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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
INTERNATIONAL TRADE NEGOTIATIONS OF LATIN AMERICA
Relevant issues for the design of a regional strategic agenda for 2016.

by Félix Peña
November 2015

English translation: Isabel Romero Carranza


 

In a world in profound transformation we can observe certain issues that may gain special relevance in 2016. These issues have a geopolitical, a geoeconomic and, for obvious reasons, a commercial scope. This is so because they are the result of the trends towards rupture and systemic fragmentation in terms of the approaches and concrete actions at the global, regional or inter-regional level. But they are also issues that might favor cooperation and joint work in multiple aspects beyond the natural differences and asymmetries that characterize the countries of Latin America and their mutual relations.

A first issue refers to the consolidation, or eventual failure, of the process initiated with the announcement of the restoration of diplomatic relations between Cuba and the US. A second issue is related with global and interregional economic governance. It opens up the possibility of multiple unfoldings. One that has currently gained relevance is related to who will be able to influence the definition of the future ground rules in the competition for world markets, be they multilateral, global, inter-regional or regional. And the third issue refers to the development of convergence in diversity as a strategic idea of regional scope, opportunely proposed by the Chilean government as a means of overcoming the tendency towards confrontation between two different Latin Americas, symbolically identified as belonging either to the Atlantic or to the Pacific.

These three issues could contribute, if addressed correctly, to facilitate the renewal of the negotiating proposals of Latin American countries in the front of international trade relations. The lessening of emotional factors and the ensuing reduction of an ideological conception of negotiations and their outcome could lead, if there is political leadership and solid technical proposals, to the creation of conditions for the region to simultaneously undertake preferential trade negotiations -consistent with WTO rules, if understood in the perspective of the "constructive ambiguity" of the GATT- with at least three regional spaces such as the US, EU and China. Latin American countries should act according to their views on what should characterize global economic competition in the future, including a global multilateral framework that is functional to the economic and social development of all countries.


Being able to develop an assertive and effective strategy for the insertion into the international political and economic competition will be of great importance in the regional agenda of Latin American countries next year. This implies developing joint efforts in terms of diagnosis and articulation of concrete actions, either at the regional, inter-regional or global level. The strengthening of a regional network of competitive intelligence should be one of the priorities for 2016.

In a world undergoing profound changes, we can observe some issues that may gain special relevance in 2016. These are issues that have a geopolitical, geoeconomic and, for obvious reasons, a commercial scope. This is so because they are the result of the trends towards fracture and systemic fragmentation in terms of approaches and specific global, inter-regional or regional actions. But they are also issues that may favor tendencies toward cooperation and joint work in several fields, beyond the differences and asymmetries that can be seen in Latin American countries and that affect their mutual relations.

If anything characterizes these relevant issues is that, due to their scope, they underscore the emotional factor in international relations. This means that they can arouse passions, sometimes expressed in ideological approaches. At a time when there is a growing inclination towards what Dominique Moisi has called the geopolitics of emotions (see "La geopolítica de las emociones", Grupo Editorial Norma, Bogotá 2009), at the global level the behavior of many nations has started to become dominated by the culture of fear, humiliation and hope (on humiliation as a re-emerging and relevant factor in contemporary international relations, see Bertrand Badie, "Le Temps des Humiliés. Pathologie des Relations Internationales", Odile Jacob, Paris 2014). And, in particular, emotions are again penetrating the internal debate of many countries regarding the world around them. Emotions then affect the definition of enemies and friends, thus hindering a more rational and balanced analysis of the options for the international integration of a country or a region.

Precisely, a first issue is linked with a bilateral relation that had a profound impact on inter-American and domestic politics of Latin American countries. It is a relation that once generated emotional and ideological debris in the political debate in several countries dand in the region as a whole. We are referring to the consolidation, or eventual failure, of the process initiated with the announcement of the resumption of diplomatic relations between Cuba and the United States (on the historic step taken by the two governments on December 17, 2014, see http://internacional.elpais.com/). Several other steps have been taken since then, including the reopening of the two embassies and, more recently, visits to Havana by senior US government officials, such as the Secretary of Agriculture, Thomas Vilsack, who on his visit on November 13 pointed to agriculture as one of the bridges to be developed between the two countries (see http://www.martinoticias.com/).

