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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
UNCERTAINTIES IN THE INTERNATIONAL TRADING SYSTEM:
Their effects on economic integration and trade strategies in the region.

by Félix Peña
September 2015

English translation: Isabel Romero Carranza


 

Three issues, which were addressed in different sessions of the XIX Annual CAF Conference in Washington, deserve special attention due to their relevance in relation to the future of regional governance and economic integration in Latin America.

The first of these issues is the positive impact that can be expected from the process of rapprochement initiated last December in the relations between the United States and Cuba. It is difficult to predict how long it will take to consolidate this process. Unforeseen difficulties could still arise in the course of the next few months. Nothing seems to indicate that it will be an easy or linear process. But the sole fact that it has begun introduces a radical change in the relations between all the countries of the hemisphere.

A second issue relates to the renewal of concepts and methods to facilitate a more effective regional governance that is, in turn, functional to the logic of cooperation and economic integration among the countries of the Latin American space. The strategic idea of convergence in diversity gains strength not only to facilitate the articulation between processes such as Mercosur and the Pacific Alliance, but also to include countries from the sub regional spaces of Central America and the Caribbean -and therefore Cuba. This implies a departure from the idea of integration as a way of joining together a set of separate parts into a new unified whole.

A third issue is linked to the agenda of international trade negotiations, whether at the multilateral or the inter-regional level. Establishing a functional link between this agenda and the construction of an effective system of governance and regional integration, which helps neutralize the negative effects that may result from current trends in the global economy and, in turn, enhance the value that the region still holds for the world -among other reasons due to its food production capacity and its human resources -will be one of the main future challenges for the leadership of Latin American countries.

One conclusion that can be drawn from the abovementioned Conference refers to the need to redouble efforts in the region for an assertive strategy of trade integration in all interregional fronts, including as a priority the negotiation of different forms of strategic economic cooperation agreements, especially, but not exclusively, with the European Union, the United States and China. This would imply continuing with all the necessary efforts to preserve and, if possible, strengthen the role of the WTO as the institutional backbone of the global multilateral trading system.


The XIX Annual Conference of the CAF - Development Bank of Latin America took place in Washington DC from 9 to 10 September of this year. It was jointly organized with the Inter-American Dialogue and the OAS. Approximately nine hundred participants from the most diverse countries attended the debates. The full program, including the names of the speakers and the videos of all sessions, can be found on http://www.caf.com/ and also on http://www.thedialogue.org/. After almost twenty years of continuous development, this CAF event has become one of the main ambits for the review of the relevant issues of the political and economic agenda of Latin America.

The context in which the CAF Conference took place was introduced in the following way by the organizers: "This is a period of both uncertainty and opportunity for the Western hemisphere. This year's parliamentary and presidential elections influence several national agendas on the grounds of Inter-American relations. The growing presence of China in Latin America prompts the analysis on decision-making strategies regarding the region's stance towards this country and all its implications. On the economic subject, the lowering oil prices could boost the growth of some countries in 2015. However, the European, Japanese and Chinese economies' deceleration could compensate the earnings derived from the fall in oil prices".

This approach was reflected by the seven topics covered in subsequent sessions, which were the following: the geopolitical challenges in the hemisphere; elections and political scenarios in different countries of the region; the present and future challenges of Latin American development given the current global environment; the growth of the middle class and its future sustainability; the course of regional integration in Latin America; the relations between Latin America and Asia, and the new horizons for Cuba after December 17, 2014.

As a very remarkable fact, it should be noted that there was also a provocative and stimulating hour-long conversation on Latin America and the world, in which Moses Naim interviewed Enrique V. Iglesias.

Of the various topics addressed, three deserve to be highlighted for their relevance in relation to the future of regional governance and economic integration in Latin America.

The first one refers to the expected positive impact of the process of rapprochement started last December in the relations between the United States and Cuba. It is difficult to predict how long it will take to consolidate. Unforeseen difficulties could still arise during the course of the next months. Therefore, nothing indicates that it will be an easy or linear process. However, the sole fact that it has begun introduces radical changes in hemispheric relations.

The future evolution of the Cuban economy and the quality of its relationship with the United States may be favored by the active cooperation of other countries of the region. This may result in the inclusion of Cuba in the regional Latin American network of increasingly dense interconnections at all levels, including trade, investment and technical cooperation. The existence of such a network will help facilitate a commercial strategy for Cuba's international integration that is diversified and multipolar at the same time.

