Open regionalism in Latin America and the Caribbean. Economic integration as a contribution to changing productions patterns with social equity

Introduction

In recent years, the Latin American and Caribbean region has shown a growing capacity to counter the effects of the prolonged crisis of the 1980s and changes on the international scene. Governments and societies alike have sought new ways of adapting to shifting circumstances and tackling the many challenges that have arisen. One of the manifold expressions of that adaptation process has been a renewed interest in the potential of intraregional cooperation, particularly through formal economic integration agreements, both multilateral and, mainly, bilateral.

This phenomenon can be attributed to a number of factors, including the laborious, slow process of multilateral negotiations under the General Agreement on Tariffs and Trade (GATT) ending in December 1993, the examples set by the formation of the European Community and the creation of a free trade area between Canada and the United States -now joined by Mexico-, as well as the gradual convergence of the economic policies implemented in Latin America and the Caribbean and the growing political affinity among the region's civilian, democratically elected Governments.

All of these developments could imply that there is no further need to convince Governments and social actors of the benefits to be derived from integration. However, the plethora of agreements concluded thus far has given rise to many questions that must be answered. Some of these are of a general nature. Why should integration be encouraged? What kind of integration should be encouraged? Which mechanisms and instruments are most suitable for integrating economies at this point in time?

Other questions are more concrete. For example, how do the "new" integration plans differ from those adopted in the 1960s and 1970s? How can the objectives of national economic policy be reconciled with those of integration agreements? Should countries seek the gradual convergence of all of these agreements into a single, region-wide arrangement, or would it be preferable to respect the heterogeneity of different situations and abandon the express aim of eventually forming a Latin American free trade area?

These and other pending issues must be clarified in order to keep existing agreements from foundering and to make further headway in their implementation. In other words, it is important to determine the best ways of supporting these commitments so that they will lead to tangible results; to identify the obstacles and incompatibilities that could arise from the multiplicity of agreements so that they can be resolved in time; and, most of all, to propose guidelines for lending continuity and coherence to these arrangements, in order to take full advantage of their potential contribution to changing production patterns with social equity.

The answers to these questions, as proposed in this document, are based on the core premise that recent integration efforts have generally involved an interaction between two types of phenomena. First, the trade liberalization and deregulation policies introduced at the national level by virtually all the countries -topics which are dealt with in a separate document * have underlined the relative importance of foreign trade in their economies. These phenomena have helped to build up reciprocal trade and investment within Latin America itself, taking advantage of geographical proximity. Second, this "natural", non-discriminatory attitude towards other countries has been complemented by integration based on explicit agreements or policies, which do entail certain preferences with respect to the treatment accorded to other nations.

This study maintains that the way in which these phenomena interact is of decisive importance. Depending on their content and scope, formal agreements can prove to be either contrary or complementary to the shift towards a growing interdependence guided by market forces and aimed at better integration with the international economy. The aim, therefore, should be to strengthen the reciprocal links between the two elements in the context of what is termed herein "open regionalism", i.e., a process of growing economic interdependence at the regional level, promoted both by preferential integration agreements and by other policies in a context of liberalization and deregulation, geared towards enhancing the competitiveness of the countries of the region and, in so far as possible, constituting the building blocks for a more open and transparent international economy. Nevertheless, even if this optimal scenario does not come to pass, open regionalism would still serve an important purpose as a defence mechanism against eventual protectionist pressures in markets outside the region.

The study is divided into three parts, preceded by a summary and conclusions section. The first part explores the relationship between multilateralism and regionalism; the second examines the foundations of open regionalism; and the third analyses the mechanisms, instruments, policies and institutional arrangements which, in the secretariat's view, will enable countries to make further progress in implementing existing integration agreements.

In sum, the study's purpose is to stimulate debate on Latin American integration in a context that is qualitatively different from the one prevailing in the 1950s and 1960s, when the countries of the region made their initial, pioneering efforts in that direction.

* See ECLAC, Latin America and the Caribbean: Policies to improve linkages with the global economy (LC/G.1800(SES.25/3)), Santiago, Chile, 1994.