Lamy: Americas free trade area could damage Union interests

Date: 26/04/01

EU TRADE Commissioner Pascal Lamy has warned that the planned Free Trade Area of the Americas could put the Union at a disadvantage as it tries to break into markets in Central and South America.

Speaking to the European Parliament's industry committee this week, Lamy said the EU should be on its guard against the region adopting US industry standards under the FTAA.

"It probably will be something more than an FTA," Lamy told MEPs. "Countries like Chile, Paraguay and Colombia are more likely to fall under US rules than the other way round. We need to be very careful in that regard."

Trade policy analysts said Lamy was thinking of the problems the EU faced in the early years of the Clinton administration, when the Japanese were arm-twisted into favouring US standards on imported cars and medical equipment over those of the EU.

Last weekend, leaders from the 34 countries on the American continents meeting in Quebec agreed to create a Free Trade Area of the Americas (FTAA) by 2005.

The Commissioner said the five South American countries negotiate a free trade agreement with the EU would use the FTAA to gain extra concessions. "There's bound to be a desire from them to play one off against the other," Lamy said.

He stressed that the EU should not accept an outdated FTA with South American countries. "We have to be careful that the concessions we make in providing access to our market...are not just tariff concessions but also have effects on the regulatory structure," he said, adding that it is "vitally important" to win concessions on standards, investment rules and public procurement.

"The danger we have to look out for is that we negotiating a traditional FTA from 30 years ago while they negotiate with the Americans a modern FTA taking into account what will happen 20 years from now."

Lamy pointed out that the EU was the most important partner for the Mercosur countries in terms of trade and investment despite the group's proximity to the US.

The Union has been negotiating a free trade agreement with the four countries of the Mercosur single market group and Chile and hopes to conclude a deal in the next few years.

EU Trade Commissioner Pascal Lamy has warned that the planned Free Trade Area of the Americas could put the Union at a disadvantage as it tries to break into markets in Central and South America.