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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
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CONVERGENCE AND PRODUCTIVE ARTICULATION AT REGIONAL LEVEL:
A timely initiative arising from the recent Summit of the Pacific Alliance

by Félix Peña
July 2014

English translation: Isabel Romero Carranza


 

It is worth reflecting on the latest initiative that has been raised in terms of Latin American regional integration. It originates from the Ninth Summit of the Pacific Alliance, where it was agreed, among other things, "to hold an informative ministerial meeting about the Pacific Alliance with countries members of Mercosur."

It is a timely initiative which can lead to an interesting renewal of the strategy for the enhancement of the regional space in terms of productive development of each country and its integration in global economic competition. It opens a window of opportunity to attempt the idea of "convergence in diversity" that has been supported by Heraldo Muñoz since the beginning of his term as Chancellor of the government of Michelle Bachelet.

The smart thing would be to harness this window of opportunity to initiate a process of political and technical dialogue, and for making effective decisions aimed at achieving a joint work methodology between countries of Mercosur and of the Pacific Alliance. It entails recognizing that, beyond the visible differences, the international context calls for concerted responses of the region as a whole.

It is possible to imagine converging actions that can generate mutual gains for countries of both schemes in at least three spheres. One is that of production linkages of regional scope, conceived in its various forms as tools to facilitate the transnational articulation in different sectors of production. Another is that of the progress in the quality of physical connectivity and trade facilitation in the main corridors of regional production linkages. And the third is that of some of the main issues on the global agenda and, in particular, those relating to the world trading system and climate change.

The most important initiative that resulted from the Summit of Punta Mita is the idea of initiating a dialogue between countries of the region interested in building spaces for cooperation that are effective and responsive to the challenges of these times. In order to achieve this, it has to be a dialogue aimed at developing concrete viable actions that reflect a reasonable balance of interests and views on the productive development of the region and that are also able to attract and excite many people, especially the young and the impoverished, eager for future horizons that transcend short-term uncertainties.


In a "multiplex" world, in the sense proposed by Professor Amitav Acharya in one of his two recent books (see "The End of American World Order", listed in the Recommended Reading section of this Newsletter) all players, large or small, have options for their international insertion. They may even have multiple options available (on this regard refer to the May 2012 issue of this Newsletter). Provided, of course, they have a strategy for taking advantage of them. This means being clear about what a country -or an organized region- wants and can obtain. An accurate diagnostic of the needs and capabilities is required for this purpose. And in a world immersed in a rapid and continuous process of change, as is the current one, it involves updating that diagnostic continually. But it also requires a strong ability to articulate the interests at stake -both internal and external- and to achieve equilibrium points through smart negotiations.

Today's world is, ultimately, very unfriendly towards willful visions -whatever their rational, emotional or ideological roots- which exclude the idea of cooperation with other actors, especially those who share a regional space (see this Newsletter March 2014, and July 2013). It is also a world in which no actor has sufficient power to enforce the international rules, either globally or in their region.

In the above perspective, one can reflect on the latest initiative that has been raised in terms of Latin American regional integration. It comes at a time when the multilateral trading system is still unable to offer interesting negotiating perspectives, beyond the efforts at the WTO Ministerial Conference in Bali and, most recently, the launch of the negotiating process aimed at concluding a plurilateral agreement on environmental assets (see on this regard: http://wto.org/). Additionally, the negotiations of mega interregional agreements in both the spaces of the Pacific and the Atlantic are showing less promising prospects than they did until recently, at least in the short-term or even in the mid-term, due to geopolitical factors, among others.

But even if the outlook of such perspectives became more optimistic, the initiative that has arisen within the scope of the Pacific Alliance is opportune, as it can lead to a renewal of the methods for the enhancement of the regional space in terms of the productive development of each country and of their insertion in global economic competition.

