Regionalism in Latin America: between
integration and cooperation
By João Baptista Areal Neto
Master thesis Political Science
European Politics and External Relations
June 2018
Supervisor: Dr. Sebastian Krapohl
Second reader: Dr. Rosa Sanchez Salgado
"(…) it is understandable that the rational talents on this side of the world, exalted in the contemplation of their own cultures, should have found themselves without valid means to interpret us. It is only natural that they insist on measuring us with the yardstick that they use for themselves, forgetting that the ravages of life are not the same for all, and that the quest of our own identity is just as arduous and bloody for us as it was for them. The interpretation of our reality through patterns not our own serves only to make us ever more unknown, ever less free, ever more solitary.”
Regionalism in Latin America: between integration and cooperation 1
Part A 2
Regionalism: conceptualisation and history 2
Theoretical framework and hypotheses 8
Case selection 14
Part B 19
Hypothesis 1: Extra-regional relations are a greater force than intra-regional factors
for integration in Latin America 19
Hypothesis 2: A ‘benevolent’ hegemon is necessary for a successful regional
organisation 29
Hypothesis 3: Strong regional institutions are conducive to further integration 39 Hypothesis 4: High levels of transnational action in civil society lead to more
integration 50
Conclusion 58
Regionalism in Latin America:
between integration and cooperation
This research project is targeted at carrying out a comparative analysis of regional integration projects in Latin America, namely the Common Market of the South (Mercosul), the Andean Community (CAN), the Caribbean Community (CARICOM) and the Central American Common Market (CACM). The principle objective of this thesis is to paint a relatively comprehensive picture of regionalism in the developing countries of the Americas by identifying the nature of integration in the region, analysing integrationist dynamics and explaining Latin American regionalism in a structured way. Throughout this paper I will attempt to answer the following question: what explains the different natures of
integration in Latin America?
This thesis shall be divided between Parts A and B. Part A will contain a literature review, the theoretical framework and the case selection. I will start this by reviewing the history of both regionalism itself and its study, linking developments in the literature with the history of the phenomenon of regional integration since the end of the World War II. In doing so I will be able to present the main classical theories of integration that came about as a response to the most successful and comprehensive case of integration to date, that of Europe.
The theoretical framework to be used in this project will follow the above review. Rather than adjudicating between the many theoretical contributions made in the course of the history of regional integration, I will attempt to combine considerations from different schools of thoughts in the best-fitting way with which to approach the subject of Latin American integration. From the classical and new theories, and from historically structural factors specific to the region, I will derive hypotheses to be tested throughout this paper. In doing so, I will touch upon considerations from neo-functionalism (Haas 1968, Schmitter 2004), supranational governance (Sandholtz & Stone Sweet 1997), institutionalism (Fligstein & Stone Sweet 2012), intergovernmentalism (Hoffmann 1995), demand and supply (Mattli 1999b), ‘two logic’ game theory (Krapohl 2017) and others. The third section concerns the case selection, where a brief overview of the regional organisations
concerned will be presented such as to inform the reader of their basic facts and trajectories.
Part B will be the core of this project, where the hypotheses are tested and the variables
are analysed. I will apply each hypothesis to all cases in order to allow for a truly comparative approach. In this vein, each hypothesis will correspond to one section of analysis.
Part A
Regionalism: conceptualisation and history
We will first do well to clarify what we mean by regional integration and regionalism. In fact, though the terms might be sometimes used interchangeably, Malamud (2013) clarifies that they both symbolise ‘two broad strands of literature’ that account for the phenomenon of states clustering in regional groupings. Regional integration, he claims, was mostly developed from the late 1950s onwards to account for European integration, kickstarted in 1951 with the establishment of the European Coal and Steel Community (ECSC). From this strand the two main classical theories of integration were born, namely neo-functionalism (Haas 1968), with its focus on interdependence and supranationalism, and intergovernmentalism (Hoffmann 1995), which in turn prioritised the nation-state at a regional level. Malamud endorses Haas’s definition of regional integration for its preciseness and parsimony. Regional integration, for Haas (1971, p6), is a “process of how and why nation states voluntarily mingle, merge and mix with their neighbours so as to lose the factual attributes of sovereignty while acquiring new techniques for resolving conflicts among themselves”. Malamud adds Schmitter’s (2004) contribution: “by creating common and permanent institutions capable of making decisions binding on all members”. What this definition entails is the need for a loss/pooling of sovereignty and a focus on supranationalism in decision-making and institution-building, both strong features of European integration.
