Competitive Diffusion of Trade Agreements in Latin America

Abstract

Preferential trade agreements (PTAs) have rapidly proliferated in Latin America since the 2000s; this paper examines the factors which have facilitated or hampered their diffusion. The paper argues that the diffusion of PTAs, and resistance against them, has resulted in two alternative trade‐integration models. On one hand, there is diffusion of US‐led neoliberal North–South PTAs in Central American and Latin American countries (LACs) on the Pacific Basin. On the other hand, the reinforcement of post‐liberal regionalism led by Brazil and MERCOSUR countries has acted as a firewall of resistance to the diffusion of US‐led PTAs and their neoliberal policies. This paper first discusses how the competitive diffusion of US‐led PTAs started in Latin America. It then analyzes two intertwined dynamics (international‐regional and institutional‐domestic) that explain why US‐led PTAs have proliferated in the region. The third section explores MERCOSUR's reactions to the US competitive PTA diffusion and also how Brazilian leadership has evolved in the South American subregion to encircle US diffusion of PTAs, leading to an outcome of two different patterns of integration in Latin America.

The Diffusion of Regionalism

“…The South African Development Coordination Conference, SADC's predecessor, which was founded in 1980, was not only a reaction to apartheid South Africa, but was also inspired by Latin America's developmental structuralism, particularly Raul Prebisch and the Economic Commission for Latin America (CEPAL; see Chapter 8 by Bianculli and Chapter 17 by Bruszt and Palestini, this volume; Dosman, 2006). More recently, Brazil and Mercosur developed a competitive counter-model to the US-led diffusion of PTAs in Latin America as a result of which we now find two different patterns of PTA designs in Latin America (Quiliconi, 2014). Last not least, Solis et al argue that the diffusion of FTA agreements in the Pacific Rim is due to competition, not the least because of Japan's participation in the Trans-Pacific Partnership "mega PTA" (Solis et al, 2009; Solis and Katada, 2014; on "mega PTAs" see Chapter 15 by Kim et al, this volume).…”

Economic Ideas and North-South Preferential Trade Agreements in the Americas

“…Finally, it has been argued that Mercosur membership was another decisive factor, since Argentina and Brazil did not appear willing to accept that Uruguay signed a PTA with the US and continued being part of the bloc (Porzecanski, 2010;Quiliconi, 2014). As seen before, Gargano recurred to this argument to strengthen the opposition to the deal, but this seemed more like a strategy to impose his view within FA.…”

“…For LA, Sánchez-Ancochea (2008) has argued that this 'fear of exclusion' has increased pressures to sign PTAs with the US, because as neighbors with similar exporting profiles do so, the risk of trade diversion overcomes policy space concerns. And in a similar vein, Quiliconi (2014) states that the combination of these competitive dynamics with the absence of large internal markets push domestic producers to pressure their governments to seek deals with the US. Other external pressure highlighted is political trade dependence (PTD), identified by Shadlen (2008) and Manger and Shadlen (2014).…”

Widening the ‘Global Conversation’: Highlighting the Voices of IPE in the Global South

“…56 This new set of regional arrangements and the variety of issues and evolving agendas bringing them together led to the debate on what kind of regionalism and overlapping of institutions the region was experiencing. 57 Many of the debates on regionalism and regional cooperation were published not only in books but also in South American journals. In terms of specific journals publishing IPE articles in South America, for those that belong to the Scimago-Scopus database, we can only mention the Brazilian Journal of Political Economy, but there is a group of journals in political science and international relations that tend to publish IPE articles even though are not exclusively dedicated to IPE topics.…”