Latin America in the New World Order: A Regional Bloc of the Americas?

Author(s): Andrew Hurrell Reviewed work(s): Source: International Affairs (Royal Institute of International Affairs 1944-), Vol. 68, No. 1 (Jan., 1992), pp. 121-139 Published by: Blackwell Publishing on behalf of the Royal Institute of International Affairs Stable URL: http://www.jstor.org/stable/2620464 . Accessed: 20/01/2012 16:11
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Latin Americain theNew blocof WorldOrder: a regional theAmericas?

ANDREW HURRELL

This article examines prospects theemergence a regional the for of blocof the Latin and CentralAmerica, UnitedStatesand Canada, the Americas, encompassing President Bush'sannouncement his 'Enterprise Initiative the following of for and Americas'in thesummer iggo. It looksat theincentivesfor thelimits of to in and in the UnitedStates. interest thistypeofregionalism Latin America in The emergenceof regional blocs is seen by many as a centralfeatureof the developing 'New World Order'.' The argumentgoes thattheend of the Cold for War and the disintegration the Soviet Union have reducedtheincentives of while the lifting the patternof global Cold War of superpowerintervention, alliancesthatused to cut acrossregionshas allowed more autonomous 'regional spaces' to emerge, freed from the distortingimpact of the East-West confrontation. The decline of American hegemony and reduced American capacity and willingnessto play a global role have made space for regional to power systems develop, in Europe around theEuropean Communityand in Asia aroundJapan. Economic trends-the successof theEuropean Community, difficulties the GATT Uruguay Round, and structural in continuing changesin and both states theworld economy-are pushingin thesame direction, pressing firmstowards expanded collaborationwithinregions. The apparenttrendto regionalismhas aroused mixed reactions.Some have and world order at both the welcomed it as a forcefor strengthening stability are regional and the global level. They argue that the benefits of two kinds: are ones in which to achieve orderand regionalframeworks the most effective and theyare likelyto facilitate orderat the withinparticular stability regions,2 global level as well.3
For a recent argument in favour of regionalism, see Walt Rostow, 'The coming age of regionalism', Encounter, June I990, pp. 3-7. a Because of a sense of common interest, because economic integrationtends to inhibit conflictand increase incentivesfor managing it, and because cohesive regional units would reduce the scope for interventionby outside powers. For a detailed analysis of these argumentssee Joseph Nye, Peace in and in parts: integration conflict regional organisations (Boston: Little, Brown, 197I). Because an internationalsystemcomposed of regional units would lay down clear ground-rulesabout the acceptable limits of political rivalryand economic competition, and because international agreementscan be more easily negotiated and policed-whether on securityissues, the environment International Affairs 68:
I2I-I39
1

(I992),

I2I

Andrew Hurrell Far more common, however, is the view that regionalismis a potentially disruptive force.The fearis thata breakdownin the multilateral tradingorder will lead to the emergence of three tradingblocs dominated by Japan, the United States and the EC. Freed from the constraints the GATT system, of thesemightbecome more exclusiveand more discriminatory, promotingtrade withinthem and discriminating againstoutsiders.This would mean increased economic friction and the adoption of beggar-my-neighbour policies between blocs. This in turn could increasinglyspill over into political tensionsespeciallygiven the United States'decliningwillingness and abilityto organize collectivemanagementof theinternational and theendingof European system, and Japanesesecurity dependence on the United States. Regionalism and Latin America ' In the contextof Latin America,'regionalism has historically meanttwo very different things-intra-regional between the countriesof Latin and cooperation Central America themselves, and inter-American hemispheric or cooperation involving the United States.Both date back to the nineteenth century.In the I980s there was a significant in resurgence thefirst thesetypesof regionalism. of The firstwave was essentially political in nature. The regional attemptsto secure peace in Central America through the Contadora Group and the Contadora Support Group were examples of this,4as were moves towards increasedpolitical consultation and coordinationin such forumsas the Group of Eightand itssuccessor, Rio Group,5and theimprovement thepolitical the in relationship between Brazil and Argentinafrom I980 and particularly from
I985.

More recently, focushas been on proposalsforeconomic cooperationand the integration.Examples have been the attemptsto extend and revitalize the CentralAmericanCommon Market,6 moves to relaunchtheAndean Pact,7and the conclusion of a series of economic agreements between Brazil and to Argentinasince I985, leading inJulyI990 to the formalcommitment create a common marketbetween the two countries. April I99I thiswas extended In to includeParaguayand Uruguay withthecreationof Mercosur.8The I990-9I
or the world economy-between a limited number of blocs than between 170 separate states.There is a long traditionin Western thinkingon internationalrelationsseeing regionalism and particularly regional spheres of influenceas providing a frameworkfor global order. See Paul Keal, Utnspoken rules and superpower dominance (London: Macmillan, I983), esp. ch. 8. The Contadora Group was formed in I983 by Mexico, Venezuela, Colombia and Panama to promote a negotiated settlementof the conflictsin Central America. Argentina,Brazil, Peru and Uruguay subsequentlyformed the so-called 'Contadora Support Group'. The Group of Eight subsequentlycalled the Rio Group, was establishedin Dec. I986 as a forum for political consultationbetween Argentina,Brazil, Colombia, Mexico, Panama, Peru, Uruguay and Venezuela. Chile, Ecuador, Bolivia and Paraguay became members in Oct. I990. The Central American Common Market was founded in I960. The Andean Pact was formed in I969. In May I99I the presidentsof the five member countries, Bolivia, Colombia, Ecuador, Peru and Venezuela, agreed to form a free trade area by 1995. Mercosur is the name given to the process of economic integrationformalized by the Treaty of Asuncion, signed on 26 Mar. I99I between Argentina,Brazil, Paraguay and Uruguay, which called for the creation of a common market by 1995.

