1992 - Andrew Hurrell - Latin America in The New World Order-A Regional Bloc of The Americas

Latin America in the New World Order: A Regional Bloc of the Americas?
Author(s): Andrew Hurrell

Source: International Affairs (Royal Institute of International Affairs 1944-), Vol. 68, No.
1 (Jan., 1992), pp. 121-139
Published by: Wiley on behalf of the Royal Institute of International Affairs
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Latin America in the New
World Order: a regional bloc of
the Americas?
ANDREW HURRELL
This article examines the prospects for the emergence of a r

Americas, encompassing Latin and Central America, the United States and Canada,
following President Bush's announcement of his 'Enterprise Initiative for the
Americas' in the summer of iggo. It looks at the incentivesfor and the limits to
interest in this type of regionalism in Latin America and in the United States.
The emergence of regional blocs is seen by many as a central feature of the

developing 'New World Order'.' The argument goes that the end of the Cold
War and the disintegration of the Soviet Union have reduced the incentives for
superpower intervention, while the lifting of the pattern of global Cold War
alliances that used to cut across regions has allowed more autonomous 'regional
spaces' to emerge, freed from the distorting impact of the East-West
confrontation. The decline of American hegemony and reduced American
capacity and willingness to play a global role have made space for regional
power systems to develop, in Europe around the European Community and in
Asia aroundJapan. Economic trends-the success of the European Community,
continuing difficulties in the GATT Uruguay Round, and structural changes in
the world economy-are pushing in the same direction, pressing both states and
firms towards expanded collaboration within regions.
The apparent trend to regionalism has aroused mixed reactions. Some have
welcomed it as a force for strengthening stability and world order at both the
regional and the global level. They argue that the benefits are of two kinds:
regional frameworks are the most effective ones in which to achieve order and
stability within particular regions,2 and they are likely to facilitate order at the
global level as well.3
1 For a recent argument in favour of regionalism, see Walt Rostow, 'The coming age of regionalism',
Encounter, June I990, pp. 3-7.
a Because of a sense of common interest, because economic integration tends to inhibit conflict and
increase incentives for managing it, and because cohesive regional units would reduce the scope for
intervention by outside powers. For a detailed analysis of these arguments see Joseph Nye, Peace in
parts: integration and conflict in regional organisations (Boston: Little, Brown, 197I).
Because an international system composed of regional units would lay down clear ground-rules about
the acceptable limits of political rivalry and economic competition, and because international
agreements can be more easily negotiated and policed-whether on security issues, the environment
International Affairs 68: I (I992), I2I-I39 I2I
Andrew Hurrell
Far more common, however, is the view that regionalism is a potentially

disruptive force. The fear is that a breakdown in the multilateral trading order
will lead to the emergence of three trading blocs dominated by Japan, the
United States and the EC. Freed from the constraints of the GATT system,
these might become more exclusive and more discriminatory, promoting trade
within them and discriminating against outsiders. This would mean increased
economic friction and the adoption of beggar-my-neighbour policies between
blocs. This in turn could increasingly spill over into political tensions-
especially given the United States' declining willingness and ability to organize
collective management of the international system, and the ending of European
and Japanese security dependence on the United States.
Regionalism and Latin America
In the context of Latin America, 'regionalism ' has historically meant two very
different things-intra-regional cooperation between the countries of Latin and
Central America themselves, and inter-American or hemispheric cooperation
involving the United States. Both date back to the nineteenth century. In the
I980s there was a significant resurgence in the first of these types of regionalism.
The first wave was essentially political in nature. The regional attempts to
secure peace in Central America through the Contadora Group and the
Contadora Support Group were examples of this,4 as were moves towards
increased political consultation and coordination in such forums as the Group
of Eight and its successor, the Rio Group,5 and the improvement in the political
relationship between Brazil and Argentina from I980 and particularly from
I985.
More recently, the focus has been on proposals for economic cooperation and
integration. Examples have been the attempts to extend and revitalize the
Central American Common Market,6 moves to relaunch the Andean Pact,7 and
the conclusion of a series of economic agreements between Brazil and
Argentina since I985, leading inJuly I990 to the formal commitment to create
a common market between the two countries. In April I99I this was extended
to include Paraguay and Uruguay with the creation of Mercosur.8 The I990-9I
or the world economy-between a limited number of blocs than between 170 separate states. There is
a long tradition in Western thinking on international relations seeing regionalism and particularly
regional spheres of influence as providing a framework for global order. See Paul Keal, Utnspoken rules
and superpower dominance (London: Macmillan, I983), esp. ch. 8.
4 The Contadora Group was formed in I983 by Mexico, Venezuela, Colombia and Panama to promote
a negotiated settlement of the conflicts in Central America. Argentina, Brazil, Peru and Uruguay
subsequently formed the so-called 'Contadora Support Group'.
The Group of Eight subsequently called the Rio Group, was established in Dec. I986 as a forum for
political consultation between Argentina, Brazil, Colombia, Mexico, Panama, Peru, Uruguay and
Venezuela. Chile, Ecuador, Bolivia and Paraguay became members in Oct. I990.
6 The Central American Common Market was founded in I960.
The Andean Pact was formed in I969. In May I99I the presidents of the five member countries,
Bolivia, Colombia, Ecuador, Peru and Venezuela, agreed to form a free trade area by 1995.
Mercosur is the name given to the process of economic integration formalized by the Treaty of
Asuncion, signed on 26 Mar. I99I between Argentina, Brazil, Paraguay and Uruguay, which called
for the creation of a common market by 1995.
I22
Latin America in the New World Order
period has witnessed an outpouring of regionalist rhetoric (for example at the

