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«Miami-Florida European Union Center of Excellence EUMA Origin and Evolution of the South American Community of Nations: From Trade to Security ...»

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Robert Schuman

Miami-Florida European Union Center of Excellence

EUMA

Origin and Evolution of the South American

Community of Nations:

From Trade to Security Concerns

Marco Aurelio Guedes de Oliveira

EUMA

Vol. 4 No. 5

March 2007

Published with the support of the EU Commission.

EUMA

European Union Miami Analysis (EUMA) is a bi-weekly service of analytical essays on

current, trend setting issues and developing news about the European Union.

These short papers are produced by the Miami-Florida European Union Center of Excellence (a partnership of the University of Miami and Florida International University) as an outreach service for the academic, business and diplomatic communities.

Among the topics to be included in the series, the following are suggested:

The collapse of the Constitution and its rescue Turkey: prospects of membership Immigration crisis and cultural challenges Security threats and responses The EU and Latin America The EU as a model and reference in the world The Common Agricultural Policy and other public subsidies The euro and the dollar EU image in the United States These topics form part of the pressing agenda of the EU and represent the multifaceted and complex nature of the European integration process. These short papers also seek to highlight the internal and external dynamics which influence the workings of the EU and its relationship with the rest the world.

Jean Monnet Chair Staff:

Miami - Florida European Union Center University of Miami Joaquín Roy (Director) 1000 Memorial Drive 101 Ferré Building Astrid Boening (Assistant Editor) Coral Gables, FL 33124-2231 Eloisa Vladescu (Research Assistant) Phone: 305-284-3266 María Lorca (Research Assistant) Fax: (305) 284 4406 E-Mail: jroy@miami.edu Miami-Florida European Union Center Web: www.miami.edu/eucenter Nicol Rae (Co-Director), FIU 2

ORIGIN AND EVOLUTION OF THE

SOUTH AMERICAN COMMUNITY OF NATIONS:

FROM TRADE TO SECURITY CONCERNS. ♣

Marco Aurelio Guedes de Oliveira ♦ Introduction There are three periods of initiatives for integrating the Americas since the end of the Cold War.

The first period began with the US move that led to the US-Canada Free Trade Agreement and to NAFTA. In South America, Brazil and Argentina were dealing with their problems of security celebrating bi-national agreements of cooperation in sensitive areas such as nuclear technology.

The Initiative for the Americas by former President George Bush was the most important action of this first moment and it represented a daring proposition from the US perspective to deal once and for all with the issue of hemispheric integration.

The second period started with South and Central American reaction to the US - a move which produced a revival of regional integration arrangements. The creation of Mercosur embodied this positive counter-action. At this point, if one takes a Hegelian perspective, he/she would conclude by saying that now it would become the synthesis of both action and reaction.

With other words, the celebration of a hemispheric free trade agreement. Unfortunately what followed was a decline in US commitment to its initial proposal and disappointment in Latin America about US intentions. Mercosur and other regional integration processes were left to accomplish integration on their own.

The third period began with the absence of Latin American issues in US foreign policy and its domination by security concerns. This new US action or inaction, what Howard Wiardai called “benign neglect”, let South America free enough to make a new and enlarged move in terms of foreign policy represented in the birth of the South American Community of Nations and in the introduction of a security perspective on the debate about South American integration.

This paper shows the decline of trade as a central issue for the integration of South America and discusses the new period of integration in the region marked by security issues. It shows how Brazil proposed the South American Community of Nations (SACN) known also as South American Union (SAU) and what are its main goals. It also shows its differences when compared to Mercosur. The basic argument is that SAU represents a new perspective on regional integration, a new view linked to security concerns, based on geopolitical integration and on a search for a more independent and active political role for the region in global politics.

♣ Paper presented at the “Comparative Regional Integration: The EU as a Model of Reference” symposium held at the University of Miami on March 26, 2007 under the sponsorship of the MiamiEuropean Union Center ♦ Dr. Guedes de Oliveira, Ph.D. in Government/ Essex University, was Chair Simon Bolivar Sorbonne Paris III, has directed the Center for Brazilian Studies at Middlesex University and is currently the Director of Nucleo de Estudos Americanos at UFPE and Professor of International Relations. His latest books are Mercosul e Politica (LTR ed. 2001), Brasil e EUA no novo milênio (UFPE 2004) co-edited with Francisco Dominguez Mercosur: Between Integration and Democracy (Peter Lang ed 2004).

i “American Foreign Policy toward Latin America in the Post-Cold War Era: A case of Benign Neglect?” in Maske et alli (Eds) US Foreign Policy Towards Third World. M.E. Sharp, London 2006





3The Decline of Hemispheric Integration through Trade

When President George Bush launched the Initiative for the Americas in 1990, many believed that after the end of the Cold War the Americas were about to go into a new era of prosperity led by the US, now as the only superpower. There was optimism about a possible upgrading of Latin America within US foreign policy. Some believed that trade and investment would drive US action in the region and this would promote a new wave of growth and development throughout the region.

The positive impact of the Initiative for the Americas in Latin America was immediate.

Together with Argentina, Paraguay and Uruguay, Brazil started in 1991 an integration process named Mercosur. Three months later, the US and the countries of Mercosur signed in Washington an agreement for their integration. Continental integration was the goal. In 1993 Brazil launched the idea of a South American Free Trade Area (SAFTA) in order to try to unify South American countries and prepare to a larger integration process. One of the main explanations for Mercosur at the time was given by the “theory of the Swimming Pool”. According to it, Mercosur was a kind of preliminary exercise in opening their members’ economy. The learned experience would be important to keep economic stability when they had to integrate into North American economy.