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LatinAmerica theNew WorldOrder in period has witnessedan outpouringof regionalist rhetoric(forexample at the Rio Group summitin October I990), and discussions regionalcooperation on involving,in one formor another,almost all the countriesof the region. The otherkind of regionalism Latin Americanexperienceis thatbetween in the Americas, covering the entireWestern hemisphere.An elaborate formal institutional structure was developed in the Organisationof American States and itsrelatedbodies, foundedin I948.9 Like intra-regional cooperation,interAmerican regionalismhas acquired new momentum in the past few years, particularly the economic sphere.The decision to make a North American in Free Trade Area an objective of US trade policy goes back to the US Trade negotiationof the AgreementsAct of I979. A notable step was the successful in US-Canada Free Trade Agreement,which came into effect JanuaryI989. This, togetherwith Canada's decision to join the OAS from I990, marked a turnin Canadian foreign been definite regionalist policy,which had previously relationsand active multilateralism a as based on building up extra-regional means of balancing the power of the United States. in Anothercrucialdevelopmentwas theturnaround Mexican policy towards inter-American regionalism.For most of the I980s Mexico had resistedthe Reagan administration's offers negotiatea freetradeagreement.In I985, the to United States and Mexico signed an agreementon countervailing duties and subsidies;in November I987 theysigned a FrameworkAgreementproviding mechanisms resolvingtradedisputesand forliberalizing for bilateraltrade; and inJune I990, PresidentSalinas formally requestednegotiationson a freetrade agreement.In the same month, on 27 June I990, PresidentBush gave his Initiative the Americas' speech. This proposed the extensionof for 'Enterprise the North AmericanFree Trade Area further south,and pointed to the longfreetradearea, one which would includeboth termobjective of a hemispheric American bilateralnegotiationsand agreementswith the various intra-Latin trade groupings. The EnterpriseInitiativespoke of the importance of debt 'reduction and rescheduling,but placed greatestemphasis on encouraging both through continuingeconomic reformswithin the foreigninvestment, a fund.Bush countries LatinAmericaand by creating multilateral of investment aired many of theseideas subsequently duringhis Latin Americanvisitin late
I990.

To provide a benchmark against which to measure the progress and significance of regionalism, we need a working definition. I will use 'regionalism' in this article to mean a set of policies by one or more states designed to promote the emergence of a cohesive regional unit, which dominatesthe pattern relations of between the statesof thatregionand the rest of theworld, and which formstheorganizingbasisforpolicy withintheregion across a range of issues.This definition emphasizesthe importanceof policyin such as geography, the emergenceof regionalismratherthan 'natural' factors language or culture.It seesthetwo routesby which regionalblocs may become
9 The OAS includes all the Latin and Central American and Caribbean statesexcept for Cuba, the United States, and (since Jan. I990) Canada. I23

Andrew Hurrell far establishedas uncoerced regionalism the one hand and (historically more on on common) hegemonic regionalism the other. It emphasizes that economic factors alone are insufficient explain eitherthe emergenceof regionalblocs to or theirnature.The definition intendedto provide some perspective the is on current discussionof regionalism the Americas,and to draw attention the in to wide gulfbetween the increasedregionalization tradingpatterns the one of on hand and the emergenceof politicallysignificant regional blocs on the other. Why the Latin American interest? Fear ofmarginalization in The renewedLatin Americaninterest regionalist arrangements involvingthe United States-the 'return to the region -reflects in the firstinstance the This stateof affairs by no means new, but it is relativeabsence of alternatives. has been accentuatedby recentdevelopments.It was clear by the early I98os thatthe Third World movementwould not serveas an effective platform for the promotion of Latin American interests. Progressin expanding ties with WesternEurope was also limitedin the I980s, though Latin America had set great hopes here too. Except in Central America, where European political involvement did increase significantlyand has become institutionalized, European professions politicalsupportforLatin America were undercutby of stagnant economic relationsand a European willingness follow the US lead to in on themanagementof the debt crisis. Japaneseinvolvement the regiongrew in the I980s, but it too fell well shortof Latin American expectations. has For manyin Latin Americait appearsthatthispattern been reinforced by the dramaticevents of I989-9I. Though publicly applauded, the collapse of communism in Eastern and Central Europe has led to an acute fear of as Latin Americanssee themselves competingwith the newly marginalization. democraticstates Easternand CentralEurope fora limitedpool of aid, loans, of and technology.They fearthatthe developing world will foreigninvestment lose out in this competition,and that within the developing world Latin at America will finditself the bottom of the listof priorities, unable to match eitherthe geopoliticalimportanceof the Middle East or the humanitarian pull of Africaand South Asia. There is feartoo thateventsin Easternand Central Europe, coincidingwiththeEuropean Community'scompletionof theinternal will lead to marketand with deepening monetaryand political integration, a period of sustainedintrospection Europe. At worst, this might mean an in increasein trade barriers;it certainly will lead to a generalEuropean lack of in interest the problems of Latin America. There is particularconcern that will no Germany,preoccupied and burdened by the demands of unification, longer be able to play its centralrole at the heart of the EC-Latin America economic relationship.

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LatinAmerica theNew WorldOrder in The renewed centrality the UnitedStates of of The I980s witnessedthe renewed centrality the United States to the Latin Americancountries.The United States' positionas the region's major trading partnerwas firmlyre-established. Between I980 and I987, the US share of Latin American exports rose from 32.2 % to 38.2 %. For Brazil it increased fromI7.4 % to 29.2 %, forChile fromI2.I % to 2I.5 %, and forMexico from 63.2 % to 69.6 %. Critical decisionson the managementof foreign debt lay in the United States: if not with the administration itself,then with US-based multilateral agencies or US-chaired committeesof privatebanks. Indeed, the mutual recognitionof regional 'spheres of influence'-the United States in Latin America,Japan in Asia, West Germanyin EasternEurope was one of the most notable features the I980s debt crisis. of In the Reagan administration, Latin America was also facingan administration thatplaced a good deal of emphasison recovering power and authority its in Latin America after what it saw as theweaknessand vacillationof the Carter of years.Much of this'reassertion hegemony' remainedon thelevel of rhetoric, and practicalimplementation was mostlyconfinedto CentralAmerica,but its impact was not entirelyabsent further south and was most notable in the increasingly forceful trendin US trade policy and, negatively,in the United to States' unwillingness make concessionson debt management. In contrast otherpartsof the developing world, the end of the Cold War to has certainly opened up an autonomous 'regional space' in Latin America. not entrenchedwith the US hegemony is perceived as having become further eventsof I989-9I. The invasion of Panama in December I989 pointed to the ease with which Cold War rationalesfor intervention could be replaced by historicallydeeper-rootedones-the need to maintain 'order', to promote If democracy,to safeguardUS propertyand economic interests. the central featureof the New World Order is its unipolar distribution structural of politicaland military power, thenthe area in which the problemsthatfollow fromthisare most apparentis undoubtedlyLatin America.

