| UNCERTAINTIES IN THE INTERNATIONAL TRADING
Their effects on economic integration and trade strategies in the region.
by Félix Peña
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
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
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.
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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