Economic and Political Issues for Governments and Firms
New Horizons in International Business series
Edited by Sidney Weintraub, Alan M. Rugman and Gavin Boyd
Chapter 11: Developmental issues posed by the FTAA
José M. Salazar-Xirinachs1 Latin American and Caribbean (LAC) countries are interested in the FTAA because they see major benefits in terms of growth, development and poverty reduction. However, the connection between free trade, new trade rules and development is complex and multifaceted. Despite much discussion about the FTAA there is surprisingly limited literature analysing its developmental impacts. This chapter tries to fill the lacunae by providing a selective, although fairly comprehensive, discussion of some of the main developmental issues posed by the FTAA. This is an issues chapter. Its main objective is to raise relevant questions and review different academic and expert positions as well as existing empirical research results surrounding them. In light of the complexity of the subject matter, it would be over-ambitious to provide definite answers to these issues. Thus the spirit of this chapter is more analytical and positive than normative or prescriptive. The developmental benefits and issues posed by the FTAA for LAC countries, are grouped in six issue areas: 1. market access in industrial goods and agriculture; 2. market access and rules in services and investment; 3. other rules related issues in areas such as intellectual property, subsidies and industrial policy; 4. treatment of differences in size and levels of development, 5. technical assistance and capacity building issues, and finally, 6. governance issues and the relationship between open markets and political institutions. Given that in terms of trade rules in a number of areas WTO agreements provide if not the floor, at least a...
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