Testimony 

Before the Subcommittee on International 

Trade, Committee on Finance, U.S. Senate 

United States General Accounting Office 

GAO

For Release on Delivery 

Expected at 2 p.m., EDT 

Tuesday, May 13, 2003 FREE TRADE AREA OF 

THE AMERICAS 

United States Faces 

Challenges as Co-Chair of 

Final Negotiating Phase and 

Host of November 2003 

Ministerial 

Statement of Loren Yager, Director 

International Affairs and Trade 

GAO-03-700T 
The United States faces several challenges as co-chair of the final phase of 

Free Trade Area of the Americas negotiations. First, USTR, which is 

responsible for co-chairing these negotiations and hosting the November 

2003 ministerial, has not added appreciably to its staff, despite the sharply 

increased workload. Second, the goals of this phase—such as achieving 

improved market access for the 34 nations—are ambitious and will require 

serious, substantive trade-offs. Finally, the negotiations are proceeding on 

the same timeline as several other complex trade negotiations involving the 

United States. In fact, the resolution of a key issue, agricultural subsidies, 

has been linked to ongoing negotiations in the World Trade Organization. 

Currently, these negotiations are bogged down. 

Moreover, important risks are already apparent in current U.S. plans for 

hosting the November 2003 Miami ministerial meeting. Gaps exist in several 

key areas important to successfully hosting a major trade ministerial. For 

example, USTR has limited experience in planning and providing logistics 

for such a meeting. Furthermore, USTR is getting little support from other 

federal agencies. In addition, no federal agency has yet received any funding 

for the November event, which is projected to cost $10 million. Finally, 

USTR is likely to encounter protestors at the November ministerial. Failure 

to link security, funding, and logistics at a prior ministerial caused serious 

problems for the organizers of that event. 

Contrasting Events Surround 2002 Quito Ministerial Meeting 

Members of Americas Business Forum meet inside during 2002 Quito 

Ministerial (left) as police secure outside area against anti-FTAA demonstrators.

Source: GAO (left photo) and Centro de Medios Independientes de Ecuador. Used with permission.

Since 1998, the 34 democratic 

nations of the Western Hemisphere 

have been negotiating a Free Trade 

Area of the Americas agreement to 

eliminate tariffs and create 

common trade and investment 

rules for these nations. The United 

States will co-chair, with Brazil, the 

final phase of the negotiations, due 

to conclude in January 2005. GAO 

was asked to (1) review challenges 

that the United States faces as cochair of the final negotiating phase 

and (2) discuss risks that the 

United States may encounter, as 

host, in Miami, of the November 

2003 ministerial meeting. 

The Office of the U.S. Trade 

Representative (USTR) should 

intensify U.S. preparations and 

regularly evaluate whether 

resources and plans are sufficient 

to carry out the tasks and mitigate 

the risks associated with its 

responsibilities as co-chair of the 

negotiations and host of the 

November ministerial. These are 

related to USTR’s (1) increased 

workload, (2) planning for the 

ministerial, (3) funding sources, 

and (4) security needs at the 

ministerial. 

 

www.gao.gov/cgi-bin/getrpt?GAO-03-700T.

To view the full report, including the scope 

and methodology, click on the link above. 

For more information, contact Loren Yager at 

(202) 512-4347 or YagerL@gao.gov. 

Highlights of GAO-03-700T, a testimony 

before the Subcommittee on International 

Trade, U.S. Senate Committee on Finance 

May 13, 2003

FREE TRADE AREA OF THE AMERICAS 

United States Faces Challenges as CoChair of Final Negotiating Phase and Host 

of November 2003 Ministerial 
Page 1 GAO-03-700T Free Trade Area of the Americas 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the readiness of the United States 

to successfully perform as co-chair (with Brazil) of the Free Trade Area of 

the Americas negotiations process and host of the November 2003 

ministerial meeting. As you know, work on the Free Trade Area of the 

Americas, or FTAA, agreement is one of the most significant ongoing trade 

negotiations for the United States. In fact, the Bush administration has 

made establishing the FTAA one of its top trade priorities. Negotiations 

toward establishing this agreement among the 34 democratic nations of 

the Western Hemisphere have formally been under way since 1998. Such 

an agreement would eliminate tariffs and create common trade and 

investment rules for these nations. The final phase of FTAA negotiations 

began last November and is scheduled to conclude with the completion of 

the agreement in January 2005. Today, I will first review the challenges 

that the United States faces, as co-chair of this final phase of FTAA 

negotiations. Second, I will discuss the risks that the United States may 

encounter as host of the November ministerial in Miami. 