In contrast, the label of regionalism has been commonly employed since the 1990s in an attempt to extend the concept beyond the European continent. It usually implies a more encompassing and universal definition of integration, and it accompanied the new developments of the post-Cold War world. Several regional organisations were created,
relaunched or fundamentally reformed in the late 1980s and early 1990s, as countries became once again able to shift their international allegiances outside the east-west divide framework. Importantly, this happened in a context of economic and market liberalisation, characterising this new ‘wave’ of regionalism as ‘open’ and outward-oriented rather than protectionist (Söderbaum 2016). Literature on the so-called ‘new regionalism’, thus, highlights the outward character of integration as a way to improve international relations, regional stability, development and competitiveness. This hints at a new rationale for integration, away from the necessary conditions of supranationalism and the inward-orientated notions of sovereignty loss and intra-regional market liberalisation.
The contrast exposed above speaks directly to the subject of this project. What definition we employ of the phenomenon to be studied influences the scope of the evidence, the criteria for evaluation and the theoretical framework to be applied. In this specific case, what we consider to be integration and how we think it should take place is of paramount importance for a comparative analysis.
In this vein, I shall employ the definition of regionalism formulated by Risse and Börzel (2016, p7), where regionalism constitutes ‘“a primarily state-led process of building and
sustaining formal regional institutions and organisations among at least three states”.
Crucially, this definition does not call for the existence of supranationality as the hallmark of integration, nor does it require any ‘loss’ of sovereignty towards binding decision-making institutions. If we were to abide by these latter conditions we would find few if any examples of successful regional organisations outside Europe, with its particularly strong supranational institutions and an integration trajectory that escaped the power of individual states. Regional organisations in Latin America would fall well below this very high threshold, rendering a comparison of integration on the continent moot. Further, taking supranationality as a defining criterion for integration success in the region is evidently problematic: whilst the Andean Community does showcase primacy of law by its supranational institutions, the CAN is not necessarily as successful or even integrated as the other three cases to be studied here. Its member-states, for instance, have engaged in several armed conflicts in the past decade, and its two largest economies have signed trade deals outside the community’s framework.
Despite the dichotomy presented by Malamud, I shall use the terms regional integration and regionalism to refer to the same phenomenon, couched, however, in the broader definition of Risse and Borzel.
The history of regional integration and its study: old and new
The discussion above exemplifies how the European Union influences the study of regional integration, primarily by fostering a rich body of literature, but also by presenting certain characteristics that do not exist in other regions. That is to say that the European experience, as alluded to in the introduction, can and should be used as point of reference, but both in terms of similarities and differences. Indeed, it is impossible to ignore the single most successful, complete and long-standing example of regional integration when discussing integration theories.
Key to understanding the character of European integration is to take into account the context in which it was first developed, namely after the Second World War. The early decades of the 20th century cast doubts on the classic Westphalian state as a way to ensure peace, stability and prosperity, with the major European powers engaging in wars that went even beyond the continent. Seen through theses lenses, it emerges that at its core European integration was targeted at maintaining peace, whilst also fostering economic development in a region that had been wreaked by two world wars in less than 30 years. An evidence of this is how the first steps towards integration happened by pooling the administration of coal and steel between France and Germany, two warring states that had engaged in conflicts due to, partly, raw resources on their border regions. The mistrust on the nation-state to ensure peace was a major motivation for countries to delegate and pool sovereignty to a supranational institution, which led to the creation of the European Coal and Steel Community (ECSC) in 1951.
The ECSC quickly became the European Economic Community (EEC) in 1957, with the Netherlands, Belgium, Luxembourg and Italy joining France and Germany in their integration project. This willingness of once strong nations to give up sovereignty, thus entrusting core state powers on an independent institution, baffled political scientists at the time, and a new theoretical approach was in order. Ernst Haas formulated the theory of neofunctionalism to account for this phenomenon.
The core of neofunctionalist theory is the concept of ‘spillover’. Whenever countries decide to integrate a sector of their economy (for whatever reason - integration is taken as the starting point), economic actors quickly realise that ‘integration by sector’ does not yield the full economic benefits. Integration in one sector, then, ‘spills over’ to another area of the economy in order to maximise the benefits available. This is what renders integration, from a neofunctionalist perspective, a self-reinforcing process (Rosamond 2000).
