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International
Business Contacts
roger
l. hiatt
Chair,
International Law Practice Group
Kansas
City Office
816.691.3373
rhiatt@stinsonmoheck.com
DENNIS
l. DAVIS
Kansas City Office
816.691.2753
ddavis@stinsonmoheck.com
Frank
G. Long
Phoenix
Office
602.212.8517
flong@stinsonmoheck.com
Carlos
a. sugich
Phoenix
Office
602.212.8535
csugich@stinsonmoheck.com
Marife
Nazario-Yordan
Kansas City Office
816.691.3217
mnazario-yordan@stinsonmoheck.com
Stinson
Morrison Hecker LLP's International Law e-Update
is a periodic e-mail service designed
to provide current information on developments affecting
business in International Law. It is intended to provide
general information only, and does not constitute a legal
opinion or legal advice. Please consult an attorney about
specific concerns in this area. The choice of a lawyer is
important and should not be based solely on advertisements.
This disclosure is required by rule of the Missouri Supreme
Court. For more information on the
firm's International Law practice, please visit our web site
at
www.stinsonmoheck.com
For
information on previous International Law e-Updates click
here.
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U.S. Free Trade Agreements Roundup
Introduction
U.S. international trade policy typically reflects both U.S. domestic and international concerns. Free trade agreements, or FTAs, which aim to significantly reduce and eventually remove most barriers to trade in goods and services between the free trade partners, are generally used by the U.S. to strengthen pre-existing political and economic bonds between the U.S. and its free trade partners. However, the selection criteria for potential free trade partners are more often than not based on geopolitical strategy than on economic dictates. Under the current Bush Administration, U.S. efforts to develop additional free trade agreements have focused heavily on the Middle East, while other areas of the world have received less attention. Unfortunately, this policy may have diverted U.S. attention from cultivating closer relationships with nations of greater economic importance to the U.S. Protectionist sentiment is now rising in Congress, at a time when the U.S. may need close friends internationally. A snapshot view of existing U.S. FTAs and the status of ongoing negotiating efforts
follows:
Implemented Free Trade Agreements
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Israel: In effect since 1985, this FTA is clearly based more on strategic political concerns than economic necessity.
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North American Free Trade Agreement (NAFTA): Effective since 1993, NAFTA has provided the framework for the startling growth of trade among the U.S.,
Canada and Mexico. Since NAFTA’s inception through 2005, trade among the NAFTA nations has grown 173%; U.S. merchandise exports to its NAFTA partners grew 133%, while U.S. exports to the rest of the world grew 77%. Canada and Mexico are now our first and second largest foreign markets. U.S. agriculture, which anchors the economy of our region, has greatly benefited. Canada and Mexico have accounted for 55% of the total increase in U.S. agricultural exports since 1993.
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Chile: Since NAFTA, the U.S. has resisted efforts to expand the regional NAFTA approach to other Western Hemisphere nations. Nevertheless, Chile was successful in negotiating a bilateral (two-sided) FTA with the U.S., effective since 2004.
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Singapore: Essentially a nation-state and one of the Asian "Four Tigers," Singapore was also successful in negotiating a bilateral FTA with the U.S., likewise effective in 2004.
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Australia: A long-time U.S. ally and trading partner, Australia negotiated an FTA effective at the beginning of 2005. New Zealand, whose economy is highly linked to Australia and which is bound to Australia through an Australia-New Zealand FTA and customs union, attempted to negotiate an FTA with the U.S. as well but has been rebuffed, based on the Bush Administration's displeasure with New Zealand's non-nuclear policy.
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Central American Free Trade Agreement (CAFTA): The most highly-publicized and contentious free trade agreement negotiated under the current Bush Administration is the Central American Free Trade Agreement
linking the United States with five Central American nations
– Guatemala, El Salvador, Honduras, Costa Rica and Nicaragua, along with the Caribbean nation of the Dominican Republic
– in a regional FTA. Costa Rica and the Dominican Republic have not yet enacted enabling legislation, but should do so soon.
