LATINAMERICA PRESS
Vol. 38, No. 22, November 29, 2006
ISSN 0254-203X
Integration inLatin America:
For a real alternative
Special edition
Director: Raquel Gargatte Loarte
Managing Editor: Elsa Chanduví Jaña
Editors: Cecilia Remón Arnáiz, Leslie Josephs
Production & layout: Carlos Zúñiga Izquierdo
LATIN AMERICA/CARIBBEAN
Recipe for a true integration
LATIN AMERICA/CARIBBEAN
Integration’s long history
LATIN AMERICA/ CARIBBEAN
Interview with Uruguayan analyst Eduardo Gudynas
CENTRAL AMERICA
The state of Central American integration
MESOAMERICA
Plan PueblaPanama: Another “top-down” neo-liberal agenda
LATIN AMERICA/CARIBBEAN
Integrating energy markets
SOUTHERN CONE
Forming an “energy ring”
LATIN AMERICA
Free trade agreements vs. integration
CHILE
A mediator among regional blocs
LATIN AMERICA
Migration: Beyond trade
LATIN AMERICA/Caribbean
Fighting for a just integration
LATIN AMERICA/CARIBBEAN
Latinamerica Press
Recipe for a true integration
Many of integration’s multi-faceted requirements remain overlooked.
Regional integration is a term that flows easily off the tongues of politicians, economists, academics and rights defenders, who advocate that it is necessary for the advancement of the region, one of the most unequal and unintegrated in the world. Most analysts agree that without true integration, any alternative development strategy for the region will fail.
The formation of regional blocs, economic cooperation agreements and other tools may appear to forge regional integration, but many are just flimsy institutions whose accords are based on free trade agreements that are counter-productive to true integration.
An alternative development strategy requires a more profound integration to function, warns Uruguayan economic analyst Eduardo Gudynas.
The Southern Common Market (MERCOSUR) is “erroneously repeating many formats of free trade,” he says, referring to the fact that the trade bloc lacks mechanisms to balance the economic asymmetry that exists among the giant economies of member countries Brazil and Argentina and smaller members Paraguay and Uruguay.
“The real policy expressed in the region is having many difficulties and that is tied the Brazilian government’s conventional trade and economic policy that is reproduced within South America in forms of hierarchies, domination, or pressure of the largest over the smallest” countries, Gudynas adds.
Brazil, Latin America’s largest economy, considers only its own interests when engaging in trade relations with MERCOSUR’s smaller member countries, while, at the same time, along with Argentina, has successfully put a stop to the US-backed Free Trade Area of the Americas (FTAA). But Brazil has never been the leader in the region’s integration processes.
“In our region the largest economies have never exercised a clear hegemony, expressed not only in terms of political leadership committed to build the necessary institutions, but one that is also able to open markets widely to other countries and supply the financial resources necessary to ease the participation of other economies with greater relative backwardness,” wrote economist Host Grebe in the Bolivian daily La Razon.
Venezuela’s incorporation into MERCOSUR this year seems to have put Brazil on alert, especially given the aspirations President Hugo Chávez to convert himself into the region’s political leader. In a recent interview in the Paraguayan newspaper Ultima Hora, Brazilian Foreign Minister Celso Amorim said that small MERCOSUR members have plenty of reason to complain, adding that Brazil should help them.
“Our bureaucratic structure is oriented only toward Brazil; there isn’t an integrated vision,” he said, urging a policy change to increase trade among all MERCOSUR members.
Following his re-election in October, Brazilian President Luiz Inácio Lula da Silva underlined the need to strengthen integration in Latin America both in MERCOSUR and the Andean Community of Nations.
Unfulfilled requirements
Commercial unity is one of the most important aspects of an effective integration, including a common tariff schedule, common production policies, free movement of citizens, common labor regulations and common policies in education, health and social security. For the most part, these measures spur trade within a bloc and reduce internal competition.
In the region, however, “the different forms of integration over the last 15 years have not been able to create production links between countries,” Gudynas stresses. While there is some coordination in the social arena, it is still weak and undeveloped.
For Grebe, there are two distinct integration processes running parallel to each other in Latin America. “Mexico and Central America have taken a different path than that of South American countries, and it is also possible to distinguish between two different approaches to development and international insertion, which were first expressed in the FTAA and later with the free trade agreements with the United States,” he said.
Currently, trade priorities in the region are abroad. Between 2000 and 2006 alone, Latin American countries signed 12 free trade pacts with blocs and countries outside of the region.
Gudynas notes that the region is a massive agro-exporter, “but we haven’t resolved our own internal demands.” He suggests shared production and trade between the region’s countries to combat this. “What’s left over is what can be exported,” he adds.
The concept of development in the majority of the region’s governments — including progressive ones — is based on an increase in exports and greater foreign investment. Greater economic growth is enough to combat poverty, some of these governments say.
But something is not working right. Latin American and Caribbean economies grew 4.3 percent in 2005, the third consecutive year of growth in the region, according to the Economic Commission for Latin America and the Caribbean (ECLAC). Nevertheless, 38.5 percent of the 525 million Latin Americans live in poverty and 14.7 percent live in extreme poverty, according to ECLAC’s 2006 Social Panorama of Latin America.