Rio Group summit in October I990), and discussions on regional cooperation
involving, in one form or another, almost all the countries of the region.
The other kind of regionalism in Latin American experience is that between
the Americas, covering the entire Western hemisphere. An elaborate formal
institutional structure was developed in the Organisation of American States
and its related bodies, founded in I948.9 Like intra-regional cooperation, inter-
American regionalism has acquired new momentum in the past few years,
particularly in the economic sphere. The decision to make a North American
Free Trade Area an objective of US trade policy goes back to the US Trade
Agreements Act of I979. A notable step was the successful negotiation of the
US-Canada Free Trade Agreement, which came into effect in January I989.
This, together with Canada's decision to join the OAS from I990, marked a
definite regionalist turn in Canadian foreign policy, which had previously been
based on building up extra-regional relations and active multilateralism as a
means of balancing the power of the United States.
Another crucial development was the turnaround in Mexican policy towards
inter-American regionalism. For most of the I980s Mexico had resisted the
Reagan administration's offers to negotiate a free trade agreement. In I985, the
United States and Mexico signed an agreement on countervailing duties and
subsidies; in November I987 they signed a Framework Agreement providing
mechanisms for resolving trade disputes and for liberalizing bilateral trade; and
inJune I990, President Salinas formally requested negotiations on a free trade
agreement. In the same month, on 27 June I990, President Bush gave his
'Enterprise Initiative for the Americas' speech. This proposed the extension of
the North American Free Trade Area further south, and pointed to the long-
term objective of a hemispheric free trade area, one which would include both
bilateral negotiations and agreements with the various intra-Latin American
trade groupings. The Enterprise Initiative spoke of the importance of debt
'reduction and rescheduling, but placed greatest emphasis on encouraging
foreign investment, both through continuing economic reforms within the
countries of Latin America and by creating a multilateral investment fund. Bush
aired many of these ideas subsequently during his Latin American visit in late
I990.
To provide a benchmark against which to measure the progress and

significance of regionalism, we need a working definition. I will use
'regionalism' in this article to mean a set of policies by one or more states
designed to promote the emergence of a cohesive regional unit, which
dominates the pattern of relations between the states of that region and the rest
of the world, and which forms the organizing basis for policy within the region
across a range of issues. This definition emphasizes the importance of policy in
the emergence of regionalism rather than 'natural' factors such as geography,
language or culture. It sees the two routes by which regional blocs may become
9 The OAS includes all the Latin and Central American and Caribbean states except for Cuba, the
United States, and (since Jan. I990) Canada.
I23
Andrew Hurrell
established as uncoerced regionalism on the one hand and (historically far more
common) hegemonic regionalism on the other. It emphasizes that economic
factors alone are insufficient to explain either the emergence of regional blocs
or their nature. The definition is intended to provide some perspective on the
current discussion of regionalism in the Americas, and to draw attention to the
wide gulf between the increased regionalization of trading patterns on the one
hand and the emergence of politically significant regional blocs on the other.
Why the Latin American interest?
Fear of marginalization
The renewed Latin American interest in regionalist arrangements involving the

