Ambassador Charles Cobb joined us to address the issues and controversy surrounding the Free Trade Area of Americas (FTAA) as well as the benefits to the U.S. in having the headquarters in Greater Miami. The FTAA would cover 800 million people from Argentina to Alaska. It aims to reduce trade barriers, attract foreign investment, create jobs and strengthen democracies. Greater Miami is competing with 14 other cities from Panama City to Chicago and Atlanta for the headquarters of the FTAA.

Governor Jeb Bush appointed Ambassador Cobb Chairman of Florida FTAA Inc.  He was charged with bringing the headquarters for the FTAA to Greater Miami.

The FTAA is intended to slash trade barriers between all 34 nations in the Americas, except Cuba, by 2005.  Chuck talked persuasively about how important Free Trade is to us in America, to the world, and all civilization.  He said that free trade is a misnomer; we should substitute the words “reducing barriers” as true free trade is never achieved.  In Florida, there are 600,000 jobs (20% of our total) dependent on international business.  This makes it the single largest source of jobs and compares to sugar and citrus production, which together contribute about 100,000 jobs.  In all of the Americas, except for Canada and Mexico, the U.S. is each country’s biggest trading partner.

President George Bush (41) originally proposed FTAA and President Clinton followed by adding his vigorous support.  Clinton, to his credit, expended significant political capital pushing free trade, often against the wishes of his traditional supporters.

The Ministers of the 34 countries have agreed to reduce barriers across the board by January 2005.  However, there is significant opposition to the FTAA.  In November in Miami, 10,000 protested various aspects the agreement and trade.  Although the FTAA, like NAFTA, will improve trade for all countries, there are always “winner and losers.” For instance, removing trade tariffs on oranges into the U.S. will result in the loss of jobs in that industry but increases in other areas where the US is more competitive.

Having the HQ in Greater Miami would mean upwards of 90,000 jobs for this area with 90% of them being local U.S.  Chuck used the analogy of European Union HQ in Brussels, which has brought significant jobs to that area.  There are a 14 cities vying for the HQ including Miami, Atlanta, Chicago, Houston, Port of Spain, Pueblo, Mexico, and Panama City.  Interestingly, the BIGGEST negative to Miami getting the HQ is the additional terrorist security screening required for entry into the U.S. The restrictions are cumbersome, often demeaning, and time consuming to foreign visitors. 

There are many concerns over achieving the full agreement now.  In order to move forward it was necessary to establish a low threshold for entry or the deal would have unraveled in November.  Because it is considered vital to the U.S. to get FTAA we are negotiating separately with 14 of the countries to create a smaller free trade area encompassing NAFTA and the newly created Central American Trade Agreement (CATA).

Chuck gave several analogies as to why trade barriers hurt all citizens of the world.  In Switzerland, the government pays each farmer $3000 for each cow he has.  In Japan, the cost of rice is five times the world market price.  In the U.S. there are sugar quotas which inflates the price we pay to two times the world market price. Candy companies are leaving the U.S. because sugar is too expensive and they can’t compete.  Mexican corn farmers who would lose their subsidy were the loudest protestors at the meeting of Ministers in Cancun in February.  Chuck also explained how the 50 states of the U.S. are the best example of free trade.   He aptly pointed out that without barriers between states we are free to produce products in the area where it is most efficient to do so, i.e. autos in Detroit, citrus in Florida and California, etc.  We have free trade and a “global market” across the United States.

Chuck is optimistic that the FTAA will be achieved because it is in the best interest of all the countries to have it.  However, each country will try to make the best deal for its own self-interest, which is the way it should be.