• NAFTA and CAFTA

NAFTA and CAFTA

This paper is a response to a meeting planned between the US and the Andean countries of Ecuador, Colombia and Peru in 2005 to negotiate a Free Trade Agreement. Arguing that the US-Andean Free Trade Agreement (AFTA) could undermine political and civil stability in the region if negotiated too aggressively, the authors call for slower negotiations with civil society engagement, stronger labour and environmental provisions, reasonable concessions for high-employment sectors in the Andes, and a comprehensive transition plan. While recognising that the AFTA has the potential to increase trade, promote economic growth, develop stability and democracy in the Andes, the authors caution that negotiations treated as a zero-sum competition can potentially undermine these very goals. This risk is further increased by the rushed pace of negotiations.

The authors argue that in order for the AFTA to support the larger goals of cooperation and economic development within the hemisphere, the following steps must be taken:

• the pace of negotiations should be slowed to allow thorough negotiation and consensus building in all four countries on contentious issues. The U.S. Congress should renew the Andean Trade Promotion and Drug Eradication Act (ATPDEA) to enable this. Negotiations should not exclude Ecuador in the rush to reach completion
• U.S. and Andean governments should actively engage all sectors of society, particularly the Andean groups most vulnerable to the dislocations of trade liberalisation, in order to build consensus and ensure the trade agreement does not undermine the goal of political stability and strengthening of democracy
• U.S. and Andean governments should build a broader base of support for ratification of the agreement by including strong labour and environmental provisions
• Andean countries should prepare comprehensive plans for a smooth transition to take advantage of trade opportunities and adjust to the short term challenges of free trade. The U.S. should assist in this preparation by allowing special treatment for areas which generate significant employment in the Andes, by lengthening phase-outs, and by sufficiently funding targeted capacity building to ensure the Andean countries can utilise their access to U.S. markets, and can develop alternatives to uncompetitive sectors.

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