United States-the 'return to the region -reflects in the first instance the
relative absence of alternatives. This state of affairs is by no means new, but it
has been accentuated by recent developments. It was clear by the early I98os
that the Third World movement would not serve as an effective platform for
the promotion of Latin American interests. Progress in expanding ties with
Western Europe was also limited in the I980s, though Latin America had set
great hopes here too. Except in Central America, where European political
involvement did increase significantly and has become institutionalized,
European professions of political support for Latin America were undercut by
stagnant economic relations and a European willingness to follow the US lead
on the management of the debt crisis. Japanese involvement in the region grew
in the I980s, but it too fell well short of Latin American expectations.
For many in Latin America it appears that this pattern has been reinforced by
the dramatic events of I989-9I. Though publicly applauded, the collapse of
communism in Eastern and Central Europe has led to an acute fear of
marginalization. Latin Americans see themselves as competing with the newly
democratic states of Eastern and Central Europe for a limited pool of aid, loans,
foreign investment and technology. They fear that the developing world will
lose out in this competition, and that within the developing world Latin
America will find itself at the bottom of the list of priorities, unable to match
either the geopolitical importance of the Middle East or the humanitarian pull
of Africa and South Asia. There is fear too that events in Eastern and Central
Europe, coinciding with the European Community's completion of the internal
market and with deepening monetary and political integration, will lead to
a period of sustained introspection in Europe. At worst, this might mean an
increase in trade barriers; it certainly will lead to a general European lack of
interest in the problems of Latin America. There is particular concern that
Germany, preoccupied and burdened by the demands of unification, will no
longer be able to play its central role at the heart of the EC-Latin America
economic relationship.
124
The renewed centrality of the United States
The I980s witnessed the renewed centrality of the United States to the Latin
American countries. The United States' position as the region's major trading
partner was firmly re-established. Between I980 and I987, the US share of
Latin American exports rose from 32.2 % to 38.2 %. For Brazil it increased
from I7.4 % to 29.2 %, for Chile from I2.I % to 2I.5 %, and for Mexico from
63.2 % to 69.6 %. Critical decisions on the management of foreign debt lay in
the United States: if not with the administration itself, then with US-based
multilateral agencies or US-chaired committees of private banks. Indeed, the
mutual recognition of regional 'spheres of influence'-the United States in
Latin America, Japan in Asia, West Germany in Eastern Europe was one of
the most notable features of the I980s debt crisis.
In the Reagan administration, Latin America was also facing an administra-
tion that placed a good deal of emphasis on recovering its power and authority
in Latin America after what it saw as the weakness and vacillation of the Carter
years. Much of this 'reassertion of hegemony' remained on the level of rhetoric,
and practical implementation was mostly confined to Central America, but its
impact was not entirely absent further south and was most notable in the
increasingly forceful trend in US trade policy and, negatively, in the United
States' unwillingness to make concessions on debt management.
In contrast to other parts of the developing world, the end of the Cold War
has certainly not opened up an autonomous 'regional space' in Latin America.
US hegemony is perceived as having become further entrenched with the
events of I989-9I. The invasion of Panama in December I989 pointed to the
ease with which Cold War rationales for intervention could be replaced by
historically deeper-rooted ones-the need to maintain 'order', to promote
democracy, to safeguard US property and economic interests. If the central
structural feature of the New World Order is its unipolar distribution of
political and military power, then the area in which the problems that follow
from this are most apparent is undoubtedly Latin America.
Economic introspection at an end
Latin America can no longer take refuge from a hostile world by concentrating
on the kind of inward-oriented development policies and schemes for self-
reliance and autonomy that characterized so much earlier Third World
thinking. One of the most striking changes of the period since I985 has been
the move away from development strategies based on ISI, high tariffs and a
large role for the state. More and more governments have embraced economic
liberalism-placing greater reliance on market mechanisms, seeking to
restructure and reduce the role of the state, and laying greater emphasis on
integration into world markets.
In part this shift is due to the discrediting and failure of previous development
I25
Andrew Hurrell
policies and increased recognition of the need for effective stabilization. The
cases of Mexico and Argentina show unexpectedly, to many that the
implementation of neo-liberal economic policies can be electorally popular.
In part the shift results from external factors. The impact of the debt crisis
constrained overall growth, intensified governments' fiscal crises, and placed a
high premium on successful export promotion. There was direct external
pressure from multilateral agencies and governments to make economic
assistance conditional upon moves towards economic liberalization. There is
also the critical impact of structural changes in the global economy the
increased pace of globalization of markets and production, and the dramatically
accelerating rate of technological change. This has led to a powerful perception
in Latin America that dynamic economies are internationalized economies, that
growth depends on successful participation in the world economy, and that the
accelerating rate of technological change undermines projects aimed at
autonomous, nationally based technological development. The failure of
Brazil's attempt to create a nationally based computer industry provides a
graphic illustration of these new constraints, and of the undermining of old
notions of autonomous development.
Structural changes in the global economy have also reinforced the fear that
economic interdependence is rapidly growing on a North-North axis, and that
Latin America and other parts of the developing world are becoming
increasingly marginalized. The trend towards marginalization can be seen in the
steady decline of Latin America's share of world exports, down from IO.9 % in
I950 to 5.43 % in I985; in Latin America's share of total direct foreign
investment, down from I5.3 % in I975 to 9.I % in I985; and in the fall of its
share of both European and Japanese trade and investment. The shift towards
greater integration into the world market is, for Latin America, the most
important aspect of the New World Order. While its causes are complex, its
impact has been to make the region more outward-looking and more
dependent on the international economy at precisely the time when the overall
pattern of international relations is in a state of great flux and uncertainty.
These changes also impact critically on US-Latin American relations. They
explain why Latin America is so interested in opening up its economies to the
United States. At the same time, the gradual implementation of these policies
has removed many of the sources of friction between the United States and
Latin America. Much of the bitterness in US-Brazilian relations in the I99Os
focused on economic friction, and in particular on US attempts to alter
Brazilian policies over trade and investment issues and over intellectual
property rights (notably in the pharmaceutical and informatics sectors).
President Collor's programme of tariff reform, the virtual abandonment of the
protectionist informatics regime and the decision to place intellectual property
rights legislation before the Brazilian Congress has thus substantially altered the
character of relations with the United States. For Mexico, the perceived costs
of failing to modernize the Mexican economy have gradually come to
outweigh long-standing fears that freer trade with the United States would
I26
impose unacceptable adjustment costs, especially in manufacturing, and would

undermine the traditional quest to preserve national autonomy.
The end of multilateral trade?
The perception that Latin America might be excluded from an increasingly

protectionist Europe, and that the multilateral trade negotiations were on the
point of breaking down, has increased the attractions of bilateral free trade
agreements with the United States. Free trade agreements offer the prospect of
maintaining and guaranteeing access to the region's most important market,
and of escaping the growth of US protectionist measures. Given the scale of the
US market and the US contribution to the Latin American trade surplus, this
is important. Between I985 and I987 the United States accounted for 54 % of
Mexico's total trade surplus and 40 % of Brazil's. It becomes even more
important because so much of the success of recent export expansion in Latin
America has been in manufactured goods, to which the United States has been
far more open than either the EC or Japan. The US share of total Latin
American manufactured exports increased from 2I.8 % in I980 to 49.5 % in
I987. Between I985 and I987 Mexican manufactured exports to the United
States doubled, and they now account for around half of total Mexican exports,
replacing oil as the key export sector. By I985 manufactured goods made up
72% of Brazilian exports to the United States (as against 29% in I972, and
compared with 33 % for the EC and 27 % for Japan). These increases in
manufactured exports raise obvious questions about long-term market access,
especially as it is precisely these products that have been most susceptible to US
protectionism. Further, consolidated market access makes countries rrm ore
attractive to inward foreign investment, especially when, as in the Mexican
case, they are so close geographically.
Regionalist momentum
Once the process of regionalism began, it took on a dynamic quality, feeding