My testimony is based on our recently published report on this subject.1

 It 

is also based on our past and ongoing work on the FTAA negotiations 

process.2

The United States faces several challenges as co-chair of the final phase of 

the FTAA negotiations. First, the Office of the U.S. Trade Representative 

(USTR), which handles the negotiations, has not added appreciably to its 

staff, despite the sharply increased workload and responsibilities 

associated with co-chairing the FTAA negotiations. Second, the goals of 

this negotiating phase are ambitious and may be difficult to achieve. For 

example, FTAA negotiations on market access commitments—considered 

the “heart” of an agreement—will require serious trade-offs among the 

 1

See U.S. General Accounting Office, Negotiations Progress, but Successful Ministerial 

Hinges on Intensified U.S. Preparations, GAO-03-560 (Washington, D.C.: Apr. 11, 2003). 

2

See U.S. General Accounting Office, Free Trade Area of the Americas: Negotiators Move 

Toward Agreement That Will Have Benefits, Costs to U.S. Economy, GAO-01-1027

(Washington, D.C.: Sept. 7, 2001); U.S. General Accounting Office, Free Trade Area of the 

Americas: April 2001 Meetings Set Stage for Hard Bargaining to Begin, GAO-01-706T

(Washington, D.C.: May 8, 2001); and U.S. General Accounting Office, Free Trade Area of 

the Americas: Negotiations at Key Juncture on Eve of April Meetings, GAO-01-552

(Washington, D.C.: Mar. 30, 2001). 

Summary 
Page 2 GAO-03-700T Free Trade Area of the Americas 

participating nations. In addition, finalizing the FTAA agreement will 

require the 34 participating nations to bridge wide, substantive differences 

on topics such as investment and intellectual property. Finally, FTAA 

negotiations are taking place at the same time as several other complex 

trade negotiations that often involve the same issues and staff. Indeed, the 

resolution of key issues for the hemisphere, such as agricultural subsidies, 

has been linked to negotiations in the World Trade Organization (WTO) 

that are presently bogged down. 

Although current U.S. plans for hosting the FTAA Trade Ministerial in 

Miami in November 20 and 21, 2003, are at an early stage, important risks 

are already apparent. Officials with prior experience in hosting ministerial 

meetings told us that certain key elements must be in place soon to 

successfully host a major trade ministerial, notably experienced staff, a 

clear plan, sufficient funding, and adequate security. However, our 

examination of agency records and other documents reveals that current 

U.S. plans leave gaps in several of these areas. For example, USTR has 

sole responsibility for all facets of planning and logistics, a complex task. 

However, USTR has limited institutional experience in this area and is 

getting little support from other federal agencies, such as the Department 

of State. In addition, although current estimates are that the FTAA 

ministerial will cost $10 million, no federal agency has yet received any 

funding for this event, and the local organizers are just beginning fundraising efforts. Failure to mitigate similar risks caused serious logistical 

and security problems at the last major trade ministerial hosted by the 

United States, the 1999 Seattle WTO ministerial. 3

In our report, we recommend that USTR intensify preparations and 

regularly evaluate whether its resources and plans are sufficient to 

successfully carry out the tasks and mitigate the risks associated with cochairing the FTAA negotiations and hosting the November 2003 ministerial 

meeting. 

In commenting on our report, USTR and the Department of State agreed 

with our overall message. However, USTR stressed that it believes plans 

for hosting the ministerial are currently at an appropriate stage of 

development. 

 3

See U.S. General Accounting Office, World Trade Organization: Seattle Ministerial: 

Outcomes and Lessons Learned, GAO/T-NSIAD-00-86 (Washington, D.C.: Feb 10, 2000). 
Page 3 GAO-03-700T Free Trade Area of the Americas 

The United States has long been a key player in the FTAA negotiations. 

Now, in addition to participating as a major negotiating country charged 

with advancing its own position with the FTAA negotiations, the United 

States has assumed responsibility in two other areas. First, this past 

November, the United States became co-chairman (with Brazil) of the 

negotiations. In this capacity, the United States has assumed responsibility 

for leading the FTAA process as a whole forward to its conclusion. 

