HSA Team in Puebla

February 5, 2004

Puebla – México

With only one day left in the TNC according to the original
calendar, the meeting is just as stalled as it was yesterday.
In addition, today the failure of the ¨confessional¨ method
(the system of meetings between the co-presidents and each of
the five countries or group of countries that made written
proposals) was revealed when the TNC adopted a new
negotiating method.

During the first part of the day, as was planned, the co-
presidents met with Bolivia and then Venezuela, completing
the cycle of ¨confessionals¨ begun yesterday. But there were
no advances, because in each of the meetings participants
basically just reiterated the positions they had presented in
their written proposals. Reports from the official so-called
¨Civil Society Forum¨ were also received in this first part
of today's meeting. The report contained a mixture of praise
and criticism of the FTAA.

With the failure of the ¨confessional¨ method, the co-
presidents pulled another rabbit out of their hat,
implementing a new negotiating modality. They divided the
negotiators into two groups: the first made up of the
delegation chiefs plus one additional member of each
delegation and the co-presidents, and the second made up of
the remaining delegation members, in a kind of plenary
¨light¨ with little decision-making power.

In the first group – the real one – they discussed the issues
that are most clearly blocking any possible common definition
of Tier 1, but with little result:

– They discussed market access, and, in particular, what
universe of goods would be subject to tariff
elimination. The U.S. reiterated that the goal should
be the elimination of substantially all tariffs (which,
according to Chile's interpretation, means at least 90%
of the tariff universe), and Mercosur maintained its
position that the goal should be 100% of tariffs. But
Mercosur showed some openness to the possibility that
this percentage could be reduced.

– Subsidies were also discussed under the market access
theme, as was the character of safeguards (on the one
hand, if they should apply in general or only to
agriculture, and, on the other hand, whether safeguards
should take the special and differential treatment
principle into account), and the breadth of Most Favored
Nation treatment (whether it should apply only to market
access for goods or also to the other negotiating
topics). Disagreements remained on each of these
issues, without any movement.

– There was also no resolution of the existing differences
in agriculture, in which both direct and indirect US
subsidies to big producers and exporters continues to be
an important stumbling block of the FTAA.

In the "Light Plenary," there were additional disagreements
and no inability to make decisions about anything. This was
evidenced by the common refrain "I have to consult." The main
discussion point was the Venezuelan document presented in
Miami, in which there are considerations and proposals
regarding agriculture, intellectual property and Special and
Differential Treatment.

Most of the meeting was spent discussing Special and
Differential Treatment, specifically the Venezuelan proposal
to create a "Structural Convergence Fund" (which goes far
beyond the Hemispheric Cooperation Program). The proposal
was supported by Mercosur, Bolivia and Caricom, and was
severely criticized by the US negotiators who stated that the
word "Fund" was not in their vocabulary, going to the extreme
of pontificating on various studies demonstrating the
"failure of European Structural Funds."

Another theme that was discussed in the "Light Plenary" was
transparency. Some countries proposed that the Trade
Ministerial meetings and the TNC meetings be transmitted
through radio and television. This proposal was rapidly
rejected by Canada, US, Mexico and Chile. Their reasoning
was that this would hinder negotiations and that the
transparency mechanisms they already have are sufficient.
They also added that there would be no public interest in
these types of discussions. In addition, the proposal that
all negotiation groups' proposals and reports be made public
was not agreed to, but the US stated that it will respond
tomorrow on whether or not it can accept the proposal.

To conclude, the latest rabbit pulled out of the co-
presidents' hat also failed to function properly. But the
deadline to finish talks is tomorrow at 1:00 p.m. (though
there are some rumblings that negotiations might go into the
night), which means that there is little time to pull more
rabbits out of the hat, which are increasingly paltry anyway.