The second topic that should be highlighted relates to the need to undertake a renewal of concepts and methods to facilitate a more effective regional governance functional to the logic of cooperation and economic integration among the countries of the Latin American geographic space. It is a renewal in which academic and technical reflection could contribute greatly. In this sense, and due to its conceptual and methodological flexibility, the strategic idea of convergence in diversity gains strength, not only to facilitate the articulation between processes such as Mercosur and the Pacific Alliance, but also to include countries from the sub regional areas of Central America and the Caribbean -and therefore Cuba.

Such conceptual and methodological renewal would imply a departure from the idea of integration as a means of joining together a set of separate components into a new unified whole, with the ensuing dogmatic vision of concepts such as 'customs union' or 'common market'. On the contrary, it would involve recognizing that, if agreeing to work together, even with common institutions, the countries would preserve their sovereignty and national identities.

However, this would not prevent them from agreeing, voluntarily and in a stable and permanent manner, collective disciplines for the exercise of their sovereignty within their national territories and jurisdictions. These are collective disciplines that require reconciling the flexibility needed for navigating highly complex and dynamic contexts, with the predictability that will naturally be demanded by those who have to make rational decisions about productive investment depending on guaranteed access to two or more national markets.

A third issue that should be noted is linked to the agenda of international trade negotiations involving countries of the region, whether at the multilateral or inter-regional level.

Two facts are especially important when it comes to defining a strategy in this regard. The first of them has to do with the ongoing negotiations in the multilateral global system of the WTO. There is not a great deal of optimism regarding the results that can be expected from the next Ministerial Conference, to be held in Nairobi in December. On the contrary, it is possible that such opportunity is used to verify the definitive failure of the Doha Round. If this were the case, it would be difficult to avoid a serious impact on the perceptions that the countries might have on the future of the WTO. The menace of a tendency towards fragmentation of the world trading system, with its foreseeable consequences in international political governance, would then be difficult to avoid. None of this would seem desirable for Latin American countries.

A second fact is linked to the results that can be expected in terms of the evolution of the current negotiations of mega inter-regional preferential agreements between countries of the Pacific and the Atlantic, in both cases with a clear leadership of the United States.

The negotiations that have the greatest potential for being concluded, even before the end of this year, are those of the Transpacific Partnership. So far, they include three countries in Latin America. But their eventual conclusion, coupled with the stagnant front of WTO negotiations which depend on the results of the Ministerial Conference of Nairobi, could help increase the trend present in some Latin American countries, particularly in business sectors, to introduce significant changes in the strategies of trade negotiations within the region, inter-regionally and globally. Mercosur could be affected by an intensification of this trend. In this perspective, it becomes more important that the bi-regional negotiations between Mercosur and the European Union are resumed.

Everything indicates that this is the intention, at least, of the four Mercosur governments participating in the bi-regional negotiations and it has also been reflected in recent announcements on both sides of the Atlantic. This is -along with the need to make progress in restoring the effectiveness and efficiency of the commitments already made by Mercosur partners, especially regarding mutual trade- one of the two main priorities of this second half of the year in which the Pro-Tempore Presidency of the Mercosur is held by Paraguay. It was precisely its Chancellor who participated in the session of the Washington CAF Conference in which the question of the status of regional integration was discussed (see his interventions in the video of the fifth session on https://www.youtube.com/).

One of the main future challenges for the leadership of Latin American countries will be, precisely, to find a way to establish a functional link between the agenda of international trade negotiations with countries from other regions and the construction of an effective system of governance and regional integration. This will need to be so if the aim is to neutralize the negative effects that may result from the current trends in the global economy and, at the same time, enhance the value that the region still has for the world-among other reasons for its food-producing capacity and human resources.

In this sense, it is possible to extract as one of the conclusions of the weighty debates of the XIX Conference of the CAF in Washington, the need to redouble efforts in terms of governance and regional integration based on an assertive trade integration strategy in all interregional fronts. This could include primarily negotiations of various forms of strategic economic cooperation agreements, taking advantage of the "constructive ambiguities", especially, but not exclusively, with the European Union, the United States and China.

Such need would imply continuing with every effort to preserve and, if possible, strengthen the role of the WTO as the institutional backbone of the global multilateral trading system.