Second, in conjunction with this role, the United States will serve as host 

of a hemispheric trade ministerial in November of this year. As such, it is 

responsible for providing facilities and making logistical and security 

arrangements for that meeting. 

The United States faces three key challenges as it takes on the 

responsibility, together with Brazil, of co-chair of the negotiations charged 

with guiding the FTAA process forward to a successful conclusion by 

January 2005: (1) handling a substantial increase in its workload, (2) 

managing the intensified negotiating pace and substantively difficult tradeoffs associated with concluding an FTAA agreement, and (3) 

simultaneously juggling the FTAA and several other complex trade 

negotiations. 

The first key challenge for the USTR as co-chair of the FTAA process will 

be handling the increased workload as negotiations intensify, without an 

appreciable increase in staff. The co-chair’s responsibilities are 

considerable. They include providing leadership to the negotiating process 

and regular guidance to the 10 negotiating groups and special committees 

charged with developing the FTAA rules, specific market access 

commitments, and institutional arrangements that will together comprise 

an FTAA agreement. The United States must also coordinate with Brazil, 

the other co-chair, on a daily basis. 

Despite general recognition that co-chairing will involve more work for the 

United States than chairing on its own, USTR only has about half as many 

staff devoted to co-chairing the FTAA negotiations as previous chairs have 

had. Presently, USTR has two staff working full-time on the day-to-day 

Background 

Co-chairmanship 

Poses Challenges for 

United States 

Workload and Negotiating 

Pace to Increase, but 

Resources Not 

Commensurate 

Workload to Increase 
Page 4 GAO-03-700T Free Trade Area of the Americas 

FTAA co-chairmanship tasks. Two other staff devote some of their time to 

the co-chair function and some to advancing U.S. positions in the FTAA 

negotiations. Brazil currently has five staff handling the co-chair function 

and plans to add a sixth. Ecuador, which chaired the negotiations from 

April 2001 to October 2002, had eight people working on substantive 

issues and additional people working on logistics. Canada, which chaired 

the negotiations from March 1998 to November 1999, had eight people, 

with access to others for special projects. To mitigate this situation, USTR 

is seeking to bolster its resources quickly by borrowing staff from other 

agencies. Although it has recently had limited success,4

 funding caps and 

other concerns may make agencies reluctant to detail more people to 

USTR without receiving reimbursement. 

Several past FTAA chairs have told us that the consequence of a U.S. 

failure to adequately staff the co-chairmanship could be a slowdown of 

FTAA negotiations. These negotiations have reached a critical juncture 

with the launch of market access talks on February 15, 2003. Any 

slowdown could make it even more difficult to achieve substantial results 

by the November 2003 Miami ministerial. 

A second key challenge facing USTR is the intensifying pace of the FTAA 

negotiations. To conclude a final agreement by January 2005, much 

remains to be done. In fact, various FTAA negotiating group meetings have 

been scheduled for practically every day for the coming 6 months. As our 

report explains, although considerable technical groundwork has been laid 

since FTAA negotiations were formally launched in 1998, up to now, FTAA 

negotiations did not involve serious, substantive trade-offs. This lack of 

substantive movement is a concern to some observers, given that only 20 

months remain until the January 2005 deadline for concluding an FTAA 

agreement. The overall timetable for FTAA negotiations and key 

milestones for the current phase are depicted in figure 1. 

 4

In mid-March, USTR announced that a senior Department of State official will be loaned to 

the agency effective June 23, 2003, to head the U.S. delegation to the FTAA’s vice 

ministerial level Trade Negotiations Committee. The official has been ambassador to the 

Republic of Azerbaijan since October 2000. Prior to being nominated to serve in Azerbaijan, 

he was principal deputy to the ambassador-at-large and special advisor to the Secretary of 

State for the New and Independent States of the former Soviet Union (1997-2000), where he 

had direct responsibility for U.S. relations with Ukraine, Central Asia, and the Caucasus. 

(This addition basically means that the senior USTR person presently responsible for this 

role will no longer have to split her time among the Chile Free Trade Area (FTA), Central 

American FTA, and FTAA negotiations, as well as the North American Free Trade Area 

(NAFTA) and other duties.) Another Department of State detailee is expected this summer. 