Crucially, higher number and levels of integration call for delegation to supranational institutions to oversee the integrated sectors. Indeed, the ECSC High Commission resulted in myriad institutions as the Community became more and more integrated. Those institutions can themselves foster integration via actions of commissioners and officials, which is called ‘cultivated spillover’. Neofunctionalism also places significant importance on non-state actors, especially those from civil society, such as trade unionists, business groups etc. These actors are expected to experience a ‘shift in loyalties’ away from national governments towards supranational institutions, precisely because the latter now have the power to rule over transnational aspects of the economy.
The ‘empty chair crisis’ in the late 1960s would bring neofunctionalism and its model of self-reinforcing integration into question, as Charles de Gaulle shaped European integration in nationalistic terms by blocking majoritarian decisions (Bache et al 2014). Nation states seemed able to block the ‘spillover’ momentum, giving birth to the intergovernmentalist theory of integration, whereby integration was unlikely to reach ‘high’ politics matters (such as security), being constrained instead to the economic dimension (‘low’ politics) (Schimmelfennig & Berthold 2011). Institutions were merely ‘agents carrying the wishes of their masters’. The focus, thus, shifted from actor plurality and supranationalism to hard bargaining. Though I shall not go into greater detail here, this neofunctionalism vs intergovernmentalism debate would shape decades of literature on European integration, bespeaking the more fundamental dichotomy between supranationalism vs nationalism. This ‘tension’ has also framed much of the debate on Latin American integration, and I shall refer back to this debate throughout the essay. Latin America, too, had its experiences with regionalism in the wake of the Second World War and the then current political and economic order. In 1960 the Latin American Free Trade Area (LAFTA) was founded by Argentina, Brazil, Chile, Mexico, Paraguay, Peru, and Uruguay, with Ecuador, Colombia, Venezuela and Bolivia joining later in the decade. A
major driving force for the creation of LAFTA was the United Nations Economic Commission for Latin America (ECLA), that envisioned an enlarged common market for the region as a way to improve import-substitution industrialisation through economies of scale. LAFTA’s focus concerned the elimination of barriers to intra-regional trade couched in intergovernmental negotiations. It did not include macro-economic or foreign policy coordination, and it lacked any substantial institutions with independent power (Mace 1988).
LAFTA would soon prove to be a failure, and other organisations would soon be created as a response. From a neofunctionalist perspective, the weakness of institutions could be seen as a major cause for the lack of integration thrust. Equally, however, it can be argued that there was not enough convergence or alignment amongst the interests of member-states, favouring a more intergovernmental approach. Military coups would bring an end to democracy in Brazil, Argentina and Peru in the 1960s, and there was a marked lack of political will from political leaders to push the project forward and implement its core ideas. The possibility of military conflicts between states increased in the following decades, and by 1980 LAFTA had become the Latin American Integration Association (LAIA), with a less ambitious agenda and looser cooperation. The project, however, did not bear fruit (Domínguez 2013).
Partially as a result of LAFTA’s failures, the Andean Group was created in 1969 to include Bolivia, Chile, Colombia, Ecuador and Peru. Earlier, in 1960, Central American countries, not included in LAFTA, created the Central American Common Market (CACM), whilst the CARIFTA (Caribbean Free Trade Area) was also set up around that time. What all these projects had in common, and what places them in the so-called ‘old regionalism’, was their inward nature and their focus on strengthening the internal market with a view to achieving economic independence from superpowers.
‘New’ regionalism
There is somewhat of a consensus in the literature that post-WW 2 regionalism happened in different waves, the first being discussed above and marked by the west-east political divide and protectionism. From the early 1980s onwards, however, a new wave of regionalism seemed to be afoot. The collapse of the Soviet Union, the strength and wide acceptance of market liberalisation and globalisation would change the rationale for
regional integration. Once a project to isolate countries so they would become independent from superpowers, regionalism became a way through which countries could join in the world economy rather than withdraw from it (Mansfield and Miller 1999). Latin America provides a good example of this paradigm shift. Many countries in the region returned to liberal democracy in the 1980s, with governments committed to liberal reforms that followed the so-called Washington Consensus, an economic ideology backed by the World Bank, the IMF and most notably the United States. The Washington Consensus bespoke lower tariffs, spending cuts, market liberalisation, privatisation and fiscal discipline. This laid the groundwork, for instance, for Brazil and Argentina to kickstart integration in South America in the late 1980s via the Argentina-Brazil Integration and Economics Cooperation Program (PICE), which would quickly attract neighbouring countries and develop into the Common Market of the South (Mercosul) (Gardini 2010). The agreement intended to liberalise the national markets, increase intra-regional trade and attract foreign investment based on neoliberal economics and democratic stability. Crucially, however, it was also a way for Brazil and Argentina to improve strained diplomatic relations from the military era. Similarly, the Andrean Group became the Andean Community in the 1990s, with new treaties, institutions and competencies. The CACM, which languished in inter-state wars and low intra-regional trade in the 1980s, also had a breath of new life with new treaties and projects. The CARICOM decided in 1989 to establish a Single Market (CSME), followed by an array of negotiations, protocols and new institutions, with new members joining over the course of the next decade.
