically negotiated items would actually be liberalized). However, 
the TNC decision on modalities is silent on this matter. Subsequent 
guidance indicates that FTAA nations can present offers in either 
manner. This lack of a uniform approach is expected to complicate the 
process of preparing and comparing offers and could thereby slow down 
future negotiations.

Some Positive Outcomes Achieved at Quito Ministerial:

Ministers achieved most of their goals at the Quito ministerial. For 
example, ministers agreed upon specific timetables and instructions for 
FTAA negotiating bodies. Moreover, ministers reiterated their political 
commitment to continue FTAA negotiations and took steps to address 
concerns that civil society and smaller economies raised.

Procedural Basis Set:

The Quito ministerial meeting settled certain procedural matters and 
set goals and directions for the next 12 months of negotiations. 
Specifically, the ministers:

* set the schedule for negotiating group meetings for the first 2 
months of the negotiating cycle;

* agreed to hold future ministerial meetings in the fourth quarter of 
2003 (in the United States) and in 2004 (Brazil);

* agreed that there will be at least three TNC meetings before the 2003 
ministerial meeting;

* named a slate of chairs for negotiating group committees that is 
considered strong by U.S. negotiators; and:

* provided other directions, such as requesting that the TNC develop a 
stocktaking report of overall progress made in the FTAA negotiations 
before the next ministerial meeting occurs.

On substantive matters, ministers set two key goals for the coming 
year. First, they confirmed that market access bargaining will begin 
with the putting forth of initial offers between December 15, 2002, and 
February 15, 2003. They also set deadlines for initial requests and 
revised market access offers for June 15 and July 15, 2003, 
respectively. Second, negotiators were charged with "achieving 
consensus on the greatest possible number of issues" in the draft 
chapters containing the text of FTAA rules and institutional 
provisions. They also have responsibility for producing a revised 
version of the draft text chapters no later than 8 weeks before the 
next ministerial meeting in late 2003. The overall timetable for FTAA 
negotiations and key milestones for the current phase are depicted in 
figure 5.

Figure 5: FTAA Time Frames and Milestones, 2002-2005:

[See PDF for image]

Note: The TNC refers to the Trade Negotiations Committee. The TNC 
guides the work of the negotiating groups and other committees and 
groups and decides on the overall architecture of the agreement and 
institutional issues. The TNC is also responsible for ensuring the full 
participation of all the countries in the FTAA process, and 
transparency (openness) in the negotiations, as well as overseeing the 
Administrative Secretariat and overseeing the identification and 
implementation of business facilitation measures.

[End of figure]

Political Willingness to Go Forward Restated:

As we stated in our May 2001 report,[Footnote 17] the ultimate success 
or failure of efforts to establish the FTAA rests on meeting several 
long-term challenges, notably summoning the political will of 
participants to conclude a deal. On the political level, with the 
exception of Venezuela, at Quito all 34 FTAA nations restated their 
political will to move forward with an FTAA and to conclude it by 
January 2005.[Footnote 18] This political impetus was particularly 
noteworthy, given that it occurred at a time of economic uncertainty 
and heightened political tensions, and with a new Brazilian 
administration. The Brazilian people elected this administration on 
October 27, 2002, 5 days before the Quito ministerial. However, 
numerous ministerial participants stressed the need for balanced 
progress and an equitable outcome. In particular, numerous participants 
used the forum provided by the Quito ministerial to say that the FTAA 
will go nowhere without meaningful agricultural liberalization and 
disciplines (rules) on subsidies and other practices that distort 
agricultural trade.

For its part, the United States made clear the importance it places on 
expanded hemispheric trade as a means of fueling growth, creating jobs 
and opportunity, and alleviating poverty. The USTR noted that it is 
already moving toward that goal bilaterally with Chile and five Central 
American nations as part of a U.S. strategy to foster competition in 
trade liberalization. Furthermore, the USTR stated that the United 
States is also prepared to move step by step toward hemispheric free 
trade if others turn back or simply are not ready. At Quito, the USTR 
urged all participants to consider how they can contribute to progress 
as FTAA negotiations enter a particularly serious phase. The USTR also 
urged other ministers to foster greater understanding and democratic 
debate on the FTAA.

Our March 2001 report identified securing greater public support as a 
key issue for FTAA negotiators, and at Quito, FTAA ministers signaled 
greater interest in doing so by taking several steps.[Footnote 19] To 
address concerns over transparency and to provide the public with a 
clear view of the proposals under discussion, the draft text of the 
FTAA agreement was publicly released in all four FTAA languages 
(English, French, Portuguese, and Spanish) immediately after the Quito 
ministerial's conclusion. Moreover, the opening and closing sessions of 
the Quito ministerial were open to the public for the first time. 
Ministers also instructed the TNC to ensure a substantial increase in 
the quality of information provided to the public as negotiations 
progress and to identify and foster the use of best practices for 
outreach and consultation with civil society.

In addition, participants attempted to intensify and make more 
interactive ministers' input from civil society. As host of the Quito 
meetings, Ecuador supported cooperative efforts by two Ecuadorian 
environmental groups to prepare constructive recommendations by 
organizing a 2-day forum. Ecuador also hosted a meeting at which those 
and other civil society representatives could present their 
recommendations directly to ministers. However, the breakdown in order 
at that meeting showed that civil society's involvement in the FTAA is 
still a "work in progress." Identifying civil society representatives 
and creating an atmosphere for constructive input and meaningful 
dialogue between civil society and the FTAA ministers are challenges 
the United States will face at the 2003 FTAA ministerial in Miami.

Hemispheric Cooperation Program Launched:

In March 2001, we reported that the FTAA faced a challenge in dealing 
with the varying resource capacity among participants.[Footnote 20] To 
deal with this challenge, the Quito ministerial announced and launched 
a Hemispheric Cooperation Program (HCP). This program will provide 
technical assistance to smaller economies for negotiating, 
implementing, and benefiting from an FTAA. It is intended to allay the 
concerns of the less-developed FTAA economies over the impacts of trade 
liberalization. Several trade experts see this move as an important 
confidence-building measure for many FTAA participants. The purpose of 
the HCP is to create a framework for planning, prioritizing, and 
funding technical assistance in a more coordinated fashion. Countries 
such as Brazil have also expressed interest in providing in-kind 
support on such topics as conducting trade analysis. The next step is 
the development of national strategies to identify and prioritize 
capacity-building needs. According to USTR, each of the Central 
American countries engaged in bilateral negotiations with the United 
States has already prepared national strategies for capacity building.

Key Challenges Exist for the Current Negotiating Phase:

Despite progress made at Quito, current negotiations for an FTAA face 
three short-term challenges. First, there is a risk that lack of 
progress in negotiations at the WTO, particularly on agriculture, could 
cause a deadlock in FTAA talks. Second, an unambiguous demonstration of 
participants' good faith through making meaningful offers to liberalize 
access to their markets is viewed by negotiators as critical to giving 
momentum to all aspects of the FTAA talks. However, this element may be 
difficult to achieve. Finally, there are concerns about the ability of 
the United States and Brazil to muster the political commitment 
necessary to see the FTAA process through to completion.

Agriculture Progress Depends on WTO:

The treatment of subsidies and other support for agriculture is a 
critical part of the FTAA trade agenda. A key issue is that of domestic 
support---payments made to farmers that raise prices or guarantee 
income. Progress on this issue depends on the WTO negotiations, but 
there is concern that these talks are bogging down. Any delay at the 
WTO could make it difficult to achieve progress in the FTAA and 
ultimately imperil its conclusion by January 2005.

Agriculture Crucial to FTAA Negotiations:

Agriculture is an important issue to all FTAA participants. As a major 
component of income in some Latin American countries such as Dominica, 
Guatemala, and Haiti, agriculture constituted approximately 17, 23, and
28 percent, respectively, of the gross domestic product in 2000. Other 
FTAA participants such as Argentina, Brazil, and the United States are 
major world producers of commodities such as coffee, oilseeds, sugar, 
soy, and beef, making agriculture an important item in their national 
trade agenda as well. Because of their interest in agriculture, many 
nations of the hemisphere were strong proponents of the new round of 
global trade talks launched in November 2001 that aim to achieve 
comprehensive agricultural reform at the WTO.

Agriculture is also an important component of an overall FTAA package. 
Several foreign officials with whom we spoke emphasized that the entire 
FTAA negotiations rested on making progress in agriculture 
negotiations. Furthermore, officials informed us that Latin American 
leaders do not want their constituents to perceive them as giving 
ground on issues of importance to the United States such as 
intellectual property rights and services without obtaining key 
concessions on priority issues for their countries, such as 
agriculture.

Among the agriculture issues on the FTAA trade agenda, domestic 
support[Footnote 21] --and U.S. domestic agriculture support in 
particular--seems to be a source of concern for many FTAA participants. 
In 1999, the United States provided $16.9 billion of trade-distorting 
domestic support, according to the most recent WTO member 
notifications. To put this in context, Antigua, Barbados, the Bahamas, 
and Jamaica all had national incomes (gross domestic products) of less 
than $8 billion in 1999. Furthermore, other large FTAA countries such 
as Brazil, Canada, and Mexico all spend considerably less in trade-
distorting domestic support. Finally, with the passage of the U.S. Farm 
Bill in 2002,[Footnote 22] which covers farm spending until the end of 
2007, U.S. domestic support for agriculture is projected to increase.