at Economic introspectionan end Latin America can no longertake refuge froma hostileworld by concentrating on the kind of inward-oriented development policies and schemes for selfreliance and autonomy that characterizedso much earlier Third World thinking.One of the most striking changes of the period since I985 has been and a the move away from developmentstrategies based on ISI, high tariffs have embracedeconomic large role forthe state.More and more governments liberalism-placing greater reliance on market mechanisms, seeking to and reduce the role of the state,and laying greateremphasis on restructure into world markets. integration In partthisshift due to thediscrediting failure previousdevelopment is and of
I25

Andrew Hurrell policies and increasedrecognitionof the need for effective stabilization. The cases of Mexico and Argentina show unexpectedly, to many that the of implementation neo-liberaleconomic policies can be electorallypopular. In part the shift resultsfromexternalfactors.The impact of the debt crisis overall growth,intensified fiscalcrises,and placed a constrained governments' high premium on successfulexport promotion. There was direct external pressure from multilateralagencies and governments to make economic assistanceconditionalupon moves towards economic liberalization.There is also the critical impact of structuralchanges in the global economy the increasedpace of globalizationof markets and production, and thedramatically rateof technologicalchange. This has led to a powerfulperception accelerating in Latin America thatdynamiceconomiesare internationalized economies,that in growthdependson successful participation theworld economy,and thatthe accelerating rate of technological change undermines projects aimed at autonomous, nationally based technological development. The failure of Brazil's attempt to create a nationally based computer industryprovides a of graphic illustration these new constraints, and of the underminingof old notions of autonomous development. Structural the changesin the global economy have also reinforced fearthat is economic interdependence rapidlygrowingon a North-Northaxis, and that Latin America and other parts of the developing world are becoming can The trendtowardsmarginalization be seenin the increasingly marginalized. steadydeclineof Latin America's shareof world exports,down fromIO.9 % in to 5.43 % in I985; in Latin America's share of total direct foreign I950 down fromI5.3 % in I975 to 9.I % in I985; and in thefallof its investment, The shift shareof both European and Japanesetrade and investment. towards greaterintegrationinto the world market is, for Latin America, the most importantaspect of the New World Order. While its causes are complex, its impact has been to make the region more outward-looking and more the dependenton theinternational economy at precisely timewhen the overall relationsis in a stateof great fluxand uncertainty. patternof international on These changesalso impact critically US-Latin Americanrelations.They in explain why Latin America is so interested opening up its economies to the of United States.At the same time,the gradual implementation thesepolicies between the United States and has removed many of the sources of friction Latin America. Much of the bitterness US-Brazilian relationsin the I99Os in focused on economic friction,and in particular on US attemptsto alter Brazilian policies over trade and investmentissues and over intellectual property rights (notably in the pharmaceutical and informaticssectors). the President Collor's programmeof tariff reform, virtualabandonmentof the informatics protectionist regimeand the decisionto place intellectual property beforetheBrazilianCongresshas thussubstantially alteredthe rights legislation character relationswith the United States.For Mexico, the perceivedcosts of of failing to modernize the Mexican economy have gradually come to outweigh long-standingfearsthat freertrade with the United States would
I26

Latin America theNew WorldOrder in impose unacceptableadjustment costs,especiallyin manufacturing, would and underminethe traditional quest to preservenational autonomy.

The endofmultilateral trade? The perceptionthat Latin America might be excluded from an increasingly protectionist Europe, and thatthe multilateral tradenegotiationswere on the of point of breaking down, has increased the attractions bilateralfree trade agreements with the United States.Free tradeagreements offer prospectof the maintainingand guaranteeingaccess to the region's most importantmarket, and of escapingthegrowthof US protectionist measures.Given thescale of the to US marketand the US contribution the Latin Americantradesurplus,this is important. Between I985 and I987 the United Statesaccounted for 54% of Mexico's total trade surplus and 40 % of Brazil's. It becomes even more importantbecause so much of the successof recentexport expansion in Latin America has been in manufactured goods, to which the United Stateshas been far more open than either the EC or Japan. The US share of total Latin American manufactured exports increasedfrom 2I.8 % in I980 to 49.5 % in I987. Between I985 and I987 Mexican manufactured exports to the United Statesdoubled, and theynow accountforaround halfof totalMexican exports, replacingoil as the key export sector.By I985 manufactured goods made up of Brazilian exports to the United States (as against29% in I972, and 72% compared with 33 % for the EC and 27 % for Japan). These increases in manufactured exportsraise obvious questionsabout long-termmarketaccess, theseproductsthathave been most susceptible US to especiallyas it is precisely ore protectionism.Further,consolidated market access makes countries rrm as in the Mexican attractiveto inward foreigninvestment, especiallywhen, case, they are so close geographically.

