| BUILDING THE REGION FROM THE BOTTOM-UP:
A methodological approach to the sustainability of joint work between nations.
by Félix Peña
English translation: Isabel Romero Carranza
The integration methodology developed in Latin America
has been characterized for being driven from the top down. It has usually
originated in government decisions with political and economic objectives.
Policy changes, sometimes the product of those observed in the international
context of the region, coupled with the fact that institutional quality
has not always been strong, help to explain the discontinuities in the
development of the different economic integration processes.
The experiences of Southeast Asia and Europe highlight
the importance of what Jean Monnet called "de facto solidarities"
for the long-term sustainability of integration processes. This means
the development of a weave of social interests between countries in the
same region that, being so strong and complex, make it difficult- although
not impossible- to go back to scenarios characterized by fragmentation
or, even less, confrontation.
Such weave develops in the measure that physical and
cultural connectivity between the different countries grows, facilitating,
among other things, the creation of transnational production networks
and affinities and reciprocal knowledge resulting from trade and the exchange
of people, including professionals and students.
Hence, the growing importance that this may have for
the future development of stronger integration and cooperation ties between
countries in the region, especially in terms of production, innovation
and creativity. Its effects transcend the economic. It contributes to
render less reversible the will for joint work between nations driven
In its international insertion, Argentina faces great
challenges in order to develop strategies aimed at a sustained projection
of its ability to produce competitive goods and services for the markets
of the region and of the world. As a federal country, such strategies
should strengthen the institutional structure of the productive sectors
in the different provinces. This would involve intensifying academic-private-public
synergies, both in terms of diagnostic capabilities and of the presence
in the different markets where it aims to have a sustained participation,
as well as in the production of goods and services and the necessary efforts
of innovation and creativity. It would involve developing capabilities
for creating partnerships between local companies and those in other countries
and the ability to influence trade negotiations in which the country participates
together with its partners.
How to make the partnership between sovereign nations that share the
same regional space sustainable over time? Today this question acquires
validity when we perceive the recurring trend towards the deterioration
of the realities and expectations generated by the processes of economic
These processes have begun with ambitious objectives and have therefore
generated great expectations in the citizens. They have opened positive
future horizons and a projection in the long term. In addition to achieving
the support of citizenships, they have been aimed at influencing potential
investors and third countries due to their capacity to impact the development
of the participating nations. All this has partly been magnified by the
media effort that is often employed to prove the future strength of the
commitments made by the partners.
However, sooner or later, the illusions and expectations fade away. This
has been so for various reasons, among which we can mention the changes
in circumstances - both external and internal - that led to the intention
and the commitment to undertake joint work between the participating countries,
and the many shortcomings in the approaches and work methods employed
in each specific case. (We have addressed these topics in other opportunities,
especially in the January
2014 and February
2014 issues of this Newsletter, on http ://www.felixpena.com.ar/).
The above can be observed in the path towards economic integration in
Latin America. It should be noted here that a first effort of regional
integration was made through the Latin American Free Trade Association
(LAFTA), created in 1960. Its gradual deterioration started the moment
it became clear that the ambitious goals for tariff reduction resulting
from the founding pact of the Treaty of Montevideo could not be fulfilled.
Due to external pressures, especially from the United States, it was necessary
to adopt the formula of a free trade zone of which there was no previous
experience in the region. It was considered that such formula was the
only one that would allow the compatibility of an area of sectoral trade
preferences of regional scope- which was the real objective- with the
provisions of the GATT. Later, it was necessary to transform LAFTA into
the Latin American Integration Association (LAIA), introducing more flexible
mechanisms and terms. Such flexibility -which has not always been fully
exploited- was legitimized in the GATT by the Enabling Clause, specifically
negotiated by Latin American countries who were Contracting Parties in
the Tokyo Round, completed almost simultaneously with the signing of the
Treaty of Montevideo of 1980
The sub-regional process called the Andean Group, which later became
the Andean Community of Nations, could not survive either. At its inception
both processes generated high expectations and had the leadership of some
of the countries that would later promote the current Pacific Alliance.