Many FTAA participants believe that domestic agriculture support needs 
to be placed under stricter rules to ameliorate the U.S. advantage. 
Accordingly, certain countries are insisting that domestic agriculture 
subsidies be addressed in both the FTAA and the WTO negotiations. The 
current draft FTAA chapter on agriculture also includes a proposal to 
require countries that provide trade-distorting domestic support to 
eliminate it.

The United States, by contrast, argues that the WTO is the appropriate 
forum to negotiate domestic support because, unlike tariffs, it is not 
possible to reduce domestic support on solely a regional basis. The 
U.S. rationale for relying on the outcome of WTO negotiations is that 
two primary users of domestic support in agriculture, the European 
Union (EU) and Japan, are not FTAA participants. Therefore, domestic 
support reform must take place in a forum like the WTO, where the EU 
and Japan are present, to avoid putting FTAA countries that subsidize 
farmers at a disadvantage in world markets. With such WTO negotiations 
now ongoing, the official U.S. position is that although all 
agricultural issues are still on the table for the FTAA negotiations, 
the FTAA countries must not do anything now that will prejudice their 
respective positions in these important global talks with extra-
hemispheric trading partners. Canada also concurs with the U.S. 
position.

The Quito ministerial declaration highlights the link between FTAA and 
WTO negotiations and underscores the importance of making progress in 
all areas of the agriculture agenda. The Quito ministerial declaration 
also recognized the divergent positions among FTAA participants in
agriculture.[Footnote 23] In the declaration, ministers accepted the 
U.S. positions that (1) markets are global, (2) significant results in 
the WTO are necessary, and (3) third-country practices[Footnote 24] 
that distort trade must be taken into account. Ministers also 
recognized other countries' positions that progress in FTAA 
agricultural market access negotiations depends on progress on domestic 
support, export subsidies, and other nontariff barriers.

However, the declaration also set a date to revisit overall progress in 
FTAA agriculture negotiations. Specifically, to ensure balanced 
progress and a timely conclusion of FTAA negotiations, ministers 
charged the FTAA Negotiating Group on Agriculture with preparing a 
report on progress achieved on all subjects on the FTAA's agricultural 
negotiating agenda for presentation before the TNC's fourteenth 
meeting. This meeting is scheduled for early July 2003.

Outcome of WTO Negotiations Uncertain:

The timing of the WTO negotiations represents a dilemma for FTAA 
negotiators because there is concern that WTO negotiations are behind 
schedule. Although interim deadlines were set to keep WTO negotiations 
on track, the December 2002 deadlines for agreeing on access to 
medicines and special and differential treatment for developing 
countries were missed. Moreover, a March 31, 2003, deadline to 
establish modalities, or the rules and guidelines for the negotiations 
on agricultural liberalization, was missed. The deadline was important, 
because participants were to have submitted comprehensive draft 
commitments for agriculture at the fifth WTO ministerial in Cancun, 
Mexico, in September 2003 based on the rules and guidelines established 
in March. Additionally, we noted in a September 2002 report on the 
WTO[Footnote 25] that meeting the deadline for establishing agriculture 
modalities was a crucial indicator of the likelihood of success in the 
overall negotiations. USTR officials have noted that they and other 
countries' delegations are currently working to minimize any negative 
impact missing the modality establishment deadline has on the overall 
negotiations.

A key factor hindering progress in the WTO agricultural negotiations is 
the pace and extent of reform of the EU's Common Agricultural Policy 
(CAP).[Footnote 26] Current arrangements of the CAP are set to expire 
at the end of 2006, and the concern is that the European 
Commission[Footnote 27] will not have the flexibility to establish 
modalities without significant reform of the CAP. The Commission has 
recently unveiled a reform proposal for the European Council to 
consider that calls for decoupling subsidies from production to make 
them less trade distorting. However, opinions among EU members over CAP 
reform are divided, with countries such as Great Britain supporting 
ambitious reform and countries such as France vigorously opposing 
substantive changes.

Because both the FTAA and WTO agreements are to be concluded as single 
undertakings, failure to conclude agreement in January 2005, in any of 
the areas of the WTO, could imperil the timely conclusion of an FTAA. 
In addition, the failure of WTO negotiators to establish agricultural 
modalities in March 2003 could have a large impact on the agricultural 
agenda assessment that the FTAA Negotiating Group on Agriculture 
expects to conduct in July 2003. At the FTAA Miami ministerial in 
November 2003, countries of the hemisphere will have a chance to 
evaluate the progress in agriculture made at the September 2003 WTO 
ministerial to determine if sufficient progress has been achieved. If 
progress is insufficient, key FTAA nations may be unwilling to move 
forward in other areas of the FTAA agreement. U.S. officials report 
that they are working to avoid this outcome. (See fig. 6 for an 
illustration of the linkage between the FTAA and the WTO agriculture 
negotiations.):

Figure 6: Relationship Between FTAA and WTO Agriculture Negotiations:

[See PDF for image]

[End of figure]

Market Access Offers Important for Momentum, but Substantial 
Liberalization Difficult:

Now that the ground rules for negotiating market access have been set, 
the current phase of FTAA negotiations will formally launch the 
exchange of liberalizing offers and requests. Many view this give-and-
take as the true start of real negotiations. Initial offers, which 
negotiators presented in February 2003, will set the tone for this 
phase, and maintaining or increasing momentum is seen as critical to 
making progress.

Several hemispheric opinion leaders had expressed hope that the United 
States would make a good faith gesture, by presenting a significant 
offer, to give momentum to FTAA talks. The United States is the largest 
trading partner for virtually all of the countries in the FTAA. 
Preparing the U.S. offer involved developing tariff lists by the 
executive branch, in consultation with Congress and the private sector.

The U.S. offer was announced on February 11, 2003. The USTR believes 
that the U.S.'s initial market access offers are bold and provide a 
strong incentive for other countries to be equally ambitious. According 
to the USTR, about 65 percent of U.S. imports of consumer and 
industrial goods from the hemisphere (not already covered by NAFTA) 
would be duty free immediately under the U.S. offer. U.S. imports of 
textiles and apparel would be duty free in 5 years, so long as other 
countries reciprocate. To further encourage reciprocal liberalization, 
the United States offered immediate elimination of tariffs on a 
reciprocal basis in key sectors such as chemicals, paper, steel, and 
wood. Although certain agricultural products such as sugar were placed 
in the longest phaseout category, the USTR emphasized that these 
products remain on the table for negotiation. Indeed, all U.S. tariff 
lines were included in the U.S. offer.

The U.S. market access offers differentiate among FTAA participants, 
meaning that the United States would apply different rates of duty to 
different FTAA partners during the transition to free trade. The bottom 
line is that some FTAA nations would be allowed quicker phaseouts of 
U.S. tariffs than others. The United States argues that this approach 
would allow it to accord smaller economies better treatment, a goal 
agreed to in principle by other FTAA nations, as well as provide 
greater leverage to negotiate market-opening concessions in large, 
lucrative markets. Others, notably Brazil, oppose this idea. Brazil's 
concerns include the belief that Brazil would be placed in a relatively 
worse bargaining position compared with the United States under a 
strictly bilateral negotiating approach and that, at the end of the 
day, it would suffer disadvantageous treatment of its products with 
respect to other FTAA partners. Indeed, the initial U.S. offer would 
provide CARICOM with immediate duty-free access for 91 percent of its 
exports, versus 58 percent for Mercosur, the trading bloc that includes 
Brazil. Others have expressed concerns about potential losses of 
regional and subregional synergies in production, administrative 
complexity, and lack of transparency. On the other hand, nations that 
currently benefit from U.S. preference programs[Footnote 28] want to 
retain their preferential access to U.S. markets and thus welcome 
differential treatment.

All of the 33 other FTAA countries also met the February 15, 2003, 
deadline for submitting initial offers on industrial and agricultural 
market access. A USTR official welcomed the universal completion of 
this first step as important progress. However, he expressed hope that, 
with the U.S. offer on the table, others would be more forthcoming in 
the months ahead. Many FTAA countries made conservative initial market 
access offers. For example, contrary to the U.S. offer, several placed 
sizeable shares of their trade into the longest phaseout category or 
excluded some key items from liberalization. In addition, Mercosur and 
CARICOM nations indicated that they were not yet ready to present 
offers on government procurement and services. Regarding investment, 
Mercosur members Uruguay and Paraguay made offers, but Brazil and 
Argentina did not.

Questions of Commitment to FTAA by the United States and Brazil Remain:

Critical to the successful completion of this phase of negotiations is 
a clear political commitment to achieving an FTAA. During the course of 
our work on the FTAA, a number of participants have stressed that an 
FTAA agreement could be successfully concluded if the key Western 
Hemisphere leaders demonstrate that they have the political will to 
finalize the agreement. However, some observers have concerns about how 
competing priorities will affect key FTAA countries, notably the United 
States and Brazil.

Interpretation of U.S. Actions Is Mixed:

While the United States has taken some steps widely viewed in the 
hemisphere as positive, other actions have been perceived as 
inconsistent with FTAA goals. In our May 2001 report, we noted that 
President Bush said at the April 2001 Summit of the Americas that he 
would seek to complete three concrete steps by the end of 2001 to 
demonstrate the U.S.'s political commitment to the FTAA: (1) secure 
Trade Promotion Authority, (2) finalize a Free Trade Agreement with 
Chile, and (3) renew the Andean Trade Preference Act (ATPA).[Footnote 
29] All three things have now been accomplished, although somewhat 
later than President Bush anticipated.