momentum Regionalist Once the processof regionalismbegan, it took on a dynamic quality,feeding theimage of ever-expanding and creating for regionalisms powerfulincentives other statesto join in. Thus Mexico's move towards accepting a free trade agreementwith the United Stateshas forcedthe othercountriesof the region to reconsider theirposition: in the first place so as not to riskexclusionand the of trade and investmenttowards Mexico, and second, because diversion Mexico's 'defection' undercuts politicaland economic viabilityof a purely the Latin Americanformof regionalism.While Mexico has been anxious to stress the continuedimportanceof its relationswith South America (forinstancein its September I99I free trade agreement with Chile), there must be some of questionover the genuineness thisconcern,and therecan be littledoubt that Mexico's 'defection' altersthe balance of power between North and South America.
I27
5 IAF 6,8

Andrew Hurrell It is thushardlysurprising thatrecentmeetingsof the Rio Group have been in dominatedby theproblemof how subregionalism Latin Americacan bestbe integrated with proposalsfor 'macro-regionalism'between Latin, Central and North America. There are significant divergencesbetween Latin American issue countries thisquestion. Some countries, on such as Chile, see the priority Others, as the negotiationof freetrade agreementswith the United States.10 such as Brazil, Venezuela and Argentina, favour encouraging subregional integrationso as to coordinate the Latin American response to the Bush the initiative, strengthen Latin American bargainingposition, and provide a In fallbackoption in case talkswith the United Statesprove fruitless. addition, the progressof Mercosur has surprisedmany observers.Despite continued problems, it representsby far the most solid example of subregional cooperation. US policy thinking Though stillfar from dominant,a number of factorshave come togetherto increase the prioritybeing placed in Washington on relations with Latin America. The year I990-9I saw an increased regionalistmomentum in the United States,though thishas not yet reached the stage of a clear regionalist turnin foreignpolicy. Imagesofexclusive regionalism In the firstplace, there is a fear of what is perceived as the growing trend in towardsexclusiveregionalism otherpartsof theworld. The image of Europe and the growing perception of Japan as an increasinglyhostile and I992 antagonisticcompetitorhave done most to refocus US attentionon Latin far America. It is worth stressing thatit is images and perceptions, more than hard evidence or arguments,that have shaped US thinkingon regionalism. Indeed thereis a real danger of the rhetoricof regionalismbecoming a selffulfilling prophecy. with Disenchantment GATT These fears have been reinforced increasing disenchantment with theGATT by framework with itsinstitutional with theproblemsit has facedin weaknesses, dealing with the complexities of post-Tokyo Round issues, and with the of difficulty securingkey US objectivesin theUruguay Round, especiallyover and over intellectual tradein servicesand agriculture Fearsthat property rights. liberal tradingorder thatis embodied is the GATT systemand the relatively
10

to integration process, whichwas Chilehas recently declined takepartin theBrazilian-Argentinian On relations with extended MarchI990 to includeUruguayand Paraguay. Mexico'sambivalent in for LatinAmerica, Jos6 see MiguelInsulza, 'Mexico and LatinAmerica:prospects a new relationship', in Riordan Roett, ed., Mexico's the I99I). externtal relationts 1990S (Boulder, int CO: LynneRienner,

128

LatinAmerica theNew WorldOrder in under threathave been illustrated recentlyin the problems of the Uruguay Round, the deadlock over agricultural tradebetween the US and the EC, and the continuedtensionsin US-Japanese traderelations. But the shiftin US trade policy can be traced to the early I98os: to the decision to push ahead with further multilateral trade negotiationsbut at the same time to strengthen safeguardUS policy by broadeningthe range of and options. One strand of this twin-trackapproach involved increased determination use US power to force unilateralconcessionsfrom countries to whose tradepolicies were deemed contrary US interests, to most visiblyin the formof investigations and retaliatory measuresunder section30I of the I974 Trade Act and itsSuper 30I successor. The otherstrand involved theconclusion of bilateraltrade agreements, with Israel in I985 and with Canada in I988. These were intended to exert pressureon the EC and Japan: there was an implicitmessagethatiftheUruguay Round broke down, such measureswould thanmerelyan adjunctto become the centralthrust US tradepolicy,rather of freetrade agreementsoffer it."1 Structured the United States both economic benefits(market access, the ability to ensure compliance with a favourable investment regimeand adequate patentprotection)and a politicalframework for the effectivemanagement of other issues (drugs, migration, the enEven if the GATT system holds together, the prospects for increased economic relations withotherregionsare not bright. The difficulties political of in and economic reform EasternEurope are becoming clearerby the day; the with China Soviet Union is in a vortexof economic chaos; economic relations In are restricted politicalfrictions. a world in which freetradecan no longer by be taken for granted,it is argued, the United States needsLatin America as a market.It is afterall a marketin which the United States has an obviously historical strong position,and it has enormouspotential(a populationof around 430 million, compared with I I0 million in Eastern Europe). Economic has already made significant liberalization progress,and businessand investor confidence is slowly returning witness the return of some flightcapital, renewed flows of foreign capital, the revival of some bank lending, and impressivegrowth ratesin several countries(the new confidencebeing most apparentin Mexico, Chile and Venezuela, most absentin Brazil). Perceived interdependencies Third, there is the need for the United States to develop a more assertive regionalist policy because of the perceived interdependenciesthat have developed on such issues as drugs, the environment, and (especially)
11 See Jeffrey Schott, 'More free trade areas?', Policy Analysesin International J. no. Economics, 27, May
I989. 12

12 vironment).