Recommended Reading:


  • Bartesaghi Hierro, Ignacio, "La Estrategia Comercial de Estados Unidos y la Unión Europea con América Latina. Impactos para el Mercosur", Grupo Magro Editores, Montevideo 2015.
  • Bonatti, Andrés; Valdez, Javier, "Una guerra infame. La verdadera historia de La Conquista del Desierto", Edhasa, Buenos Aires 2015.
  • Fan, He; Xiaoming Pan, "China's Trade Negotiation Strategies. Matters of growth and regional economic integration", en Ligang Song; Ross Garnaut; Cai Fang; Lauren Johnston (editors), "China's Domestic Transformation in a Global Context", ANU Press, Camberra 2015, pp. 361-382.
  • Fan, He, "China's negotiation strategies at the crossroads of international trade", East Asian Forum, 3 August 2015, http://www.eastasiaforum.org/.
  • Hearn, Adrian H.; Myers, Margaret, "China and the TPP: Asia-Pacific Integration or Desintegration?", The Dialogue, China and Latin America Report, July 2015, http://www.thedialogue.org/.
  • Hubbard, Paul, "If Mao still ran China, China would still be poor", East Asia Forum, 23 August 2015, http://www.eastasiaforum.org/.
  • Hufbauer, Gary, "Is China a market economy", East Asia Forum, 28 July 2015, http://www.eastasiaforum.org/.
  • Hurst, Luke, "TPP may deny Australia its piece of the China pie", East Asia Forum, 11 August 2015, http://www.eastasiaforum.org/.
  • IRI, "Revista Relaciones Internacionales", Instituto de Relaciones Internacionales, Universidad Nacional de La Plata - Nuevo Hacer, Año 24, nº 48, January/June 2015, www.iri.edu.ar.
  • Jamieson, Alan G., "Faith and Sword. A Short History of Christian-Muslim Conflict", Reaktion Books, London 2006.
  • Kotsopoulos, John, "The Atlantic as a new security area? Current engagements and prospects for security cooperation between Africa and its Atlantic counterparts", Atlantic Future - Scientific Paper, 6 September 2014, http://www.atlanticfuture.eu/.
  • Makuc, Adrián; Duhalde, Gabriela; Rozemberg, Ricardo, "La Negociación Mercosur-Unión Europea a Veinte Años del Acuerdo Marco de Cooperación: Quo Vadis?, BID-INTAL, Nota Técnica N° IDB-TN-841, August 2015, http://www10.iadb.org/.
  • Mercado, Silvia D., "El Relato Peronista. Porqué la Única Verdad no Siempre es la Realidad", Espejo de la Argentina - Planeta, Buenos Aires 2015.
  • Nozari, Mohammad, "Leadership through Battles. Learning Leadership and Management through the Greatest Battles in History", Thinkstock, Toronto 2015.
  • Rapoport, Mario, "Historia Oral de la Política Exterior Argentina (1930-1966)", Octubre Editorial, Buenos Aires 2015.
  • Redrado, Martín, "Las Cuentas Pendientes. Desafíos en la Argentina Post Kirchnerista", con Prólogo de Roberto Lavagna, Planeta, Buenos Aires 2015.
  • Sousa, Inés, "Maritime Territorial Delimitation and Maritime Security in the Atlantic", Atlantic Future - Scientific Paper, 7 June, 2014, http://www.atlanticfuture.eu/.
  • Squeglia, Claudia; Matarazzo, Raffaello, "The US-EU Energy Trade Dilemma", Istituto Affari Internazionali, IAI Working Papers, September 2015, http://www.iai.it/.
  • Thorstensen, Vera; Oliveira, Luciana, "O Sistema de Solução de Controvérsias da OMC. Uma primeira leitura". WTO Chairs Programme. Aduaneiras. Sao Paulo, 2014.
  • Thorstensen, Vera; Oliveira, Lucina, "Releitura dos Acordos da OMC. Como interpretados pelo órgão de apelação", FGV-EESP, Centro de Comércio Global e Investimentos (CCGI), São Paulo, 2013, http://ccgi.fgv.br/pt-br/node/140.
  • Warner, Eric, "Patenting and Innovation in China. Incentives, Policy, and Outcomes", Pardee Rand Graduate School, November 2014, http://www.rand.org/.
    .

Félix Peña Director of the Institute of International Trade at the ICBC Foundation. Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF). Member of the Executive Committee of the Argentine Council for International Relations (CARI). Member of the Evian Group Brains Trust. More information.

http://www.felixpena.com.ar | info@felixpena.com.ar


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