Other FTAA nations viewed the passage of TPA by the 107TH Congress in 
August 2002 as a very positive development. Under this authority, the 
executive branch is required to consult regularly with Congress, and 
solicit advice from advisory committees and the public, as trade 
agreements are being negotiated. In return, Congress agrees not to 
amend legislation implementing trade agreements, voting up or down on 
these agreements. In addition, the law sets out parameters for 
negotiations dealing with such issues as agriculture, antidumping, 
labor, the environment, and investment. In some cases, the law places 
formal limits on the President's flexibility to negotiate. However, 
none of these issues, which were already sensitive domestically and are 
relevant to the FTAA, were taken off the table for negotiation. In some 
cases, such as investment, the guidance TPA provided has actually made 
it easier for the United States to negotiate, U.S. officials report.

Since TPA was secured, the United States has pushed forward on 
multilateral, regional, and bilateral fronts, including trade 
negotiations to establish a U.S.-Central American Free Trade Agreement 
(CAFTA). In December 2002, the United States announced the substantive 
conclusion of free trade area agreements with Singapore and Chile as 
well. These agreements contain important breakthroughs in such areas as 
intellectual property rights and services. In addition, President Bush 
signed a presidential proclamation restoring and expanding benefits 
under the Andean Trade Preference Act.

While this renewed U.S. engagement in trade liberalization efforts is 
generally seen as energizing FTAA talks, and is viewed by USTR as 
complementary, there is some concern that such other considerations may 
affect U.S. leadership within the FTAA. First, some FTAA nations have 
complained about other U.S. trade actions taken in 2002, notably 
imposition of restrictions on steel imports and passage of a new farm 
bill (P. L. 107-171) that substantially increases subsidies to American 
farmers through 2007. Second, some FTAA participants view the many 
bilateral negotiations the United States has engaged in, both within 
and outside the hemisphere, as indicative of a lack of U.S. commitment 
to the FTAA itself.

Brazil's Commitment Unclear:

FTAA participants are also looking to Brazil to affirm its political 
commitment to FTAA negotiations. Even before Brazil's recent 
presidential election, concerns existed about Brazil's commitment to 
the FTAA process. Although Brazil has actively participated in the 
negotiations, observers say that Brazil has appeared reticent to 
decisively embrace an FTAA. Brazilian officials admit that Brazil has 
held back during the negotiations because they believe the United 
States is not ready to negotiate on issues of greatest interest to 
Brazil, such as high tariffs on key Brazilian exports and trade 
remedies. Moreover, according to press reports, before his election as 
President of Brazil in October 2002, Luiz Inacio Lula da Silva made 
this comment about the FTAA: "As it is being proposed by the United 
States, the FTAA is not an integration proposal, it is annexation 
politics, and our country won't be enclosed." Since being elected, 
however, the new Brazilian administration has pledged to continue to 
negotiate in good faith to conclude a mutually beneficial FTAA and has 
promised to honor all commitments made. Nevertheless, perhaps because 
of the newness of the administration, Brazilian participation in the 
FTAA process has slowed down, and Brazil has announced that it needs 
additional time to prepare market access offers on services, 
investment, and government procurement.

Gaps in U.S. Preparations for Co-chairmanship and Hosting of Miami 
Ministerial May Pose Risks:

The United States faces several risks as it takes on the 
responsibility, together with Brazil, of guiding the FTAA process 
forward to a successful conclusion. These risks include (1) handling an 
increased workload as co-chair with the pace of negotiations 
intensifying, and without a commensurate increase in resources; (2) 
serving as co-chair with Brazil, a novel situation; and (3) hosting a 
November 2003 ministerial meeting for all the trade ministers of the 
hemisphere and their delegations, which requires expertise, planning, 
funding, and security preparations.

Workload and Negotiating Pace to Increase, but Resources Not 
Commensurate:

As the USTR assumes the co-chairmanship of the FTAA negotiations, it 
faces a heavy expansion of its workload. At the same time, its 
resources, in particular the staff dedicated to the co-chairmanship, 
are not expected to increase commensurately. Some past chairs have 
warned that this situation may lead to a slowdown in the FTAA process.

Workload and Negotiating Pace to Increase:

A major challenge for the USTR as it assumes responsibility as co-chair 
of the FTAA process will be handling the increased workload without an 
increase in staff. Demands on USTR's resources will be particularly 
high in the fall of 2003, when USTR's responsibilities as co-chair of 
the negotiations and host of the ministerial will intensify. The co-
chair's formal tasks are considerable. They include:

* coordinating with Brazil on a daily basis;

* providing guidance and management coordination to the FTAA 
Administrative Secretariat;

* providing guidance to the negotiating groups and committees;

* co-chairing TNC meetings;

* co-chairing the TNC Subcommittee on Administration and Budget, 
including setting the calendar of meetings; and:

* vice-chairing the Technical Committee on Institutional Issues.

In addition to the roles and responsibilities of the co-chair, another 
factor placing additional demands on the USTR is the intensifying pace 
of the negotiations during the final phase of negotiations. The goals 
for this final phase are ambitious. In order to meet FTAA completion 
time frames, participants aim to conclude negotiations in all nine 
trade negotiating groups. However, initial market access offers are 
just starting. FTAA participants must also agree on all issues 
currently under brackets in the draft text. The U.S.'s goal is to have 
a largely clean text by the end of 2003. To reach these goals, 
negotiations have been scheduled for practically every day during the 
next 6 months.

Competing negotiating priorities, and their commensurate resource 
needs, may also affect the USTR's resources. Several U.S. negotiators 
told us that what they primarily require to conclude an FTAA 
successfully is to be able to focus on it with single-minded energy and 
determination. But other negotiations are competing for their time and 
attention. For example, the USTR has notified Congress of its intent to 
pursue Free Trade Agreements (FTA) with Central America, Australia, the 
South African Customs Union,[Footnote 30] and Morocco and has started 
negotiations toward this end. Meanwhile, the Doha Development Round of 
WTO negotiations involving 146 nations and a similarly broad set of 
issues will officially be at the midpoint at the September 2003 WTO 
ministerial. This ministerial is to be held in Cancun, Mexico, only 2 
months before the FTAA ministerial in Miami. Some of the same USTR 
staff are involved in these concurrent negotiations. In addition, 
negotiations with Chile and Singapore officially concluded at the end 
of 2002, but the agreements must still be finalized and undergo 
congressional approval.

Resources May Not Be Adequate:

In terms of resources, the U.S. team negotiating the FTAA--though 
perceived as highly capable--is small and stretched thin. Other nations 
we have contacted have had eight or more staff working to fulfill FTAA 
chairmanship responsibilities. These staff handle such demands as 
drafting negotiating schedules and documents and providing regular 
coordination with other FTAA nations, negotiating groups, and the FTAA 
Administrative Secretariat. According to a USTR official, Brazil 
currently has six staff dedicated to the co-chair function and plans to 
hire an additional three in early 2003. Ecuador had eight people 
working on substantive issues and additional people working on 
logistics. Canada had eight people, with access to others for special 
projects. Like past chairs, USTR has dedicated some staff specifically 
to the co-chair function, while other USTR staff work on advancing the 
U.S. position in the negotiations. Presently, USTR has two staff 
working full-time on the day-to-day FTAA co-chairmanship tasks. Two 
other staff members currently devote some of their time to the co-chair 
function. USTR has been given an additional slot for an FTAA director 
and plans to fill it with a permanent staff member working full-time on 
the co-chairmanship soon. In terms of support by other agencies, the 
USTR presently is receiving little direct or indirect assistance in 
fulfilling the U.S.'s co-chair responsibilities, although a Justice 
Department detailee (person on loan to USTR) is one of the two part-
time co-chair staff and also helps with leading the U.S. delegation, 
and a Department of State economic officer in Brazil has been made 
available to assist in coordinating with Brazil on FTAA co-chairmanship 
issues. As well, the Department of Commerce is temporarily staffing one 
of the two full-time co-chair USTR positions.

With respect to overall personnel, USTR as a whole is relatively small-
-having been set up to coordinate policy among and draw expertise from 
executive branch agencies such as the Departments of State, Commerce, 
Agriculture, and the Treasury. As past negotiations have become more 
intense, other agencies have often provided staff on a nonreimbursable 
"detail" (on loan) basis to augment USTR staff quickly. For example, 
according to a USTR official, at the height of the Uruguay Round of WTO 
negotiations, 45 staff from other agencies were detailed to USTR, 
versus 
30 staff on detail now. These agencies have also given other support, 
such as assigning staff to handle major aspects of USTR negotiations 
while residing at their own agencies. USTR is hoping to resume the 
practice of using such support and has begun seeking additional details 
from other agencies. In mid-March, USTR announced that a senior 
Department of State official will be loaned to the agency effective 
June 23, 2003, and will advance U.S. positions in the negotiations as 
head of the U.S. delegation to the FTAA's TNC. Another State detailee 
is expected to be provided this summer, to work full-time in the co-
chair function. However, caps on their funding and other concerns may 
make other agencies reluctant to detail additional people to USTR on a 
nonreimbursable basis. These agencies also need lead time to make 
arrangements and identify staff with the requisite expertise.

In discussions with us, several past FTAA chairs have warned that the 
consequence of U.S. failure to adequately staff the co-chairmanship 
could be a slowdown of FTAA negotiations, which are, with the launch of 
market access talks on February 15, 2003, reaching a critical juncture. 
Any slowdown could make it difficult to achieve substantial results by 
the November 2003 Miami ministerial.