Paul Krugman has argued that regional free trade areas allow neighbours to negotiate at a level of detail and mutual intrusiveness that is increasinglydifficult a global level: see Paul Krugman, 'The at move to free trade zones', paper presentedto symposium on 'Policy implications of trade and currencyzones', Jackson Hole, 22-4 Aug. I99I, p. 35. I29
5-2

Andrew Hurrell immigration.The argumentis that the I98os focus on militarythreatsand military responseshas been renderedobsolete with the end of the Cold War. Old-stylesecurity threats have gone, and security needs to be redefined around precisely these kinds of problems problems that can only be effectively managed by activecooperationwith the states theregionand by developing of new structures sources of influence.13 and Not only does the managementof theseissuesinvolve active cooperation; it forcestheUnited Statesto make fargreater efforts towardsensuring overall the stabilityand prosperityof the region. For example, formal international on agreements measuresto curtailthe drug tradeor to addressenvironmental issuesare of littleuse ifgovernments unable to implement are themwithintheir own societies: If,however, Mexico or someCaribbean states becametoo weakto deal withinternal or poverty domestic problems, transborder flowsof migrants, drugsor contraband might create new foreign a policyagendafortheUnitedStates. Similarly, developing countries thatcannotprevent destruction theirforests the of will affect global the weakness those climate, thevery yet of states diminish powertoinfluence will the them. the of Ironically, current neglect weak ThirdWorld nations may reduceAmerica's future themon thenew transnational powerto influence issues.14 Ideological motives The proponentsof US regionalismargue that the United States has both a and a moral duty to uphold the values of politicaldemocracy politicalinterest and economic liberalismthatare now in the ascendantin Latin America, but in many cases stillvery fragile.They argue thatthe widespreadacceptanceof these values, togetherwith the increase in US power in relation to Latin to America,has createda historic opportunity shape and sustaina new orderin the Americas,reflecting American values and Americaninterests. The regionalist option is strengthened thefactthatthesearguments to are by be foundin differing combinationsamong both liberalsand conservatives. An increasedregional emphasisto US policy can be accommodated by both the 'declining hegemony' thesisand the view of the United States as the world hegemon of the post-Cold War world. For the declinists,Latin America becomes the refugefrom an increasingly hostile world. For the hegemony resurgent school, Latin America is a testof the United States' abilityto give concreteembodimentto its stilldiffuse vision of a New World Order, to act or decisivelyin support of its values, to assertits authorityover recalcitrant delinquentstates. However, we should not exaggerate the importance of regionalism, withinthe stillvery globally minded Bush administration. Bush's particularly
13

14

For an examination of the 'new securityagenda' see Andrew Maguire and Janet Welsh Brown, eds., on and Bordering trouble:resources politicsin Latin America(Washington, DC: Adler & Adler for World Resources Institute,I986). Joseph Nye, Bound to lead: thechanging natureof American power (New York: Basic Books, I990), p.
I98.

I30

in LatinAmerica theNew WorldOrder gestureto reassure Enterprise Initiativespeech was at least in part a rhetorical in forgotten theface Latinand CentralAmericathatit had not been completely Equally, the in of the momentousdevelopments Europe and the Soviet Union. North American Free Trade Area is still seen by many in Washington as a bargainingtool, a hedging policy within the broader context of the GATT for negotiations.But the pressuresand justifications an increased regionalist are already in place. If no agreementis reached in the Uruguay emphasis if withJapandeteriorate, US politicalopinion continuesto Round, if relations direction:theywill grow. move in an introspective

The limits to regionalism degree of coincidencein the kinds In otherwords, therehas been a significant of factorsthat have led Latin America and the United States to thinkagain stepshave already been about increasedregional cooperation; and significant into reality.On the one hand, a taken to translate theseoverlappinginterests have already Initiative numberof framework under theEnterprise agreements will be likelythatagreement been signed. On the otherhand, it is increasingly reachedbetween the United Statesand Mexico over theNorth AmericanFree Trade Area.15 There are stillmanyproblems,of course.The Free Trade Area is opposed by and clothing churchgroups,unions,textile a coalitionof US environmentalists, manufacturers and agriculturalpressuregroups, who fear that a free trade agreementwill mean the loss of jobs and lowered environmental and health sectors large-oil, agriculture, is and safety The rangeof problematic standards. banking, automobiles, and the environment and there is the perennial is issue.But in theend theMexican agreement likely problem of the migration are far more directlyengaged in Mexico than to go through. US interests is of elsewherein the region, the transformation Mexican economic thinking greater than elsewhere in the region, and the degree of existing economic is interdependence already high. Around 70 % of Mexican exportsgo to the have already fallen significantly United States. Tariffs (the average Mexican now IO%, compared to 30% in I985). There is alreadya high degree tariffis And migration led has of of integration cross-border productionarrangements. which has in turnhad an impact to a high degree of human interdependence, and social and economic values. on identity But it is also clear that there are importantfactorsthat work against the emergenceof any cohesive,broadly based regionalismin the Americas.More for important therestof theworld, thereis littleto suggestthatsuch regionalist
15

Aftera meeting between Bush and Salinas at Camp David on I4 Dec. I99I, it was announced that the NAFTA treatyis to be delayed at least until afterthe I992 US election. This is partlydue to the political climate in the US, where pressingNAFTA too hard would be politically riskygiven sentiment,and partly due to the currentemphasis on tryingto salvage a successful protectionist conclusion to the GATT Uruguay Round. Despite this delay, it is likely that NAFTA will be

in concluded I993.

I3'

