Latin America and the Caribbean: legislative issues in 2001-2002.

Summary

This report provides an overview of the major legislative issues Congress dealt with in 2001 and 2002 relating to Latin America and the Caribbean. Organized by the regions and subregions of the Western Hemisphere, the report provides reference and linkages to other reports covering the issues in more detail. The importance of the region to the United States has been emphasized by President Bush's trips to Mexico in February 2001 and March 2002 and his trips to Peru and El Salvador in March 2002, and by a number of congressional trips to the region.

At the hemispheric level, the major legislative issues included action to implement the Declaration and Action Plan of hemispheric leaders at Summit of the Americas III in Quebec City, Canada, in April 2001. This included action to conclude negotiation of a Free Trade Area of the Americas (FTAA) by January 2005, to promote democracy throughout the hemisphere, to strengthen multilateral mechanisms for counter-narcotics activity, and to further sustainable development and environmental protection in the region. The hemispheric response to the September 2001 terrorist attacks on the United States is also included.

With neighbor Mexico in North America, the major bilateral issues for the United States have been related to trade, drug trafficking, and migration, as President George W. Bush sought to advance friendly relations with President Vicente Fox, the first President of Mexico from an opposition party in over 70 years.

With regard to Central America, the major issues were disaster relief and reconstruction, the proposed Central America-U.S. free trade agreement, earthquakes in El Salvador, implementation of the peace accords in Guatemala, and the new government in Nicaragua. With regard to the Caribbean, President Bush announced a "Third Border Initiative" to strengthen the development of the smaller Caribbean countries, and the President and Congress have been seeking ways to advance democracy in Cuba and Haiti.

In the Andean region, the major issues were President Bush's requests for new assistance and additional authorities under the Andean Regional Initiative for Colombia and regional neighbors, the extension of the Andean Trade Preference Act (ATPA), dealing with the new Toledo government in Peru, and seeking ways to engage the "maverick" government in Venezuela following the ouster and return of President Chavez.

In the region encompassing Brazil and the Southern Cone countries of South America, the major issues were managing trade and economic issues with Brazil as the country selected a new president, dealing with a serious economic crisis in Argentina, and completing negotiations for a U.S.-Chile Free Trade Agreement with Chile.

I. Hemispheric Issues

Summit of the Americas III

Summit of the Americas III was held in Quebec City, Canada, on April 20-22, 2001, with 34 democratically elected Presidents and Prime Ministers from the Western Hemisphere in attendance, including George W. Bush from the United States. The hemispheric leaders dealt with three major themes: (1) Strengthening Democracy, where they agreed to a democracy clause that specified that democratic government was an essential condition for participation in the summit process; (2) Creating Prosperity, where they agreed to advance toward the conclusion of the agreement on the Free Trade Area of the Americas (FTAA) by January 2005; and (3) Realizing Human Potential, where they agreed to initiatives to promote education, health, and greater equity for women, youth, and indigenous peoples.

For more information, see CRS Report RL30936, Summit of the Americas III, Quebec City, Canada, April 20-22, 2001: Background, Objectives, and Results, by K. Larry Storrs and M. Angeles Villarreal.

Free Trade Area of the Americas (FTAA)

The proposed Free Trade Area of the Americas (FTAA) is a regional trade agreement that would include 34 nations of the Western Hemisphere. Ideally, it would promote economic integration by creating a comprehensive (presumably WTO-plus) framework for reducing tariff and nontariff barriers to trade and investment. The FTAA held center stage in discussions at the Third Summit of the Americas that convened in Quebec on April 20-22, 2001, and despite protests from various interest groups, all countries except Venezuela signed the Declaration of Quebec City. The first draft text of the FTAA was adopted, renewing the commitment to complete the FTAA by January 2005, with the agreement's entry into force to occur no later than the end of the same year.

The Seventh Trade Ministerial occurred on November 1, 2002 in Quito, Ecuador. Five major achievements stand out: (1) Brazil and the United States became co-chairs of the Trade Negotiations Committee (TNC), which will guide the overall negotiation process for the final phase scheduled to be completed by January 2005; (2) a new Hemisphere Cooperation Program (HCP) was established to develop resources to help small countries "strengthen their capacity to implement and participate fully in the FTAA;" (3) a second draft of the FTAA agreement was released; (4) a time line was established for the critical market access negotiations; and (5) the final rotation of chairs for the various negotiating groups was completed. The TNC is scheduled to meet three times in 2003, with the next meeting set for April 2003 in Trinidad and Tobago. At that time, negotiating group meeting schedules will be determined for the coming year. Milestones have been set by the TNC for developing negotiating group revised drafts of the agreements. The eighth FTAA ministerial meeting will convene in Miami, Florida sometime in the fourth quarter of 2003, and the ninth is scheduled to take place in Brazil in the following year.