Co-chairing with Brazil Is Novel Situation:

Many officials and trade experts view the idea of the United States 
serving as co-chair with Brazil as a bold and useful way of providing 
the leadership and commitment needed from two of the most important 
players at a crucial time in the FTAA negotiations. At the same time, 
however, co-chairing is expected to be more difficult than chairing by 
a single country. All decisions, both mundane and substantive, will 
have to be agreed to by both countries. The co-chairmanship arrangement 
is novel because up until now, only individual countries have acted as 
chairman of the FTAA process. Officials at USTR told us that the 
operating vision is that the co-chairmanship will be a true 
partnership, with both countries making decisions based on achieving 
consensus on every aspect of the process throughout the 2 remaining 
years of negotiations. Such a true U.S.-Brazil co-chairmanship may have 
certain advantages. For example, the fact that Brazil and the United 
States will be guiding the process simultaneously as co-chairs during 
the final phase of negotiations could facilitate consensus building. If 
either the United States or Brazil had singly undertaken this 
responsibility, some members might not have perceived their stewardship 
as balanced.

Some FTAA participants told us, however, that co-chairing will be more 
difficult than chairing by a single country. One foreign official 
speculated that if all decisions require consensus, the co-chair 
structure would double the work and the time necessary to reach 
decisions or perform tasks. A USTR official confirmed this view and 
stated that even every letter has to be signed by both countries. 
Former FTAA chairs told us that the two countries have very different 
interests in the FTAA and, if such political considerations play a role 
in decision-making, stalemates or further delays could result. Another 
foreign official told us that differences in governmental structures 
and bureaucratic systems in which the USTR and Brazil's foreign 
ministry operate may also create difficulties.

In addition to the operating difficulties, U.S. working relations with 
Brazil are still uncertain. Brazil had been unwilling to discuss 
anything more than the technicalities of the co-chairmanship until its 
new President took office in January 2003. More recently, however, 
there have been several working meetings in an effort to clarify 
Brazil's views and solidify working relations. Moreover, the U.S. and 
Brazil co-chairs have taken steps to provide active leadership and 
coordination of the negotiating process by, for example, meeting with 
the chairmen of each FTAA negotiating group well in advance of the 
April TNC meeting to identify issues requiring decisions or guidance.

In meeting its responsibilities as co-chair for moving the process 
forward, the United States will need to keep separate the interests of 
the 
34 countries, or the process as a whole, from those of the United 
States as negotiator. Brazil, for its part, will have three roles to 
keep in mind --its own negotiating positions, those of Mercosur, and 
that of the FTAA.

Risks to Successfully Hosting November 2003 Miami Ministerial Have Not 
Been Fully Mitigated:

The United States will host the Eighth FTAA Trade Ministerial in Miami 
in November 2003, just 7 months from now, a considerable 
responsibility. This ministerial is particularly significant because it 
occurs just a year before the slated conclusion of FTAA and WTO 
negotiations. The responsibilities of an FTAA host are numerous and 
include several elements critical for a successful event. Preparations 
for the ministerial are at an early stage, however, and, if left 
unfilled, gaps in the current U.S. plans for hosting the ministerial 
pose risks to achieving a successful event. Risks that the USTR has not 
yet fully mitigated include its inexperience in hosting a major 
ministerial meeting, working with plans that have not been fully 
defined, counting on funding that has not been secured, and arranging 
security for numerous participants and protesters. Failure to address 
any of these risks could undermine the success of the meeting. These 
same kinds of risks also contributed to serious problems at the last 
major trade ministerial that the United States hosted, the 1999 Seattle 
WTO ministerial. USTR and the Miami organizers recognize that intense 
U.S. efforts will be necessary to fill these gaps.

To evaluate USTR's readiness to perform as host, we undertook a three-
part analysis. First, we obtained information about the formal 
responsibilities of FTAA host countries from USTR. We also obtained 
official documents of the FTAA and held conversations with past FTAA 
hosts, the results of which are reported in the first section below. 
Second, we solicited advice from persons with experience in planning 
and conducting such meetings, including responsible officials of past 
FTAA host nations, former USTR officials involved in planning the 
Seattle WTO ministerial, and officials at the State Department's Office 
of International Conference Planning and Economics Bureau. These 
officials had been involved in planning past trade ministerials hosted 
or attended by the United States, as well as other international 
conferences. Through these interviews with "cognizant officials," we 
identified factors critical for success as well as suggestions for 
steps USTR could take to adequately prepare for its responsibilities as 
host of the November FTAA ministerial. Third, we obtained information 
about the state of USTR preparations for the November FTAA ministerial 
through interviews with responsible officials and reviews of available 
documentation from USTR and Miami concerning timelines, plans, budgets, 
guidance, and organization. In addition, as it became clear that USTR 
was relying heavily on the Miami organizing group for fulfilling key 
requirements, we discussed the status of their efforts with both the 
executive director and the chairman of the board of that group, as well 
as with officials of Florida FTAA. This information on the actual 
status of U.S. FTAA ministerial plans follows our initial discussion of 
responsibilities and requirements for hosting the ministerial.

Responsibilities of the Host of an FTAA Ministerial Are Numerous:

Executing the many responsibilities of an FTAA ministerial host is 
critical, given the importance of ministerial meetings in the 
negotiations. These meetings of trade ministers from the 34 FTAA member 
countries provide political guidance and impetus to the negotiating 
process. The November meeting in Miami is particularly important, 
because it is the last ministerial before the talks' conclusion and 
will occur just 13 months before the January 2005 deadline set for FTAA 
nations to conclude the talks. At the Miami ministerial, the range of 
issues facing ministers may be complex, requiring political guidance 
from the ministers in order to move forward. Furthermore, because 
issues that are important to key FTAA participants, such as 
agriculture, are tied up in WTO talks, the extent of progress at the 
WTO ministerial in September 2003 may result in an overall reassessment 
of the FTAA's scope and timeline.

The host of an FTAA ministerial has numerous complex responsibilities. 
These responsibilities are detailed in a 29-page, single-spaced 
document that the FTAA Administrative Secretariat prepared. The host is 
generally responsible for providing facilities, transportation, and 
security for both the ministerial and the Trade Negotiations Committee 
meeting, a meeting of vice ministers that precedes the ministerial. In 
addition, a separate forum for the business community typically 
accompanies FTAA ministerials. Civil society groups also held a forum 
at the Quito ministerial. Each of these events involves hundreds of 
people, including many high-level officials requiring appropriate 
protocol and special security measures. Further, hosts are required to 
provide simultaneous translation during all of the negotiations and the 
other meetings, including immediate distribution of written documents 
to delegates.

Coordination and security during all these activities is complex. For 
example, the business community and civil society groups were given the 
opportunity to provide input to the ministers at Quito. However, 
managing the participation of the business community and civil society 
groups and ensuring consideration of their views remain challenges. For 
example, at the Quito ministerial, both the business community and 
civil society groups prepared recommendations to be presented to the 
ministers. The structure and length of the business community 
presentation, however, made it difficult for ministers to take in all 
the input that the business community had prepared. Nevertheless, 
compared with the business community's presentation, the civil society 
groups' presentations were chaotic. Protesters in the audience 
disrupted the presentation, and serious security concerns arose, as 
many protesters were very vocal and, in one case, threatened a 
presenter. In fact, the final presenter was unable to speak over the 
noise, and the presentation ended with an unceremonious exit of the 
ministers out a side door. A key goal of the Miami organizers is to 
make the presentations at this November's separate business and civil 
society forums more targeted, timely, and orderly so they can be 
factored into ministerial deliberations.

The task of the United States as host is especially complex, because it 
is now standard practice to rely on host cities to supply most of the 
resources associated with conducting international meetings held here, 
according to a Department of State official. As a result, USTR must 
coordinate actively with local officials and oversee host city 
preparations to ensure they are satisfactory. It is also essential to 
begin planning early for the ministerial, according to officials with 
experience in planning similar events.

Several Factors Critical to Success; Certain Steps Recommended:

Our discussions with cognizant officials suggest that hosts must have 
several basic factors in place to fulfill the responsibilities outlined 
above (see fig. 7). Particularly important is having (1) experienced 
staff capable of bringing together all the different components 
including logistics, budgeting, and procurement; (2) a plan that 
clearly sets forth roles, responsibilities, and timelines; (3) access 
to funds to pay for expenses; and (4) assurance of adequate security. 
This latter item must be paramount, given the antiglobalization 
protests that have accompanied past FTAA and other trade ministerials, 
and the heightened concerns over terrorism.

Figure 7: Keys to a Successful Ministerial:

[See PDF for image]

[End of figure]

The U.S. Department of State does not have written guidance on how to 
plan such events, according to a State official. However, in discussing 
the November FTAA meeting, cognizant officials with experience in 
planning similar meetings, including former USTR officials, have 
offered the following suggestions for hosting a successful event. 
Essential to such an event would be:

* consulting previous FTAA hosts in order to define requirements and 
responsibilities;

* clearly defining the roles and responsibilities of the host city and 
the federal government, preferably through a memorandum of 
understanding;

* creating a budget for the event;

* assuring that adequate funding is available through monitoring of 
host city fund-raising and requesting agency appropriations if 
necessary; and:

* getting assistance from the Department of State, other federal 
agencies, and/or a management firm with experience in planning major 
events.