There are still many obstacles to be overcome and many bridges to be built in this new bilateral relation if the goal is to consolidate it. But the important thing to consider is the effect that this could have for addressing other issues that are relevant to the region, such as, among others, the peace negotiations in Colombia and its relations with Venezuela, including Venezuela's own political evolution.

The rest of Latin America not only benefits from this new era of bilateral relations but can also play a role in its consolidation. Establishing solid bridges that emphasize the link between Cuba and other countries of the region and the world may contribute to its multipolar international integration, thus avoiding the ghost of a return to asymmetric and exclusive relationships with a great power (initially Spain, then the US and finally the USSR). And on many other issues the countries of the region acting together with other countries that have the capacity to influence the Cuban economic development, such as, among others, the EU, Canada and China, can make a valuable contribution.

This was precisely one of the issues discussed at the Seminar held on November 4, in Hamburg, on the triangular relations between the EU, Latin America and the Caribbean, and Cuba (http://eulacfoundation.org/), organized by the EU-LAC Foundation, GIGA and CAF. These are triangular relations that do not exclude other relations in which each of the three regions are engaged. In a certain way, the world of relatively institutionalized regions tends to be perceived, increasingly, as a network of inter-regional overlapping triangles. In order to continue developing, the EU-LAC-China triangle requires a gradual approach to growth -the snowball methodology-that starts with specific projects of high symbolic value and strong economic, political and cultural potential.

In this sense, the renewed appreciation for the Old Havana and the preservation of its socio-cultural characteristics -a true jewel of urban planning and Latin American culture (see the article "La nueva Cuba está en La Habana Vieja", in El País newspaper from 12 June 2015, on http://internacional.elpais.com/)- is one of many aspects related to the economic and social development of Cuba in which the countries that eventually form this triangle could join efforts for an effective cooperation. Regional organizations such as the CAF-Latin American Development Bank, which is already operating in relation to Cuba or, in terms of production and trade cooperation, the ALADI along with the ECLAC and the CELAC, the SELA and the SEGIB, could have a leading role that would be extremely useful in promoting actions such as those mentioned at the Hamburg Seminar.

A second issue relates to global and interregional economic governance. It is an issue that opens up the possibility of multiple unfoldings. One that has currently gained relevance refers to who will be able to influence the definition of the future ground rules of the competition for world markets, be they multilateral and global or inter-regional and regional.

Three current negotiating fronts illustrate this issue. One is the WTO and its upcoming Ministerial Conference, to be held in Nairobi. Will it be decided there, as has been proposed by some countries, to end the Doha Round without previously defining an alternative for global trade negotiations that is acceptable to all member countries?

This can be linked to the second negotiating front, which is the end result of the recently concluded negotiating process of the Trans-Pacific Partnership (TPP). If the agreement finally came into force it could be considered as a basis for defining future rules of international trade. This has been raised by prestigious specialists including Professor Richard Baldwin, among others. Even when the TPP negotiations -like other regional and inter-regional trade negotiations- have not been characterized by transparency, the full text of the agreement including its various annexes, is now available (see http://www.acuerdoscomerciales.gob.pe/). Furthermore, when announcing the publication of the full text, President Obama himself admitted that knowing who defines the rules of the future of international trade is an important matter. Specifically, he pointed out that if the US did not define the rules, at least with regards to Asia, China would do so (see the text of his statement of November 6 on https://www.whitehouse.gov/). Was he acknowledging in this way a geopolitical dimension of the TTP?

