This week, US newspapers reported that Congress is expected to ratify the Free Trade Agreement (FTA) with Peru before the November break. The FTA will eliminate 80 percent of US export tariffs in Peru, and the remaining 20 percent will be canceled over the next 10 years. While US lawmakers advocated the inclusion of labor and environmental regulations, no comments were made regarding the impact of the FTA on regional integration efforts in South America.
When trade negotiations with the United States began in Peru in 2006, Colombia and Ecuador are also negotiating bilateral free trade agreements. Many feared that these agreements would threaten the goals of the Andean Community (CAN). Bolivian President Evo Morales expressed it directly, saying: “These treaties destroy the Andean community,” accusing countries of refusing the principle of regional solidarity through negotiation individually, and not as a group. The decision to hold these FTAs led Venezuela to withdraw from CAN, as opposed to what President Hugo Chavez called the United States imperial projects.
Since then, Colombia has approved their FTA and is now waiting for ratification by the US Congress, while Ecuador has historically refused to negotiate after the victory of the socialist candidate Rafael Correa in the 2006 presidential election.
Combining the benefits of free trade on the one hand, the agreement represents a significant victory in US trade policy as a whole. Since the first president Bush proposed the "Entrepreneurship Initiative for North and South America" in 1991, the United States is trying to unite the hemisphere into one open community, where goods and services can pass through America without hindrance.
Initially, the proposal was rejected by the countries of Central and South America, who argued that such a Mac-Trade Pact would be a national suicide for their countries. In the same year, the peoples of Brazil, Argentina, Uruguay and Paraguay formed Memorosur, a regional integration bloc designed to unite the economies of the Southern Cone and increase their bargaining positions in future trade negotiations with foreign powers. In 2000, 12 presidents of South American countries met in Brasilia to discuss the creation of a new, larger block that would allow the region to negotiate on an equal basis with its northern neighbor, this initiative eventually led to the creation of the Union (Unasur), formerly known as the Community of South American Nations, in 2004.
While South America reorganized itself as an inevitable round of two, the United States moved forward with plans B and C. In 1994, the United States, Canada and Mexico signed the North American Free Trade Agreement (NAFTA). With the election of George W. Bush in 2000, the United States began a new push to form a wide hemispheric free trade zone or a free trade zone in North and South America (FTAA or ALCA in Spanish), since it came to be called. While initially unsuccessful, this time the US managed to convince the Central American and Caribbean states of Guatemala, El Salvador, Honduras, Costa Rica, Nicaragua, Panama and the Dominican Republic to sign a free trade agreement between the US and the Dominican Republic and the United States (CAFTA-DR ) in 2004. This agreement, along with NAFTA, left South America in an even weaker position when and if it ever decides to resume trade negotiations with the US
So, was South America wrong to reject FTAA-ALCA when she did it? Perhaps, but not consistent failure of any internal unity on this issue left them much weaker than in 1991 or 2000. The refusal of the regional authorities of Brazil, Argentina and Venezuela left smaller countries in favor with several options other than a bilateral trade agreement. To this end, Chile agreed on a FTA in 2006, and Uruguay now threatens to withdraw from MERCOSUR and agree on its own if progress in achieving regional goals of Mercosur does not advance.
This leaves the large economies of Brazil and Argentina, which have few remaining allies in any future negotiations, and the very poor countries of Venezuela, Paraguay, Bolivia, Ecuador, Guyana and Suriname are even more behind than they already are. Ultimately, the continued confidence in regional unity as a viable economic strategy evaporates, since the lack of concrete progress towards integration of individual countries into South America does not affect it alone. It seems that the Greek Thrasymah was right when he said that it was not enough to disprove his opponent, you must have your own decision; because there are many people who may ask, but few can answer.