Gaps in USTR Preparations Pose Risks:

Successful U.S. execution of the November 2003 FTAA ministerial 
requires intense preparations to fill remaining gaps in current U.S. 
preparations in the areas of expertise, planning, funding, and 
security. While USTR has lead responsibility for the ministerial, USTR 
has little experience in planning trade ministerials, and it is 
receiving limited assistance from other agencies with expertise in 
planning major international diplomatic events, due to resource 
constraints. Funding has not been secured: As of March 27, a final 
budget for the event does not exist, local fund-raising has just begun, 
and no federal agencies have received funding for the FTAA ministerial 
meeting in Miami. As well, security will be critical because the 
estimated number of protesters ranges from 20,000 to 100,000 people. 
Although the USTR's current plans for hosting the ministerial address 
several of these challenges, they do not fully mitigate the risks we 
identify.

USTR Lacks Experience, but Miami Organizers Have Track Record as Host:

USTR has never had sole responsibility for planning a major trade 
ministerial hosted by the United States. The last trade ministerial 
that the United States hosted was the Seattle WTO ministerial in 1999. 
There, USTR received substantial assistance from Department of State 
officials with past experience in planning major international meetings 
as well as from the WTO's Conference Services Department. Even so, 
financial and security concerns not fully mitigated before the event 
caused serious logistical and security problems and higher-than-
expected costs. These problems included bitter disagreements with the 
host city over roles and responsibilities, jeopardizing key logistical 
arrangements such as transportation and build-out of the convention 
center; costs that far exceeded initial estimates; and security lapses 
that delayed sessions, put delegates at risk of physical harm, and 
caused extensive property damage.

Furthermore, the agency has relatively little experience in this area. 
Currently, USTR has four permanent staff working part-time on planning 
the FTAA ministerial, with others at USTR assisting. One of these staff 
has significant experience in logistics, security, and administration, 
and that person has been put in charge of these areas for the Miami 
FTAA ministerial. Although other USTR staff have been involved in 
arranging U.S. participation in trade ministerials held abroad, hosting 
a trade ministerial is much more complicated than arranging U.S. 
participation. The host is responsible for all aspects of the meeting, 
not just its own delegation.

Furthermore, this gap in experience is not being overcome by receiving 
assistance from other agencies with the necessary expertise, according 
to USTR officials. The USTR has requested State's assistance in 
planning the Miami ministerial, and discussions on specific assistance 
State can provide are ongoing. The State Department reports that it is 
trying to respond positively to assistance requests where possible, 
given its own budgetary constraints. One of the reasons for State's 
reluctance to help is that its budget for participation in 
international conferences has been cut. In fiscal year 1995, State was 
receiving $6 million for participation in international conferences. By 
fiscal year 1999, this appropriation had been discontinued, with no 
commensurate increase to USTR's budget for trade meetings. The 
Department of State has suggested that USTR consider hiring a 
management firm, but USTR has not budgeted for that expense and does 
not believe that hiring an outside firm would provide cost benefits for 
the agency.

With little assistance from State or elsewhere,[Footnote 31] and 
limited experience in hosting major events, USTR plans to rely heavily 
on Miami's expertise to carry out the November 2003 meeting. Miami has 
considerable expertise in hosting major events. The city has hosted 
numerous major sporting events such as Super Bowls and Orange Bowls. 
Importantly, Miami hosted the 1994 Summit of the Americas, which 
involved 34 heads of state and started the process of creating a Free 
Trade Area of the Americas. According to the Miami organizing group, 
the summit was successful. The organizers of that meeting used an 
arrangement similar to that of the upcoming Miami ministerial, where a 
combination of private and public funds paid for the summit and local 
organizers took the lead in making logistical arrangements. The person 
responsible for planning the Summit of the Americas is the same one who 
is leading the Miami organizing group for the November FTAA 
ministerial. This individual also coordinated U.S. participation in the 
April 2001 Summit of the Americas in Quebec City. He is familiar with 
FTAA events by virtue of attendance at several of the FTAA ministerials 
that have been held thus far as well as the associated Americas 
Business Forums. He recently held a 2-day meeting in Miami with all 
seven previous FTAA/Americas Business Forum hosts to obtain information 
and advice, and these past hosts have also agreed to provide the Miami 
organizers with ongoing advice. Moreover, Miami also has the necessary 
infrastructure in place to host major events, according to the 
organizing group. In addition to having experienced staff, Miami also 
served as the site of FTAA negotiations from 1998 to 2001. However, 
this experience was not entirely positive, and lessons learned from 
this experience have been incorporated into the planning for the Miami 
ministerial, according to USTR.

While Miami does have expertise, an official from the Miami organizers 
informed us that they would like a full-time staff person from the 
federal government to be detailed to Miami in a liaison capacity as 
soon as possible to work with the Miami organizers (as had been done 
for the Summit of the Americas). The liaison would, among other things, 
formalize the shared responsibility for the event and augment 
coordination between federal and local authorities. The desire for a 
locally based federal liaison was based on the assumption that the 
workload, and hence need for intense coordination, would increase as 
the ministerial drew closer.

Plans for Ministerial in Early Stages:

Both the federal government's and Miami's plans for hosting the 
November 2003 ministerial are in early stages as of March 1, 2003. To 
get a sense of the general timeline to keep in mind when planning the 
November FTAA meeting in Miami, we interviewed cognizant officials who 
served as former hosts at FTAA ministerial meetings, officials at 
State, and former USTR officials. These officials indicated that 
planning for a November ministerial usually begins in January. 
Implementation of the plan should begin in March, with an acceleration 
of plans in October shortly before the ministerial. USTR officials 
responsible for planning the FTAA ministerial agreed on this general 
timeline, and, citing specific areas of progress, believe they are "on 
track" as of March 26, 2003.

On the federal government side, USTR has obtained a guide that the FTAA 
Administrative Secretariat prepared for host countries detailing the 
basic logistical requirements of a ministerial. USTR is using this 
guide to plan the FTAA ministerial in Miami. USTR has also prepared a 
timeline for security, logistical, and administrative services for 
Miami to use in planning the event. A rough division of labor between 
the federal government and the host city appears to have been agreed 
upon, whereby the host city will take care of most logistical 
arrangements, and USTR staff will provide guidance and oversight of 
security, logistics, and administrative issues through regular contact 
with and visits to Miami. In addition, USTR plans to draft some 
guidance documents, such as the memorandums of understanding that will 
be signed between the host committee and the entities to be contracted 
with for services.

On the host city side, Miami has formed a group to organize the 
ministerial and the Americas Business Forum. This group became 
operational in February 2003 and has hired an executive director for 
the FTAA ministerial planning effort. Several staff for the 
organization are now on board, and more are expected. The executive 
director has put together a management committee to organize the 
meeting. The Miami organizing group reports that it has established an 
extensive support network of partners from both the public and the 
private sectors and is already receiving in-kind staff support from 
several municipalities. It plans to utilize contractors and volunteers 
to supplement these resources as appropriate. The group has also 
created a fund-raising committee specifically to raise funds for the 
Miami ministerial, according to a Miami organizer.

Some of the specific tasks identified in the FTAA guidelines have been 
accomplished, and more are in process. For example, in terms of 
accommodations for delegates and meeting space, locations have been 
selected and reserved, rates negotiated, and registration arrangements 
established. Several transportation arrangements have been made, 
although important details must still be ironed out.

Despite this progress, the USTR and Miami both agree that much remains 
to be done between now and the November 2003 ministerial. Among other 
things, a budget that clearly outlines funding sources and responsible 
parties must be finalized; meeting space configured; a security plan 
developed; and arrangements for providing credentials, translation, 
administrative support, and other services made. For example, 
requirements for telecommunications, computer, audiovisual, and 
related equipment must be finalized and needed equipment and services 
obtained. The FTAA Administrative Secretariat requires the United 
States to provide it and delegates with details of the U.S. 
arrangements for the November FTAA ministerial by late September 2003. 
Making all of the required arrangements by then will require intense 
preparations on the part of both the USTR and Miami officials, both 
agree. Executing the plan and updating it as necessary will occupy 
officials between mid-September and November 2003.

Funding Has Not Been Secured, and Funding Responsibilities Are Still 
Unclear:

Serious risks are involved in the USTR's plans to rely on the host city 
to assume responsibility for the majority of the costs. Although some 
requirements can be met through in-kind contributions, securing 
necessary funds generally requires considerable lead time, and expenses 
that require an outlay of funds are expected to be incurred within the 
next 2 months. No federal agency has received funding for this event. 
The organizing group does not yet have a final budget and has just 
begun fund-raising, although USTR and the Miami organizers anticipate 
that a budget will be finalized and funding responsibilities will be 
clarified by mid-April.