the image of ever-expanding regionalisms and creating powerful incentives for
other states to join in. Thus Mexico's move towards accepting a free trade
agreement with the United States has forced the other countries of the region
to reconsider their position: in the first place so as not to risk exclusion and the
diversion of trade and investment towards Mexico, and second, because
Mexico's 'defection' undercuts the political and economic viability of a purely
Latin American form of regionalism. While Mexico has been anxious to stress
the continued importance of its relations with South America (for instance in
its September I99I free trade agreement with Chile), there must be some
question over the genuineness of this concern, and there can be little doubt that
Mexico's 'defection' alters the balance of power between North and South
America.
I27
5 IAF 6,8
Andrew Hurrell
It is thus hardly surprising that recent meetings of the Rio Group have been
dominated by the problem of how subregionalism in Latin America can best be
integrated with proposals for 'macro-regionalism' between Latin, Central and
North America. There are significant divergences between Latin American
countries on this question. Some countries, such as Chile, see the priority issue
as the negotiation of free trade agreements with the United States.10 Others,
such as Brazil, Venezuela and Argentina, favour encouraging subregional
integration so as to coordinate the Latin American response to the Bush
initiative, strengthen the Latin American bargaining position, and provide a
fallback option in case talks with the United States prove fruitless. In addition,
the progress of Mercosur has surprised many observers. Despite continued
problems, it represents by far the most solid example of subregional
cooperation.
US policy thinking
Though still far from dominant, a number of factors have come together to
increase the priority being placed in Washington on relations with Latin
America. The year I990-9I saw an increased regionalist momentum in the
United States, though this has not yet reached the stage of a clear regionalist
turn in foreign policy.
Images of exclusive regionalism
In the first place, there is a fear of what is perceived as the growing trend
towards exclusive regionalism in other parts of the world. The image of Europe
I992 and the growing perception of Japan as an increasingly hostile and
antagonistic competitor have done most to refocus US attention on Latin
America. It is worth stressing that it is images and perceptions, far more than
hard evidence or arguments, that have shaped US thinking on regionalism.
Indeed there is a real danger of the rhetoric of regionalism becoming a self-
fulfilling prophecy.
Disenchantment with GATT
These fears have been reinforced by increasing disenchantment with the GATT
framework with its institutional weaknesses, with the problems it has faced in
dealing with the complexities of post-Tokyo Round issues, and with the
difficulty of securing key US objectives in the Uruguay Round, especially over
trade in services and agriculture and over intellectual property rights. Fears that
the GATT system and the relatively liberal trading order that is embodied is
10 Chile has recently declined to take part in the Brazilian-Argentinian integration process, which was
extended in March I990 to include Uruguay and Paraguay. On Mexico's ambivalent relations with
Latin America, see Jos6 Miguel Insulza, 'Mexico and Latin America: prospects for a new relationship',
in Riordan Roett, ed., Mexico's externtal relationts int the 1990S (Boulder, CO: Lynne Rienner, I99I).
128
under threat have been illustrated recently in the problems of the Uruguay
Round, the deadlock over agricultural trade between the US and the EC, and
the continued tensions in US-Japanese trade relations.
But the shift in US trade policy can be traced to the early I98os: to the
decision to push ahead with further multilateral trade negotiations but at the
same time to strengthen and safeguard US policy by broadening the range of
options. One strand of this twin-track approach involved increased de-
termination to use US power to force unilateral concessions from countries
whose trade policies were deemed contrary to US interests, most visibly in the
form of investigations and retaliatory measures under section 30I of the I974
Trade Act and its Super 30I successor. The other strand involved the conclusion
of bilateral trade agreements, with Israel in I985 and with Canada in I988.
These were intended to exert pressure on the EC and Japan: there was an
implicit message that if the Uruguay Round broke down, such measures would
become the central thrust of US trade policy, rather than merely an adjunct to
it."1 Structured free trade agreements offer the United States both economic
benefits (market access, the ability to ensure compliance with a favourable
investment regime and adequate patent protection) and a political framework
for the effective management of other issues (drugs, migration, the en-
vironment). 12
Even if the GATT system holds together, the prospects for increased
economic relations with other regions are not bright. The difficulties of political
and economic reform in Eastern Europe are becoming clearer by the day; the
Soviet Union is in a vortex of economic chaos; economic relations with China
are restricted by political frictions. In a world in which free trade can no longer
be taken for granted, it is argued, the United States needs Latin America as a
market. It is after all a market in which the United States has an obviously
strong historical position, and it has enormous potential (a population of around
430 million, compared with I I0 million in Eastern Europe). Economic
liberalization has already made significant progress, and business and investor
confidence is slowly returning witness the return of some flight capital,
renewed flows of foreign capital, the revival of some bank lending, and
impressive growth rates in several countries (the new confidence being most
apparent in Mexico, Chile and Venezuela, most absent in Brazil).
Perceived interdependencies
Third, there is the need for the United States to develop a more assertive
regionalist policy because of the perceived interdependencies that have
developed on such issues as drugs, the environment, and (especially)
11 See Jeffrey J. Schott, 'More free trade areas?', Policy Analyses in International Econom
I989.
12 Paul Krugman has argued that regional free trade areas allow neighbours to negotiate at a level of
detail and mutual intrusiveness that is increasingly difficult at a global level: see Paul Krugman, 'The
move to free trade zones', paper presented to symposium on 'Policy implications of trade and
currency zones', Jackson Hole, 22-4 Aug. I99I, p. 35.
I29
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Andrew Hurrell
immigration. The argument is that the I98os focus on military threats and
military responses has been rendered obsolete with the end of the Cold War.
Old-style security threats have gone, and security needs to be redefined around
precisely these kinds of problems problems that can only be effectively
managed by active cooperation with the states of the region and by developing
new structures and sources of influence.13
Not only does the management of these issues involve active cooperation; it
forces the United States to make far greater efforts towards ensuring the overall
stability and prosperity of the region. For example, formal international
agreements on measures to curtail the drug trade or to address environmental
issues are of little use if governments are unable to implement them within their
own societies:
If, however, Mexico or some Caribbean states became too weak to deal with internal
poverty or domestic problems, transborder flows of migrants, drugs or contraband
might create a new foreign policy agenda for the United States. Similarly, developing
countries that cannot prevent the destruction of their forests will affect the global
climate, yet the very weakness of those states will diminish the power to influence them.
Ironically, the current neglect of weak Third World nations may reduce America's
future power to influence them on the new transnational issues.14
Ideological motives
The proponents of US regionalism argue that the United States has both a
political interest and a moral duty to uphold the values of political democracy
and economic liberalism that are now in the ascendant in Latin America, but
in many cases still very fragile. They argue that the widespread acceptance of
these values, together with the increase in US power in relation to Latin
America, has created a historic opportunity to shape and sustain a new order in
the Americas, reflecting American values and American interests.
The regionalist option is strengthened by the fact that these arguments are to
be found in differing combinations among both liberals and conservatives. An
increased regional emphasis to US policy can be accommodated by both the
'declining hegemony' thesis and the view of the United States as the world
hegemon of the post-Cold War world. For the declinists, Latin America
becomes the refuge from an increasingly hostile world. For the hegemony
resurgent school, Latin America is a test of the United States' ability to give
concrete embodiment to its still diffuse vision of a New World Order, to act
decisively in support of its values, to assert its authority over recalcitrant or
delinquent states.
However, we should not exaggerate the importance of regionalism,
particularly within the still very globally minded Bush administration. Bush's
13 For an examination of the 'new security agenda' see Andrew Maguire and Janet Welsh Brown, eds.,
Bordering on trouble: resources and politics in Latin America (Washington, DC: Adler & Adler for World
Resources Institute, I986).
14 Joseph Nye, Bound to lead: the changing nature of American power (New York: Basic Books, I990), p.
I98.
I30
Enterprise Initiative speech was at least in part a rhetorical gesture to reassure

