INTERNATIONAL RELATIONSOF THE CARIBBEAN
Integration in Latin American and the Caribbean
Dr. Jacqueline LAGUARDIA MARTINEZ
Traditional Regional Integration in Latin America and the Caribbean
ASOCIACIÓN LATINOAMERICANA DE INTEGRACIÓN (ALADI)
COMUNIDAD ANDINA DE NACIONES (CAN)
SISTEMA DE INTEGRACIÓN CENTROAMERICANA (SICA)
MERCADO COMÚN DEL SUR (MERCOSUR)
60 and 70s: Import substitution industrialization (ISI) model of development • Influences of ECLAC and industrialization policies
• Central role of the State in promoting economic development and integration projects
• Setting of tariff and non-tariff protection outside the block
• Economic approach, mostly commercial based on reducing tariff tax to enlarge domestic markets
• Rigid goals
• Geographical vision (neighbors countries)
80s: External debt crisis and stabilizing adjustment• To support neoliberal reforms to open, market based economies
• Shift to “informal integration” and “integration projects” (minimal institutional infrastructure)
• Positive valuation of FDI, market driven approach, No S&D Treatment
Integration in Latin America
Pragmatic period (90s): Open/New Regionalism• How to achieve compatibility between the explosion of
regional trading arrangements and the global trading system as embodied in the World Trade Organization
• To set a gradual economic and policy convergence among countries
• Integration as support for improving international competitiveness
• To increase trade between members through the achievement of a common external tariff
• Realistic goals and concrete commitments
• Still Washington Consensus influence (NAFTA, MERCOSUR)
Current times
• Post liberal Regionalism
• Two “comebacks”1. State as a main player2. Development agenda, accompanied by
social goals
Latin American Free Trade Association (LAFTA)• It was a first step in the process of Latin American regional
integration
• 1960: Treaty of Montevideo
• Members (7): Argentina, Brazil, Chile, Mexico, Paraguay, Peru and Uruguay
• LAFTA intended to establish a free trade among member states in the space of twelve years
• The project was very much an idea of the Economic Commission for Latin America and Caribbean (ECLAC), looking at industrialization and the needs of the opening markets in the region, as well as the need to develop better mechanisms for the facilitation of trade and transfer of payments
• The LAFTA project did not succeed and no longer exists
• In 1980 it was replaced by a more flexible agreement, the ALADI
Asociación Latinoamericana de Integración (ALADI)• 1980: Treaty of Montevideo
• Members (13): Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Panama, Paraguay, Peru, Uruguay and Venezuela
• General principles:
a. pluralism in political and economic matters;
b. progressive convergence of partial actions towards the formation of a Latin American common market;
c. flexibility;
d. differential treatment based on the level of development of the member countries;
e. and multiplicity in the forms of agreement of commercial instruments
Comunidad Andina (CAN)• It is a Free Trade Zone
• Origins in1969: Cartagena Agreement (Andean Pact)
• 1997 changed its name
• Members (4): Bolivia, Colombia, Ecuador and Peru (Chile and Venezuela were former Members)
• Purpose: Achieving more rapid, better balanced and more autonomous development through Andean, South American and Latin American integrationTo move ahead in deepening an integral integration process that will contribute effectively to sustainable and equitable human development, in order to live well, with respect for the diversity and asymmetries that agglutinate the different visions, models and approaches and that will converge in the formation of the Union of South American Nations (Unasur)
Contradictions within• Absence of regional cohesion
• Colombia and Peru: Supporters of the New Regionalism and the North-South links
• Ecuador and Bolivia: Against Washington Consensus, State as main player, social and sectorial policies, South-South cooperation
• Venezuela protested the non-compliance of Colombia and Peru of the terms agreed within the Andean Community regarding intellectual property rights after both signed FTA with the USA
• Colombia and Peru have also signed a Trade Agreement with the European Union (2012)
Mercado Común Centroamericano (MCCA)Sistema de Integración Centroamericana (SICA)
• 1960: Treaty of Managua • Members: Guatemala, El Salvador,
Honduras, Nicaragua and Costa Rica• Establishment of a Common Market • 1991: Protocol of Honduras (+ Panama)• 1993: Protocol of Guatemala to create a Customs Union
and a Monetary Union without setting a specific deadline
• 2000: Belize joins• 2013: DR joins (8 Members)
Sistema de Integración Centroamericana (SICA)• Fundamental objective: To achieve the integration of Central
America, to establish it as a region of peace, freedom, democracy and development
• Main issues: democracy, security, freedom, economic union and strengthen the Central American financial system, unique foreign policy, environment
• Obstacles:1. Poverty, exclusion, inequality2. Violence (Gangs)3. Political instability4. ONGs and civil society excluded from the negotiations
The Central America Four (CA-4)
• Formed by four countries (Guatemala, El Salvador, Honduras, and Nicaragua) experiencing political, cultural and migratory integration
• They have introduced common internal borders and the same type of passport
Mercado Común del Sur (MERCOSUR)• 1991: Treaty of Asunción• Members (5): Argentina, Brasil, Paraguay, Uruguay, Venezuela and Bolivia• Purpose: Achieving a Common Market of the South1. Free movement of goods, services and factors of production between
countries through, inter alia, the elimination of customs duties and non-tariff barriers on the movement of goods, and any other equivalent restrictions;
2. The establishment of a common external tariff and the adoption of a common trade policy in relation to third States or groups of States and the coordination of positions in regional and international economic and trade fora;
3. The coordination of macroeconomic and sectoral policies between Members in agricultural, industrial, fiscal, monetary, foreign exchange and capital, services, customs, transport and foreign trade and other communications sectors to ensure suitable conditions of competition between the States Parties;
4. The commitment of States Parties to harmonize their legislation in relevant areas in order to strengthen the integration process.