Unfortunately the US proposal did not live to its expectations. Soon after President Clinton launched his FTAA in 1994, it became clear that social and political issues were not going to be addressed in the US initiative. Due to the gap between words and reality, the FTAA proposal began to be interpreted by many as an attempt by the US to dominate Central and South American economies and re-design its hegemony in Latin America. Supporters of FTAA pointed out the positive aspects of NAFTA on Mexican economy: growth of its northern region; growth of trade with the US and so on. Nevertheless, the Mexican case also showed that the key issue of regional asymmetries in Latin America was not dealt with. If Mexico wanted to be looked at as a model case in favor of FTAA, there should be a way to address regional asymmetries in Latin America, an issue that has provoked social and political unrest and instability all over the region.

Since the beginning of the FTAA initiative, Brazil has occupied a strategic position within its negotiations. It co-chaired the process with the US while continued to work for the development of Mercosur, a sub-regional integration initiative intended to go far beyond FTAA promises.

According to a former Brazilian Ambassador to the US, Rubens Barbosa ii, a FTAA acceptable to Brazil and Mercosur should include: a) the elimination of tariff barriers and the transformation of all specific customs duties into ad valorem tariffs; b) effective access to markets by means of a gradual but continual reduction of all non-tariff barriers (i.e. quotas, phytosanitary measures, etc.); c) discipline in the application of defensive trade measures (e.g.

safeguards, antidumping) that affect Brazilian agricultural exports to the United States as well as other sectors that have been traditionally subjected to selective protectionism (i.e. steel products, footwear, etc.); d) a precise understanding that mechanisms that provide for unilateral trade sanctions must not be used; e) the elimination of trade-distorting mechanisms (such as export subsidies) and the disciplined application of domestic subsidies that affect the setting of domestic and foreign prices; and f) harmonizing the FTAA negotiations with those of the WTO, in order to adjust the advances achieved within the scope of the Hemisphere to the efforts that will be undertaken in multilateral agreements.

As one can see the issues of discord between Brazil and the US concerning FTAA were above all internal to the idea of trade liberalization. There was a perception that the US proposal would trap important sectors of Brazilian economy within a set of agreements that would benefit

ii Barbosa, Rubens. The FTAA that is in Brazil’s Interest.

4 only US business. This view enhanced the arguments against the FTAA proposed by the US and pushed into its opposition even those Latin American intellectuals who believed that international trade increases economic welfare and supported the opening of Latin American economies to the US.

In face of little progress towards a multi-lateral agreement, the US reoriented its policy in two directions. First, to search for the establishment of bi-national free trade agreement with Latin American countries at the expenses of an overall agreement. Apart from the agreement reached with Chile, the US has not been able to make progress in this direction. On the contrary, this option has undermined the importance given to free trade in the FTAA initial proposal. Secondly, incapable of conciliating its proposals with Mercosur views, the US stepped back and accommodated itself in a kind of deadlock.

The US took agricultural subsidies - a central issue for Latin America- off the negotiations and indicated the WTO as the adequate forum to deal with it. In response Brazil suggested that intellectual property – a central issue for the US- should also be removed from the FTAA agenda.

The optimistic idea of a FTAA as a way forward for the Americas was abandoned. It was gradually replaced by a set of summits and meetings that did not led to solutions. Politics and geopolitics were dominating again the theory and practice of hemispheric integration. This time free trade was not the dominant factor. Regrettably, access to the US market had become a tool of foreign policy making.

After September 11, the FTAA debate became irrelevant to the George W. Bush administration. The “securitization” of US foreign policy replaced the idea of opening markets and fostering free trade for the idea of closing borders and subordinating trade and all other issues to security. Now, one must support US foreign policy in order to apply for access to the US market. During the first year of President Bush administration, US support for the legalization of illegal workers from Latin America was seen as a matter of justice. After September 11, Latin America became a problem due to large number of illegal and uncontrolled emigrants in and coming to the US.

This situation was interpreted in Latin America as a confirmation that the FTAA was not part of a solution to its problems. It also enhanced Latin America perception that it had to find a way by its own to foster economic growth as well as to reduce social asymmetries. Regional integration arrangements such as Mercosur and the Andean Community regained perspective.

It was Brazilian President Fernando Cardoso that invited South American Presidents to participate in September 2000 on what later became known as the First South American Presidential Summit. According to Cardoso’s assessment the meeting was historic and represented a step forward to the construction and exchange of common experiences on democracy, peace, justice and prosperity for all countries of South America. He pointed out five key decisions taken at the meeting. iii First, the countries of South America must strive together to keep and consolidate democracy, human rights and freedom in the region. And this must take into account the history of the great South American leaders that fought for independence and freedom. Second, Mercosur and the Andean Community must move into shaping an enlarged South American free trade area including also Guyana and Surinam. Third, each country is expected to draw a plan and projects for the development of South American energy and transport infrastructure. They would count with the support of the Inter-American Development Bank and other regional institutions to finance these projects. Fourth, a committee was created to combat money laundering as well as corruption and organized crime in the financial sector. Fifth, a regional fund was created to foster common development of sciences and technology. The seed of the South American Union was planted and the debate on regional integration began to introduce issues other than trade.

iii Fernando Henrique Cardoso, “ Cúpula Sul-Americana:Uma Avaliação” in Correiro Brasiliense 7 March 2000 5 Firstly seen as an up-dated version of the South American free trade initiative taken by former Brazilian President Sarney, it represented a further attempt to keep the debate on the need for regional integration firmly on the agenda of South American nations. It also introduced a new treatment to the issue of integration at the levels of energy (building of dams, the use of natural gas and other common natural resources such as water) and communications (roads, railroads, waterways and ports).



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