US cites progress in Andean talks but agriculture remains sticking point
International Trade Daily
Tuesday, February 15, 2005
Vargo Cites Progress in Andean Talks But Agriculture Remains Sticking Point
By Rossella Brevetti
Negotiators working on a free trade agreement between the United States and the three Andean countries of Colombia, Ecuador, and Peru made "strong advances" in the latest round of talks in a number of areas—including market access and dispute settlement—but still have much work to do on agriculture, Assistant U.S. Trade Representative for the Americas Regina Vargo said Feb. 14.
"It was a good round. I think we made steady progress," Vargo told reporters via a conference call on the seventh round of U.S.-Andean Free Trade Agreement negotiations that took place the week of Feb. 7 in Cartagena, Colombia.
Negotiators made "strong advances" on the text of the agreement in a number of areas, including market access, customs, procurement, and dispute settlement, Vargo said. Several of the chapters are "very close to closing," including telecommunications and electronic commerce, she added.
All three Andean countries and Bolivia receive unilateral trade benefits from the United States under the Andean Trade Preference Act (ATPA) but those benefits are scheduled to expire in December 2006.
Industrial Market Access
With respect to industrial market access, Vargo said that negotiators had arrived at a "good place."
"We’ve almost consolidated their ATPA benefits [for industrial goods] and for the most part now we are looking for targeted improvements," she commented.
Areas where good advances were made included chemicals, heavy equipment, and medical devices and scientific equipment, Vargo said.
In Vargo’s view, the most notable development with respect to pharmaceuticals in the last round was the fact that Colombia and Ecuador indicated that they could provide data protection. "That was a good first step ... but we’re still very far apart on the details," she remarked.
Areas that still need improvement are automobile parts, appliances, paper and wood, and pharmaceuticals. "We see these negotiations ending in a way that [the Andean countries] are no worse off on any particular product than they are right now [under the ATPA] but that will have to be consolidated in the course of these countries providing meaningful market access to the United States," Vargo told reporters.
Agriculture Talks in March
Citing broad ranging discussions on agriculture, Vargo said that a zero-for-zero tariff exchange was achieved with Colombia on about "seven to eight chapters." But she said that agricultural discussions were still in early stages and that the zero-for-zero exchanges were on noncontroversial issues.
Also, since "agriculture is an area that clearly needs more work," the United States will do a series of bilateral discussions with the countries over three weeks in March, Vargo said. These agricultural bilaterals—most likely consisting of two days each week with an individual country—will begin March 9 with the last bilateral concluding on March 22.
Rice, poultry, dairy, corn, and feed were identified by Vargo as problematic agricultural products. "We still need to find a way forward for virtually all of the U.S. agricultural export priorities," Vargo said under questioning. "There is an awful lot of detail outstanding in agriculture," she said.
No Progress on Price Bands
Asked about price band mechanisms that shield the region’s farmers from foreign competition, Vargo said that she would not characterize the discussions as having made any progress. While the Andean nations "did make some sort of a proposal," Vargo declined to provide details. All the Andean countries have price band mechanisms on their agricultural commodities. The U.S. agricultural community has made elimination of these price bands—which result in variable duties—a top priority.
The next Andean FTA negotiating round will take place in Washington, D.C., the week of March 14. The eighth round will focus on a number of issues that need more time such as intellectual property rights, investment, and specific rules of origin, Vargo said. The round will also include a "deeper discussion on the structure of the agreement," Vargo told reporters.
Textile Issues
Textile negotiations will take place March 16-18 in Miami, Fla., in conjunction with the largest apparel show in the United States, Vargo said.
Talks on a textile rule of origin are still continuing, Vargo said, adding that she did not believe the task would be too difficult because the countries already have domestic textile-making capability. Vargo said that the U.S. approach would be similar to what has been followed in the past in other bilaterals.
There has not been a "demonstrated need" for tariff preference levels in the agreement, Vargo commented. TPLs allow for the use of third-country components in apparel shipped duty-free to the United States.
She said that the United States was willing to talk about cumulation with respect to some of the countries’ common FTA partners. A cumulation provision would allow for duty-free treatment for apparel produced in the Andean countries from fabrics from free trade partners that the nations have in common with the United States.
Bolivia continues to participate in the negotiations as an observer. There are issues that Bolivia is addressing—such as reform of its hydrocarbon law—that the United States would like to see resolved in a manner that demonstrates respect for the sanctity of contracts, Vargo told reporters.
Because ATPA benefits will be expiring at the end of 2006, the countries want to make sure that both they and the United States can complete their ratification process "in sufficient time not to endanger that deadline," Vargo said.
From the perspective of the Andean countries, that means focusing on early summer of 2005 to complete the negotiations, she indicated.
"We’re interested in moving these negotiations forward as soon as we can on what we consider to be a good basis for closing," Vargo said when asked about the U.S. time frame.
All of the negotiating groups will meet concurrently in Peru the week of April 18 for an additional round, Vargo said.End of article graphic