Relying on the host city to pay the majority of the costs is a model 
the United States has followed at past summits and trade ministerials 
where a host committee, or an organizing group composed of local 
representatives associated with the host city, paid for the majority of 
the costs. Miami worked with this model when it hosted the 1994 Summit 
of the Americas. Some experiences with host committees have been 
unsuccessful, however. For example, at the 1999 Seattle WTO 
ministerial, decisions to rely on the host committee and the 
committee's ultimate failure to raise sufficient funds caused problems 
at the meeting. In addition, costs kept escalating as year-long 
planning efforts continued, ultimately reaching $24 million. This 
amount is considerably higher than the December 1998 budget of 
$9 million. Financial shortfalls resulted in part from inherent 
difficulties that USTR encountered in having a private group fund the 
Seattle ministerial. For example, the Seattle organizers were not 
permitted to sell tickets to donors or recognize contributions (similar 
rules will apply for the host committee in Miami). The Seattle host 
committee ultimately fell far short of its fund-raising goals and only 
paid for one-fourth of associated costs. The local, state, and federal 
governments paid the remainder, with the local and state governments 
covering the bulk of these costs, or around $17 million. To satisfy the 
federal government's share, the USTR requested a $1.3-million 
supplemental appropriation that was shared between USTR and the State 
Department. The State Department paid an additional 
$1.2 million, and the city of Seattle also received a $3.8-million 
partial reimbursement from the federal government to help defray its 
substantial costs; these costs were for security only. Thus, all told, 
the federal government ended up paying $6.3 million for the Seattle WTO 
ministerial, an event that is admittedly larger in scale than the FTAA 
ministerial.

No federal agency has yet received funding for the FTAA ministerial. 
The USTR has only requested $200,000 for the FTAA ministerial, but this 
is in the fiscal year 2004 budget year that begins October 1, 2003. At 
a minimum, USTR will have to pay for the expenses of its staff 
participating in the event, for setting up and staffing a fully 
equipped "control room"--an office in which U.S. delegates can work--
for basic translation services, and for certain aspects of security. To 
minimize some expenses, USTR will utilize computers and other equipment 
procured for the Cancun WTO ministerial to set up control rooms at the 
Miami FTAA ministerial. USTR has asked the Office of Management and 
Budget (OMB) to submit a request for a $1.3-million supplemental 
appropriation for this WTO-related procurement, but OMB has not yet 
approved this request.

Furthermore, USTR has no back-up plan in the event that its costs 
exceed the amount it has requested or the host city does not meet its 
fund-raising goals. For example, the USTR plans to ask other federal 
agencies participating in the ministerial to pay for their own 
expenses. This approach has been used in past ministerials, such as the 
Doha WTO ministerial, with mixed success. At Doha, for example, USTR 
ultimately absorbed nearly $1 million in costs after other agencies 
withdrew or failed to provide pledged funding. In terms of the 
financial support expected from Miami, USTR has sought to forestall any 
possible funding difficulties through an agreement with the Miami 
organizers on a series of fund-raising principles and periodic status 
reports from Miami on the amounts of money raised. Miami will rely on 
its business community as well as on state and local government 
contributions in kind and in cash to meet its fund-raising goals. The 
four municipalities involved have drafted a memorandum of understanding 
regarding their financial support of the meeting under which they agree 
to provide in-kind and cash support according to a yet-to-be specified 
formula.[Footnote 32] However, this agreement allows signatories to 
withdraw from the arrangement if they determine that they can no longer 
financially participate. As yet, the Miami organizing group has not 
finalized its fund-raising goals or begun fund-raising in earnest. 
However, the USTR and the Miami organizers have told us that the 
committee has a strategy for raising needed contributions and will meet 
its fund-raising goals.

Another key risk facing USTR at the Miami meeting is unclear funding 
responsibilities. USTR has stated that Miami will provide the vast 
majority of funds for the ministerial. One Miami official said that in 
broad terms they agree Miami will shoulder the majority of costs. 
However, the Miami organizers believe the federal government will also 
assume some financial responsibility for the ministerial because, in 
their view the ultimate host of the ministerial is the federal 
government, not the Miami organizers. One way to clarify these 
misunderstandings over responsibilities is through a memorandum of 
understanding. Department of State officials involved in the Seattle 
WTO ministerial and other major events emphasized the importance of 
documenting financial responsibilities in order to avoid disagreements 
over costs later on. However, USTR has decided not to sign a memorandum 
of understanding with the Miami host committee assigning financial 
responsibilities. Instead, it plans to rely on Miami's desire to be the 
site of the permanent FTAA Administrative Secretariat as incentive 
enough to raise the necessary funds and carry out the logistical and 
security requirements for hosting the ministerial. The Miami organizers 
also do not feel that a memorandum of understanding with the federal 
government is necessary. Instead, both parties have agreed to use the 
budget development process to identify funding sources and apportion 
financial and logistical responsibilities. This breakdown has not been 
prepared but is being worked on.

Security Is Critical:

Another key risk the United States will face in Miami is ensuring the 
security of participants, given the extensive security requirements of 
previous trade ministerials and the protests encountered at these and 
other events that have attracted opponents of globalization. At Genoa, 
Italy, for example, a protestor was killed during antiglobalization 
protests. Also, at the FTAA ministerial in Quito, a child was killed 
during the protests. Estimates for the number of protesters expected at 
Miami range from 20,000 to 100,000 people, according to both the USTR 
and the Miami organizers. USTR expects around 6,000 participants, 
compared to
9,000 participants and 50,000 protesters at the Seattle WTO 
ministerial. In a February 2000 report on the November 1999 Seattle WTO 
ministerial,[Footnote 33] we noted that protests interfered with the 
Seattle ministerial by causing delays and disrupting the proceedings. 
Protesters also threatened and in some cases assaulted delegates. 
Furthermore, protesters, police officers, and bystanders were injured, 
and property was damaged. In Seattle, the city's decision to stop 
providing security was a factor in forcing the meeting to close before 
its scheduled conclusion.

According to USTR officials, the need to link logistics and security is 
an important lesson learned after the security problems experienced at 
the Seattle ministerial and is a critical component of the planning for 
the Miami event. At the Seattle ministerial, security costs accounted 
for approximately half of the expenses incurred, in part because 
security had not been factored into logistical arrangements from the 
beginning, according to the USTR. USTR's present goal is to have a 
security plan finalized by May 30, 2003. However, the plan will remain 
flexible thereafter as it is updated to reflect the latest information. 
Security staffing for the event will also need to be arranged. So far, 
the USTR reports that local police will provide security at the event. 
According to the Miami organizers, police security services will be 
provided in kind, using existing staff and resources rather than 
relying on fund-raising to pay for security. Other entities involved in 
providing security include the U.S. Coast Guard and the Department of 
State's Bureau of Diplomatic Security. If certain high-level officials 
attend, the Secret Service and Homeland Security will need to be 
involved. Further, the federal government will be responsible for 
providing information security.

Conclusions:

Negotiations toward achieving an FTAA face an important test in the 
coming year. Despite 4 years of talks and an acceleration of progress 
by the time of the November 2002 Quito ministerial, considerable work 
remains in order to culminate an initiative that the region's 34 
democratically elected leaders once embraced as key to integrating 
their economies; improving growth and equity; and strengthening nascent 
democratic institutions. With a January 2005 deadline for completion, 
the FTAA faces numerous challenges in the current phase. These include 
making progress on key issues such as agriculture and starting market 
access negotiations in earnest. Ensuring that negotiations have 
sufficient political support from key players such as the United States 
and Brazil also remains a challenge. Our work suggests that the U.S.'s 
readiness to co-chair the negotiations and host a major trade 
ministerial in Miami 7 months from now is not assured because, to date, 
the plans and human and financial resources are not in place to 
complete the required duties and to counter likely risks. Filling these 
gaps is critical to success and will require intense preparations on 
the part of USTR and Miami organizers between now and November.

Recommendation for Executive Action:

In order to successfully carry out the responsibilities involved in co-
chairing the Free Trade Area of the Americas negotiations and hosting 
the November 2003 Miami ministerial, we recommend that the USTR 
intensify U.S. preparations and promptly and regularly evaluate whether 
current resources and plans are sufficient to carry out the tasks and 
mitigate the risks associated with these two responsibilities. The 
risks we have identified are (1) handling the increased workload 
associated with co-chairing the negotiations and hosting the Miami 
ministerial with limited staff at USTR, (2) resolving procedural and 
substantive issues through the co-chairmanship, (3) acquiring 
sufficient expertise in planning major events, (4) clarifying and 
further developing plans for the Miami ministerial, (5) securing 
sufficient funding for the ministerial, and (6) ensuring the security 
of participants at the ministerial. Several of these resources and 
plans involve allowing significant lead time, which the USTR should 
take into consideration.

Agency Comments and Our Response:

We provided draft copies of this report to the Office of the U.S. Trade 
Representative and the Department of State and received formal comments 
from both agencies (see apps. I and II). They also provided technical 
comments, which we have incorporated in the report as appropriate.

USTR and State generally agreed with our overall message. USTR stressed 
that it is committed to successfully concluding an FTAA by January 2005 
and hosting the November 2003 ministerial and expressed belief that 
plans for the ministerial are at an appropriate stage of development. 
USTR also noted various steps it has recently taken to address the 
challenges ahead in the FTAA negotiations and for ministerial 
preparations. Accordingly, we have updated our report, citing specific 
progress that USTR has made in this regard. For example, we noted that 
the USTR is working with Brazil to provide more active leadership and 
coordination to the negotiating process and that venues for the 
ministerial and associated events have now been reserved. We also noted 
that the Miami organizing group has established an extensive network of 
partners from the public and the private sectors to provide support. 
Nevertheless, we maintain our basic findings and recommendation.

The Department of State addressed the issue of assistance to USTR by 
saying that it is trying to be as helpful as it can within the 
constraints of its available resources. We have noted that in our 
report.

In addition to formal agency comments, the Miami host committee was 
invited to provide comments on the report. It generally agreed with our 
findings and provided several clarifications, which we incorporated.

