| A TIMELY INITIATIVE ORIGINATED IN THE LAIA
When materialized, it will revalue the region in a world where confusion
by Félix Peña
English translation: Isabel Romero Carranza
The growing confusion that is observed today at the
level of global governance and which is externalized with different intensities
in the different regional spaces is being reflected in sometimes contradictory
One of such tendencies indicates the idea of a predominance of national
institutions and rules, without any constraints originated in the commitments
assumed at the global multilateral level. Thus, a perception is being
established that this idea may be the one guiding the vision on the international
trading system of relevant government officials of President Trump's administration.
The second trend is reflected in initiatives aimed at deepening the
development of regional cooperation spaces in order to empower nations
belonging to a region so that they can more easily navigate a world in
which confusion now prevails and where chaos may predominate in the future.
A recent initiative by the Secretary General of LAIA (ALADI), approved
by the Committee of Representatives of the organization, to promote a
technical study in collaboration with the ECLAC, the SIECA and the INTAL
for a comprehensive Latin American trade economic agreement, moves precisely
in the direction of revaluing the region within the perspective of the
challenges that arise in an uncertain and volatile international environment,
where the institutions and rules of the global multilateral trading system
are being challenged.
What would be some of the conditions and qualities, that could grant
effectiveness and sustainability to initiatives that the Latin American
region promotes to increase its cooperation and economic and commercial
integration to face the challenges and opportunities that arise in the
new global scenario? This question should be present in the debates in
which governments, businesses and social organizations of the region participate
from now on, also taking into account the contributions that may come
from action-oriented spaces of thought.
The institutions and ground rules, which currently have an impact on
the international trade of goods and services as well as transnational
investments, are manifest at three different but interconnected levels.
These are often in tension and may even contradict each other.
The first is the national level, that is, the internal sphere of each
sovereign nation or autonomous unit of power. It is, without doubt, the
most relevant in the internal perspective of each country. The second
is the global multilateral level, which is reflected in particular by
the World Trade Organization (WTO) and, before that, in the General Agreement
on Tariffs and Trade (GATT). Its degree of relevance is high if considered
in the perspective of a commercial governance that contributes to ensure
a reasonable world order. The third level is that of the multiple regional
geographical spaces in which, in the last decades, different types of
agreements and processes of cooperation and even economic integration
have developed between the nations that share them. Among others, some
relevant examples are the European Union (EU), the ASEAN in South East
Asia and LAIA (ALADI) in the Latin American region. These agreements and
processes do not respond to a single model, nor do they exclude other
sub-regional versions, sometimes aspiring to the objectives of possibly
deeper cooperation and integration, such as the Mercosur, the Central
American Common Market, the Pacific Alliance, the Caribbean Community
and even the ALBA, all in the Latin American region.
The growing confusion observed today at the level of global governance,
expressed with different intensities in the regional spaces, is manifesting
itself in tendencies that are, at times, contradictory. One of them reflects
the idea of the predominance of national institutions and rules devoid
of any constraints originating in commitments made at the global multilateral
level. The second trend is reflected in initiatives aimed at deepening
the development of spaces for cooperation and regional integration, in
order to empower the nations of a given region to be able to navigate
more easily in a world where confusion now prevails and where chaos may
prevail in the future.
The first trend is observed today especially in the USA. It is a relevant
trend given the role played by that country in the design of the current
global commercial order, in particular of the GATT and the WTO rules.
It is reflected in positions that could be indicating a disregard by the
government of President Trump -or at least of sectors with responsibilities
in the foreign trade policies of the new administration- for the commitments
assumed within the global multilateral order and, in particular, in the
WTO. The original version of the document on the trade policy agenda of
the President of the US for 2017, published by the USTR, (http://im.ft-static.com/)
stated that American citizens are subject only to laws and regulations
made by the US government and not by rules made by other governments or
by international organizations. The text reads: "American citizens
are subject only to laws and regulations made by the US government - not
rulings made by foreign governments or international bodies
since the United States won its independence, it has been a basic principle
of our country that American citizens are subject only to laws and regulations
made by the US government- not rulings made by foreign governments or
international bodies". Later on, this and other paragraphs from the
original version that was published by the international media, such as
the Financial Times of March 1st 2017, were changed. Another section stated
that: "Congress has made clear that Americans are not directly subject
to WTO decisions
.In other words, even if a WTO dispute settlement
panel - or the WTO Appellate Body- rules against the United States, such
a ruling does not automatically lead to a change in US law or practice",
Even when from a strictly legal point of view this can be considered as
technically correct, if viewed in the perspective of the approach that
President Trump has indicated as essential and distinctive of his government,
reflected in the expression "America First" (see the reference
to the "America First Trade Policy" on https://ustr.gov/)
it supports a vision that can contribute to a pronounced weakening of
the global multilateral system of international trade, which the US itself
promoted after the Second World War. In addition to this, Trump has expressed
that the bilateral will be favored over the multilateral in trade negotiations.
At any rate, these are views that can have an impact on the development
of the path leading to the Eleventh WTO Ministerial Conference at Buenos
Aires, next December.
