Market Access And Other Issues In The Free Trade Area Of The Americas Negotiations by John Murphy

Notification Of Intent To Testify In The 9/9/02 Hearing Before The Trade Policy Staff Committee On Market Access And Other Issues In The Free Trade Area Of The Americas
Negotiations

Person to Testify: John Murphy, Vice President, Western Hemisphere Affairs, U.S. Chamber of Commerce

September 9, 2002

SUMMARY

In the view of the U.S. Chamber of Commerce and the Association of American
Chambers of Commerce in Latin America (AACCLA), the Free Trade Area of the
Americas (FTAA) should accomplish the following:

• It should eliminate existing all or virtually all tariff and non-tariff barriers and
  bar the creation of new ones;
• It should remove other restrictions on trade in goods and services as well as
  investment unless specifically exempted;
• It should harmonize technical and government rule-making standards;
• It should exceed World Trade Organization disciplines, where possible;
• It should provide national treatment for investment and investor safeguards against expropriation;
• It should establish a viable dispute settlement mechanism; and
• It should improve intellectual property rights protection.

I am pleased to appear before this committee on behalf of the U.S. Chamber of
Commerce. With over three million members of every size, sector, and region, the
U.S. Chamber is the world's largest business federation.

I am also pleased to represent the Association of American Chambers of Commerce
in Latin America (AACCLA). AACCLA is a leading advocate of increased trade and
investment between the United States and Latin America. With over 20,000
member companies, AACCLA represents over 80 percent of all U.S. investment in
Latin America.

Given the brief time allotted, let me summarize the principle objectives of these two
organizations in the FTAA negotiations by running through some of the negotiating
groups, and then adding one general comment.

With respect to the negotiating group on market access, the FTAA negotiations
should strive — ambitiously — for the earliest possible removal of all tariffs, quotas,
and other barriers to trade. Each FTAA country should eliminate a high proportion
of its tariffs within five years.

Toward this end, the negotiators should pursue such strategies as the immediate
removal of low tariffs, the adoption of ceiling rates from which progressive
reductions can be made, and the establishment of sectoral arrangements, where
appropriate.

In the critically important agriculture negotiating group, the FTAA countries should
eliminate the use of agricultural export subsidies (as defined in the WTO Agreement
on Agriculture) and ban the importation of agricultural goods receiving such
subsidies from outside of the region.

In the services negotiating group, the FTAA should bring about the maximum
liberalization of trade in all modes of supply, including cross-border supply of
services and movement of people, across the widest possible range of services, as
set out in greater detail in comments by the Coalition of Service Industries.

The FTAA should also provide rights of establishment with majority ownership and
national treatment for service-providing companies operating in foreign markets.
In services and in other areas, the FTAA should promote transparency of regulatory
processes, including rulemaking, licensing, setting standards, and judicial and
arbitral proceedings.

On intellectual property, the FTAA countries should strengthen intellectual
property rights protection throughout the hemisphere, including through
implementation and enforcement of the WTO's Trade Related Aspects of Intellectual
Property Rights (TRIPS) Agreement, and supporting measures to reduce piracy and
counterfeiting.

The FTAA Agreement should require signatory countries to become parties to the
World Intellectual Property Organization (WIPO) Copyright Treaty and WIPO
Performances and Phonograms Treaty. The FTAA countries should take the
necessary steps to adhere to and implement existing multilateral agreements,
including the Brussels Convention, Berne Convention, Paris Convention, Budapest
Treaty, Patent Cooperation Treaty, Trademark Law Treaty, and Madrid Protocol on
the International Registration of Marks.

With respect to competition policy, rules on official monopolies and state
enterprises should be included in the text of the FTAA Agreement and should
ensure that when the state participates in commercial activities, its FTAA trading
partners are not subject to discrimination.

In its chapter on investment, the FTAA should afford investors from an FTAA
country — when they seek to initiate investment into the territory of another FTAA
country and throughout the life of that investment — the better of national
treatment or most favored nation (MFN) treatment when the investors are in like
circumstances.

The FTAA Agreement should endorse classic expropriation disciplines. It should
also provide mechanisms for the resolution of investor-state disputes as included in
dozens of bilateral investment treaties and in free trade agreements such as the
NAFTA.

On government procurement, the FTAA Agreement should include rules to
ensure non-discriminatory treatment for suppliers of goods and services from any
FTAA country bidding on government procurement contracts in any other member
country. It should make transparency a central principle of all government
procurement regimes.

In concluding, I would like to add a general comment. Passage just over a month
ago of the Trade Act of 2002 affords us a tremendous opportunity. Winning
Congressional approval of Trade Promotion Authority took a great deal of work,
with many advocates of business and consumers — as well as advocates of a truly
progressive foreign policy — doing yeoman's work to win the argument.
TPA is law today because we succeeded in making the case that trade is a
tremendous boon to the economic well-being of this nation, and potentially at least,
every nation around the world.

Now we must put this legislation to work, and we must use TPA to pursue great and
ambitious goals, such as the FTAA.

On behalf of the U.S. Chamber and AACCLA, I urge the Administration to be
ambitious as you contemplate the goal of hemispheric free trade. These are hard
times for Latin America, and there is nothing better that this nation can do to lend a
hand to the other members of what President Bush has called our hemispheric
familia than to make the FTAA a reality.

It is in the U.S. national interest. It is in the interest of the peoples of Latin
America and the Caribbean. It is a chance to build a better future.
Thank you very much. I will be happy to try to answer any questions.