Scope and Methodology:

To conduct our analysis of the progress made in the negotiations on 
creating a Free Trade Area of the Americas and the outcome of the Quito 
ministerial meeting, the key challenges for the current negotiating 
phase, and the U.S. challenges associated with co-chairing the FTAA 
process and hosting the November 2003 Miami ministerial meeting, we 
reviewed FTAA and executive branch documents on the FTAA negotiations 
and the U.S. preparations for roles as co-chair of the negotiations and 
host of the Miami ministerial, and budget documents from USTR for 2002 
and 2003. We also reviewed academic and economic literature related to 
the negotiations. We conducted interviews with U.S. negotiators and 
with foreign government officials, including officials who have chaired 
the FTAA negotiations in the past. We also held discussions with 
multilateral institutions that provide technical assistance to the FTAA 
negotiations, including the Organization of American States, the Inter-
American Development Bank, and the Economic Commission for Latin 
America and the Caribbean. We attended public hearings on the FTAA and 
spoke with professional scholars and other experts familiar with the 
negotiations. In November 2002, we traveled to Quito, Ecuador, to 
attend the Americas Business Forum and a civil society group meeting 
associated with the FTAA ministerial. This report is also based on our 
past work on the FTAA negotiations in the Western Hemisphere (see 
Related GAO Products).

We conducted our work from July 2002 through March 2003 in accordance 
with generally accepted government auditing standards.

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to interested congressional committees, the U.S. Trade Representative, 
the Secretary of State, the Administrator of the U.S. Agency for 
International Development, the Secretary of the Treasury, the Secretary 
of Agriculture, and the Secretary of Commerce. We also will make copies 
available to others upon request. In addition, the report will be 
available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please 
contact me at (202) 512-4347. Additional GAO contacts and staff 
acknowledgments are listed in appendix III.

Loren Yager
Director,
International Affairs and Trade:

Signed by Loren Yager:

[End of section]

Appendixes:

Appendix I: Comments from the Office of the U.S. Trade Representative:

EXECUTIVE OFFICE OF THE PRESIDENT DEPUTY UNITED STATES TRADE 
REPRESENTATIVE WASHINGTON, D.C. 20508:

April 1, 2003:

Susan Westin:

Managing Director, International Affairs and Trade U.S. General 
Accounting Office:

Washington, D.C. 20548:

Dear Ms. Westin:

Thank you for providing the Office of the United States Trade 
Representative (USTR) with the opportunity to review a draft of your 
report to the Chairs of the Committee on Finance, U.S. Senate, and the 
Committee on Ways and Means, U.S. House of Representatives, on the 
status of the negotiation of the Free Trade Area of the Americas (FTAA) 
Agreement and the planning for the upcoming Trade Ministerial in Miami 
in November. The successful completion of the FTAA is a high priority 
for the Bush Administration, and a successful Ministerial in Miami will 
help us to achieve that goal.

Your report is wide-ranging and provides useful information regarding 
the status of the negotiations, the preparations for the Ministerial in 
Miami, and the challenges ahead with respect to each. Your report also 
contains important information regarding the steps that USTR is taking 
to address those challenges. It is in this latter area in which I 
believe that the snapshot provided by your report would benefit from 
further amplification.

The negotiation of the FTAA Agreement is progressing along a path that 
can get us to a successful agreement by January 2005. There are many 
challenges, but the participants, under the leadership of the current 
Co-Chairs, the United States and Brazil, continue to make significant 
progress in the negotiations. The continued commitment to the FTAA of 
the nations in the hemisphere is evidenced in many ways, including by 
the agreement of the countries to begin tariff reductions from current 
applied rates rather than much higher WTO-bound rates; by the tabling 
by all countries of tariff offers in a timely fashion; and by the 
adoption of the Hemispheric Cooperation Program in order to enable 
countries at lower levels of development and with smaller economies to 
fully participate in the FTAA and its benefits. As Co-Chairs, the 
United States and Brazil understand the great responsibility they share 
at this important stage, a recognition that is reflected in the way in 
which we are working together to ensure that the negotiations are a 
success. Among other things, we are providing more active leadership to 
the negotiating process and fostering greater coordination than did 
previous Chairs.

In recognition of the importance of our various relationships with 
Brazil, including as Co-Chairs of the FTAA process, Ambassador Zoellick 
has reached out to Brazil to cement our working relationship. He met 
with President-elect Lula and his team in Washington before his 
inauguration. Ambassador Zoellick then traveled to Brazil to attend the 
inauguration and have further meetings with his new counterparts. In 
addition,

Ambassador Zoellick is planning meetings with his Brazilian 
counterparts in the coming months to focus on FTAA preparations.

Preparations for hosting the ministerial are also well underway with 
the support of a strong partnership between USTR and State and local 
governments in Florida. Governor Bush has publicly stated his 
commitment to a successful Ministerial and his intention to remain 
personally involved in order to ensure that the Ministerial is 
successful. Ambassador Zoellick recently met with the Governor to 
highlight the preparations and the schedules for the Ministerial and to 
draw attention to important topics that will need to be resolved in the 
coming months. With the help of Governor Bush, a strong team has been 
established to lead the efforts for organizing the Ministerial. The 
organizing groups efforts are being led by Ambassador Charles Cobb, 
former U.S. Ambassador to Iceland, and Ambassador Luis Lauredo, who is 
serving as the Executive Director of the organizing group. Ambassador 
Lauredo is the former U.S. Ambassador to the Organization of American 
States, previously served as U.S. Coordinator for the Presidential 
Summit of the Americas in Quebec City in April 2001 and as Executive 
Director of the first Summit of the Americas, held in Miami in December 
1994.

The Miami organizing group has established an extensive support network 
of partners from both the public and the private sector. The organizing 
group, and its partners, have extensive experience in organizing large 
events. We have great confidence in their experience and dedication and 
in our ability to work with them in preparing for a successful 
Ministerial. Our confidence in this partnership has been confirmed by 
the progress to date, including the selection of the site for the 
Ministerial and the identification and reservation of hotel rooms and 
meeting space, and the identification of resources for transportation, 
security, information technology support, and administrative services.

We are also encouraged by the enthusiasm of the Miami community for the 
FTAA Ministerial. Miami has long been considered the gateway to the 
Americas, and they see hosting the ministerial as an opportunity to 
showcase both the State of Florida and why Miami is the ideal location 
for the home of the FTAA permanent Secretariat. Positive and deliberate 
steps have been taken by USTR staff and the Miami organizers to develop 
effective and comprehensive plans to address all aspects of preparation 
for the ministerial. USTR planning for the complex logistical and 
security preparations necessary for a successful ministerial reflects 
an unprecedented level of coordination and cooperation from the federal 
government, private sector, and State and local governments. In 
addition, fund-raising by the Miami organizing group has been 
developing since January 2003. There has been good progress in both the 
establishment of an effective fund raising network, and the 
identification of in-kind support and services from State and local 
governments. For example, security for the Ministerial and associated 
events will, in large part, be covered by in-kind donations from State 
and local governments. Drawing upon significant expertise within USTR 
and the Miami organizers, plans for the ministerial are at an 
appropriate stage of development given the current time line.

USTR is committed to ensuring that the Miami Ministerial is a success 
and that the negotiation of the FTAA is completed by January of 2005. 
Your report is a valuable tool to assist in achieving those goals. We 
appreciate the time and attention of your auditors, and are grateful to 
have had the opportunity to provide input during the final drafting of 
this report.

Sincerely,

Peter F. Allgeier:

Signed by Peter F. Allgeier:

[End of section]

Appendix II: Comments from the Department of State:

United States Department of State Washington, D. C. 20520:

Dear Ms. Westin:

We appreciate the opportunity to review your draft report, "FREE TRADE 
OF THE AMERICAS: Negotiations Progress, but the United States Needs to 
Bolster Preparations for November 2003 Ministerial," GAO-03-560, GAO 
Job Code 320139.

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report.

If you have any questions concerning this response, please contact 
Robert Manogue, Bureau of Economic and 
Business Affairs, Office of Bilateral Trade Affairs at (202) 647-1997.

Sincerely,

Christopher B. Burnham 

Assistant Secretary for Resource Management and 
Chief Financial Officer:

Signed by Christopher B. Burnham:

Enclosure:

As stated.

cc: GAO/IAT - Kim Frankena State/OIG - Luther Atkins State/EB - E. 
Wayne:

State/H - Paul Kelly:

Ms. Susan S. Westin, Managing Director, International Affairs and 
Trade, U.S. General Accounting Office.

Department of State Comments on GAO Draft Report FREE TRADE AREA OF THE 
AMERICAS: Negotiations Progress, but United States Needs to Bolster 
Preparations for November 2003 Ministerial, (GAO-GAO-03-560, GAO Code 
320139):

The State Department has been actively participating in the FTAA since 
its inception. Working with other agencies, under the USTR's able 
leadership, the Department has been making positive contributions in a 
number of areas. Senior Department officials have instructed staff to 
do as much as possible, bearing in mind the Department's resource 
constraints, to support USTR and the Administration's ambitious trade 
agenda. State is working with USTR on a regular basis to try and 
determine where State assistance is possible. Given that State has not 
been provided any additional funds for the Miami Ministerial, any 
assistance will have to come from existing resources.

Responding to an USTR request, State's Office of International 
Conferences has offered to provide its advice and guidance to USTR 
staff planning the Ministerial and share lessons learned from other 
international meetings.

