RNM UPDATE 0309

May 23, 2003

Prepared by the Communications Division of the Caribbean Regional

Negotiating Machinery (CRNM), this electronic newsletter focuses on the RNM,
trade negotiation issues within its mandate and related activities.

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- MERCOSUR A PRIORITY FOR BRAZIL

- ZOELLICK TO VISIT BRAZIL
- UNCERTAINTY OVER FTAA
- GAO FAULTS USTR 'READINESS' FOR KEY FTAA MEETING
- US LAWMAKERS LASH OUT AT BILATERAL TRADE PACTS
- WTO BRIEFING
- NEWS BRIEFS
- UPCOMING EVENTS

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MERCOSUR A PRIORITY FOR BRAZIL

During the week of May 12, Brazil's Foreign Minister - Celso Amorim - indicated that he
would consider direct free-trade talks between the Southern Cone Common Market
(Mercosur), the world's third-largest trading bloc, and the United States. He added, "we
believe it is necessary to make some adjustments to the form of Free Trade Area of the
Americas (FTAA) negotiations", citing the very different size of economies of the thirty-
four countries involved in negotiating the hemispheric trade pact.

This follows recent calls from the Presidents of Uruguay and Argentina for stronger
regional integration. They have stated the need for a reinvigorated Mercosur that could
open the way for trade discussions with the United States following a "4+1" model,
reference to the four member countries of Mercosur - Argentina, Brazil, Paraguay and
Uruguay - and the United States. Brazil's President Luiz Inacio Lula has been signalling,
since taking office in January, that a strengthened and consolidated Mercosur is a
priority, particularly concentrating on trade between Mercosur and South America. The
election of Nestor Kirchner in Argentina has boosted the emphasis on Mercosur. On
May 8, after having met with President Lula, President-elect Kirchner indicated that
relations with Mercosur and South America should take "precedence" over the FTAA.

Mercosur is convinced that the "4+1" model can be more useful to their objectives than
the thirty-four country FTAA.
ZOELLICK TO VISIT BRAZIL

US Trade Representative Robert Zoellick is set to visit Brazil in late May. Brazil and the
United States are spearheading the FTAA process from March 2003 through to December
2004. On the agenda of the co-Chairs' meeting will be developing a plan to make a
November FTAA Ministerial, in Miami, a "springboard" to the completion of FTAA
talks on schedule. This according to Assistant US Trade Representative for the
Americas, Regina Vargo, in comments to the US private sector on May 7.

UNCERTAINTY OVER FTAA

Deputy US Trade Representative Peter Allgeier said this past week that Brazil's attitude
to the FTAA is in "flux".

At a May 1 hearing at a US Senate panel the White House nominee for Assistant
Secretary of State to the hemisphere told senators "the issues that we will have to
decide...in the coming months [are] whether it is better to continue to pursue this
hemispheric approach or go at it in a sub-regional way: finish with Central America and
look at other potential partners".

GAO FAULTS USTR 'READINESS' FOR KEY FTAA MEETING

A report released by the United States Congress' investigative arm, the General
Accounting Office (GAO), has a scathing review of the Office of United States Trade
Representative's (USTR) preparedness in this the last phase of FTAA negotiations. The
report questioned its readiness to position the United States to effectively co-chair the
final phase of FTAA negotiations and host a Ministerial Meeting in Miami in November,
citing human resource short-comings. It stressed that the USTR must "intensify its
preparations" for the Ministerial.

US LAWMAKERS LASH OUT AT BILATERAL TRADE PACTS

At a US House Energy and Commerce Trade and Consumer Protection Subcommittee

hearing, May 8, Democratic lawmakers were highly critical of the labor provisions of the
trade pacts the US has negotiated with Chile and Singapore, respectively. There was
particular concern about replicating those labor provisions in the US-Central America
trade accord. "Serious problems" cited in this regard were in connection to how those
provision's regressed from what was negotiated in the landmark US-Jordan free-trade
accord.

WTO BRIEFING
The following are the remaining key deadlines regarding Implementation-related issues
within the framework of the Doha work programme (following from those featured in
RNM UPDATE 'May 14 edition').

Negotiating subjects Issues to Determine/Decide on Deadlines

Technical Cooperation WTO DG presented interim Report End of 2002

and Capacity Building to General Council on adequacy of
of technical cooperation and
capacity building in Doha
Declaration.
Full Report to be presented to
Ministers at Fifth Ministerial.

Agriculture Committee on Agriculture has October 15/16,2002

submitted reports to General Council
on export and insurance credits and
the Marrakesh Decision on Measures
concerning the Possible Negative Effects
of the Reform Programme on LDCs
and Net Food Importing Developing
Countries.
The General Council has approved some
recommendations of the Report.

Market Access Committee on Market Access was to End of 2002

report to General Council on meaning
of "substantial interest" regarding
non-discriminatory application of
quantitative restrictions Article XIII
GATT 1994.
Issue remains unresolved and has been
referred back to General Council.

TRIPS Developed country members were to End of 2002

have presented reports on the
functioning of incentives provided to
their enterprises for technology transfer.
Not every member has yet done so.

TRIPS TRIPS Council to examine relationship No time limit

between TRIPS Agreement and
Convention on Biological Diversity,
protection of traditional knowledge/folklore,
etc.
Subsidies & The Committee on Subsidies and July 31,2002
Countervailing Countervailing Measures could
Measures not present a consensus-based
Report to the General Council
regarding countervailing duty
investigations. Its continued
existence remains an open question.

