A seminar entitled The Free Trade Area of the Americas (FTAA) was organised by the Panamerican Leather Fair to consider the possible impact on the leather industry in the Americas.

The speakers at the seminar were Charles S Myers, president of Leather Industries of America, and Mauro Leiser, managing director of Arlei Leather of Buenos Aires. The session was moderated by Richard Smith, coordinator of CMP and APLF events in south America, who gave an overview of the FTAA which is due to come on stream on January 1, 2006.

It will encompass 34 countries (excluding Cuba at the insistence of the United States) from north, central and south America as well as the Caribbean basin in the largest free trade area on the planet. In essence, the FTAA is an extension of the NAFTA agreement in force between the USA, Canada and Mexico since 1994.

Smith explained that the FTAA protects intellectual property rights and patents. It will also enhance the ability of corporations to relocate their manufacturing facilities to countries with cheaper labour costs and less stringent environmental protection standards. This, in turn, will help improve profitability and dividends to shareholders over the longer term. Much needed employment will be generated in the southern part of the Americas, increasing income levels in the general population due to the expected zero rated import tariffs.

For manufacturing industry in the Latin countries, there will be unparalleled export opportunities with new markets and new consumers, especially in the US and Canada. This will generate more hard currency for the underdeveloped countries of the region allowing them to finance social programmes and service international debt etc.

In his informative and entertaining presentation, Myers emphasised the nature and history of the FTAA, pointing out that so far most of the negotiations had been conducted behind closed doors. The US is involved in many free trade agreements at a global level and being a trade negotiator is an almost sure career path with so many treaties in the offing! Using the NAFTA agreement as an example, Myers said that for the US work force, almost 500,000 jobs had been lost and relocated to Mexico since 1994.

Originally, after World War II, the US policy in helping poorer nations was based around providing aid packages and loans so that, eventually, these nations would be able to trade with the US and the rest of the world.

However, after the end of the Cold War, clearly symbolised by the fall of the Berlin Wall in 1989 and the dissolution of the Soviet Union in 1991, the reasons behind such aid changed dramatically. Instead of being commercially and trade based, the US used its influence and financial clout to spread the word and concept of western style democracy throughout the poorer nations, thus reflecting the idea expressed by President Bush (senior) of the New World Order.

With nine working groups creating the ‘rules’ for the FTAA, Myers saw the process as drawn out and rather complicated if the inauguration of the FTAA was to take place at the beginning of 2006. In fact, he felt that it could take up to ten years or more to effectively institute the treaty. In mid December 2001, the House of Representatives passed the so-called Fast Track legislation by 215 votes to 214, giving President Bush (junior) a free hand to negotiate trade agreements without congressional approval. However, Myers was of the opinion that final approval by the US Senate of Fast Track, due to be voted on in February 2002, would be more difficult to obtain.

Turning his attention to the leather industry, Myers noted that the tariff on leather imports to the US averaged 2.4%, whereas US exports were heavily penalised by tariffs of 17% or more throughout the Americas. He provided statistics for 2000 indicating the balance of trade between the main five south American leather exporters and the US, saying that it is precisely to redress this balance that he wants free trade in the Americas for his industry. To illustrate the advantages of free trade, he also produced some statistics from Mexico, also for 2000, with free trade under the NAFTA agreement.

Even though the trade balance in the leather industry with Mexico is still almost 2 to 1 in the latter’s favour, it illustrates the advantages that free trade offers to the US leather industry. It was precisely for this reason that Myers, as president of the LIA, supported the theory of the FTAA for his industry.

Leiser expressed grave doubts about the feasibility of the FTAA, taking into account the yawning gulf between the rich and poor nations of the Americas and concluded that free trade under the FTAA would benefit the wealthier nations of the continent. He also believes that the FTAA will need much longer to come on stream than the projected starting date of 2006, perhaps even as much as ten years.