Special instructions were provided in the areas of market access at the Quito Ministerial. Market access negotiations involve five separate negotiating groups: market access, agriculture, services, investment, and government procurement. Specific instructions were given for the negotiating groups on agriculture and market access to coordinate their efforts in developing guidelines and chapter revisions. Firms dates have been set for market access negotiations, with final revised offers due by July 15, 2003. It was also formally recognized that discussions on agriculture, critical and sensitive for all negotiating members, will have to be done with an eye on parallel discussions being undertaken by the WTO. The WTO deadline for agriculture negotiations is also set for January 2005. Most of the second draft text of the FTAA agreement contains bracketed text, denoting the general and still evolving nature of the agreement.

Much attention is focused on how Brazil and the United States will undertake their duties as co-Chairs of the TNC, both as leaders of the negotiating process and as the two largest economies with significant differences of opinion on many issues, including difficult topics such as treatment of steel and agricultural products. In neither country is there a consensus on the FTAA, and despite some statements by public sector officials in support of the agreement, private sector discussions still reflect an ongoing tension between the two countries. Additional complications to completing an FTAA include challenges to economic and social progress in Latin America, such as the financial crisis in Argentina, the recent large IMF package for Brazil, and deteriorating political conditions in Venezuela and Colombia. Setbacks in these areas raise the potential for eroding stability and the spirit of cooperation that launched the FTAA negotiations in 1998. The U.S.-Chile bilateral agreement and a new U.S. overture toward a U.S.-Central American free trade agreement may also raise questions in Latin America over the U.S. commitment to a regional approach to trade liberalization in the Western Hemisphere.

For more information, see CRS Report RS20864, A Free Trade Area of the Americas: Status of Negotiations and Major Policy Issues, by J. F. Hornbeck; CRS Issue Brief IB95017, Trade and the Americas, by Raymond J. Ahearn; and CRS Report RL30935, Agricultural Trade in the Free Trade Area of the Americas, by Remy Jurenas.

Democracy in Latin America and the Caribbean

Latin America has made enormous strides in recent years in the development of democracy, with all countries but Cuba led by democratically-elected heads of state. Nonetheless, many government institutions in the region have proven ill-equipped to deal with challenges to their further development, such as strong, often autocratic presidents; violent guerrilla conflicts; militaries still not comfortable with civilian rule; and narcotics trafficking and related crime and corruption.

The Organization of American States (OAS) has also made progress in efforts to promote democracy in the hemisphere by establishing procedures for collective action when democracy is interrupted, beginning with the Santiago Commitment to Democracy in 1991, and following most recently with the adoption of the Inter-American Democratic Charter in Lima, Peru, on September 11, 2001, the same day as the terrorist attacks on the United States. Since then, the Inter-American Democracy Charter has been used to some extent to deal with the situations in Venezuela and Haiti.

Regarding Venezuela, on April 13, 2002, the OAS Permanent Council, with support from the United States, condemned the alteration of constitutional order in Venezuela when President Hugo Chavez was temporarily ousted. The Council sent an OAS Mission headed by OAS Secretary General Cesar Gaviria to Venezuela to gather facts and undertake good offices, and it convoked a special session of the General Assembly to deal with the situation in accordance with the Inter-American Democratic Charter. In August 2002, the Council reiterated the Organization's readiness to offer support, and in September 2002 a joint mission of the OAS, the United Nations Development Programme, and the Carter Center sought to facilitate dialogue between the government and the opposition. Secretary General Gaviria has continued to monitor the situation and to encourage talks between the two sides.

Regarding Haiti, the OAS passed two resolutions in 2002 encouraging the democratic process in Haiti. Resolution 806, adopted in January, established an OAS Mission in Haiti and called on the Haitian government to "restore a climate of security" necessary for resuming negotiations with the opposition and holding free and fair elections. On September 4, invoking the Inter-American Democratic Charter, the OAS passed Resolution 822, which strengthened the mission, supported normalization of Haiti's relations with international financial institutions, freed the government to hold elections in 2003 without a prior agreement with the opposition, and called on Haiti to comply fully with previous OAS resolutions and government commitments.

For more information, see CRS Report 98-684, Latin America and the Caribbean: Fact Sheet on Leaders and Elections, by Mark P. Sullivan, as well as references cited above on Summit of the Americas III and cited below on Haiti, Peru, and Venezuela.