Today there is a growing debate on the sustainability of Mercosur over
time, at least with its current scope and methodologies. (Regarding this
topic see, among others, the January
2016 and March
2016 issues of this newsletter on http://www.felixpena.com.ar/).
This is a debate not only present in Latin America, as evidenced by the
latest developments in the European Union and the dilemmas posed, among
others, by the so-called "Brexit" and the growing "euro-skepticism"
of the European citizenship.
Even in our region it is too early to anticipate if the Pacific Alliance
will be an exception to the "curve of disenchantment". It has
much political drive and a strong business presence. But its main trading
instrument, the Additional Protocol to the Pacific Alliance Framework
Agreement, signed on 10 February 2014, has just entered into force in
May of this year (for the full text go to http://www.sice.oas.org/).
The methodology of economic integration developed in Latin America has
been thus characterized by being driven from the top-down. Usually it
has originated in government decisions with political and economic objectives.
Changes in government policies, sometimes the product of the changes observed
in the international context of the region, coupled with the fact that
institutional quality has not always been strong, help explain the frequent
discontinuities in the development of the different economic integration
processes in the region.
The experiences of other regions, and especially of Southeast Asia and
Europe, highlight the importance of what, at the time, Jean Monnet called
"de facto solidarities" for the long-term sustainability of
integration processes. This means the development of a weave of social
interests between countries of the same region that, being deeply rooted
and not easy to unravel, make it difficult - although never impossible
- to go back to a scenario characterized by fragmentation or, much less,
This weave develops in the measure that the physical and cultural connectivity
between the countries grows and facilitates, among other things, the development
of transnational production networks, trade and a greater reciprocal knowledge
derived from the exchange of goods and people, mainly professionals and
students. Hence, its growing importance for the future development of
integration and for an enhanced cooperation between the countries of the
region, especially in terms of production, innovation and creativity.
Its effects go beyond the economic. It contributes to render less reversible
the will for joint work driven by governments.
Strategies aimed at intensifying the effects of "de facto solidarities"
between the economic and social systems of Latin American countries can
be advanced in at least three areas.
The first is that of the diagnostic capabilities of the changes that are
taking place globally and which affect the relative competitiveness of
the various productive sectors of each country. This involves developing
networks for action-oriented thought. Their function is to generate a
steady stream of prospective analysis that helps understand the dynamics
of change in the world -political and economic as well as technological
and cultural- and to identify the opportunities and challenges that may
result from such changes. (See the December
2015 issue of this newsletter on http://www.felixpena.com.ar/).
The second is the coordination and joint action of the institutions representing
the productive sectors of the different countries. This has been an important
factor in the presence of offensive business interests -and not just defensive
ones, as has often been the case of Latin American experiences, for example,
in the negotiation of exception lists to the programs of tariff liberalization-in
the case of European integration and particularly of the ASEAN. The networks
of business institutions, especially when they represent the offensive
interests of its members, are a positive factor in the development of
sustainable regional integration processes.
And the third area is that of academic exchanges. Remarkable examples
of this are the various versions of the Erasmus program in the European
Union. This is still in its budding stage in Latin America.
In relation to its international insertion, Argentina has strong challenges
ahead in order to develop strategies for a sustained projection of its
ability to produce competitive goods and services in world markets and
especially in the markets of the region. In order to be effective, these
strategies should involve the active participation of the institutions
that represent productive interests and, in particular, of the SMEs.
As a federal country, in order to be fully effective, such strategies
should strengthen the institutional structure available in each province
or that can be developed at governmental level and at the level of the
productive sectors. It is the country as a whole that must set into motion
in order to project to the world the talent of Argentines, translated
into the capability to produce smart goods and services that are competitive
and valued in the rest of the world.
This will involve intensifying academic-private-public synergies across
the country, both in terms of diagnostic capabilities and in the sustained
and long-term presence of its companies in the various markets it aspires
to reach with goods and services that are the result of its innovation
and creativity efforts.
It would also involve developing capabilities for partnering with local
and foreign companies and, moreover, the ability to influence international
trade negotiations in which the country participates together with its
Mercosur partners. (In this regard, see the January
2015 issue of this newsletter on http://www.felixpena.com.ar/).
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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