FTAA Negotiations 

Intensifying, as Are Substantive 

Demands 
Page 5 GAO-03-700T Free Trade Area of the Americas 

Figure 1: FTAA Time Frames and Milestones, 2002–2005 

Note: The TNC refers to the Trade Negotiations Committee. The TNC guides the work of the 

negotiating groups and other committees and groups and decides on the overall architecture of the 

agreement and institutional issues. 

Five of the nine FTAA negotiating groups—agriculture, market access, 

services, government procurement, and investment—finally began work 

negotiating concrete market access commitments, or schedules to 

liberalize trade, in mid-February 2003. These negotiations are considered 

very important, because they will determine how much trade and 

investment will actually be liberalized and how rapidly trade barriers will 

be removed. Even though all 34 FTAA countries met the deadline for 

submitting initial offers on industrial and agricultural market access, many 

of these offers were conservative. For example, in contrast to the U.S. 

offer, several nations placed sizeable shares of their trade into the longest 

phaseout category (more than 10 years) or excluded some key items from 

liberalization. In addition, some nations have not yet made offers on 

investment, services, and government procurement. Ultimately, achieving 

substantial liberalization will be difficult, because the tariffs of many 

FTAA participants are high, and tariffs are an important source of 

government revenue for many FTAA nations. 

November 2002

Quito, Ecuador:

Seventh FTAA

ministerial

November 2002–December 2005

January 2005

Deadline to conclude

FTAA negotiations

December 2005

Entry into force

of FTAA

February 2003

Deadline for 

submission of 

initial market

access offers

June 2003

Deadline for

submission of

requests for

improvements

to offers

September 2003

Submit a new

version of the 

chapters to the TNC

November 2003

Miami, Florida:

Eighth 

FTAA ministerial

2004

Brazil:

Ninth 

FTAA ministerial

(Date to be determined)

Source: GAO.

July 2003

Initiate the process for the

presentation of revised offers 

and subsequent negotiations

on improvements

Deadline for stocktaking 

report on agriculture

Submit to the TNC a revised 

version of the FTAA

text chapters
Page 6 GAO-03-700T Free Trade Area of the Americas 

FTAA participants must also agree on the final legal text or rules on such 

complex topics as intellectual property rights and competition policy. To 

give you an idea of the magnitude of this task, the draft FTAA agreement 

made public last November was nearly 400 pages long. Moreover, most of 

the text was in brackets, which signified disagreement among the 34 

participating nations. Bridging these disagreements may be difficult, given 

the number and diversity of nations participating. Several FTAA 

participants, including the United States, are among the wealthiest nations 

in the world. But some FTAA participants, such as Haiti, are among the 

poorest, and others are small or isolated in geographic terms. 

To deal with the problem of differences in the 34 participants’ wealth and 

size, the November 2002 Quito ministerial launched a Hemispheric 

Cooperation Program. This program is considered vital to building a 

necessary consensus among the FTAA participants. The program’s goal is 

to identify critical priorities and help marshal funds that would bolster the 

capacity of the lesser-developed nations to negotiate, implement, and 

benefit from an FTAA. Participants’ interests within the FTAA negotiations 

differ, even among the largest countries. According to reports, although 

the U.S.’s work with Brazil is going smoothly, Brazil’s commitment to the 

FTAA and to its deadlines remains unclear. Recently, for example, Brazil’s 

Foreign Minister stated that the FTAA completion deadline of 2005 is too 

ambitious. 

Indeed, FTAA negotiators have set ambitious goals for the coming months. 

By June 15, 2003, the five groups negotiating market access will exchange 

requests for revised offers. All ten negotiating groups are working to 

provide vice ministers with a revised text at their next meeting on July 7, 

2003 (in El Salvador). The goal is to have a rather advanced agreement by 

this November’s FTAA ministerial in Miami. 

A third challenge facing the United States as co-chair is that other major 

negotiations are occurring concurrently with the FTAA. For example, the 

U.S. Trade Representative has notified Congress of his intent to pursue 

free trade agreements with (1) five nations of Central America, (2) 

Australia, (3) the South African Customs Union,5

 and (4) Morocco, and 

USTR has started negotiations toward this end. Meanwhile, the Doha 

Development round of WTO negotiations involving 146 nations and a 

similarly broad set of issues will officially be at the midpoint at the 

 5

A customs union including South Africa, Lesotho, Botswana, Namibia, and Swaziland. 