Whilst Europe is commonly associated with old regionalism, it can be argued that the new paradigm of regionalism in the 1980s and 1990s also significantly reignited and shaped European integration. Most notably, the Single European Act (1987) was a major step for the Community since it laid the groundwork for a single-market, changed how decisions were made in European institutions and set the pace for new and important treaties in the 1990s. Interestingly, part of the reason for this new push for more integration in Europe came from a perceived lack of competitiveness vis-à-vis Japan and the United States. Europe wanted to strengthen in its market in order to compete internationally, which is a similar rationale used by Latin American countries at the time (Bache et al 2014). The role of the Commission and the widening and deepening of competencies of European institutions would again spike interest in theoretical approaches to integration, with some authors attempting to ‘revive’ or update neofunctionalism, and Moravcsik (1995) developing the influential theory of liberal intergovernmentalism, couched in a two-level
approach to integration whereby governments consult internal societal actors in order to bargain at the regional level.
Theoretical framework and hypotheses
Most integration theories and their considerations were created with the European case in mind, such that no one theory could satisfactorily apply to Latin America regionalism. Rather than reformulating or adjudicating between existing theories, then, I will make use of several approaches in a way that seems more suitable to explaining regionalism in Latin America. In this vein, I have devised four hypotheses that test variables couched in different theories. Below I will detail how I drew these hypotheses from the relevant literature.
Hypothesis 1: Extra-regional relations are a greater force than intra-regional factors for integration in Latin America
European integration is based, historically and theoretically, on one basic and fundamental starting condition: high levels of economic interdependence between regional partners. Indeed, the very start of the European experience was based on the sharing of raw resources between two countries that depended on each other. Interdependence was high between European member-states from the beginning of the integration process, and has only continued to rise ever since (Fink & Rempe 2017). Integration was developed against this background, thus giving birth to organisations and agreements that planned to manage the pre-existing levels of dependency between nations. The same story, however, does not and has never applied to Latin America. Intra-regional trade has historically been significantly low, especially if compared to the levels shown by the European Union or even NAFTA, another example of a regional organisation (RO) developed to manage pre-existing strong economic ties.
This has theoretical importance because the assumption of the existence of interdependence has led most European integration theories to focus on how member-states endeavour to liberalise the internal regional market with a view to benefit from economies of scales within them. This also steers Mattli’s (1999b) ’supply and demand’ theory, since, according to him, ‘demand’ from integration comes from business groups and other economic actors that see potential gains in an enlarged market. The prospects
for integration in the absence of economic interdependence are therefore low, since demand for greater economic ties and liberalisation with a relatively unimportant partner will also be low. Yet regional integration has proliferated in regions where such interdependence is not present, bespeaking the need for a new theoretical approach. To this disparity between theory and actual developments, Krapohl (2017) developed the so-called two logic approach to integration, particularly targeted at ROs in the Global South and building on the outward-oriented literature on new regionalism. Krapohl argues that, compounding the internal logic of liberalising internal regional markets, there is also an extra-regional logic to integration that is couched in improving the countries’ standings in the global market through regionalism. Countries can derive benefits from joining or forming a regional organisation in order to achieve size and stability effects. This is particularly pertinent for the Global South, where extra-regional superpowers (like the US, the EU, Japan or China) tend to be the most important trade partners of most developing countries.
Through regionalism countries can, for instance, be more attractive to foreign investment since they are now part of a larger and integrated market. Foreign companies can make use of economies of scale and thus run fewer risks in investing in that region, since a regional market will necessarily be larger than that of an individual country. ROs usually provide democratic ways to settle disputes between member-states, which are then less likely to resort to armed conflicts or trade wars, which also contributes to attracting foreign investment. Indeed, upholding democracy has been a significant success, for instance, of Mercosul. Additionally, by adding their economies together, developing countries have a greater clout on the global stage when negotiating trade deals with other countries.