Problems and recent conflicts• Absence of coordination in politics that endangers
agreements in the commercial level
• Unilateral and reactive reactions (protectionism, devaluation)
• Brazil as dominant actor in the group, significant asymmetries
• Brazil is looking for new alliances and MERCOSUR is not longer the main “building block”
• Disputes among Members: Paraguay was suspended after the coup d'état in 2012, and Paraguay had not approved Venezuela’s incorporation. Final solution in January 2014
• Disputes because energy: Hydroelectric Yacyretá between Argentina and Paraguay (debt of Paraguay with Argentina for construction, the sale price of electricity and expansion projects)
Intraregional trade
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
0
5
10
15
20
25
30
35
Comunidad Andina CARICOM Mercosur SICA
Exports by intra-regional integration process 1980-2011 (%)
Fuente: Martha Cordero, presentación de CEPAL con datos de COMTRADEComunidad Andina: Bolivia, Colombia, Ecuador y Perú.CARICOM: Antigua y Barbuda, Bahamas, Barbados, Belice, Dominicana, Granada, Guyana, Haití, Jamaica, Montserrat, Santa Lucía, San Kitts y Nevis, San Vicente y las Granadinas, Suriname y Trinidad y Tabago.SICA: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua y Panamá. MERCOSUR: Argentina, Brasil, Paraguay, Uruguay y Venezuela. Resto de América Latina y el Caribe: Cuba, Chile y República Dominicana.
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
MCCA: Intraregional exports 1960-2011(USD Millions)
Fuente: Elaboración propia a partir de la información de la Secretaría de Integración Centroamericana (SIECA).
MCCA: Intraregional exports 1990-2011(USD Millions)
Fuente: Comisión Económica para América Latina (CEPAL) sobre la base de la información de la Secretaría de Integración Centroamericana (SIECA), Sistema de Estadísticas de Comercio de Centroamérica.
-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
CR ES GT HN NI CR ES GT HN NI
Exportaciones Importaciones Saldo
20101990
Esquema de integración
Primarios Basados en recursos naturales
Baja tecnología
Media tecnología
Alta tecnología
Comunidad Andina
67,25 30,4 0,61 1,59 0,12
MERCOSUR 14,98 16,76 9,09 49,62 3,65
MCCA 6,6 28,81 36,13 20,50 6,09
CARICOM 26,33 21,61 11,32 14,93 20,27
Fuente: Comisión Económica para América Latina y el Caribe, sobre la base de información oficial.
Intraregional exports based on technological intensity, 2012 (%)
Esquema de integración
PIB total PIB per cápita
Población Territorio Gasto social per cápita
Comunidad Andina
15,4 3,3 4,6 5,0 3,5
MERCOSUR 118,5 3,9 58,0 15,8 13,1
MCCA 6,3 6,7 3,1 6,2 8,8
CARICOM 59,2 26,5 194,0 826,8 …
CELAC 5 120,9 26,5 3 759,6 32 749,5 19,4
Fuente: Comisión Económica para América Latina y el Caribe, sobre la base de información oficial.
Asymmetries, 2010(Number of times in which the highest value of the group exceeds the lowest one)
Asymmetries within integration projects
Source: Antonio Romero, “La integración económica en el Caribe. Experiencias y desafíos recientes de la CARICOM”, Anuario CRIES, Anuario de Integración 9, 2012
Common difficultiesDefined inclination towards integration but:• Spaghetti bowl: Oversupply, Overlapping, Summit
diplomacy…• Insufficient financial institutions/mechanisms (no real
possibilities for an common currency)• Insufficient infrastructure• Lack of transportation alternatives• Competition in instead of complementarity• Not enough policies design to the less developed
countries• Not enough participation of the civil society• Not enough participation of the SMEs