Other Trade Negotiations 

Occurring Concurrently 
Page 7 GAO-03-700T Free Trade Area of the Americas 

September 2003 WTO ministerial. Some of the same USTR staff are 

involved in these concurrent negotiations. Moreover, several issues of 

importance to U.S. trade partners in the hemisphere, notably agriculture 

subsidies and trade injury remedies, are linked to ongoing negotiations at 

the WTO. The U.S. position is that the WTO is the appropriate forum to 

deal with domestic agriculture subsidies, but many other FTAA 

participants maintain that domestic agriculture support needs to be 

addressed in both the FTAA and the WTO. The November 2002 Quito 

ministerial declaration notes the importance of progress in both the WTO 

and FTAA agriculture negotiations. 6

 However, WTO negotiators missed a 

March 31, 2003, deadline to establish modalities, or the rules and 

guidelines for agricultural liberalization, as well as other deadlines in other 

areas under negotiation. We noted in a September 2002 report that 

meeting this deadline was a crucial indicator of the likelihood of success 

in the overall negotiations.7

 Lack of progress in these WTO negotiations 

has caused concern about prospects for progress in FTAA negotiations. 

The United States will host the Eighth FTAA Trade Ministerial in Miami in 

November 2003, just 6 months from now. This ministerial is particularly 

significant, because it will occur just over a year before the slated 

conclusion of FTAA and WTO negotiations. As host, the United States has 

numerous responsibilities, but U.S. planning for the ministerial is at an 

early stage. Given the lead times involved, however, intense efforts are 

needed to fill the remaining gaps in the areas of expertise, planning, 

funding, and security. 

 6

Specifically, the Quito ministerial declaration states: 

We recognize that, in a global market, we must have significant results in the negotiations 

on agriculture, both in the FTAA and in the WTO. In this context, we must also take into 

account the practices by third countries that distort world trade in agricultural products. 

We also recognize that our respective evaluation by country or group of countries, of the 

results in the market access negotiations in agriculture in the FTAA, will depend on the 

progress we can reach in other subjects that are part of the agriculture agenda. 

7

See U.S. General Accounting Office, World Trade Organization: Early Decisions are 

Vital to Progress in Ongoing Negotiations, GAO-02-879 (Washington, D.C.: Sept. 4, 2002). 

Gaps in U.S. 

Preparations for 

Hosting November 

2003 Ministerial Pose 

Risks 
Page 8 GAO-03-700T Free Trade Area of the Americas 

The host of an FTAA ministerial is generally responsible for providing 

facilities, transportation, and security for both the ministerial and the 

Trade Negotiations Committee meeting, a gathering of vice ministers that 

precedes the ministerial. In addition, separate forums for the business 

community and civil society typically accompany FTAA ministerials. Each 

of these events involves hundreds of people, including many high-level 

officials requiring appropriate protocol and special security measures. The 

task of the United States as host is especially complex, because USTR 

must coordinate actively with local officials and oversee host city 

preparations to ensure they are satisfactory. Successfully executing the 

many responsibilities of an FTAA ministerial host is critical, given the 

importance of ministerial meetings in the negotiations. 

Our discussions with cognizant officials suggest that hosts must have 

several basic elements in place to fulfill the responsibilities outlined above 

(see fig. 2). Particularly important is having (1) staff experienced in 

bringing together all the different components including logistics, 

budgeting, and procurement; (2) a plan that clearly sets forth 

responsibilities and timelines for putting in place necessary logistical 

arrangements; (3) access to funds to pay for expenses; and (4) assurance 

of adequate security. 

Figure 2: Keys to a Successful Ministerial 

USTR has sole responsibility for organizing the FTAA ministerial. As an 

agency, it has relatively little institutional experience in this area, however, 

and it is receiving limited assistance from other agencies with expertise. 