The other negotiating front refers to climate change. Will the Paris Conference, to be held next December, have the same fate as the previous Conference held in Copenhagen? Known as COP16 / CMP6, it is a notorious case of the difficulty of defining rules in the new stage of the international system -Ian Bremmer's G0?- characterized by the fact that it is not easy to know how many countries must sit at the international negotiating table in order to produce rules that are effective, efficient and legitimate (see the May 2012 issue of this Newsletter on http://www.felixpena.com.ar/). Hence the uncertainties that now surround the outcome of the Paris Conference and on what would be the concrete legal effect of any rules that are approved there.

The third issue refers to the development of convergence in diversity as a strategic idea of regional scope, proposed at the time by the government of Chile in order to overcome the trends towards confrontation of two different Latin Americas, identified symbolically as belonging either to the Atlantic or to the Pacific. Instead, it has been pointed out that it would be advisable to look for different communicating vessels between the Mercosur countries and the countries of the Pacific Alliance in different areas, such as, for example, physical connectivity, production linkages, technological innovation, preservation of the environment and academic exchanges.

At a meeting of ministers, held in November 2014, in Santiago de Chile and which included the participation of non-governmental sectors, it was made clear that this did not imply integrating or merging the two major agreements in the region, including those of Central America and the Caribbean. And as we pointed out at the time: "Convergence or confrontation? Two options evoked by the relation between Mercosur and the Pacific Alliance. Choosing one or the other transcends the economic and the commercial level. It delves deep into the political as it is closely related with regional governance and the prevalence of a climate of harmony functional to democracy and to the economic and social development of the member countries". (Refer to the December 2014 issue of this Newsletter on http://www.felixpena.com.ar/).

Even when some time has elapsed since its introduction, the above is a strategic idea that still preserves full force and validity for the Latin American region. It is an idea that may even be useful in other regions and at a global scale to counter the marked differences and asymmetries that characterize today's world. Perhaps it failed to maintain the momentum that it had obtained in the abovementioned meeting of November 2014. And the fact is that the discussed approaches did not translate into what should have been a roadmap, for example, in the field of joint action of a triangle of regional institutions such as the CAF, the ECLAC and the ALADI. Several factors appear to have caused this, including long-standing bilateral conflicts.

What would seem advisable for the agenda of 2016 is that this strategic idea recovers its initial momentum. This could help deactivate the tendencies towards fragmentation of the region, fueled by competing ideological visions on how to enter global economic competition and how to contribute to the necessary global governance. If these opposing views prospered, they would open the door to new emotional cleavages that would render difficult any effort aimed at regional governance, with the resulting repercussions on the domestic politics of some of the countries whose cultures are more prone to the geopolitics of emotions. This would not to be a desirable scenario.

The three abovementioned issues could contribute, if properly addressed, to facilitate the renewal of the negotiating proposals of the countries of Latin America in the front of international trade relations. The lessening of emotional factors and its ensuing impact on reducing the ideological conception of the negotiations and their outcomes could eventually lead, assuming there is political leadership and sound technical proposals, to creating conditions for the region to simultaneously undertake preferential trade negotiations that are functional to their interests and consistent with WTO rules (if well understood in the perspective of "constructive ambiguity") with three other large regional spaces relevant to Latin America, such as the US, the EU and China. In such negotiations, Latin American countries should act according to their own visions of what should characterize the global economic competition of the future, including a global multilateral framework of the WTO that is functional to the economic and social development of all countries.


Recommended Reading:


  • ADBInstitute, "Integrating SMEs Into Global Value Chains. Challenges and Policy Actions in Asia", ADBInstitute, Asian Development Bank, Manila 2015, en: http://www.adb.org/.
  • Austin, Greg, "No easy solution in US-China cyber security", EastAsiaForum, October 2, 2015, en http://www.eastasiaforum.org/.
  • CEPAL, "Panorama de la Inserción Internacional de América Latina y el Caribe. La crisis del comercio regional: diagnóstico y perspectivas", CEPAL, Santiago de Chile, octubre 2015, en http://repositorio.cepal.org/.
  • Drezner, Daniel W. (editor), "Avoiding Trivia. The Role of Strategic Planning in American Foreign Policy", Brooking Institutions Press, Washington D.C., 2009.
  • Drezner, Daniel W. "The System Worked. How the World Stopped another Great Depression", Oxford University Press, New York 2014.
  • Esteban, Mario (coordinador), "China en América Latina: repercusiones para España", Real Instituto Elcano, Documento de Trabajo 3/2015, Madrid 2015, en http://www.realinstitutoelcano.org/.
  • Jensen, J.Bradford; Quinn, Dennis P., Weymouth, Stephen, "The Influence of Foreign Direct Investment, Intrafirm Trading, and Currency Undervaluation on US Firm Trade Disputes", Peterson Institute for International Economics, Working Paper Series, Washington DC., September 2015, en https://www.piie.com/.
  • Hamilton, Daniel S.; Pelkmans, Jacques (editors), "Rule-Makers or Rule-Takers. Exploring the Transatlantic Trade and Investment Partnership", Center for Transatlantic Relations CTR) and Centre for European Policy Studies (CEPS), Washington D.C. and Brussels 2015.
  • Hees, Felipe (organizador), "O Comércio Internacional no Século XXI. Limites e Desafíos para a Defesa Comercial", Editora Singular, São Paulo 2015.
  • Hufbauer, Gary; Jung, Eujin; Miner, Sean; Moran, Tyler; Schott, Jeffrey, "From Drift to Deals: Advancing the WTO Agenda", Peterson Institute for International Economics, Peterson Institute Report, commissioned by the ICC World Trade Agenda, Washington DC., June 2015, en http://www.iccwbo.org/.
  • ICTSD, "Pontes. Eleicoes na Argentina: novos caminhos?". Vol.11, Número 8, Geneva, Outubro 2015, en http://www.ictsd.org/.
  • Leitão, Míriam, "História do Futuro. O Horizonte do Brasil no Século XXI", Editora Intrínseca, Rio de Janeiro 2015.
  • Patrouilleau, Rubén Dario; Kozel, Andrés; Lacoste, Carlos, "Un nudo en el foco. Vigilancia prospectiva del Sistema Agroalimentario Argentino 2015", INTA Ediciones, Colección Divulgación, Buenos Aires 2015.
  • Prasad, Eswar S., "The Dollar Trap. How the U.S. Dollar Tightened its Grip on Global Finance", Princeton University Press, Princeton and Oxford 2014.
  • Peña, Félix, "Cincuenta años integrados. De la influencia europea a la construcción de una identidad", INTAL-BID, Revista Integración y Comercio (INTAL 50 Años), n° 39, septiembre 2015, ps. 86 a 91.
  • Peña, Félix, "Prioridades do Mercosul para um futuro de credibilidade", ICTSD, Pontes, Vol.11, Número 8, Geneva, Outubro 2015, p. 4 a 6, en http://www.ictsd.org/.
  • Perrotti, Daniel E., "La República Popular China y América Latina: impacto del crecimiento económico chino en las exportaciones latinoamericanas", Revista de la CEPAL116, Santiago de Chile, Agosto 2015, páginas 47-60, en http://repositorio.cepal.org/.
  • Roy, Martin, "Charting the evolving landscape of services trade policies: Recent Patterns of Protection and Liberalization", WTO, Economic Research and Statistic Division, Staff Working Paper ERSD-2015-08, Geneva, October 2015, en https://www.wto.org/.
  • Sapiro, Miriam, "Transatlantic Trade and investment negotiations: Reaching a consensus on investor-state dispute settlement", Global Economy and Development at Brookings, Global Views, nº 5, Washington DC., October 2015, en http://www.brookings.edu/.
  • Sevares, Julio, "China. Un socio imperial para Argentina y América Latina", EDHASA, Buenos Aires 2015.
  • Tokatlian, Juan Gabriel, "Recalibrar la política exterior", Diario "La Nación", 19 de octubre 2015, en http://www.lanacion.com.ar/.
  • Viegas Filho, José, "Diplomacia do Brasil. De Tordesilhas aos Nossos Dias", Editora Forum, Belo Horizonte 2015.

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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