The ongoing efforts of the Bush Administration to develop FTAs in the Middle East have been essentially strategic in nature, based on obvious geopolitical considerations, rather than based on economic necessity. FTAs between the U.S. and four Middle Eastern nations have been negotiated and signed. The U.S. now has FTAs in place with these Middle Eastern and North African nations: Jordan, Morocco, Bahrain and Oman, effective as follows:
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Jordan: Effective 2001
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Bahrain:
Effective 2006
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Morocco: Effective 2005
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Oman: Effective 2006
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The FTAs profiled above are signed and fully implemented, which means they are a binding part of U.S. law regulating international trade. There are other FTAs which are negotiated but not signed and implemented, others
are signed but not yet implemented, and others are currently in negotiation. All of these FTAs are profiled below.
FTAs Signed But Not Implemented Or In Negotiation
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Colombia
and Peru: The Bush Administration has very recently signed two FTAs with two friendly South American
nations: Colombia and Peru. The original goal was to negotiate an Andean FTA, which was a regionally-based concept, intended to link and integrate the economies of the United States and the Andean nations of Colombia, Ecuador and Peru. Recent political events in Ecuador, specifically seizure by the Ecuadorian government of a U.S.-based petroleum
company's property, resulted in suspension of the FTA negotiations between the U.S. and
Ecuador. These negotiations have not been resumed. The pace of negotiations between the U.S. and Colombia and between the U.S. and Peru
differed. In the end, the U.S. agreed to two separate bilateral FTAs, one with Colombia and one with Peru, rather than one regional FTA. Both of these FTAs are signed, but neither is implemented. The
Congress of Peru has passed enabling legislation; the Congress of Colombia has not. Regardless, it now appears doubtful the U.S. Congress will pass the required enabling legislation. Instead, the Andrean Trade Preferences available to Colombia, Peru, Ecuador and Bolivia may be extended for some years, and these two FTAs may remain unimplemented.
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Panama: The U.S. also
has completed negotiations for an FTA with Panama. However, ratification and implementation of the agreement have not occurred.
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United Arab Emirates (UAE): The efforts of the Bush Administration to develop other FTAs with friendly nations in the Middle East continue. Negotiations for an FTA with the United Arab Emirates (UAE) are ongoing, although presently bogged down because of workers' rights issues.
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Southern African Customs Union (SACU): Other U.S. efforts to negotiate FTAs throughout the world focus on strengthening and deepening existing ties with strategically placed nations of significant importance to the U.S. Negotiations have been ongoing for several years between the U.S. and the five nations composing the Southern African Customs Unions
– South Africa, Namibia, Botswana, Lesotho and Swaziland
– to develop a regional FTA between the U.S. and the SACU. Significant questions regarding protection of foreign direct investment, intellectual property protection and government procurement remain.
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Thailand: Negotiations are also ongoing between the U.S. and Thailand to develop a bilateral FTA. Questions in relation to intellectual property protection, agricultural and vehicle tariffs remain.
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Malaysia: Negotiations to develop an FTA with Malaysia were initiated in 2006. Negotiations are
ongoing and appear to be progressing well.
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South Korea: Also beginning in 2006, the latest efforts of the U.S. to develop a bilateral FTA resulted in the opening of negotiations between the U.S. and South Korea. This relationship is an important one, both from strategic and economic standpoints. Negotiations are progressing slowly, and many open issues remain. A U.S.-South Korea FTA is not expected anytime soon.
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Conclusion
The free trade agenda of the Bush Administration has produced some positive results for U.S. business. While many of the FTAs profiled above are more strategically based in terms of geopolitics than rooted in economic necessity, the net economic effect for the U.S. should still be positive over time. Unfortunately, the geopolitical considerations which are driving many of these FTAs overlook the importance of opening the markets of larger U.S. trading partners to U.S. goods and, more particularly, services. The U.S.-South Korea FTA, if and when that FTA emerges, might prove to be a model to accomplish such objectives with other important U.S. trading partners, should economic necessity ever become the primary driving force for
the negotiation of additional FTAs.
For
more information, please contact Roger Hiatt at
816.691.3373 (rhiatt@stinsonmoheck.com).
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Stinson
Morrison Hecker LLP Offices
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Kansas
City, MO
1201 Walnut St.
Kansas City, MO 64106
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City, MO
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St.
Jefferson City, MO 65101
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Louis, MO
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St. Louis, MO 63102
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Overland Park, KS 66210
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KS
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