Hemispheric Response to September 2001 Terrorist Attacks

Latin American nations strongly condemned the September 11, 2001 terrorist attacks on New York and Washington, D.C. and took action through the Organization of American States (OAS) and the Rio Treaty to strengthen hemispheric cooperation against terrorism. The OAS, which happened to be meeting in Peru at the time, swiftly condemned the attacks, reiterated the need to strengthen hemispheric cooperation to combat terrorism, and expressed full solidarity with the United States. At a special session on September 19, 2001, OAS members invoked the 1947 Inter-American Treaty of Reciprocal Assistance, also known as the Rio Treaty, which obligates signatories to the treaty to come to one another's defense in case of outside attack. Another resolution approved on September 21, 2001, called on Rio Treaty signatories to "use all legally available measures to pursue, capture, extradite, and punish those individuals" involved in the attacks and to "render additional assistance and support to the United States, as appropriate, to address the September 11 attacks, and also to prevent future terrorist acts."

In another resolution, the OAS called on the Inter-American Committee on Terrorism (CICTE) to identify urgent actions aimed at strengthening inter-American cooperation in order to combat and eliminate terrorism in the hemisphere. The CICTE was reinvigorated in the aftermath of September 11, and has cooperated on border security mechanisms, controls to prevent funding of terrorist organizations, and law enforcement and counterterrorism intelligence and information.

On June 3, 2002, OAS members meeting in Barbados for the OAS General Assembly signed a newly completed Inter-American Convention Against Terrorism. Signing the treaty for the United States, Secretary of State Powell said that the OAS had "produced the first new international treaty since September 11 targeted at improving our ability to combat terrorism." (2) Secretary Powell also noted that the OAS should continue its work of reviewing hemispheric security policy, with the goal of developing an inter-American declaration that would focus on cooperative security efforts and ways to identify, prevent, and remedy potential threats.

The Convention, among other measures, would improve regional cooperation against terrorism, commit parties to sign and ratify U.N. anti-terrorism instruments, commit parties to take actions against the financing of terrorism, and deny safe haven to suspected terrorists. (3) President Bush submitted the convention to the Senate on November 12, 2002, for its advice and consent, and the treaty was referred to the Senate Foreign Relations Committee. An OAS meeting to discuss the scope of the Convention and the anti-terrorism approach for the hemisphere is scheduled for January 22-24, 2003, in El Salvador.

For background information, see CRS Report RS21049, Latin America: Terrorism Issues, by Mark P. Sullivan; and "The Americas' Response to Terrorism," on the OAS web site at [http://www.oas.org/OASpage/crisis/crisis_en.htm].

Drug Certification Process

From the mid-1980s to the beginning of FY2001, Congress required the President to certify that drug producing and drug-transit countries were cooperating fully with the United States in counter-narcotics efforts in order to avoid a series of sanctions, including suspension of U.S. foreign assistance and financing, and opposition to loans in the multilateral development banks. Congress closely monitored these certification decisions and submitted resolutions of disapproval in some years. Under the legislation, the sanctions would also apply if Congress, within 30 calendar days, passed a joint resolution of disapproval to overturn the presidential certification, although any resolution would be subject to veto.

Over the years, spokesmen from many countries complained about the unilateral and non-cooperative nature of the drug certification requirements, and urged the United States to end the process and to rely upon various multilateral methods of evaluation developed recently. (4) Mexico, often the focus of congressional debate, particularly expressed dissatisfaction with the process, even though it was regularly certified as being a fully cooperative country. Following the July 2000 election of opposition candidate Vicente Fox as President of Mexico, a number of legislative measures were introduced to modify the drug certification requirements, and these initiatives were mentioned when President Bush met with President Fox in Mexico in mid-February 2001, and in the United States in early September 2001.

In 2001, the Senate Foreign Relations Committee reported out two measures (S. 219 and S. 1401) that would have modified the certification requirements for three years. By the end of the year, the only measure that passed was the Foreign Operations Appropriations for FY2002 (H.R. 2506/P.L. 107-115) that waived the drug certification requirements for FY2002 only, but required the President, with some waiver authority, to designate and withhold assistance from the worst offending countries that had failed demonstrably to adhere to international counter-narcotics agreements.

In 2002, both houses passed the Foreign Relations Authorization for FY2003 (H.R. 1646/P.L. 107-228) that permanently modified the drug certification requirements. Section 706 requires the President, with some waiver authority, to designate and withhold assistance from the worst offending countries that have "failed demonstrably" to make substantial counter-narcotics efforts. At the same time, it permits the President to use his discretion to withhold assistance and apply previous sanctions against countries that are failing to cooperate fully with the United States in counter-narcotics …