FTAA Agreement, Its Members, With Its Pros and Cons

Why the World's Largest Trade Zone Failed

FTAA protest
Anti-globalization protesters demonstrate on the second day of the summit to create a Free Trade Area of the Americas (FTAA) November 18, 2003 in downtown Miami, Florida. Due to expected protests from anarchists, labor groups and globalization foes, much of the city of Miami is in a police lockdown, with thousands of businesses closed and a steel barricade circling the summit area. Photo:

Spencer Platt/Getty Images

The Free Trade Area of the Americas is a proposed free trade agreement between the United States and 34 countries in North, Central, and South America, as well as the Caribbean. The exception is Cuba. Although the countries worked on it for a decade, it was never finalized. 

Negotiations began right after the completion of the North American Free Trade Agreement in 1994. They were supposed to have been completed by January 1, 2005. But Venezuela, Argentina, Bolivia, and Brazil opposed the deal.

By 2002, negotiations began to falter. Newly elected progressive leaders started opposing many of the details that had been negotiated to date. At that time, they were looking for South American unity, independent of the United States.

This concept, known as "Bolivarism," was proposed by Venezuelan President Hugo Chavez. It was strongly supported by Bolivian President Evo Morales and Argentinian President Nestor Kirchner. It was moderately supported by Brazilian President Luiz Inacio Lula da Silva. These countries led the creation of the Mercosur trade pact and the Banco del Sur development bank.

As a result, FTAA negotiations were abandoned in November 2004. Instead, the United States and six countries signed the Central American-Dominican Republic Free Trade Agreement in August 2004. Those countries included Honduras, El Salvador, Guatemala, Nicaragua, Costa Rica, and the Dominican Republic. CAFTA-DR increased total trade of goods by 71%, or $60 billion, in 2013.

Like most other trade agreements, FTAA would have expanded trade by eliminating tariffs and other trade fees. It would have improved market access for companies by streamlining customs administration, reducing technical barriers to trade, and improved transparency. It would have protected patent rights, as well as installed environmental and labor protections. Many state-owned utilities, such as telecommunications, electricity, and insurance would have been opened up to foreign direct investment.

Key Takeaways

  • The FTAA is a proposed trade agreement between the United States and 34 countries in the Americas and the Caribbean.
  • Although they worked on it for a decade, it was never finalized. 
  • Countries were opposed to the unfair competitive advantage that U.S. federal subsidies give to American agricultural exports.

Member Countries

If it had been approved, the FTAA would have been chartered among all of these countries. But many of them have signed bilateral trade agreements or investment treaties with the United States instead, indicated below with links to these agreements.

North America: Canada, United States

Caribbean Countries: Antigua and Barbuda, Bahamas, Barbados, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, Trinidad and Tobago.

Central America: Belize, Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama.

South America: Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, Paraguay, Peru, Uruguay, Venezuela.


The agreement would have unified a trade area serving around 972 million people who generate $25.4 trillion in gross domestic product as of 2014. Like NAFTA, it would have given the Americas a comparative advantage when competing in global trade with the European Union, and with the many trade agreements established by China in the Pacific Region.


Depending on the final negotiations, it could have helped companies in smaller countries compete with those in the powerhouses of Mexico and Brazil.

It would have given them access to those markets. A large domestic market is one reason the United States does so well with consumer products and technological innovations. New products can be tested in this market before being sent overseas. Smaller companies could have also benefited from the technology and modern manufacturing processes if they partnered with larger U.S. companies. 

This large market would have given these companies in these countries the ability to develop economies of scale, so necessary to lower operational costs. Without that, it's very difficult for businesses in small countries to compete globally in anything other than a niche business. That, in turn, makes it difficult for countries to escape a traditional economic base.


The FTAA had the same major problem that has plagued NAFTA and CAFTA-DR and that halted the Doha trade agreement in its tracks. It's the unfair competitive advantage that U.S. federal subsidies give to American agricultural exports. 

Local family farmers can't compete with a flood of cheap U.S. food products, putting many of them out of business. As a result, they'd be forced to take jobs in U.S. factories that moved to their countries. But these aren't stable positions because the factories are moved to whenever cheaper locations arise. The jobs are low-paying and don't comply with U.S. labor standards. 

Farmers that don't leave their lands are forced to more profitable, but illegal, crops like coca, poppies, and marijuana in response to the high prices, or outright pressure, from drug cartels. The resultant violence creates massive emigration, both legally and illegally, to the United States. 

But the FTAA also suffered from a host of other problems. Countries had to treat corporations as legal entities like people. Some said that meant, for example, companies could sue governments for profits lost due to sovereign laws protecting workers, consumers, or the environment. 

Countries would not have the ability to protect any small-scale domestic industries such as the farmers. They cannot require foreign companies to train local companies on advanced technology or their workers on the skills needed to operate them and continue their own research. This technology and skills transfer is by China and is one of the reasons for that country's growth.


Foreign companies were not required to share their profits with the local countries or communities.

That meant they could have purchased or leased commodity-rich property, then mine it for its value, and not share the profits with the country or its people. Often, local people are stripped of their communities, hired to work for the companies, and then left with pollution and resultant illnesses.

FTAA Compared to Other Trade Agreements

The FTAA would have been much smaller than other regional trade agreements, such as NAFTA. It would have been dwarfed by the Transatlantic Trade and Investment Partnership between the United States and the European Union. It would have also been smaller than the Trans-Pacific Partnership, which the Trump administration abandoned.


After NAFTA was signed, the United States organized the Summit of the Americas in December 1994 in Miami. At that time, most countries in the Americas wanted to take advantage of an agreement that would help the region compete with the EU.

Little was done until 1998 when they initiated the FTAA process. The countries established working committees to tackle the main areas of negotiation: market access; investment; services; government procurement; dispute settlement; agriculture; intellectual property rights; subsidies, antidumping, and countervailing duties; and competition policy.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
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  2. The Office of Trade Agreements Negotiation and Compliance. "Grenada Bilateral Investment Treaty."

  3. The Office of Trade Agreements Negotiation and Compliance. "Jamaica Bilateral Investment Treaty."

  4. The Office of Trade Agreements Negotiation and Compliance. "Trinidad And Tobago Bilateral Investment Treaty."

  5. Office of the United States Trade Representative. "Key Facts of the U.S.-Panama Trade Promotion Agreement."

  6. The Office of Trade Agreements Negotiation and Compliance. "Argentina Bilateral Investment Treaty."

  7. The Office of Trade Agreements Negotiation and Compliance. "Bolivia Bilateral Investment Treaty."

  8. Office of the United States Trade Representative. "Chile Free Trade Agreement."

  9. Office of the United States Trade Representative. "Overview of the U.S.-Colombia Trade Agreement."

  10. The Office of Trade Agreements Negotiation and Compliance. "Ecuador Bilateral Investment Treaty."

  11. Office of the United States Trade Representative. "Peru Trade Promotion Agreement."

  12. The Office of Trade Agreements Negotiation and Compliance. "Investment Treaty With Uruguay."

  13. Govinfo.gov. "Federal Register," Volume 66, No. 134. Page 1.

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