This initiative was proposed on June 20 in Punta Mita, Mexico, where the Ninth Summit of the Pacific Alliance (Chile, Colombia, Peru and Mexico) took place. Among other things, it was agreed "to hold an informative ministerial meeting on the Pacific Alliance with countries members of Mercosur." Moreover, "with the same informative spirit", the Presidents agreed to "conduct a seminar of academics, businessmen, entrepreneurs and senior officials of the Pacific Alliance, Mercosur and other countries of the region, including Central America and the Caribbean."

It is possible that the obviously careful wording of the paragraph is reflecting the need to reconcile different views on the convenience of promoting such a meeting. It can thus be assumed because there is evidence that would seem to indicate that different sectors in some countries of the Alliance still regard both processes as conflicting and possibly incompatible. This is reflected in academic and business views, and most especially, in the media.

In this regard, it is noteworthy that the Chancellor of Chile, consulted at the Summit on the scope of the proposal (according to the newspaper "La Tercera" Santiago, Chile, June 20, 2014), said that "Chile made a proposal within the Pacific Alliance for a ministerial meeting with Mercosur. That proposal was approved. Now, our purpose is not a merger or union of the two groups. Such hypothetical purpose would be unrealistic, since between the two schemes there are marked differences in tariffs and regulations." And he added that "we can explore areas of agreement on issues of common interest. We can discuss matters of natural convergence in the short, medium and long term."

If the initiative of the Summit of Punta Mita were to materialize under the mentioned terms, it would mean opening a window of opportunity for "convergence in diversity" an idea that has been supported by Heraldo Muñoz since the beginning of his term as Chancellor of Chile. In his view, this would be a main focus of the Latin American policy of his country (see the last March issue of this Newsletter and the article cited there by Chancellor Muñoz in the newspaper El País of Madrid, 13 March 2014, on http://elpais.com/).

One approach in this direction had already been made by Ricardo Lagos, former President of Chile, in a lecture in March at the University of Sao Paulo. He pointed out the great mistake of conceiving a Latin America of the Pacific in opposition to another Latin America of the Atlantic. He claimed that "if the mainstay of world trade is between the Atlantic and the Pacific and we are between both oceans, then we have a say in these changing times that are taking place on the planet." (On the tendency of some sectors to visualize the Pacific Alliance and Mercosur as antagonistic processes with notorious differences, even ideological ones, see this Newsletter from June 2013).

As a result of what was agreed at their summit, the Pacific Alliance countries have summoned colleagues from Mercosur to an informational meeting in Cartagena de Indias (Colombia).

It would be wise to take advantage of the window of opportunity that is thus opening to kick start a process, first of political and technical dialogue and later of adoption of effective decisions, aimed at defining a methodology for joint work between countries of Mercosur and of the Pacific Alliance. It would imply recognizing that, beyond the differences that may exist -originating from multiple factors, not just the economic, political or ideological-, the international context calls for concerted answers of the region as a whole.

There are at least three spheres in which it is possible to imagine converging actions that can generate mutual benefits for the countries of both schemes. The first is that of production linkages of regional scope, conceived in its various forms as instruments to facilitate transnational articulation in different sectors of production. These are actions that should be carried out with sectorial approaches and with the active participation of all the stakeholders involved in the current or potential production linkages between countries of the region. The second sphere is that of the quality of physical connectivity and trade facilitation in the main corridors of regional productive articulation. Finally, the third sphere is related to some of the main issues on the global agenda and, in particular, to those associated with the world trading system and climate change.

In these three spheres, both Asian and European countries have garnered an interesting experience. Perhaps, one of the results of the upcoming 2015 Summit in Brussels between the countries of the European Union and Latin America, gathered in the CELAC, could be to put the EU-LAC Foundation (created in the VI bi-regional Summit of Madrid) in good conditions -that is, to provide sufficient resources- to identify effective modalities of convergence between different areas of regional integration, in particular in terms of the articulation of production systems.