Latin America and the Caribbean is the most unequal region in the world, ECLAC says. Brazil is considered the region’s most unequal country, where the poorest 10 percent shares just 0.7 percent of the wealth, while the 10 richest percent holds 47 percent of the wealth.
Proposals still imprecise
Development models in the region are becoming increasingly dependent on the ups and downs of international markets, leaving the internal situation by the wayside.
Social movements that defend the right to development based on social inclusion and respect for economic, social, political, cultural and environmental rights, the preservation of cultural and natural patrimony and control over natural and energy resources, have continued to grow. The movement that suggests “another world is possible,” is now saying that “another integration is possible.”
Bolivian President Evo Morales’ People’s Trade Treaty was proposed in this line of thinking, as was as Chávez’s Bolivarian Alternative for the Americas, known as ALBA, a counter-proposal tothe FTAA, which is supported by Bolivia and Cuba.
These agreements seek an integration that goes beyond trade, one that also deals with education, health, culture and cooperative relations throughout the region.
These alternative proposals add to the growing debate on a genuine integration that takes all of these elements into consideration. But they are still imprecise. For example, it is not yet certain how the ALBA will be organized.
“In some of Chávez’s declarations his idea seems to be: Venezuela sells energy to Brazil, Argentina sells agricultural products to Brazil and Brazil makes cars and tractors. This is a kind of trade that, expressed in another way, is the same as England and Indian in the 18th century. England bought raw materials and sent back textiles,” says Gudynas.
“Up until now, its only practical application has been a trilateral agreement between Venezuela, Cuba and Bolivia which, in reality, has a traditional cooperative format,” he adds, but the idea of an articulated production or supra-nationality has not been considered yet.
The social movement’s support is key in all areas of integration. Its efforts must aim for sub-regional blocs to maintain their democratic values and for cooperation and solidarity in the region to turn into concrete common social policies. Only this way will Latin America be able to orient itself toward a true form of integration.
CARIBBEAN COMMUNITY & COMMON MARKET (CARICOM)
Member countries: Antigua & Barbuda, Bahamas, Barbados, Belize, Dominica, Granada, Guyana, Haiti, Jamaica, Montserrat, St. Lucia, St. Kitts & Nevis, St. Vincent & the Grenadines, Suriname, and Trinidad & Tobago
Associate member countries: Anguilla, Bermuda, British Virgin Islands, Cayman Islands and Turks & Caicos
Founded: Chaguaramas, Trinidad & Tobago, July 4, 1973
Combined area: 462,353 square kilometers (178,500 square miles)
2005 combined population: 15.7 million
Combined 2005 gross domestic product: US$17.5 billion
2004 combined exports: US$ 8.8 billion
2004 combined imports: US$13 billion
Sources: CARICOM, ECLAC
ANDEAN COMMUNITY OF NATIONS (CAN)
Member countries: Bolivia, Colombia, Ecuador and Peru. Venezuela withdrew in April 2006
Associate member countries: Argentina, Brazil, Chile, Paraguay and Uruguay
Observer countries: Mexico and Panama
Founded: Bogota, Colombia, May 26, 1969
Combined area: 3.8 million square kilometers (1.5 million square miles)
2005 combined population: 96.6 million
2005 combined gross domestic product: US$247.3 billion*
2005 combined exports: US$50.4 billion*
2005 combined imports: US$47.2 billion*
*Without Venezuela
Sources: CAN, ECLAC
SOUTHERN COMMON MARKET (MERCOSUR)
Member countries: Argentina, Brazil, Paraguay, Uruguay and Venezuela (since May 2006)
Associate member countries: Bolivia, Chile, Colombia, Ecuador and Peru
Founded: Asuncion, Paraguay, March 26, 1991
Combined area: 12.7 million square kilometers (4.9 million square miles)
Combined population: 262.3 million
2005 combined gross domestic product: US$1.1 trillion*
2005 combined exports: US$214 billion*
2005 combined imports: US$132.7 billion*
*Including Venezuela
Sources: MERCOSUR, CAN, ECLAC
CENTRAL AMERICAN INTEGRATION SYSTEM (SICA)
Member countries: Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama
Associate member country: Dominican Republic
Observer country:Mexico
Founded:Tegucigalpa, Honduras, Dec. 13, 1991
Combined area: 523,780 square kilometers (202,200 square miles)
Combined population 2005: 40.2 million
2005 combined gross domestic product: US$98.9 billion
2005 combined exports: US$22.2 billion
2005 combined imports: US$40.5 billion
Sources: SICA, ECLAC
LATIN AMERICA/CARIBBEAN
Ramiro Escobar in Lima
Integration’s long history
Despite numerous integration efforts, regional unity is a long way off.
Even before Latin American countries attained their independence from Europe, the concept of forging continent-wide unity was on the minds on the region’s visionaries. The fight for freedom was often associated with the dream of a single regional community.
“Because they already have one origin, one language, customs and one religion,” liberator Simón Bolívar reasoned in his 1815 Jamaica Letter that Latin America should unite into a single nation. His vision is still drawn upon today in integration proposals.