Responsibilities of the 

Host of an FTAA 

Ministerial Are Numerous, 

Important 

Several Factors Critical to 

Success 

USTR Lacks Experience 

Hosting; Miami Has Track 

Record but Wants Support 

Keys to a Successful Ministerial

Experienced and capable staff

A plan that clearly sets forth roles, responsibilities, and timelines

Access to adequate funds

Ample security for participants

Source: GAO.
Page 9 GAO-03-700T Free Trade Area of the Americas 

Until late April USTR had four permanent staff working part-time on 

planning the FTAA ministerial, only one of these staff has significant 

experience in logistics, security, and administration. USTR had received 

substantial help in planning the last major trade ministerial it hosted, the 

1999 Seattle WTO ministerial, including assistance from several 

Department of State officials with previous international conference 

planning experience.8

 The Department of State is not providing similar 

support for the November 2003 FTAA ministerial, however, largely due to 

budgetary constraints. In fiscal year 1995, the Department of State was 

receiving $6 million to fund and support U.S. participation in international 

conferences. By fiscal year 1999, this appropriation had been 

discontinued, with no commensurate increase to USTR’s budget for trade 

meetings.9

As a result, USTR plans to rely heavily on Miami’s expertise to carry out 

the November 2003 meeting. Miami hosted the 1994 Summit of the 

Americas that launched the FTAA initiative, and the city has hosted other 

major events. However, the Miami organizers (committees and individuals 

representing both private and public sectors in South Florida, including 

the jurisdictions of the city of Miami, the county of Miami-Dade, the city of 

Coral Gables, and the city of Miami Beach), informed us that they would 

like more support from the federal government. In particular, on the 

premise that the workload and need for coordination will increase as the 

ministerial draws closer, they would like a full-time federal staff person to 

be detailed from the Department of State to Miami in a liaison capacity as 

soon as possible. (This had been done for the 1994 Summit of the 

Americas, also in Miami.) 

Both the federal government’s and Miami’s plans for hosting the November 

2003 ministerial are in early stages. Some of the specific tasks identified in 

FTAA guidelines have been accomplished, and more are in process. For 

example, accommodations for delegates and meeting space have been 

selected. However, the USTR and Miami both agree that much remains to 

be done between now and the November 2003 ministerial. Among other 

things, a budget that clearly outlines funding sources and responsible 

 8

Although some records are available, including timelines and task lists, the Department of 

State does not have written guidelines on how to plan such an event, and no formal, written 

“lessons learned” were prepared after the Seattle WTO ministerial. 

9

In fiscal year 2000, the Department of State received a separate appropriations for the 

Seattle ministerial. 

Plans for Ministerial in Early 

Stages; Intense Preparations 

Required 
Page 10 GAO-03-700T Free Trade Area of the Americas 

parties must be finalized; meeting space configured; a security plan 

developed; and arrangements for providing credentials, translation, 

administrative support, and other services made. The FTAA Administrative 

Secretariat requires the United States to provide both the Secretariat and 

the delegates with details of the U.S. arrangements for the November 

FTAA ministerial by late September 2003. Making all of the required 

arrangements by then will require intense preparations on the part of both 

the USTR and Miami officials. 

Among other things, funding for the FTAA ministerial has not been 

secured. As of early May, a budget for the event had not been finalized, 

local fund-raising had just begun, and no federal agencies had received 

funding for the FTAA ministerial meeting. Current estimates are that the 

ministerial will cost $10 million. Although some funding requirements can 

be met through in-kind contributions, expenses that require an outlay of 

funds are expected to total about $3 million and will be incurred within the 

next 2 months. Such expenses include making deposits for hotels and 

transportation and paying the firms supporting the FTAA Web site and 

preparing delegate credentials. 

Relying on the host city to pay the majority of the costs is a model the 

United States has followed at past summits and trade ministerials where a 

host committee, or an organizing group composed of local representatives 

associated with the host city, paid for the majority of the costs. For 

example, this model was used for a ministerial meeting of the International 

Telecommunications Union held in 1998 in Minneapolis, Minnesota. Some 

experiences with host committees have been unsuccessful, however. For 

example, at the 1999 Seattle WTO ministerial, decisions to rely on the host 

committee, and the committee’s ultimate failure to raise sufficient funds, 

caused problems at the meeting. In addition, costs kept escalating as yearlong planning efforts continued, ultimately reaching $24 million.10 This 

amount is considerably higher than the December 1998 budget of $9 

million. Moreover, it is nearly as large as USTR’s entire fiscal year 2001 

budget, which was $29 million. 

No federal agency has yet received funding for the FTAA ministerial. The 

USTR has only requested $200,000 for the FTAA ministerial, or 2 percent 

of the currently projected cost, but this is in the President’s fiscal year 

 10Security expenses accounted for more than half of the total cost, amounting to $14 

million. 