The second trend is reflected in what was agreed by the LAIA Committee
of Representatives at its meeting in Montevideo, on February 23rd, 2017,
in the sense of approving an initiative by the Secretary General, Carlos
"Chacho" Alvarez, to carry out a technical study for a comprehensive
Latin American commercial economic agreement. According to a statement
issued by LAIA, such technical study will be carried out jointly with
the ECLAC, the SIECA and the INTAL and with the participation of a group
of experts on regional integration. (On the Secretary General's initiative,
refer to his article, published on February 17, 2017, in El Cronista newspaper,
included as recommended reading of this newsletter).
Three paragraphs of the ALADI communiqué include the objectives
of the initiative (the English translation from the original Spanish version
- "The objectives of the technical proposal involve the need to
deepen integration, increase intraregional trade and contribute to the
formation of sub regional and regional value chains. This exercise seeks
to identify, through an in-depth analysis, the spaces that have generated
bilateral and plurilateral advances in Latin America in terms of both
tariff relief and regulations, as well as the spaces that still need
to be advanced (which include bilateral relations not covered or partially
covered), with a view to achieving convergence in the commercial and
- "In addition to the commercial component, the base proposal will
contemplate a second aspect related to cooperation, taking advantage
of the experience of the region in various areas such as trade facilitation,
investment, services, public procurement, technological complementarity,
and new topics such as the digital market, environmental issues, and
Latin American citizenship."
- "LAIA is the appropriate body for such an undertaking, as its
founding treaty contains the fundamental principles of flexibility,
pluralism, convergence and differential treatment. It should be noted
that currently approximately half of the bilateral relations between
Latin American countries are covered by broad-based trade agreements,
which provide for preferential treatment for the trade of most products.
It is worth bearing in mind that the Montevideo Treaty of 1980 provides
the institutional framework needed to promote any variable geometry and
multiple speed actions that may be recommended by the aforementioned technical
study and in which all member countries not necessarily need to be involved.
The instrument of partial scope agreements is more than adapted to a concerted
strategy of actions involving only the countries concerned - at least
at an early stage. Let us also recall that in the area of tariff preferences,
the LAIA is inscribed within the framework of the GATT-WTO "Enabling
Clause". In practical terms, this is not a minor fact today.
What would be the conditions and qualities that would grant efficiency
and sustainability to initiatives such as that originated in the LAIA,
and that the Latin American region promotes in order to increase its cooperation
and economic and commercial integration to better face the challenges
and opportunities that arise in the new global scenario?
This is a question that should be present in the debates that governments,
businesses and social organizations of the region participate in henceforward,
counting for this purpose with the ideas that may be contributed by action-oriented
spaces of thought (think tanks).
As for the conditions that can help generate commitments that are effective
- meaning that produce the expected results- and sustainable - that they
endure in time- we can mention the following:
- that the participating countries undertake their commitments in accordance
with national strategies that are defined through broad social participation;
- that they are commitments driven in each country by a firm and legitimate
- that the commitments assumed reflect the rich cultural, economic and
political diversities of the participating countries;
- that they are commitments which help generate "de facto solidarities"
(meaning linking effects, in the sense proposed by Jean Monnet at the
founding moments of the European integration) between the participating
- that the entire process of generating the commitments has, in each
country, a broad social participation, facilitated by an effective transparency
of the decision-making mechanisms at the different stages.
As for the qualities of the commitments that are assumed and that can
also contribute to their effectiveness and sustainability, the following
should be mentioned:
- that they are flexible in order to contemplate changing circumstances
and emergencies that could make it difficult to fulfill, in certain
occasions, the agreed commitments;
- that they are foreseeable, meaning that, without affecting their flexibility,
they also allow for sufficient legal certainty so that those who have
to make productive investment decisions can do so with a reasonable
expectation that the commitment will be fulfilled (for example, in terms
of the opening of the markets for goods and services and for investments
from countries participating in the process of economic cooperation
and integration, irrespective of their economic size and relative power),
- that they are adaptable, as necessary, to the changes in the political
and economic circumstances, both regional and global.
Finally, when it comes to international commitments that create institutions
and ground rules of global scope, for example within the WTO, or a regional
one, for example within the sphere of trade and integration agreements
in Latin America, experience shows the importance of managing the negotiating
process that originates them, and also the institutional architecture
of the corresponding agreement.
Two recent books make valuable contributions in relation to both subjects.
One, with respect to the management of the negotiating process, is that
written by Kai Monheim, entitled "How Effective Negotiation Management
Promotes Multilateral Cooperation, The Power of Process in Climate, Trade,
and Biosafety Negotiations", Routledge Oxon, New York 2015. The other,
which deals with the institutional architecture of agreements that generate
international norms, especially in terms of the balance between the flexibility
and predictability of the rules, is that written by Krzysztof Pelc and
entitled "Making and Bending International Rules: The Design of Exceptions
and Escape Clauses in Trade Law", Cambridge University Press, New
Both books deserve a careful read. They help understand the international
experience in those aspects, which, undoubtedly, are very relevant to
the new stage that is opening up in global and regional cooperation in
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1917 - A World on the Edge", St. Martin's Press, New York 2016.
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Aires 1º de marzo 2017, en http://www.cronista.com/.
- Subramanian, Arvind, "The WTO Reborn?", Project Syndicate,
February 22 2017, en https://www.project-syndicate.org/.
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Cátedra - Historia Menor, Madrid 2016.
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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