In 1819 Bolívar founded Gran Colombia, or “Greater Colombia,” the bloc composed of parts of present-day Colombia, Ecuador and Venezuela.
Between 1823 and 1840 there was the short-lived Federal Republic of Central America that included Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. Later, in 1826 Bolívar summoned the Anfictionic Congress — named after the confederations of ancient Greek cities — of Panama, in hopes of forming a broad-based bloc of republics.
But only representatives from Central America, Colombia, Mexico and Peru attended. The movement was later weakened as internal and inter-state fighting, usually over territory, took over the landscape.
Times of struggle and hope
“These struggles began to block the initial integrationist impulse,” says Nelson Manrique, a historian at the Pontifical Catholic University of Peru. A clear example is the 1879-83 War of the Pacific, a bloody conflict among Bolivia, Chile and Peru.
Nevertheless, attempts to unify the region continued throughout Latin America, which began using that name around 1860. The use of this name coincided with England and the United States’ bursting onto the scene as the world’s new imperialist powers.
England saw two concrete possibilities in the region: the opening of new markets and the exploitation of raw materials. The United States had the “Americas for Americans” doctrine under the James Monroe(1817-25) administration.
In 1889, this policy took a strategic turn when then-Secretary of State James G. Blaine under President Benjamin Harrison (1889-93) called the first Pan-American Conference, which was attended by Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Paraguay, Peru, Uruguay and Venezuela, in addition to the United States. The conference could be considered the precedent to today’s free trade agreement negotiations since representatives debated issues such as patent rights. The US goal was simple and two-fold: eradicate European influence and dominate the continent.
Pan-Americanism vs. Latin-Americanism
Two competing integrationist approaches reigned in the early 20th century: the US-backed Pan-Americanism and the more autonomous Latin-Americanism. Other movements resulted, however, such as that of Peruvians Víctor Raúl Haya de la Torre, who founded the APRA party of current Peruvian President Alan García, and José Carlos Mariátegui, who denounced “US imperialism.” Haya de la Torre even spoke of “Indoamericanism.”
In 1939, the Second World War all but halted Latin American integration. “Only after this conflict did (the movement) take hold,” says Peruvian political analyst Alberto Adrianzén.
When the war ended in 1945, there was a worldwide decolonization process, and according to Adrianzén, this once again ignited the integration debate. On April 30, 1948, the Organization of American States (OAS) was formed in Bogota, Colombia, with 21 member countries.
The profile to belong to this organization was made evident in 1962 when Cuba, already under the Fidel Castro regime, was kicked out. But the Latin-Americanism movement did not loose steam.
The Latin American Free Trade Association was born in 1960 that included South American nations (except for French Guiana, Guyana and Suriname) and Mexico. Around the same time, the Central American Common Market was founded with the former members of the Federal Republic of Central America.
In both cases a free trade zone was the goal. With the same logic, the Caribbean Free Trade Zone was founded in 1968, which later evolved into the 14-member Caribbean Community and Common Market (CARICOM).
In 1969, the Cartagena Agreement was signed, which launched the Andean Group. The first members were Bolivia, Chile, Colombia, Ecuador and Peru. Venezuela joined in 1973 and, during the tyrannical dictatorship of Augusto Pinochet, Chile withdrew in 1976. The bloc’s name was officially changed to the Andean Community of Nations in 1996.
Unlike the Latin American Free Trade Association, the CAN aimed to strengthen not only commercial integration in the region. In 1979, for example, the Andean Court of Justice was formed.
In 1991 the Southern Common Market (MERCOSUR) was founded by Argentina, Brazil, Paraguay and Uruguay. Venezuela recently joined the bloc after it withdrew from the CAN in April of this year.
Also in 1991 inTegucigalpa, Honduras, the Central American Integration System (SICA) was founded with an economic and political agenda. While the bloc aims to strengthen economic union, regional security and human rights protection are also on SICA’s agenda.
But other kinds of intregration proposals have not come only from within the region. In 1994, the United States, Canada and Mexico signed the North American Free Trade Agreement (NAFTA), what was intended to be a stop on the way to the US’ sweeping Free Trade Agreement of the Americas (FTAA).
But Pan-Americanism and Latin-Americanism supporters continue to butt heads. The latter has demonstrated some economic effectiveness. According to Paraguayan researcher Fernando Masi, between 1990 and 1998 the percentage of exports within Latin America increased from 14 percent to 21 percent.
The era of free trade
Leading up to 2000, trade within Latin America began to decrease, as countries in the region sought new markets in other parts of the world, such as Asia. Almost simultaneously, free trade agreements burst onto the scene.
Between 2000 and 2006, 12 free trade pacts between Latin American countries and blocs outside the region were signed. This coincided with the failure of the FTAA proposal, which in 2003 met harsh resistance from Argentina, Brazil and Venezuela.
In the middle of the passage of free trade pacts sprung up a certain revival of regional integration. A vital sign of this process was the 2003 signing of a free trade agreement between CAN and MERCOSUR. And, in December 2004, the South American Community of Nations was founded in Cusco, Peru.