Latin and Central America that it had not been completely forgotten in the face
of the momentous developments in Europe and the Soviet Union. Equally, the
North American Free Trade Area is still seen by many in Washington as a
bargaining tool, a hedging policy within the broader context of the GATT
negotiations. But the pressures and justifications for an increased regionalist
emphasis are already in place. If no agreement is reached in the Uruguay
Round, if relations with Japan deteriorate, if US political opinion continues to
move in an introspective direction: they will grow.
The limits to regionalism
In other words, there has been a significant degree of coincidence in the kinds
of factors that have led Latin America and the United States to think again
about increased regional cooperation; and significant steps have already been
taken to translate these overlapping interests into reality. On the one hand, a
number of framework agreements under the Enterprise Initiative have already
been signed. On the other hand, it is increasingly likely that agreement will be
reached between the United States and Mexico over the North American Free
Trade Area.15
There are still many problems, of course. The Free Trade Area is opposed by
a coalition of US environmentalists, church groups, unions, textile and clothing
manufacturers and agricultural pressure groups, who fear that a free trade
agreement will mean the loss of jobs and lowered environmental and health
and safety standards. The range of problematic sectors is large-oil, agriculture,
banking, automobiles, and the environment and there is the perennial
problem of the migration issue. But in the end the Mexican agreement is likely
to go through. US interests are far more directly engaged in Mexico than
elsewhere in the region, the transformation of Mexican economic thinking is
greater than elsewhere in the region, and the degree of existing economic
interdependence is already high. Around 70 % of Mexican exports go to the
United States. Tariffs have already fallen significantly (the average Mexican
tariffis now IO%, compared to 30% in I985). There is already a high degree
of integration of cross-border production arrangements. And migration has led
to a high degree of human interdependence, which has in turn had an impact
on identity and social and economic values.
But it is also clear that there are important factors that work against the
emergence of any cohesive, broadly based regionalism in the Americas. More
important for the rest of the world, there is little to suggest that such regionalist
15 After a meeting between Bush and Salinas at Camp David on I4 Dec. I99I, it was announced that
the NAFTA treaty is to be delayed at least until after the I992 US election. This is partly due to the
political climate in the US, where pressing NAFTA too hard would be politically risky given
protectionist sentiment, and partly due to the current emphasis on trying to salvage a successful
conclusion to the GATT Uruguay Round. Despite this delay, it is likely that NAFTA will be
concluded in I993.
I3'
Andrew Hurrell
initiatives as do emerge in the Americas will be of a closed or exclusive

character.
Economic limitations
In the first place, it is important to highlight the economic limits to the growth
of regionalism. The geographical focus of US attention is likely to remain
firmly fixed on Mexico and the Caribbean. Mexico has increasingly come to
dominate US economic relations with Latin America. Between I980 and I988,
Mexico's share of total US exports to Latin America increased from 39.4 % to
46.7 %, and of imports from 32.3 % to 43.6 %. Social, political, economic and
environmental interdependence is far higher between the United States and
Mexico than with the rest of the region.
Further south, economic regionalism is likely to remain patchy, slow, and ad
hoc. There is no guarantee that the United States will seek to negotiate further
free trade areas. The United States may continue to be reluctant to conclude
additional free trade areas for example with Chile so as not to provoke
further regionalist initiatives in other parts of the world. Washington may also
believe that it can achieve its political and economic objectives without making
regionalism or the construction of new economic arrangements a high
priority. Hegemony strengthened by the detachment of Mexico from
South America may well be seen as making institutionalized regionalism
unnecessary.
It is also clear that economic regionalism is not going to include large-scale
flows of US economic aid to Latin America, nor significant debt reduction. The
United States has neither the economic resources nor the political motivation
for mounting any economic programmes in the region on the model of the
Kennedy era Alliance for Progress. In fact the limitations of Washington's
capabilities in this area are well illustrated by the difficulties of securing
significant amounts of aid to the two recent showcases of US policy, Panama
and Nicaragua.
More importantly, US economic interests do not point towards the creation
of a close, exclusivist regional bloc. Though significant, Latin America is not a
major economic partner, and the relations that matter will continue to be those
with the major industrialized countries. Indeed Latin America's share of US
trade has declined. In I989 Latin America's share of US exports was I3.46%
(as against I7.5 % in I980), and the region supplied I2.2% of United States (as
against I5.5 % in I979). In the same year Latin America represented only io.6 %
of total US foreign investment and I3.5 % of its foreign investment in
manufacturing (though 72 % of US manufacturing investment in the
developing world is in Latin America). In addition, the build-up of bank
reserves and the debt-rescheduling process has drastically reduced the threat to
US banks posed by a Latin American default.
US trading patterns are strongly multilateral. In I989, 26 % of total US trade
was with Canada and/or Mexico, 35 % with Asia, and 20% with the EC. By
I32
I989 the North American region the United States, Canada and Mexico was
nearly as tightly integrated with Asia (29 %) as internally (35 %).16 The
evidence of a long-term trend towards increased intra-regional trade in the
Americas, and, as Fred Bergsten has pointed out, 'geographical propinquity is
no longer central to trading patterns '.17 A move towards regional blocs would
risk cutting the United States off from the most dynamic world markets and
would favour less efficient Latin American producers in a number of sectors
over their more efficient Asian counterparts, thereby eroding the long-term
competitiveness of US industry. Moreover, it is difficult to see how an
American regional bloc would significantly increase US bargaining power in
international trade negotiations.
Finally, the rhetoric of regionalism has to be set against countervailing trends
in the world economy. The structures of global economic interdependence that
have developed since the Second World War have been built around the
consolidation of global markets and global production, in a dense and complex
network that could only be altered at very high cost. In particular, regional
blocs would cut across the emergence of the complex cross-regional production
arrangements that have developed within and between companies, and also
across the rapidly expanding volume of foreign trade based on transnational
production."
US economic interests, then, do not point unequivocally towards
regionalism. But, of course, the current perception of US interests, which sees
regionalism as an adjunct to a still fundamentally globalist trade policy, could
be altered by a number of factors by increased domestic political pressures as
the country moves towards the I992 election, by the rhetoric of regionalism
acquiring a logic of its own, by deteriorating relations withJapan, above all by
a disintegration of the GATT system, which has embodied certain common
understandings, however incomplete and ambiguous, on how regionalist
trading schemes should be integrated into a multilateral framework.
No longer a closed continent
Second, regionalism is unlikely to dominate the pattern of relations between the