Andrew Hurrell initiativesas do emerge in the Americas will be of a closed or exclusive character. Economic limitations In thefirst to place, it is important highlight economic limitsto the growth the of regionalism.The geographical focus of US attentionis likely to remain fixed on Mexico and the Caribbean. Mexico has increasingly firmly come to dominateUS economic relations with Latin America. Between I980 and I988, Mexico's shareof totalUS exportsto Latin America increasedfrom39.4 % to 46.7 %, and of importsfrom32.3 % to 43.6 %. Social, political,economic and environmental interdependence far higher between the United States and is Mexico than with the restof the region. is Further south,economic regionalism likelyto remainpatchy,slow, and ad hoc.There is no guaranteethatthe United Stateswill seek to negotiatefurther freetrade areas. The United States may continueto be reluctant conclude to additional free trade areas for example with Chile so as not to provoke further initiatives otherpartsof the world. Washingtonmay also in regionalist believe thatit can achieve itspoliticaland economic objectiveswithoutmaking regionalism or the constructionof new economic arrangementsa high priority. Hegemony strengthenedby the detachment of Mexico from South America may well be seen as making institutionalized regionalism unnecessary. It is also clear thateconomic regionalismis not going to include large-scale debt reduction. The flowsof US economic aid to LatinAmerica,nor significant United Stateshas neitherthe economic resourcesnor the political motivation for mountingany economic programmesin the region on the model of the Kennedy era Alliance for Progress. In fact the limitationsof Washington's of capabilities in this area are well illustratedby the difficulties securing amountsof aid to the two recentshowcasesof US policy, Panama significant and Nicaragua. More importantly, economic interests not point towardsthe creation US do of a close, exclusivist Latin America is not a regionalbloc. Though significant, and therelations thatmatter will continueto be those major economic partner, with the major industrialized countries.Indeed Latin America's share of US trade has declined. In I989 Latin America's share of US exportswas I3.46% of United States(as (as againstI7.5 % in I980), and the regionsupplied I2.2% Latin America against % in I979). In thesameyear I5.5 represented io.6 % only of total US foreign investmentand I3.5 % of its foreign investmentin manufacturing(though 72 % of US manufacturinginvestment in the developing world is in Latin America). In addition, the build-up of bank reserves and the debt-rescheduling reduced the threatto processhas drastically US banks posed by a Latin American default. In US trading are multilateral. I989, 26 % of totalUS trade patterns strongly was with Canada and/or Mexico, 35 % with Asia, and 20% with the EC. By
I32

Latin America theNew WorldOrder in theNorthAmericanregion theUnited States,Canada and Mexico was nearlyas tightly integrated with Asia (29 %) as internally %).16 There is no (35 trade in the evidence of a long-termtrend towards increasedintra-regional Americas,and, as Fred Bergstenhas pointed out, 'geographical propinquityis no longercentralto tradingpatterns A move towardsregionalblocs would '.17 riskcuttingthe United States offfromthe most dynamic world marketsand would favour less efficient Latin American producersin a number of sectors over theirmore efficient Asian counterparts, therebyeroding the long-term competitivenessof US industry.Moreover, it is difficult see how an to American regional bloc would significantly increaseUS bargainingpower in international tradenegotiations. of has Finally,therhetoric regionalism to be setagainstcountervailing trends in theworld economy. The structures global economic interdependence of that the Second World War have been built around the have developed since in consolidationof global markets and global production, a dense and complex network that could only be altered at very high cost. In particular, regional blocs would cut acrosstheemergenceof thecomplex cross-regional production that have developed within and between companies, and also arrangements across the rapidlyexpanding volume of foreigntrade based on transnational
I989

production." US economic interests, then, do not point unequivocally towards which sees regionalism.But, of course,the current perceptionof US interests, regionalismas an adjunct to a stillfundamentally globalisttradepolicy, could be alteredby a numberof factors by increaseddomesticpoliticalpressures as the countrymoves towards the I992 election,by the rhetoricof regionalism relations acquiringa logic of its own, by deteriorating withJapan,above all by a disintegration the GATT system,which has embodied certaincommon of however incomplete and ambiguous, on how regionalist understandings, into a multilateral framework. tradingschemesshould be integrated No longer closed a continent of is betweenthe Second, regionalism unlikelyto dominatethepattern relations Latin and CentralAmericanstatesand the restof the world. We are not seeing the the 'closing of thehemisphere'as occurredearlyafter Second World War, when outside powers came to view the region as an adjunct to theirrelations with Washington. Indeed a furtherloosening of US-European and USthatWesternEurope Japaneserelations may well end completelythe deference in shown to US interests Latin America, and to and Japan have historically over the activitiesof non-hemispheric states. Washington'ssensitivities
16

17

18

See Helen Milner, 'A three bloc trading system', paper presentedto InternationalPolitical Science Association conference,Buenos Aires, 20-25 July I99I, p. II. C. Fred Bergsten, 'Policy implications of trade and currencyzones', paper presentedto Jackson Hole symposium, 23 Aug, I99I, p. 8. For an examination of these trendssee DeAnne Julius,Global companies publicpolicy: thegrowing and challenge offoreign direct investment (London: Pinter/RIIA, I990).

I33

Andrew Hurrell It is certainly truethatEurope's preoccupationwith the problemsof Eastern Europe, with the completionof the singlemarketand with the need to rethink Europe's broader international positionhave led to a period of introspection. thereis stilla chance thatthe completionof the internalmarketmay Further, lead to some increased protectionism, a means of shifting as the burden of fromEC firms and labour onto the outsideworld. The completion adjustment of the internal market may well also involve furthernon-tariff barriers, resulting fromthe New Community-widenormsand standards. There is also the genuine problem of a diversionof resourcesaway from the developing world and towards Easternand Central Europe. But thesetrendsshould not be exaggerated.There is no clear evidence that is likelyto lead to significantly I992 higherlevels of protectionism. Diversion of resourcesto the East will affect public fundsmostlyin the formof bilateral aid aid which, for most of Latin America, is minimal (the and multilateral and exceptionis CentralAmerica). The evidence on privateinvestment private and suggests markedreluctance move capitalto the a lendingis lessclear-cut, to East, whereuncertainties over the successof economic and politicalreform are, if anything, even greaterthan in Latin America. in As to Japan,itsdeclininginterest Latin America duringthe I980s was due to primarily thedeep economic crisis facingtheregion.As theoveralleconomic climateimproves,thepressures both theJapanese on stateandJapanesebusiness to increasetheireconomic stake in the region will increase.Indeed the same recipeforsuccessthatis needed to underpinan increasein US-Latin American economic relations economic stabilization, structural reformand economic liberalization will also help improve relationswithJapan. Politicalissues cannotbe seen solelyin economic terms.The recentmoves Third, regionalism towardsincreasedeconomic regionalism have to be placed in thecontextof the broader agenda between the Americas. It is an unfortunate byproductof the success of the European Community that regionalismelsewheretends to be discussed overwhelminglyin economic terms. But in the Americas, noneconomic issues are likely to work against the emergence of a tightlyknit illusion of an regional bloc, and certainlyagainst the liberal functionalist automatic spilloverfromincreasedeconomic interaction the emergenceof to political common interests. Hemisphericregionalismis unlikelyto form the organizingbasis for policy between the Americas across a range of important issues democratization, environment, the security. Democracy:The promotion of democracy has reappeared as an important theme of the debate on inter-American regionalism.It might be argued that democratization could be the issue to re-engageUS interests Latin America in and to serveas a sourceof common values to underpinthe growthof economic ties. There is, afterall, an extensiveinter-American institutional framework I34

