Decision casts doubts on future of world's largest free-trade a

MIAMI -- The trade ministers from 34 nations smiled, shook hands and patted one another on the back after finishing their latest meeting on creating the world's largest free-trade area.

But many see this week's congratulatory mood as unwarranted, arguing that the framework that the ministers approved Thursday was a major setback from the original goal set here nine years ago of tearing down all trade barriers from Alaska to Argentina.

"On one hand it was a success," said Eric Farnsworth, a vice president for the Council of the Americas, a business group.

"But they've still got a long way to go."

The ministers created a framework for the Free Trade Area of the Americas that would have a common set of rules for all countries, with the option of participating in more areas.

Their declaration speaks in generalities, but many believe it would allow countries to avoid making concessions on controversial issues such as agriculture subsidies and intellectual property rights. Conflicts over those issues derailed World Trade Organization talks two months ago.

Proposed free-trade area

The proposed hemispheric free-trade area would unite 34 countries, creating a market of 800 million people and a collective economic output of about $14 trillion. It would affect everything from the price of orange juice in supermarkets to whether steelworkers have jobs in Brazil, the United States or elsewhere in the region.

About 5,000 issues and items, however, still need to be resolved by January 2005.

"This remains a tremendous challenge, to try to create free trade all throughout the hemisphere," U.S. trade representative Robert Zoellick said late Thursday after announcing the Miami agreement. "It's a good couple of steps forward, frankly."

Those steps are still far from the free-trade area spanning the Western Hemisphere that was announced at a 1994 summit of the leaders from all the nations in the Americas except Cuba.

"A key to prosperity is trade without barriers, without subsidies, without unfair practices, and with an increasing stream of productive investments," then-President Clinton and other leaders announced as they gave the proposed project its ambitious name.

A slowing regional economy and declining faith in Washington's pet projects have slowed progress, so ministers in Miami had to cobble together any agreement they could this week.

"We would like to have everything here on paper, but we aren't going to be able to do that," Brazilian Foreign Minister Celso Amorim said.

The step back from the original concept is in line with delays faced by other free trade areas. The seeds of the European Union were in the common coal and steel market created in 1951, but the EU's single market free of trade barriers took another four decades to be formed.

Zoellick said the Bush administration is still pushing for a comprehensive agreement that opens the Americas to free trade. He and Amorim said the Miami framework was a way to keep everyone at the bargaining table.

Both Brazil and the United States gave ground on key issues. Brazil wanted the United States to cut the billions of dollars in subsidies it gives to American farmers. The United States wanted Brazil to allow negotiations on creating legal guarantees for foreign investment and intellectual-property rights in the developing world.

Both countries came to realize that headway on those topics would have to come at the WTO level. Because the FTAA does not include major economies in Europe and Asia, Brazil and the United States would lose leverage at the global level if they negotiated those sensitive issues regionally.

Opponents of free trade predicted that the Miami framework would be the beginning of the end of the FTAA. They say free-trade pacts lead to corporate greed, the exploitation of workers and the degradation of the environment.

"The declaration sweeps the hard issues under the rug, and they've only got a year to settle them," said Thea Lee, chief international economist for the AFL-CIO.

The U.S. business community had a mixed response to the framework.

"This is not the road we wanted to take, but it's the only road available," said Frank Vargo, vice president of international economic affairs for the National Association of Manufacturers. "The alternative, allowing the talks to collapse because a way could not be found to bridge the gap with Brazil, would have been a disaster for all."