Crucially, however, this external logic of integration, particularly when the internal logic is so feeble, means that ROs in developing regions are specially susceptible and reliant on the behaviours of those important extra-regional partners. If the external logic is guiding integration, it follows that variations in policy of superpowers can significantly affect regionalism in the Global South. Further, Krapohl argues that if extra-regional gains outweigh intra-regional gains for a particular country (usually the leading power), then this country is likely to prioritise extra-regional relations and hinder regional integration with a view to keep its economic benefits. This is well documented in Krapohl & van Huut (2017), who used examples of how preferential trade agreements between the European Union
and regional powers in Asia and Africa motivated these larger countries to prioritise the maintenance of closer ties with Europe over fostering integration with their poorer and smaller neighbours. This is an example of a ‘Rambo’ situation, where countries defect from regional cooperation.
I will thus test the supposed primacy of extra-regional relations in Latin America by analysing levels of intra and regional trade, relations between ROs and major extra-regional partners, the nature and level of foreign policy coordination of each organisation and whether that has provoked negative or positive consequences for the integration project as a whole. For example, the existence of trade deals between larger member-states and extra-regional partners would be an indication of a ‘Rambo’ situation likely to hinder integration, as would be trade deals with foreign powers that favour just one member-state.
Hypothesis 2: A ‘benevolent’ hegemon is necessary for a successful regional organisation
The role of the regional superpower has been a point of interest for much of recent literature in comparative regionalism and speaks directly to Hypothesis 1. The need for a ‘benevolent’ hegemon is a fundamental part of Mattli’s integration theory of ‘supply and demand’, according to which regional organisations are more likely to succeed if there is an undisputed leader committed to fostering integration by serving as an “institutional focal point or a regional paymaster” (Mattli 1999b, p16). A ‘benevolent’ hegemon thus can serve as point of reference in the design of institutions and policies, and can offset negative distributional consequences surrounding the cost of integration.
A classic and relevant example is that of Germany in the European Union. Mattli describes how Germany is credited with developing the European monetary system, relaunching the European Monetary Union, as well as serving as an economic model for the European Central Bank (inspired by the Bundesbank) and regional standardisation (serving as point of reference in that regard). These cases exemplify how a regional leader can strengthen integration by offering leadership and points of reference to which other countries can converge. Indeed, it is less costly for a regional organisation to switch to the technical standards of the regional leader rather than creating new ones or following smaller economies.
Additionally, Germany has helped to alleviate distributional tensions by acting as a ‘regional paymaster’. Germany is the largest single contributor to the European budget, parts of which go towards redistributing resources from richer to poorer member-states. Malamud and Schmitter (2011) also describe the German example as that of a leader who, instead of focusing on self-maximising its role via the organisation, tends to downplay its influence. Interestingly, France, whilst also serving as a joint leader, has at times seen European integration as a way to reassert itself on the global stage. This was, for instance, de Gaulle’s main idea for Europe, whereas for historical reasons the German approach has been notably different.
What, then, of Latin America? The role of the hegemon is particularly important for the region given its sensibility to extra-regional relations that might shape regional leaders’ approaches. The ‘Rambo’ situation identified by Krapohl delineated above will be a guiding principle in testing this hypothesis. The overriding questions here are: Does the regional organisation in question have an undisputed leader? If so, has this leader positively contributed to the integration project by acting as a point of reference, by offsetting negative distributional consequences, by being willing to downplay its leading role and/or by prioritising integration over self-maximisation that might hinder regionalism?
These questions can be answered by different types of data. I intend, for instance, to characterise the regional leaders in terms of size, economic prowess and development. Malamud (2015), for instance, points out that large economies that are nonetheless developing and are even poorer than other member-states on a per capita basis are unlikely to act as paymasters. Great disparities in economic and social indicators can also mean that it is significantly harder for a hegemon to give up its sovereignty when it already enjoys so much power in the region. I will also look at how each hegemon behaved at promoting (or hindering) the biggest undertakings of each organisation (treaties, summits etc), and whether the regional leaders have prioritised extra-regional relations via trade deals or other forms of cooperation that undermine regional cohesion.