Latin and Central American states and the rest of the world. We are not seeing
the 'closing of the hemisphere' as occurred early after the Second World War,
when outside powers came to view the region as an adjunct to their relations
with Washington. Indeed a further loosening of US-European and US-
Japanese relations may well end completely the deference that Western Europe
and Japan have historically shown to US interests in Latin America, and to
Washington's sensitivities over the activities of non-hemispheric states.
16 See Helen Milner, 'A three bloc trading system', paper presented to International Political Science
Association conference, Buenos Aires, 20-25 July I99I, p. II.
17 C. Fred Bergsten, 'Policy implications of trade and currency zones', paper presented to Jackson Hole
symposium, 23 Aug, I99I, p. 8.
18 For an examination of these trends see DeAnne Julius, Global companies and public policy: the growing
challenge offoreign direct investment (London: Pinter/RIIA, I990).
I33
Andrew Hurrell
It is certainly true that Europe's preoccupation with the problems of Eastern

Europe, with the completion of the single market and with the need to rethink
Europe's broader international position have led to a period of introspection.
Further, there is still a chance that the completion of the internal market may
lead to some increased protectionism, as a means of shifting the burden of
adjustment from EC firms and labour onto the outside world. The completion
of the internal market may well also involve further non-tariff barriers,
resulting from the New Community-wide norms and standards. There is also
the genuine problem of a diversion of resources away from the developing
world and towards Eastern and Central Europe.
But these trends should not be exaggerated. There is no clear evidence that
I992 is likely to lead to significantly higher levels of protectionism. Diversion
of resources to the East will affect public funds mostly in the form of bilateral
and multilateral aid aid which, for most of Latin America, is minimal (the
exception is Central America). The evidence on private investment and private
lending is less clear-cut, and suggests a marked reluctance to move capital to the
East, where uncertainties over the success of economic and political reform are,
if anything, even greater than in Latin America.
As to Japan, its declining interest in Latin America during the I980s was due
primarily to the deep economic crisis facing the region. As the overall economic
climate improves, the pressures on both theJapanese state andJapanese business
to increase their economic stake in the region will increase. Indeed the same
recipe for success that is needed to underpin an increase in US-Latin American
economic relations economic stabilization, structural reform and economic
liberalization will also help improve relations with Japan.
Political issues
Third, regionalism cannot be seen solely in economic terms. The recent moves
towards increased economic regionalism have to be placed in the context of the
broader agenda between the Americas. It is an unfortunate byproduct of the
success of the European Community that regionalism elsewhere tends to be
discussed overwhelmingly in economic terms. But in the Americas, non-
economic issues are likely to work against the emergence of a tightly knit
regional bloc, and certainly against the liberal functionalist illusion of an
automatic spillover from increased economic interaction to the emergence of
political common interests. Hemispheric regionalism is unlikely to form the
organizing basis for policy between the Americas across a range of important
issues democratization, the environment, security.
Democracy: The promotion of democracy has reappeared as an important

theme of the debate on inter-American regionalism. It might be argued that
democratization could be the issue to re-engage US interests in Latin America
and to serve as a source of common values to underpin the growth of economic
ties. There is, after all, an extensive inter-American institutional framework
I34
around which regional support for democratization might be built. Not-

withstanding its undoubted weaknesses, some see the basis here for an effective
framework for international support for democracy."9 That the OAS was able
to coordinate a regional response to the September I99I coup in Haiti and,
more importantly, that the United States was prepared to set its own policy
within a multilateral framework could be argued as solid evidence of a
growing convergence of attitudes to democratization.
But there are number of factors that cloud this happy and harmonious
picture. It is clear to many in Latin America that US willingness to back
democratization with solid economic assistance is still heavily influenced by
strategic and geopolitical concerns, as illustrated by the US decision to offer
substantial debt relief to Poland and Egypt, but its determination to 'ring fence'
these offers to prevent them being taken as a precedent. There is also a danger
that democratization can all too easily become an excuse for an interventionist
foreign policy, a cloak for darker and less admirable purposes. The historical
record illustrates all too fully that the region has not been well served by its
geographical proximity to the United States, a country whose political
traditions have made it particularly susceptible to democratic crusading,
whether of the liberal Wilsonian or the conservative Reaganite variety. Thus
while democratic values are indeed widely shared throughout the Americas, the
dangers of the abuse of hegemonic power have led, and will continue to lead,
Latin American states to try to limit the scope for 'democratic interventionism',
and to place continued emphasis on the principle of non-intervention.
Nor is the record of US attempts at supporting democracy encouraging.
Outside intervention can all too easily distort domestic political outcomes and
undermine fragile democracies by encouraging the polarization of domestic
politics. As one scholar has recently written:
Recurrent efforts by the government of the United States to promote democracy in