Funding Has Not Been Secured, 

and Funding Responsibilities 

Are Still Unclear 
Page 11 GAO-03-700T Free Trade Area of the Americas 

2004 budget request for the year that begins October 1, 2003. At a 

minimum, USTR will have to pay for the expenses of its staff participating 

in the event, for setting up and staffing a fully equipped office in which 

U.S. delegates can work, for basic translation services, and for certain 

aspects of security. To reduce costs, USTR had planned to use computers 

and other equipment procured for the September 2003 Cancun WTO 

ministerial for the Miami FTAA ministerial. To date, however, USTR has 

not been given approval by the Office of Management and Budget to 

submit a request for a $1.3 million supplemental appropriation that would 

fund this procurement. 

USTR has stated that Miami will provide the vast majority of funds for the 

ministerial. USTR plans to rely on Miami’s desire to be the site of the 

permanent FTAA Administrative Secretariat as incentive to raise the 

necessary funds. However, the Miami organizers believe the federal 

government will also assume some financial responsibility because, in 

their view, the ultimate host of the ministerial is the federal government. 

Both parties have agreed to use the budget development process to 

identify funding sources and apportion financial and logistical 

responsibilities. However, this breakdown is still being discussed. 

USTR has sought to forestall any possible funding difficulties through 

signing an agreement with the Miami organizers for them to provide a 

statement of fund-raising principles and periodic status reports. So far, the 

four Miami municipalities involved have drafted a memorandum of 

understanding regarding their financial support of the meeting. Under the 

memorandum, they agreed to provide in-kind and cash support according 

to a yet-to-be specified formula.11 This agreement allows signatories to 

withdraw, however, if they determine that they can no longer financially 

participate. 

Another key risk the United States will face in Miami is ensuring the 

security of participants. Previous trade ministerials have involved 

extensive security requirements, in part because these events have 

attracted protestors opposing globalization. USTR expects around 6,000 

participants at the Miami ministerial. The number of protesters expected, 

however, ranges between 20,000 and 100,000, according to both USTR and 

the Miami organizers, compared to 9,000 participants and 50,000 protesters 

 11The four municipalities involved are the city of Miami, the county of Miami-Dade, the city 

of Coral Gables, and the city of Miami Beach. 

Security Is Critical 
Page 12 GAO-03-700T Free Trade Area of the Americas 

at the Seattle WTO ministerial. In a February 2000 report,12 we noted that 

protestors interfered with the Seattle WTO ministerial by causing delays 

and disrupting proceedings. Protestors also threatened and, in some cases, 

assaulted delegates. Local reports indicated that 92 protestors and 

bystanders and 56 police officers were injured, and that downtown Seattle 

businesses suffered $3 million in property damage. At the FTAA 

ministerial in Quito, Ecuador, protestors were also present, and a 

breakdown in order at a meeting between trade ministers and civil society 

groups raised security concerns. 

According to USTR officials, the need to link logistics and security is an 

important lesson learned after the security problems experienced at the 

Seattle ministerial and is a critical component of the planning for the 

Miami event. At the Seattle ministerial, security costs accounted for more 

than half of the expenses incurred, in part because security had not been 

factored into logistical arrangements from the beginning. USTR’s goal is to 

have a security plan finalized by May 30, 2003. 

In summary, Mr. Chairman, despite 4 years of talks, considerable work 

remains in order to culminate an initiative that the hemisphere’s 34 

democratically elected leaders once embraced as key to integrating their 

economies, improving growth and equity, and strengthening democracy. 

With a January 2005 deadline for completion, our work suggests that the 

United States faces challenges as co-chair of the final phase of FTAA 

negotiations and as host of a major trade ministerial in Miami just over 6 

months from now. Filling gaps in human and financial resources is critical 

to success and will require intense preparations on the part of both USTR 

and the Miami organizers between now and November. As a result, in our 

report, we recommend that USTR intensify U.S. preparations and regularly 

evaluate whether resources and plans are sufficient. 

Mr. Chairman and Members of the Subcommittee, this concludes my 

prepared statement. I will be pleased to answer any questions you may 

have. 

 12See GAO/T-NSIAD-00-86. 

Conclusions 
Page 13 GAO-03-700T Free Trade Area of the Americas 

For future information on this testimony, please call Loren Yager or Kim 

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testimony included Venecia Rojas Kenah, R. Gifford Howland, Rona 

Mendelsohn, Kirstin Nelson, Jon Rose, and Marc Molino. 

Contacts and Staff 

Acknowledgments 

(320181) 
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