Hypothesis 3: Strong regional institutions are conducive to further integration
As touched upon before, institutions are a central tenet of the neofunctionalist theory of European integration. Already in the late 1950s neofunctionalists argued that an increase
in transnational activity would mean a push for supranational bodies to oversee such interaction, and these bodies themselves would act as a catalyst for integration by pushing for more supranationalism and community-wide rules and processes (Rosamond 2000). This is what was called cultivated spillover, which would be accompanied by a shift in loyalties on the part of transnational actors towards supranational institutions away from national bodies. A ‘self-reinforcing’ process of integration would follow, couched in a feedback loop between institutions and transnational actors. The more cross-border transactions, the greater the need for supranational rules. And as processes became supranational, the more actors complied to it and demanded greater opportunities for even more transnational action. Interestingly, more recent literature (Sandholtz & Stone Sweet 2012; Fligstein & Stone Sweet 2002) has built upon this basic idea of spillover and feedback loop by producing empirical data confirming the theory and refining it into an institutionalist theory of European integration. In their words, “the underlying logic of our model can be stated simply: as problems and new circumstances arise, firms and other market actors will press governmental organizations, including legislators and courts, for rules to govern markets. To the extent that these organizations respond to the demands, new opportunities to expand markets will emerge. If market actors adapt their activities to exploit these new opportunities, then the feedback loop will be completed, and the cycle will begin anew.” (Fligstein & Stone Sweet 2002, p1213)
Institutionalists have shown that supranational activity continued at a strong pace even during the years of the so-called ‘eurosclerosis’, when intergovernmentalism seemed to have been vindicated. European organisations showed significant output in terms of litigation and legislation, and transnational actors formed an increasing number of lobby groups that for their part showed greater lobbying activity with time. The ECJ, for instance, was crucial in pushing integration forward when institutionalising the founding treaties via supranational and binding decisions. The Commission (led by Jacques Delors), for instance, was a major driving force behind the Single European Act (Bache et al 2014). More recently, we can look at the decisive role of the European Central Bank in assuaging the effects of the Eurozone crisis, leading to unprecedented levels of financial integration and a banking union (Merler 2014)
The crucial point here is that this fostering of integration by institutions can happen even against the wishes of member-states (Stone Sweet 2012), such that integration gains an almost independent force and is not entirely reliant on member-states and the political will
of national leaders. Supranationalism seems to emerge as a strong force for integration, thus making an analysis of a regional organisation’s institutions and level of supranational power an important dimension in explaining integration outcomes and the nature of the process.
In order to evaluate Latin American integration from this institutionalist perspective, I will firstly attempt to characterise the nature of existing institutions in each regional organisation, their level and scope of activity, and their importance to the integration process. This will be done by a careful examination of the institutional make up of each organisation, as well as provisions in their fundamental treaties that regulate their institutions. I will also measure institutional activity by looking at how many disputes were referred to and settled by supranational courts, how active the legislative body is in formulating legislation and whether the executive has the means to effectively enforce supranational rules.
Hypothesis 4: High levels of transnational action in civil society lead to more integration
The variable of civil society follows naturally from the institutionalist theory and the idea of a feedback loop between supranational institutions and non-governmental actors. Actor plurality was also an important part of neofunctionalism, that assumed the ‘shift in loyalties’ would act as an important force for further integration. As mentioned above, Fligsten & Stone Sweet (2002) have shown, for instance, how the increase in lobbying by an increasing number of lobby groups led to more judicial activity, leading to more integration in Europe. Business groups are also a fundamental part of Mattli’s supply and demand theory, since they exert pressure on governments to push forward with integration as a way to capitalise on the possible economic benefits associated with transnational exchange.
Since the so-called ‘governance turn’ in the 1990s and the supposed end of a ‘permissive consensus’, more scholarly and political attention has been paid to civil society in the European Union (Heidbreder 2012). This was accompanied by the 2001 White Paper on Governance (European Commission 2001), that laid the ground for concerted efforts on the part of the EU to involve civil society organisations in the process of policy-making, culminating with the Citizens’ Initiative in the Treaty of Lisbon, that allowed citizens to
initiate legislation directly. A Citizens’ Initiative Forum was also launched in May 2018 for Europeans to share ideas and find partners online (European Commission 2018). Today the EU funds thousands of NGOs across Europe with a view to improve social and political inclusion. The Commission and Parliament have frequent contact with societal actors as a way to mediate between citizens and the EU, to serve as consultative bodies and provide expertise on particular matters. For instance, Niemann and Ioannou (2015) argue that the European Roundtable of Industrialists (ERT) exerted significant influence on legislation during the Eurozone crisis, with the Commission consulting the ERT and drafting policies that followed much of what was recommended to them. Following the European experience, and the theories that match it, we can conclude that civil society participation has been a significant factor in pushing for and shaping regional integration.