LatinAmerica theNew WorldOrder in around which regional support for democratizationmight be built. Notits some see the basis here foran effective withstanding undoubted weaknesses, framework international for supportfordemocracy."9 That the OAS was able to the September I99I coup in Haiti and, to coordinatea regional response more importantly, that the United States was preparedto set its own policy within a multilateralframework could be argued as solid evidence of a growing convergenceof attitudes democratization. to But there are number of factorsthat cloud this happy and harmonious picture. It is clear to many in Latin America that US willingnessto back democratizationwith solid economic assistanceis still heavily influencedby strategicand geopolitical concerns,as illustrated the US decision to offer by to substantial debt relief Poland and Egypt,but itsdetermination 'ring fence' to theseoffers preventthembeing takenas a precedent.There is also a danger to thatdemocratization can all too easilybecome an excuse foran interventionist foreignpolicy, a cloak for darkerand less admirable purposes. The historical record illustrates too fullythat the region has not been well served by its all geographical proximity to the United States, a country whose political traditionshave made it particularlysusceptible to democratic crusading, whetherof the liberal Wilsonian or the conservativeReaganite variety.Thus the while democraticvalues are indeed widely sharedthroughout Americas,the dangersof the abuse of hegemonic power have led, and will continueto lead, LatinAmericanstates tryto limitthescope for'democraticinterventionism', to and to place continuedemphasison the principleof non-intervention. Nor is the record of US attemptsat supportingdemocracy encouraging. can domesticpoliticaloutcomes and Outside intervention all too easilydistort underminefragiledemocracies by encouraging the polarization of domestic written: politics.As one scholarhas recently of in Recurrent efforts thegovernment theUnitedStates promote to by democracy and Latin Americahave rarelybeen successful, then only in a narrowrange of ... circumstancesFromtheturn thecentury theI980s, theoverall of until of impact U.S. to democratic was policyon LatinAmerica's ability achieve politics usually negligible, often and counterproductive, onlyoccasionally positive.20 on Puttinga highpriority democracyall too oftencutsacrossotherUS interests and objectives. This was of course a centralfeatureof the Cold War period, when fearof radicalizationconsistently forcedthe United Statesinto the arms of decidedlyundemocraticmilitary regimes.But it could pose problemsagain if, for example, political liberalizationin Mexico does not keep up with the Anotherimportant speed or successof economic reform. example is Colombia, where in the context of managing the drugs issue the importantprocess of domestic political pacificationby negotiationand social reincorporation cuts across US preferences police action and extradition. for
1 20

Johns HopkinsUniversity Press, I99I),

See, for example, Tom Farer, 'The United States as guarantor of democracy'in the Caribbean basin: is there a legal way forward?, Human RightsQuarterly, No. Io (I988). Abraham F. Lowenthal, 'The United States and Latin American democracy: learning from history', in Abraham Lowenthal, ed., Exporting democracy: UnitedStatesand Latin America(Baltimore, MD: the
p.

26I.

I 35

Andrew Hurrell Finally,it is not obvious that democraticor ideological common interests point Latin America towards the United States. If democracyis to become a central element of internationalalignments,then political and ideological common interests in manyfundamental are ways farstronger withEurope than with the United States.This is certainly trueof politicalpartiesand ideologies, illustrated the fact that 95 % of the members of the Party Internationals by consistof partiesfromEurope and Latin America. The pursuitof democratization could develop as the ideological cementfor a strengthened inter-American regionalism,but moves in that directionare and it is equally possible that democratizationwill beset with difficulties, is and frustration if US rhetoric not backed up emerge as a source of friction if by concreteeconomic benefits, the dangers of democraticinterventionism with othercore reappear,and if the pursuitof democracycomes into conflict US interests. Environmental issues: A second importantissue is the environment.This has a central issue on the inter-Americanagenda. Environmental emerged as problems are importantto Latin America for three reasons. First,they are highlyvisiblein theLatinAmericancontextin thatifproblemsof deforestation, are soil erosion and the deterioration the urban environment not tackled, of directdamage is likelyto be suffered. international Second, thereare significant costsattachedto nottakingthe environment seriously, Brazil has discovered as in the late I980s with the international campaign against Amazonian deforestation. Third, the global environmentis the one area where Northis South interdependence based on solid realityratherthan emptyrhetoric.In thissenseit providesLatin America with potentially significant opportunities. has In most respects, North-South interdependence declined since the heady days of the I970s: the North trades less with the South, less Northern investment takesplace in the South, the North has less need of most Southern mineralsand commodities,and Northernbanks have graduallyreduced their potentially cripplingexposure to developing countrydebt.2"But the effective management of the global environmentis one area where the developing is countries' cooperationand activeparticipation likelyto prove essential-both in for negotiatinginternational agreementsand, more importantly, ensuring are that those agreements effectively implemented. Now thereare clearlysome environmental issuesthatcan best be dealt with at a regionalor inter-American level. There have been a wide rangeof regional environmental suchas theUN Environmental initiatives, Programme'sregional seas programme or the EC environmentalregime, and many more are under discussion.22 Crossborderpollution between Mexico and the currently United States is the most obvious example within Latin America, and
21

On this see John Ravenhill, 'The North-South balance of power', International Affairs 66:4, Oct.
1990, pp. 73 1-48.

22

See Peter H. Sand, 'International cooperation: the environmentalexperience', in JessicaTuchman Matthews, ed., Preserving global environment: challenge sharedleadership the the of (New York: Norton, '99').