Agreement on Subsidies Committee on Subsidies and January 1,2003

& Countervailing Countervailing Measures was to have
Measures embraced appropriate methodology
regarding exemption of some
developing countries from the prohibition
of export subsidies.
No proposal submitted, so methodology
offered by Chair was applied.

Antidumping Measures Committee on Antidumping

Practices was to have fashioned End of 2002
recommendations to General Council
on a number of issues.
Disparity of views on certain issues prevail.

Rules of Origin Report has been delivered by July 31,2002

Committee on Rules of Origin
outlining recommendations to
outstanding issues. Not all
outstanding issues have been resolved.
Reaching a decision on essential trade
policy has been set for July 2003.
Technical matters work will have to
be concluded December 31, 2003.

Rules of Origin Completion of work programme on non- End of 2002

preferential rules of origin.
December deadline for completion
of work programme not honored. New
July 2003 deadline set.

LDCs Interim Report presented by WTO DG End of 2002

to General Council on issues
affecting LDCs.
Full Report to be presented to Ministers
at Fifth WTO Ministerial.
Agreement on Textiles A request was made of Council for Trade July 31,2002
and Clothing in Goods to report to the General
Council on implementation issues
regarding quota levels.
Fundamental differences in outlook and
interpretation have surfaced amongst members.

Customs Valuation Committee on Customs Valuation was to End of 2002

report to General Council on concerns
relating to accuracy of declared value and
information exchange on export values.
No consensus-based reply provided to this
issue.

Outstanding TNC has received reports from WTO bodies End of 2002
Implementation Issues mandated with examining these issues.
No negotiation mandate has been provided.

NEWS BRIEFS

US Concerned over Scourge of Global Counterfeiting and Piracy

On May 1, the Office of the USTR released its "Special 301" annual report on the
adequacy and effectiveness of intellectual property protection globally. While the report
noted that the implementation of the WTO Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) has improved intellectual property protection, it
found such protection remains a problem; in particular in the counterfeiting and piracy of
'optical media' products. The report maintained some governments need to take stronger
actions to combat commercial piracy and counterfeiting.

The report expressed concerns about Caribbean countries. On the priority watch list is
The Bahamas because, according to the report, it has not implemented its commitment to
enact legislation to correct deficiencies in its copyright law. On the watch list are the
Dominican Republic and Jamaica. While admitting the Dominican Republic has taken
"commendable steps in 2002 to improve copyright protection and enforcement" the
report maintains levels of copyright piracy remain high. It also indicates that while
Jamaica's trademark and copyright regimes are generally consistent with international
standards and enforcement efforts the "lack of parliamentary action to bring Jamaica's
patent, industrial design, and plant variety laws into conformity with its international
obligations" remains a concern.

Guyana and Brazil Deepen Cooperation

On May 6, officials from Guyana and Brazil ended two days of talks in Georgetown
aimed at deepening bilateral cooperation, particularly under a recently signed Partial
Scope Agreement.

The aim of the Agreement is to foster bilateral trade flows through the exchange of tariff
preferences between Guyana and Brazil, increase cooperation on trade matters, and
participation of the private sector. The talks reviewed amendments to the Agreement;
signing and final ratification of which will be "expedited". According to a statement
issued, details of such actions will be revealed within the next six weeks.

St. Kitts & Nevis on Caribbean Nurses

The recruitment of trained Caribbean nurses to Europe and North America has come
under fire from St. Kitts & Nevis Health Minister Hon. Dr. Earl Asim Martin. The
Minister recently blasted this practice, warning it poses a "real threat" to the sustainability
of health care in the twin island country and the Region.

Mexico to host Hemispheric Leaders

Mexico will host a meeting of hemispheric Heads of Government in November 2003.

The summit meeting will follow a November 20 to 21 gathering of hemispheric trade
ministers in Miami.

NAFTA Trade Court Concerns

A proposed North American Free Trade Agreement (NAFTA) trade court has come
under scrutiny. Serious concerns about such a court were raised May 7 when the
Canadian Government questioned the feasibility of a proposal by a parliamentary
committee to establish a permanent North American court on trade and investment that
would amalgamate all existing NAFTA dispute settlement processes under one body.
On a conciliatory note, the Canadian Government indicated it agreed "that the current
dispute settlement mechanisms in NAFTA could benefit from improvements, and agrees
to engage Mexico and the United States in discussions on this matter".

Citrus Tax Fight

Brazil is set to go forward with its WTO complaint against a Florida state 'equalizing
excise tax' on processed citrus products, arguing it violates WTO rules by discriminating
between imported and domestic citrus. This comes after US and Brazilian trade officials
were unable to reach a settlement to the dispute.

WTO panel proceedings began in October 2002, at the request of Brazil, but were later
suspended so that the two parties could advance a compromise. This compromise has not
been forthcoming forcing panel selection procedures to be started again.

WTO Chief to Broker GI Deadlock

Supachai Panitchpakdi, Director-General of the WTO, has received approval by WTO
members to convene talks aimed at breaking the deadlock on offering protection under
WTO rules to geographical indications (GI) for products other than wines and spirits.

UPCOMING EVENTS

Small Economies Meeting

The FTAA Consultative Group on Smaller Economies (CGSE) will meet from May 26 to
27 in Puebla, Mexico. Dr. Deryck Brown, CARICOM Lead Negotiator, will head the
Region's team attending this meeting.

FTAA Services Meeting

An FTAA Negotiating Group Services will be convened June 2 to 6.

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For More Information Contact:

Nand C. Bardouille
Tel: (246) 430-1678
email: nand.bardouille@crnm.org