Bridges Weekly Trade News Digest • Volume 9 • Number 41 • 30th November 2005
AG, IP Hobble Andean-US Free Trade Talks
Nine days of free trade negotiations between the US and Colombia, Peru and Ecuador have again ended without an agreement. This round — the thirteenth — had been expected to be the last in the Andean-US free trade agreement (FTA) talks, which started in 2004. Nevertheless, disagreements over farm trade and intellectual property rights (IPRs) prevented the parties from striking a deal, even after extending the Washington meetings up to four days beyond the originally scheduled 14-18 November dates.
The Andean negotiators have largely attributed the impasse to the US’ lack of flexibility on agriculture, IPRs, and, to a lesser degree, sanitary and phytosanitary (SPS) measures, issues that have been sticking points for much of the negotiations (see BRIDGES Weekly, 14 September 2005). Ecuador strongly criticised the US for inflexibility on agriculture and IPRs after the recent meetings.
Agriculture has always been isolated from the broader Andean-US FTA talks, with negotiations taking place on separate bilateral tracks between the US and each of the three Andean Community (CAN) countries. It now appears that all remaining unresolved issues in the joint talks are coming up in the bilateral discussions as well.
Among the three Andean counties, the US’ bilateral talks with Peru have reportedly showing the most progress. However, even these talks broke down during the recent meetings, with Peruvian Foreign Trade and Tourism Minister Alfredo Ferrero saying that "We are not yet in condition to reach a balanced agreement comprising Peru’s interest."
Colombia, Ecuador and Peru are members of the Andean Community, a South American regional alliance. The current FTA negotiations began in May 2004 after the US announced that it would not renew the Andean Trade Preferences and Drug Eradication Act, a trade preference scheme for Bolivia, Colombia, Ecuador and Peru scheduled to expire in December 2006.
Data exclusivity at centre of IPRs, Ecuador warns Peru against concessions
The length of the pharmaceutical "data exclusivity" period has been one of the key sticking points in the talks. This refers to a protection period for the clinical test data that brand name pharmaceutical companies submit to government sanitary authorities when seeking the right to put a new drug on the market. This could potentially delay the entry of generic versions into the market, since would-be generic manufacturers would have to either wait for the end of the exclusivity period or run their own clinical tests in order to secure marketing approval for their products.
Peru and Colombia are said to have accepted the five-year period that the US was seeking. However, Peru is seeking the option of waiving this condition in the event of a national emergency. This issue went unresolved during its recent bilateral talks with the US. It is not clear whether Colombia is seeking a similar waiver.
Ecuador has been holding out for a shorter, three-year period for data protection, in addition to a national emergency waiver. It also has concerns with regard to the coverage and effects of patents. Ecuadorian trade negotiators insist that they are unwilling to accept hasty concessions simply in order to strike a deal. One suggested that it would block the negotiations indefinitely if Peru agreed to IP concessions that it found unacceptable.
Ecuador’s comparatively wary approach to the negotiations have some trade analysts suggesting that Peru and possibly Colombia would abandon the joint discussions altogether in favour of separate bilateral agreements with the US.
Market access key to agriculture negotiations
Agriculture has been another major obstacle to agreement. All parties are pushing for greater market access; the Andean countries have been arguing that the US’ position does not offer them enough benefits. Many of the differences centre on issues related to each country’s ’sensitive’ products, for which they are reluctant to expand market access.
Colombia and the US were unable to agree on how to treat several products. Colombia wants greater market access for its sugar exports than the US has been willing to give. The US is in turn demanding market access for pork, rice and beef exports, which Colombia deems ’sensitive.’ Colombia did, however, agree to accept the eventual elimination of tariffs on ’sensitive’ products, so long as suitable safeguard measures are an integral part of the deal. It is, however, still seeking a measure of protection to some ‘very sensitive’ products after the agreement is implemented. The two countries also differed on sanitary and phytosanitary measures facing Colombian exports, as well as rules of origin requirements for tobacco.
Agricultural negotiations between the US and Ecuador have been primarily stuck on issues related to rice, corn, dairy products and flowers, and rules of origin issues for tuna.The US dismissed a last minute offer by Ecuador to expand tariff rate quotas and reduced phase-out times as insignificant.
Inflexibility linked to fears over Congressional approval for FTA
Throughout the negotiations, the Bush Administration has warned that Congress would be unlikely to support a deal that did not match the level of market access for sensitive products in the US’ recent FTA with Central American countries. Congress approved that agreement by two votes (see BRIDGES Weekly, 3 August 2005); some question whether Bush, whose recent poll ratings have been falling, would be able to influence Congress enough to secure support for an eventual Andean deal.
Joint talks between the four countries are scheduled to take place on 5 December.
"Peru Puts Off FTA Talks with US," AGENCIA INFORMATIVA LATINOAMERICANA PRENSA LATINA S.A., 24 November 2005; "Colombia Insists on FTA with US," AGENCIA INFORMATIVA LATINOAMERICANA PRENSA LATINA S.A., 24 November 2005; "Ecuador-US FTA Comes to a Halt," PRENSA LATINA, 23 November 2005; "Colombia President Uribe Approval Falls on Free Trade Talks," DOW JONES NEWS, 21 November 2005; "Colombia Jilts US FTA for Venezuela," PRENSA LATINA, 27 November 2005.