Latin America have rarely been successful, and then only in a narrow range of
circumstances ... From the turn of the century until the I980s, the overall impact o
policy on Latin America's ability to achieve democratic politics was usually negligible,
often counterproductive, and only occasionally positive.20
Putting a high priority on democracy all too often cuts across other US interests
and objectives. This was of course a central feature of the Cold War period,
when fear of radicalization consistently forced the United States into the arms
of decidedly undemocratic military regimes. But it could pose problems again
if, for example, political liberalization in Mexico does not keep up with the
speed or success of economic reform. Another important example is Colombia,
where in the context of managing the drugs issue the important process of
domestic political pacification by negotiation and social reincorporation cuts
across US preferences for police action and extradition.
1 See, for example, Tom Farer, 'The United States as guarantor of democracy' in the Caribbean bas
is there a legal way forward?, Human Rights Quarterly, No. Io (I988).
20 Abraham F. Lowenthal, 'The United States and Latin American democracy: learning from history',
in Abraham Lowenthal, ed., Exporting democracy: the United States and Latin America (Baltimore, MD:
Johns Hopkins University Press, I99I), p. 26I.
I35
Andrew Hurrell
Finally, it is not obvious that democratic or ideological common interests

point Latin America towards the United States. If democracy is to become a
central element of international alignments, then political and ideological
common interests are in many fundamental ways far stronger with Europe than
with the United States. This is certainly true of political parties and ideologies,
illustrated by the fact that 95 % of the members of the Party Internationals
consist of parties from Europe and Latin America.
The pursuit of democratization could develop as the ideological cement for
a strengthened inter-American regionalism, but moves in that direction are
beset with difficulties, and it is equally possible that democratization will
emerge as a source of friction and frustration if US rhetoric is not backed up
by concrete economic benefits, if the dangers of democratic interventionism
reappear, and if the pursuit of democracy comes into conflict with other core
US interests.
Environmental issues: A second important issue is the environment. This has

emerged as a central issue on the inter-American agenda. Environmental
problems are important to Latin America for three reasons. First, they are
highly visible in the Latin American context in that if problems of deforestation,
soil erosion and the deterioration of the urban environment are not tackled,
direct damage is likely to be suffered. Second, there are significant international
costs attached to not taking the environment seriously, as Brazil has discovered
in the late I980s with the international campaign against Amazonian
deforestation. Third, the global environment is the one area where North-
South interdependence is based on solid reality rather than empty rhetoric. In
this sense it provides Latin America with potentially significant opportunities.
In most respects, North-South interdependence has declined since the heady
days of the I970s: the North trades less with the South, less Northern
investment takes place in the South, the North has less need of most Southern
minerals and commodities, and Northern banks have gradually reduced their
potentially crippling exposure to developing country debt.2" But the effec
management of the global environment is one area where the developing
countries' cooperation and active participation is likely to prove essential-both
for negotiating international agreements and, more importantly, in ensuring
that those agreements are effectively implemented.
Now there are clearly some environmental issues that can best be dealt with
at a regional or inter-American level. There have been a wide range of regional
environmental initiatives, such as the UN Environmental Programme's regional
seas programme or the EC environmental regime, and many more are
currently under discussion.22 Crossborder pollution between Mexico and the
United States is the most obvious example within Latin America, and
21 On this see John Ravenhill, 'The North-South balance of power', International Affairs 66:4
1990, pp. 73 1-48.
22 See Peter H. Sand, 'International cooperation: the environmental exp

Matthews, ed., Preserving the global environment: the challenge of shared le
'99').
I36
environmental questions have emerged as a major subject of detailed

negotiations within the moves to a Free Trade Agreement.
But it is far from clear that inter-American regionalism is the most logical or
politically effective forum for securing Latin American objectives in en-
vironmental negotiations. Latin America's key strategic alliance on this issue is
with the developing world. The potential bargaining power of the developing
world is considerable, and Latin America has a fundamental interest in making
use of this, both to ensure a fair distribution of the costs and benefits of global
environmental management, and as a lever to force the North to address the
broader question of North-South inequality. Although the United States
moved some way towards accepting the principle of environmentally related
resource transfers at the Houston Group of Seven economic summit in July
I990, it has been the least willing of the industrialized countries to take action
in this direction. Europe has been consistently more open to considering
mechanisms to provide additional resources. And it is Japan, often pilloried as
'eco-outlaw' over its record on whaling, driftnet fishing and imports of
tropical timber, that has promised the largest amounts of foreign aid for
environmental projects. So not only does the logic of environmental nego-
tiations point Latin America towards the developing world; it also suggests that
Latin America is more likely to win concessions from Europe and Japan, and
more likely to face the United States as an opponent rather than as an ally.
Security issues: A third critical set of issues concerns security. The consolidation
of a regional security order was, after all, an important part of the hegemonic
regionalism of the period after the Second World War. What are the chances
of security re-emerging as a focus for hemispheric regionalism?
There are some signs of convergence. The United States has placed
considerable emphasis on nuclear proliferation and on controlling conventional
arms sales as elements of its proclaimed New World Order. In Latin America,
the proliferation issue has been transformed by two related factors: first by the
rapprochement that has taken place between Brazil and Argentina and the role
that nuclear confidence-building measures and low-level cooperation played in
this, and second by the Collor government's shift in Brazil's nuclear policy,
highlighted by Collor's United Nations speech in September I990, and
illustrated by the public abandonment of Brazil's so-called 'parallel' nuclear
research programme. There has also been progress in resolving disputes
between the United States and Brazil and Argentina over arms sales to the
Middle East and the transfer of missile technology. Moreover, Latin America
offered solid, if not wholly unequivocal, support to US and UN policy during
the Gulf War.
But it would be wrong to paint too rosy a picture. The transfer of sensitive
technology remains a problematic issue-witness continued differences between
the United States and Brazil over the transfer of supercomputer technology. A
good deal of the public shift in attitudes on these issues has been as much to
please the United States and in the expectation of future benefits as it has been
I37
Andrew Hurrell
based on a fundamental shift in thinking within the political and military

