Talking Points on the FTAA?

Diane Monaco dmonaco at pop3.utoledo.edu
Tue Apr 17 12:04:08 PDT 2001


Hi Yoshie,

Welcome to the ranks of those of us attempting to sort out the successes, failures, prescriptions and such of globalization!...perhaps I may offer you a few "talking" points. The FTAA is a free trade area, as the name suggests, which is not a particularly deep form of economic integration like NAFTA. And like all free trade areas it has its problems...goods and capital (for the most part) can freely move across the borders of the FTA member countries but the labor cannot. This creates huge inequities among and within factors that can only be somewhat solved through domestic redistribution policies which as we well know is regime sensitive! :-)

Also, there is no common external tariff (or commercial policy) when trading with the non FTA member countries which can create additional macroeconomy level problems through its external balances. The goods have a tendency to enter the FTA through the borders of the member country with the lowest tariff...then they freely move within the FTA.

One final point involves increased integration between developing and developed countries and its effects on the terms of trade. NAFTA is unique in that it was the first real attempt toward a free trade area between developed and developing countries...I presume the composition of the FTAA will be the same. Developing countries, as a result of their underdevelopment, tend to export natural resources, agricultural goods, and very "basic" manufactures...the market prices for these goods rise very little over time if at all. Developed countries, on the other hand, export more capital intensive goods and manufactures that have large R&D expenditures behind them thus commanding higher prices. This trading situation continually deteriorates the terms of trade for the developing countries. As the volume of trade increases with increased integration, so does this worsening of the terms of trade. This will also be true for the developing countries of the FTAA most probably.

I hope this little bit helps. Good luck as a panelist!

Diane

At 01:14 AM 4/17/2001 -0400, you wrote:
>Has any of you written an article, given a talk, organized a teach-in,
>etc. on the FTAA (Free Trade Area of Americas)? If you have an article,
>could you post it here or send it to me offlist? I got invited to be on a
>panel discussion on the FTAA. What do you think should be my talking
>points? All inputs from all political perspectives welcome!
>
>Yoshie



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