A possible agenda of convergence that helps enhance, with multi-speed and variable geometry actions, the numerous institutional channels linking the productive systems of the countries of the region -some bilateral and others of sub regional, South American and Latin American scope- can draw not only from the experiences of other regions but specifically from very valuable recent reports, such as that from the CEPAL entitled "Integración regional. Hacia una estrategia de cadenas de valor inclusivas" (see http://www.cepal.org/). It can also draw from the wealth of regulations and instruments provided by the LAIA -often underutilized despite the variety of instruments adapted to the current needs that can derive from the Treaty of Montevideo of 1980, moreover taking into account its insertion in the scope of the WTO through the Enabling Clause-, and from the contributions that can be made by institutions such as the CAF-Latin American Development Bank due to their rich experience in productive and infrastructure development in the region.

The most important thing resulting from the initiative of the Summit of Punta Mita, is then the idea of initiating a dialogue between the countries of the region interested in building spaces for cooperation that are effective and responsive to the challenges of current times. To achieve this, it has to be a dialogue aimed at materializing viable actions that reflect a reasonable balance of interests and views on the productive development of the region and that can also attract and excite many people, especially the young and the impoverished, eager for future horizons that can transcend short-term uncertainties.



Recommended Reading:


  • Acharya, Amitav, "Rethinking Power, Institutions and Ideas in World Politics. Whose IR? Routledge, London-New York 2014.
  • Acharya, Amitav, "The End of American World Order", Polity, Cambridge-Malden 2014.
  • Ariza Dolla, Guillermo, "Barreras Técnicas Comerciales. Los obstáculos reglamentarios al comercio exterior y cómo solventarlos", Instituto Español de Comercio Exterior (ICEX), Madrid, Junio 2012.
  • Badie, Bertrand, "Le Temps des Humiliés. Pathologie des Relations Internationales", Odile Jacob, Paris 2014.
  • Bruce, James, "Those Perplexing Argentines", Longmans, Green and Co., New York-London-Toronto 1953.
  • Castro Martínez, Elena; Fernández de Lucio, Ignacio, "El significado de innovar", CSIC-Los Libros de Catarata, Madrid 2013.
  • D'Outreligne, Carlos Enrile, "Promoción de las Exportaciones a Través de Internet", Instituto Español de Comercio Exterior (ICEX), Madrid, Octubre 2011.
  • Escaith, Hubert; Gaudin, Hadrien, "Clustering Value-Added Trade: Structural and Policy Dimensions", WTO. Economic Research and Statistics Division, Geneva, June 2014, on http://wto.org/.
  • Freedman, Lawrence, "Strategy. A History", Oxford University Press, Oxford-New York 2013.
  • Gana, Alia; Richard, Yann, "La régionalisation du monde. Construction territoriale et articulation global/local", IRMC-KARTHALA, Tunis-Paris 2014.
  • Hugill, Peter J., "World Trade since 1431. Geography, Technology and Capitalism", The Johns Hopkins University Press, Baltimore-London 1995.
  • ICEX, "Operativa y práctica del comercio exterior-Curso Básico", Instituto Español de Comercio Exterior-Cámaras Consejo Superior (ICEX-CSC), Madrid 2005.
  • Lampton, David M., "Following the Leader. Ruling China, From Deng Xiaoping to Xi Jinping", University of California Press, Berkeley-Los Angeles-London 2014.
  • Weber, Steven; Jentleson, Bruce W., "The End of Arrogance. America in the Global Competition of Ideas", Harvard University Press, Cambridge-London 2010.
  • World Economic Forum, "Mega-regional Trade Agreements. Game-Changers or Costly Distractions for the World Trading System?", WEF, Geneva, July 2014, on http://www3.weforum.org/.

Félix Peña Director of the Institute of International Trade at the ICBC Foundation. Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF). Member of the Executive Committee of the Argentine Council for International Relations (CARI). Member of the Evian Group Brains Trust. More information.

http://www.felixpena.com.ar | info@felixpena.com.ar


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