The Strategic Dynamics of Latin American Trade

Edited by Vinod K. Aggarwal, Ralph Espach, & Joseph S. Tulchin
(Woodrow Wilson Press and Stanford University Press, 2004)

More information about this book.

Vinod K. Aggarwal, University of California, Berkeley
Ralph Espach, University of California, Berkeley
Joseph S. Tulchin, Director Latin American Program, WWICS

Ambassador Andrés Bianchi, Embassy of Chile
Jaime Granados, Inter-American Development Bank
Maryse Robert, Organization of American States

On Monday April 19, 2004, the Latin American Program hosted a book launch of the volume The Strategic Dynamics of Latin American to discuss the issues outlined in the book such as the various strategies pursued by the major players in Latin America – Argentina, Brazil, Chile, and Mexico – regarding negotiations in the World Trade Organization (WTO) and the Free Trade Area of the Americas.

Vinod K. Aggarwal argued that while Latin American countries are embracing the WTO, challenges have arisen during the negotiations and countries are pursuing other strategies including bilateral and regional agreements. Aggarwal stated that the trading system is becoming increasingly fragmented, and he questioned whether regional or bilateral agreements would further the multilateral framework. He explained that to understand the various trade strategies followed by countries in the region it is necessary to consider not just economic explanations, but also political and strategic factors.

Maryse Robert focused her presentation on the domestic challenges that accompany trade liberalization. In addition to human capital and good governance, a series of microeconomic investments are needed. Countries that are embarking on trade negotiation agreements also must have in place the framework needed to pursue development strategies. Trade liberalization is just one element in the "cocktail of policies" required for development. She also noted that closer trade ties do not imply a loss of sovereignty, and that in the context of globalization, all countries should be share the benefits from access to global markets.

Ambassador Bianchi focused on Chile's trade liberalization strategies and he described the various agreements being pursued by the government. After years of poor economic performance until the 1970s, Chile embarked on a policy of gradual trade liberalization that included the reduction of tariff and non-tariff barriers. The opening of the economy continued during the restoration of democracy in the 1990s when Chile became an associate member of MERCOSUR, and then actively pursued trade agreements with the Andean countries, the United States, the European Union, South Korea, Mexico, Canada, and Central America. Today, there is a broad consensus in the country in favor of open trade. He noted that being a small economy is a big advantage when negotiating trade agreements because you are not seen as a threat. However, as a result of concluding several trade agreements, Chile's bargaining position improved dramatically. The network of agreements also implies there is much greater certainty with regard to trade and Chile's economy as a result is more stable.

Jaime Granados said it was believed that the FTAA would improve the economic conditions of the region, encourage development, force certain sectors to become competitive, and promote structural reform and state modernization. Some but not all of these goals have been achieved. Trade liberalization in the region has improved cooperation and dialogue, has facilitated the transfer of information and technology, and has increased the participation of civil society. Still, several challenges remain such as the lack of consensus in key issue areas and the perception that unbalances exist in the negotiating process. In addition, political cycles come into play as politicians are often not able to grant concessions, and changes of administrations can disrupt the trade negotiation process already underway. The Inter-American Development Bank believes the momentum of the FTAA negotiation should continue. Granados argued that hemispheric integration should consider its social responsibilities, and that new public policy frameworks are needed.

Joseph Tulchin commented that, unlike the case of Chile, other countries such as Argentina suffer from a lack of domestic support for trade liberalization, and that some governments do not have the institutional framework or mechanisms in place to marshal domestic actors in support of a negotiated strategy.