Bush Backs Tariff Cuts to Spur Free Trade Talks

President Bush will offer to slash tariffs on two-thirds of America's imports of consumer and industrial products from Latin America immediately upon creation of a hemisphere-wide free trade zone, an administration official says.

It is part of a comprehensive proposal coming soon to lower U.S. trade barriers in an effort to jump-start stalled negotiations aimed at creating the world's largest free trade zone stretching from Alaska to the tip of South America, a senior U.S. government official, speaking on condition of anonymity, told The Associated Press.

Bush declared during a summit in April 2001 in Quebec that creation of the Free Trade Agreement of the Americas, covering all 34 democracies in the Western Hemisphere, would be one of his administration's top trade priorities.

However, the negotiations have stalled with officials in Brazil and Argentina, the two largest economies in South America, complaining that the United States has been unwilling to lower its own trade barriers, especially in agriculture.

According to documents obtained by The Associated Press, U.S. negotiators will offer to eliminate all tariffs on about 65 percent of U.S. imports of consumer and industrial goods immediately upon creation of the new free trade area. The current deadline calls for the free trade zone to go into effect in January 2005.

Under the U.S. offer, all U.S. tariffs on the remaining products would be phased out over the next 10 years.

U.S. Trade Representative Robert Zoellick was to formally unveil the U.S. offer in Washington and it will be presented later this week by American negotiators during talks in Panama.

In the sensitive area of agriculture trade, the U.S. will propose making 56 percent of farm products duty-free immediately when the FTAA takes effect in 2005. The remaining farm products would be grouped into categories with tariffs phased out over five years, 10 years or in some cases even longer.

The U.S. negotiating offer will be presented along with offers from the other 33 countries participating in the talks. Only communist Cuba has been excluded from the negotiations.

These discussions are aimed at reaching tentative agreements in some areas by the time of a conference of trade ministers from the 34 nations in Miami on Nov. 20-21.

The FTAA is aimed at eliminating trade barriers among the 34 nations, building on the existing North American Free Trade Agreement, which covers the United States, Canada and Mexico.

The Bush administration, which won congressional approval last year to negotiate new free trade agreements, has struck smaller deals recently with Singapore and Chile and has launched talks with a number of other nations, hoping those efforts will provide momentum to reaching the big prize of a hemisphere-wide free trade zone.

Under the new U.S. negotiating proposal, U.S. imports of textiles and apparel would be duty-free in five years from creation of the FTAA provided other countries made similar offers to open their markets to U.S. textiles and apparel.

Markets would also be open for service industries such as banking and telecommunications and barriers to investment would also be removed, under the U.S. proposal.

The U.S. negotiating offer would also allow all FTAA nations to compete on an equal footing for government contracts covering goods and services purchased by 51 federal agencies.

The U.S. offer to eliminate all tariffs in 2005 on 65 percent of consumer and industrial products would be a hemisphere-wide average. Less-developed countries in the Caribbean would see duty-free status granted to 91 percent of their non-farm shipments to the United States, under the proposal.

Central American countries would have 66 percent of their goods covered while the percentage would be 61 percent for Andean nations. Countries in the Mercosur trading bloc, which includes Brazil and Argentina, would have 58 percent of their non-farm products covered under the duty-free status beginning in 2005.

For agriculture products, the U.S. proposal, according to a fact sheet, would make 85 percent of farm products from Caribbean countries duty-free in 2005. The percentages for the other regions would be 64 percent for Central America, 68 percent for Andean countries and 50 percent for countries in the Mercosur bloc.