It has also agreed to fund the Department's share of control room costs 
during the Ministerial (Standard operating procedure is for State to 
fund its participation in terms of travel and per diem.) State will 
also provide an administrative officer to assist during the 
Ministerial.

State will consider additional requests from USTR on a case-by-case 
basis as received. For example, following an additional request from 
USTR, State expects to provide administrative officer support for the 
two weeks before the Ministerial. It is also considering how it can 
provide additional officers to help with foreign delegations during the 
Ministerial.

[End of section]

Appendix III: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Kim Frankena (202) 512-8124
Venecia Rojas Kenah (202) 512-3433:

Staff Acknowledgments:

In addition to the individuals named above, R. Gifford Howland, Rona 
Mendelsohn, Kirstin Nelson, Jon Rose, and Marc Molino made key 
contributions to this report.

[End of section]

Related GAO Products:

[End of section]

Free Trade Area of the Americas: Negotiators Move Toward Agreement That 
Will Have Benefits, Costs to U.S. Economy. GAO-01-1027. Washington, 
D.C.: September 7, 2001.

World Trade Organization: Early Decisions on Key Issues Vital to 
Progress in Ongoing Negotiations. GAO-02-879. Washington, D.C.: 
September 4, 2002.

Free Trade Area of the Americas: April 2001 Meetings Set Stage for Hard 
Bargaining to Begin. GAO-01-706T. Washington, D.C.: May 8, 2001.

Free Trade Area of the Americas: Negotiations at Key Juncture on Eve of 
April Meeting. GAO-01-552. Washington, D.C.: March 30, 2001.

World Trade Organization: Progress in Agricultural Trade Negotiations 
May Be Slow. GAO/T-NSIAD-00-122. Washington, D.C.: March 7, 2000.

World Trade Organization: Seattle Ministerial: Outcomes and Lessons 
Learned. GAO/T-NSIAD-00-86. Washington, D.C.: February 10, 2000.

World Trade Organization: Seattle Ministerial: Outcomes and Lessons 
Learned. GAO/T-NSIAD-00-84. Washington, D.C.: February 8, 2000.

Agricultural Trade: Changes Made to Market Access Program, but 
Questions Remain on Economic Impact. GAO/NSIAD-99-38. Washington, D.C.: 
April 5, 1999.

:

(320139):

FOOTNOTES

[1] The ministerial meeting, composed of the trade ministers of all the 
countries that are members of the proposed Free Trade Area of the 
Americas, is the highest decision-making body in the ongoing 
negotiations. Ministerial meetings are intended to evaluate the 
progress and overall status of the trade negotiations to date and to 
set the agenda for future work. The meetings result in a ministerial 
declaration setting forth agreed decisions and directions.

[2] See U.S. General Accounting Office, Free Trade Area of the 
Americas: Negotiators Move Toward Agreement That Will Have Benefits, 
Costs to U.S. Economy, GAO-01-1027 (Washington, D.C.: Sept. 7, 2001); 
U.S. General Accounting Office, Free Trade Area of the Americas: April 
2001 Meetings Set Stage for Hard Bargaining to Begin, GAO-01-706T 
(Washington, D.C.: May 8, 2001); U.S. General Accounting Office, Free 
Trade Area of the Americas: Negotiations at Key Juncture on Eve of 
April Meetings, GAO-01-552 (Washington, D.C.: Mar. 30, 2001). 

[3] The World Trade Organization, established in January 1995, consists 
of 146 members and provides the institutional framework for the 
multilateral trading system.

[4] The 34 countries participating in FTAA negotiations are Antigua and 
Barbuda, Argentina, the Bahamas, Barbados, Belize, Bolivia, Brazil, 
Canada, Colombia, Chile, Costa Rica, Dominica, the Dominican Republic, 
Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, 
Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, St. Kitts and 
Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad 
and Tobago, the United States, Uruguay, and Venezuela.

[5] CARICOM is a regional bloc whose members are Antigua and Barbuda, 
the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, 
Jamaica, Montserrat (overseas territory of the United Kingdom), St. 
Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, 
and Trinidad and Tobago. 

[6] Mercosur includes Argentina, Brazil, Paraguay, and Uruguay.

[7] Free trade agreements generally eliminate tariff duties and other 
barriers on substantially all trade between the member countries and 
may include other provisions covering subjects such as investment and 
government procurement. Customs unions go beyond free trade agreements 
by not only eliminating duties between partners but also by setting 
common external tariffs applied to countries not party to the 
agreement.

[8] NAFTA consists of Canada, Mexico, and the United States.

[9] A subsidy is generally considered to be a financial contribution 
provided by a government that gives a benefit to a specific company, 
industry, or group of industries for the production, manufacture, or 
distribution of goods or services. Antidumping duties are imposed on 
"dumped imports" (i.e., imports sold at a price lower than normal 
value). Countervailing duties are imposed on subsidized imports.

[10] The Andean Community is a subregional organization endowed with an 
international legal status. The community consists of Bolivia, 
Colombia, Ecuador, Peru, and Venezuela. The Andean Community is also a 
free trade area.

[11] See GAO-01-552.

[12] Specifically, the TNC agreed that the base rate from which tariff 
liberalization will be negotiated is the most-favored-nation applied 
rate as of October 15, 2002. Regional subgroupings, such as Mercosur, 
that apply common external tariffs, were given until December 14, 2002, 
to present their base tariffs and until April 15, 2003, to adjust these 
tariffs; the base rate was set at the applied tariff rate as of January 
1, 2004.

[13] Specifically, USTR solicited public input, requested advice from 
the U.S. International Trade Commission, conducted a public hearing, 
notified Congress of objectives for an FTAA agreement, and continued 
its environmental assessment of the FTAA.

[14] See GAO-01-1027.

[15] Most countries were required to notify their base tariff rates by 
October 15, 2002, and did so.

[16] The deadline for presenting initial offers was February 15, 2003. 
For a discussion on the status of the presentation of offers, see 
Market Access Offers Important for Momentum, but Substantial 
Liberalization Difficult section below.

[17] See GAO-01-706.

[18] Venezuela reserved its position on the question of concluding FTAA 
negotiations by 2005, reiterating a reservation taken at the conclusion 
of the April 20-22, 2001, Summit of the Americas. 

[19] See GAO-01-552.

[20] See GAO-01-552.

[21] The WTO agriculture agreement classifies agricultural domestic 
support into three categories identified by "boxes": green (permitted), 
amber (trade-distorting subsidies that must be reduced), and blue 
(production-limiting programs). For the WTO, most of the domestic 
support measures considered to distort production and trade fall into 
the amber box. Thirty WTO members, eight of whom are FTAA participants 
(Argentina, Brazil, Canada, Colombia, Costa Rica, Mexico, the United 
States, and Venezuela), have commitments to reduce their trade-
distorting amber box supports. One proposal within the FTAA draft text 
would eliminate some of these supports.

[22] The Farm Security and Rural Investment Act of 2002 (P.L. 107-171, 
May 13, 2002).

[23] Specifically, the Quito ministerial declaration states:

We recognize that, in a global market, we must have significant results 
in the negotiations on agriculture, both in the FTAA and in the WTO. In 
this context, we must also take into account the practices by third 
countries that distort world trade in agricultural products. We also 
recognize that our respective evaluation by country or group of 
countries, of the results in the market access negotiations in 
agriculture in the FTAA will depend on the progress we can reach in 
other subjects that are part of the agriculture agenda.

[24] Those practices by countries that are not FTAA signatories, yet 
distort intrahemispheric trade. For example, if a good exported from 
Japan to Brazil with the benefit of export subsidies caused U.S. 
exports to Brazil of the same good to decline, that transaction would 
be a trade-distorting practice by a third party. 

[25] See U.S. General Accounting Office, World Trade Organization: 
Early Decisions Are Vital to Progress in Ongoing Negotiations, GAO-02-
879 (Washington, D.C.: Sept. 4, 2002).

[26] The CAP is a set of rules and regulations governing agricultural 
production in the EU. CAP rules cover most aspects of agricultural 
activity, including support to farmers, production methods, marketing, 
and controls over quantities of food that different agriculture sectors 
can produce.

[27] The European Commission is the EU's executive body. It is 
responsible for implementing the European legislation (directives, 
regulations, decisions), budget, and programs adopted by Parliament and 
the European Council. The Commission negotiates international 
agreements on behalf of the EU and has the right to propose legislation 
to the European Council and the Parliament, the primary decision-making 
bodies.

[28] These preference programs provide preferential duty-free entry 
into the United States for certain products.

[29] The Andean Trade Preference Act (ATPA) is a program providing for 
the duty-free entry of merchandise from designated beneficiary 
countries. ATPA was first enacted into law by the United States on 
December 4, 1991.

[30] A customs union including South Africa, Lesotho, Botswana, 
Namibia, and Swaziland.

[31] The State Department has committed to providing one administrative 
officer for 2 weeks prior to the conference and to provide an 
administrative officer to assist during the ministerial meeting. It has 
also agreed to providing advice and guidance to USTR and to share 
lessons learned from past experience.

[32] The four municipalities involved are the city of Miami, the county 
of Miami-Dade, the city of Coral Gables, and the city of Miami Beach.

[33] See U.S. General Accounting Office, World Trade Organization: 
Seattle Ministerial: Outcomes and Lessons Learned, GAO-00-86 
(Washington, D.C.: Feb. 10, 2000).

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