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Reducing trade barriers
Jerry Haar is a senior research associate at both the University of Miami's Dante B. Fascell North-South Center and the Wharton School of the University of Pennsylvania.. Frank Santeiro is managing director of Global Trade Services, Latin American and Caribbean Division of Federal Express.
Jerry Harr and Frank Santeiro
Few cities in the hemisphere are as trade-dependent as Miami. Thus the April trade-minister's meeting in Buenos Aires had great relevance to our area's economic fortunes. In this sixth Summit of the Americas, the ministers will report on progress toward achieving a Free Trade Area of the Americas agreement by 2005.
There has been debate about whether progress can be made and if the accord will be implemented by 2005. Some argue that the FTAA already has produced results. These include a strengthening of hemisphere relations, wider market access, a deepening of macroeconomic reforms and sub-regional trade liberalization, and a cooperative network of public officials. Skeptics say that results have been procedural, not substantive, and that self-interest and protectionism will prevent the agreement from becoming a reality.
We believe that the most substantive accomplishment of the FTAA has received relatively little attention -- namely, approval of eight customs-related Business Facilitation Measures. At the 1999 Toronto trade ministerial meeting, the measures were designed to contribute to business by reducing transaction costs and creating a more-consistent and predictable business environment.
Those involved were heartened by the ministers' decision to focus on customs, a basic yet critical area. The BFMs address the disparity between increased trade and slow, cumbersome customs-clearance procedures. Faster, simplified clearance for express-delivery shipments and low-value items will reduce losses and lost business caused by customs delays. Risk-based inspections will allow customs authorities to focus limited resources on high-risk shipments.
Streamlined temporary importation of promotional and professional materials will facilitate business contacts and trade. Application of the 1996 Harmonized Commodity Description and Coding System will ensure consistent classification from country to country.
How have the FTAA countries fared to date in implementing the BFMs? Many nations claim to have made great strides. However, only an objective, quantifiable assessment will show if there has been real progress. Reliance on self-reporting by countries has produced unrealistic, overly optimistic assessments on the state of implementation. The express industry has determined that, with notable exceptions, there has been little effect on day-to-day clearance activities and limited benefit to consumers. Government and business agree that the countries need technical assistance to put the BFMS in place.
At the summit, ministers will be deliberate about the texts of trade-negotiating groups: market access; services; investment; intellectual property; government procurement; competition policy; agriculture; dispute settlement; and subsidies, dumping and countervailing duties.
Rather than put a public-relations spin on differences, the ministers should acknowledge difficulties that remain and call for full implementation of the BFMs as the highest priority. This would be a logical first step to pave the way for more-difficult negotiations on tariff and nontariff reductions. As exporters and importers will attest, the implementation of the customs-related measures is the key to facilitating hemisphere trade and to the success of the FTAA.
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