I36

LatinAmerica theNew WorldOrder in environmental questions have emerged as a major subject of detailed negotiationswithinthe moves to a Free Trade Agreement. is But it is farfromclear thatinter-American regionalism themostlogical or politically effectiveforum for securing Latin American objectives in environmental negotiations. Latin America'skey strategic alliance on thisissue is with the developing world. The potentialbargainingpower of the developing in world is considerable, and Latin America has a fundamental interest making of of use of this,both to ensurea fairdistribution the costsand benefits global environmental management,and as a lever to forcethe North to addressthe broader question of North-South inequality. Although the United States related moved some way towards acceptingthe principleof environmentally resource transfers the Houston Group of Seven economic summitin July at I990, it has been the least willing of the industrialized countriesto take action in this direction. Europe has been consistently more open to considering mechanismsto provide additionalresources.And it is Japan,oftenpilloriedas 'eco-outlaw' over its record on whaling, driftnet fishingand imports of tropical timber, that has promised the largest amounts of foreign aid for environmental projects. So not only does the logic of environmental negotiations pointLatin Americatowardsthedevelopingworld; it also suggests that Latin America is more likely to win concessionsfromEurope and Japan,and more likely to face the United Statesas an opponent ratherthan as an ally. issues:A thirdcriticalset of issuesconcernssecurity. The consolidation Security of a regionalsecurity orderwas, afterall, an important partof the hegemonic regionalismof the period afterthe Second World War. What are the chances of security re-emerging a focus for hemispheric as regionalism? There are some signs of convergence. The United States has placed considerable and conventional emphasison nuclearproliferation on controlling arms sales as elementsof its proclaimedNew World Order. In Latin America, the proliferation issue has been transformed two relatedfactors:first the by by thathas takenplace betweenBrazil and Argentinaand the role rapprochement thatnuclearconfidence-building measuresand low-level cooperationplayed in this,and second by the Collor government'sshiftin Brazil's nuclear policy, highlighted by Collor's United Nations speech in September I990, and illustrated the public abandonmentof Brazil's so-called 'parallel' nuclear by research programme. There has also been progress in resolving disputes between the United States and Brazil and Argentinaover arms sales to the Middle East and the transfer missiletechnology.Moreover, Latin America of offered solid, ifnot wholly unequivocal, supportto US and UN policy during the Gulf War. But it would be wrong to paint too rosya picture.The transfer sensitive of remainsa problematic issue-witness continueddifferences between technology the United Statesand Brazil over the transfer supercomputer of technology.A on good deal of the public shiftin attitudes theseissueshas been as much to benefits it has been as please the United Statesand in the expectationof future
I37

Andrew Hurrell based on a fundamentalshiftin thinkingwithin the political and military establishments these countries. Latin American Countries are distinctly of unhappy about the growth of US ideas of linking economic assistanceto controls on militaryspending and arms sales. And underneaththe public the support, view thatin the GulfWar the United Stateswas manipulating the United Nations for its own purposes and was backing only a selective law found an echo in many quartersin Latin enforcement international of America. What of the broader securityagenda? Mutual cooperation against threats fromoutside the Americashas been renderedalmost wholly obsolete with the declinein Soviet power. There certainly much potentialforinterstate is friction withintheregion,but particularly comparedwithotherpartsof thedeveloping world, the overall patternof the I98os was positive,with the resolutionof a numberof long-standing mostnotablybetweenBrazil and Argentina tensions, and between Argentina and Chile. This would seem to suggest that such tensions continueor re-emerge as instanceby may be bestdealtwith in thefirst increasingthe kind of bilateralconfidence-building measuresthat have been developed by Brazil and Argentina, and perhaps later by some form of subregional securityarrangement.It is hard to see a militaryor political rationalefor US involvementin thiskind of arrangement. Here as elsewherein the developing world, the most relevantand pressing securityissues are internal ones-instability resultingfrom social tensions, political polarization, drugs-related violence, environmental degradation. Securityproblems and flare-upsof old territorial disputesare likely to stem from the underlying fragilityof domestic social, political and economic structures. The very nature of these issues, and the asymmetryof power between the United Statesand Latin America,work againstthe re-emergence of an effective inter-American security system. Latin America remainsextremely sensitive anythingthatmightfacilitate to or legitimizeUS intervention. Indeed one of the most noticeable trendshas been decliningLatin Americanwillingness providemultilateral to cover forUS interventions, illustrated the contrast best between the handlingof military by the crisesin the Dominican Republic in I965 and in Nicaragua in I979. At the same time,US and Latin Americanviews on how to respondto thesekindsof threatshave diverged, with the United States tending to favour counterand militarization, and Latin America looking more to social and insurgency economic reconstruction. This cleavage lay at the heartof differences over the natureof the crisisin Central America in the I98os, and it is also visiblein the differences between the United Stateson the one hand and Peru and Colombia on the other over the question of drugs.

To conclude. The current obsessionwith regionalismin Latin America-and, arguably,elsewhere-is misplaced. It certainlyfocuses attentionon genuine perceptionsand on some concretedevelopments.Inter-American regionalism
I38

LatinAmerica theNew WorldOrder in is of growingimportanceto Latin America,and to a lesserextentto theUnited States, and is likely to remain so. There is much to be gained by regional cooperation, and there are some issues-migration, transborderpollution, drugs-that can only be effectively addressedon a region-widebasis. But the notion that a cohesive and exclusive regional bloc is likely to emerge in the Americas follows from a one-sided analysisof inter-American relations.It is contradictedby the complexities and continued ambiguities of US-Latin American relations; by the range of Latin America interests;by the new pluralismin the international system-even if the fullimpact of thatpluralism has yetto work itself in out, particularly an increasedworld role forEurope and Japan; by the consolidation of global marketsfor production, finance and technology; and by the growth of global issues which cannot be contained withina purelyregional framework. I6 December199I

I39