establishments of these countries. Latin American Countries are distinctly
unhappy about the growth of US ideas of linking economic assistance to
controls on military spending and arms sales. And underneath the public
support, the view that in the Gulf War the United States was manipulating the
United Nations for its own purposes and was backing only a selective
enforcement of international law found an echo in many quarters in Latin
America.
What of the broader security agenda? Mutual cooperation against threats
from outside the Americas has been rendered almost wholly obsolete with the
decline in Soviet power. There certainly is much potential for interstate friction
within the region, but particularly compared with other parts of the developing
world, the overall pattern of the I98os was positive, with the resolution of a
number of long-standing tensions, most notably between Brazil and Argentina
and between Argentina and Chile. This would seem to suggest that such
tensions as continue or re-emerge may be best dealt with in the first instance by
increasing the kind of bilateral confidence-building measures that have been
developed by Brazil and Argentina, and perhaps later by some form of
subregional security arrangement. It is hard to see a military or political
rationale for US involvement in this kind of arrangement.
Here as elsewhere in the developing world, the most relevant and pressing
security issues are internal ones-instability resulting from social tensions,
political polarization, drugs-related violence, environmental degradation.
Security problems and flare-ups of old territorial disputes are likely to stem
from the underlying fragility of domestic social, political and economic
structures. The very nature of these issues, and the asymmetry of power
between the United States and Latin America, work against the re-emergence
of an effective inter-American security system.
Latin America remains extremely sensitive to anything that might facilitate
or legitimize US intervention. Indeed one of the most noticeable trends has
been declining Latin American willingness to provide multilateral cover for US
military interventions, best illustrated by the contrast between the handling of
the crises in the Dominican Republic in I965 and in Nicaragua in I979. At the
same time, US and Latin American views on how to respond to these kinds of
threats have diverged, with the United States tending to favour counter-
insurgency and militarization, and Latin America looking more to social and
economic reconstruction. This cleavage lay at the heart of differences over the
nature of the crisis in Central America in the I98os, and it is also visible in the
differences between the United States on the one hand and Peru and Colombia
on the other over the question of drugs.
To conclude. The current obsession with regionalism in Latin America-and,

arguably, elsewhere-is misplaced. It certainly focuses attention on genuine
perceptions and on some concrete developments. Inter-American regionalism
I38
is of growing importance to Latin America, and to a lesser extent to the United

States, and is likely to remain so. There is much to be gained by regional
cooperation, and there are some issues-migration, transborder pollution,
drugs-that can only be effectively addressed on a region-wide basis. But the
notion that a cohesive and exclusive regional bloc is likely to emerge in the
Americas follows from a one-sided analysis of inter-American relations. It is
contradicted by the complexities and continued ambiguities of US-Latin
American relations; by the range of Latin America interests; by the new
pluralism in the international system-even if the full impact of that pluralism
has yet to work itself out, particularly in an increased world role for Europe and
Japan; by the consolidation of global markets for production, finance and
technology; and by the growth of global issues which cannot be contained
within a purely regional framework.
I6 December 199I
I39

1992 - Andrew Hurrell - Latin America in The New World Order-A Regional Bloc of The Americas

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1992 - Andrew Hurrell - Latin America in The New World Order-A Regional Bloc of The Americas

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Latin America in the New World Order: A Regional Bloc of the Americas?

Author(s): Andrew Hurrell

World Order: a regional bloc of

This article examines the prospects for the emergence of a r

The emergence of regional blocs is seen by many as a central feature of the

International Affairs 68: I (I992), I2I-I39 I2I

Far more common, however, is the view that regionalism is a potentially

Regionalism and Latin America

period has witnessed an outpouring of regionalist rhetoric (for example at the

To provide a benchmark against which to measure the progress and

Why the Latin American interest?

The renewed Latin American interest in regionalist arrangements involving the

The renewed centrality of the United States

Economic introspection at an end

impose unacceptable adjustment costs, especially in manufacturing, and would

The end of multilateral trade?

The perception that Latin America might be excluded from an increasingly

Once the process of regionalism began, it took on a dynamic quality, feeding

Images of exclusive regionalism

Disenchantment with GATT

Enterprise Initiative speech was at least in part a rhetorical gesture to reassure

The limits to regionalism

initiatives as do emerge in the Americas will be of a closed or exclusive

No longer a closed continent

Second, regionalism is unlikely to dominate the pattern of relations between the

It is certainly true that Europe's preoccupation with the problems of Eastern

Democracy: The promotion of democracy has reappeared as an important

around which regional support for democratization might be built. Not-

Recurrent efforts by the government of the United States to promote democracy in

Finally, it is not obvious that democratic or ideological common interests

Environmental issues: A second important issue is the environment. This has

22 See Peter H. Sand, 'International cooperation: the environmental exp

environmental questions have emerged as a major subject of detailed

based on a fundamental shift in thinking within the political and military

To conclude. The current obsession with regionalism in Latin America-and,

is of growing importance to Latin America, and to a lesser extent to the United

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