1.) As a result, the scheduled  conclusion of the FTAA in January 2005 passed without an agreement. Before Miami, Negotiators Made Technical Progress, but Mounting U.S.-Brazil Differences Over Scope and Depth of Obligations Prevented Further Progress

From the November 2002 Quito ministerial to the November 2003 Miami  ministerial, FTAA negotiators made technical progress. However, during this time—November 2002 to November 2003—mounting  differences between the United States and Brazil and their respective allies  over the scope and depth of obligations in the proposed agreement slowed  substantive progress in the FTAA. As a result, the scheduled deadline for concluding the FTAA  negotiations in January 2005 was missed without agreement. Two-tier Structure and Co- chairmanship Have Not Facilitated Compromise

A third factor hindering progress on the FTAA is that two mechanisms  intended to facilitate U.S.-Brazil compromise—the new two-tier structure  and the co-chairmanship—have thus far failed to do so. Though Pessimistic on Near-term Prospects, Many Believe Hemispheric Integration Worth Pursuing and Hope for Resumption of Talks in 2005

Although many participants and experts were pessimistic when we spoke  with them in the fall of 2004, they generally believe that integrating the  hemisphere is still worth pursuing and remain hopeful about prospects for  reviving the FTAA in 2005. Second, officials from many of the nations we contacted continue to  anticipate gains from concluding an FTAA. Agency Comments

We provided draft copies of this report to the Office of the U.S. Trade  Representative, the Departments of State, Commerce, and Agriculture on  January 4, 2005, and received formal comments from USTR and the  Department of Commerce. USTR disagreed with our report, stating that it is an inaccurate and poorly  framed portrayal of progress and problems in the negotiations,  overemphasized the role of the United States and Brazil in the current  impasse, and did not give sufficient weight to U.S. efforts to make progress  in the talks. We disagree with USTR’s assessment. Our objectives were to assess  the progress that was made since our April 2003 report, the factors that  have affected progress, and future prospects for the FTAA. Scope and Methodology

To conduct our analysis of the progress made in FTAA negotiations since  our last report (April 2003), the factors influencing the FTAA’s progress, and  the FTAA’s future prospects, we reviewed public foreign government and  official FTAA and executive branch documents. GAO’s Comments

1. 2. 3. 13. World Trade Organization: Early Decisions on Key Issues Vital to  Progress in Ongoing Negotiations. Free Trade Area of the Americas: Negotiators Move Toward Agreement  That Will Have Benefits, Costs to U.S. Economy.
Why GAO Did This Study

If completed, the Free Trade Area of the Americas (FTAA) agreement would encompass an area of 800 million people and about $13 trillion in production of goods and services, making it the most significant regional trade initiative presently being pursued by the United States. The 34 democratic nations of the Western Hemisphere formally launched negotiations towards a FTAA in 1998, and set a January 2005 deadline for concluding a FTAA agreement. GAO was asked to analyze (1) progress made in FTAA negotiations since GAO's last (April 2003) report (2) factors that have been influencing the FTAA's progress; and (3) future prospects for the FTAA. USTR disagreed with our report, stating it was a poorly framed portrayal of progress and problems in the negotiations, overemphasized the role of the United States and Brazil in the current impasse, and did not give sufficient weight to U.S. efforts to make progress. GAO made several changes in response, but disagreed with USTR's assessment. The Departments of State, Commerce, and Agriculture provided technical comments, which we incorporated.

What GAO Found

Since our April 2003 report, FTAA negotiations reached an impasse that remains unbroken. Prior to the November 2003 FTAA Ministerial in Miami, negotiators made technical advances, but differences over the scope and depth of obligations in the FTAA slowed substantive progress. Despite adopting a new structure at Miami, negotiations have been suspended since early 2004, and the scheduled conclusion of the FTAA in January 2005 expired without agreement. This spurred recent efforts to re-start the talks. Three factors have been impeding progress in the FTAA negotiations: (1) the United States and Brazil have made little progress in resolving basic differences on key negotiation issues, (2) member governments have shifted energy and engagement from the FTAA to bilateral and multilateral trade agreements, and (3) two mechanisms intended to facilitate progress--a new negotiating structure and the co-chairmanship by the U.S. and Brazil--have so far failed to do so. Although in the Fall of 2004 participants and experts were pessimistic about near-term prospects, many believe that integrating the hemisphere is still worth pursuing and hope that FTAA talks can be revived in 2005. Some believe that progress on agriculture at the World Trade Organization and the upcoming 2005 Summit of the Americas could spur movement on the FTAA. However, many still see finally concluding the FTAA as linked to further WTO progress and to renewal of U.S. Trade Promotion Authority, which facilitates U.S. Congressional approval in mid-2005. Nevertheless, officials from many of the nations and regional groups we contacted indicate continued commitment to establishing a mutually beneficial FTAA.