Per decisions taken at a recent FTAA conclave in Nicaragua, and “Guidelines” subsequently developed, negotiators have been instructed to make particular allowances for the needs of smaller economies.
A Free Trade Area of the Americas was agreed to at the first Summit of The Americas in 1994 in Miami. At the1998 Summit in Santiago, the heads of state approved the start of negotiations. The FTAA initiative is the largest regional integration effort ever undertaken, involving both developed and developing countries. Its objective is to realise free trade and investment in goods and services, allowing large and small nations to compete on an equal basis. A fully implemented FTAA would constitute the largest free trade arrangement in history, uniting nations with a combined GDP of more than $12 trillion and a market of some 800 million people.
This development recognises the economic inequalities that exist between countries and the need to balance the benefits a hemispheric wide free trade arrangement would bring. Each negotiating group addressing special and differential treatment for small economies are required to do so in a way to ensure flexibility — effectively, special allowances will be made on a case by case basis, taking into consideration the varying economic bases of the smaller countries.
Considered a major step forward for the region, the guidelines also include provisions for the transitional periods that CARICOM member countries have been requesting, and will complement plans within the region. The FTAA agreement is expected to acknowledge any arrangements made by CARICOM under its Single Market and Economy (SME) agreement, adopting such as part of its own process.
In commenting on the recent development, the Bahamas Ambassador for Trade, James Smith, said this *”might be considered the first step in creating a hemispheric cooperation plan to ensure that lesser developed countries can participate fully in the FTAA process.”* Amb. Smith serves as Chairman of the FTAA Services Negotiating Group.
Nine FTAA Negotiating Groups are in place, with all countries participating in the process represented on each group. Additionally, three special committees have been established to review and consider (a) the special issues relating to smaller economies; (b) the implications of e-commerce; and (c) and to ensure that the views of civil society are fully considered and included in the process. A Trade Negotiations Committee (TNC) coordinates the overall work of these groups.
Private Sector Participation In The FTAA Process
Minister of Economic Development Zhivargo Laing has said that the Bahamas Government is working hard to ensure that the private sector is fully aware of all changes and developments in the negotiating process.
This has been achieved through a series of Private Sector Trade Consultative Groups, an integral part of the new national trade negotiations machinery established earlier this year to assist with FTAA negotiations. The group comprises a broad cross-section of public sector and quasi-governmental organisations. The Government also has reported that the FTAA team is working on drafting a “Trade Regime” Report, expected to be developed over the next three years.
An FTAA trade negotiation structure had existed for some time, but the new Trade Negotiating Group is expected to enhance the research and support facilities of this structure, with Bahamian negotiators now provided with the information and technical support necessary to facilitate both FTAA and WTO deliberations. The Bahamas has Observer Status with the WTO, and has applied for Full Membership.
International Monetary Fund Involvement
The Bahamas Government is working with the IMF to review options relating to a transition from a customs duty-dependent tax regime to some other tax regime. The IMF is expected to begin work in this area in November, 2001. The IMF was instrumental in the harmonising and rationalisation of the existing customs duty regime, which saw 123 categories of customs duties drop to 29, with an average tariff rate of about 45% dropped to 30%.