In order to evaluate this variable and test the hypothesis, then, I will look at the existence (or lack thereof) of transnational groups, their scope of activity and influence on the integration process. I will also consider at whether non-governmental actors have engaged with supranational institutions via lobbying, grassroots initiatives aimed at the RO concerned and usage of regional courts. In doing so I will determine whether there are appropriate channels for civil society actors to effectively partake in policy-making or consultation, and whether there are efforts on the part of the ROs to support societal groups.
Case selection
Though only the Mercosul was founded in the 1990s, all regional organisations concerned here were marked by the new wave of regionalism from the late 1980s and early 1990s. The three pre-existing ROs (CAN, CARICOM and CACM) were relaunched, renamed and restructured via new treaties and protocols that attempted to reignite the almost defunct pace of integration. Together they represent important areas of Latin America: the Caribbean, Central America, and the Northern and Southern parts of South America. Though different combinations of those four ROs have been studied comparatively, there are few, if any, efforts in the way of comparing all of them in a structured manner. Interestingly, they each present somewhat unique features. The Mercosul contains by far the largest, richest and most important country in the whole subcontinent: Brazil. The regional power has considerably shaped integration in the Southern Cone, both negatively
and positively. The Andean Community has the highest levels of supranationalism and institutionalisation in the world, after the European Union. The CACM, for its part, has constantly shown the highest levels of intra-regional trade in Latin America, and has succeeded in signing trade deals with the US and the EU as a bloc. Finally, the CARICOM has the highest number of member-states, with high rates of disparity amongst them. All four cases, however, lag significantly behind the European Union in terms of integration. These ROs have often failed to meet their own plans, sharing amongst each other, at least during certain times, non-compliance with community-wide rules, political instability and high sensitivity to both internal and external political developments. Failures notwithstanding, the four cases studied here have so far stood the test of time, and fundamentally shaped politics on the subcontinent via new modes of cooperation and institution-building. In this section I will provide a brief overview of each regional organisation, with a focus on their history and defining features. A more in-depth analysis of their characteristics and relevant features will be done during the core body of analysis of this project.
Table 1. Data from comtrade.un.org
* Venezuela has been suspended since December 2016; Bolívia’s access is still not complete.
Mercosul
The Mercosul was created in 1991 with the Treaty of Asúncion, building on the previously established bilateral agreement between Argentina and Brazil (PICE). An Argentine-Brazilian effort from the get go, it was compounded firstly by Uruguay and Paraguay, small neighbouring countries that could not afford to be excluded from this trade partnership amongst the two largest economies in the Southern Cone. Venezuela (2006) and Bolivia (2015) have more recently joined the bloc, although the former has been suspended due to internal political tensions and the latter’s accession is yet to be completed.
Mercosul Andean
Community Central American Common Market Caribbean Community N member-states 6* 4 8 15
GDP U$ 2,901.237 trillion
U$ 706.903 billion U$ 266.213 billion U$ 72.2 billion
The 1994 Protocol of Ouro Preto laid down intergovernmental structure, and the ambitions for a customs union and common market, the former remaining rather incomplete and the latter far in the distance. The executive-focused nature of Mercosul integration has given birth to the term ‘interpresidentialism’, coined by Malamud (2015) as a way to describe the mode of governance in the region.
As an example of the new wave of regionalism, Mercosul promotes trade liberalisation and outward-oriented integration targeting the then high levels of unemployment and inflation in the region (Gardini 2010). Argentine and Brazilian leaders saw in the project a way to attract foreign direct investment to the region, and, given the low levels of interdependence between member states at the time of its inception, the extra-regional logic discussed previously seems to apply neatly to the motivation behind the Mercosul: whilst the larger economies wanted to benefit from extra-regional relations, smaller countries, for their part, saw in the access to the larger markets of their neighbours an opportunity to draw economic benefits (Bouzas et al 2002).
During its first decade of existence the Mercosul seemed to be a remarkably successful case of regional integration in the Global South. Intra-regional trade tripled, foreign direct investment grew, and the organisation acted as a credible interlocutor during the 1996 Paraguayan crisis (Genna & Hiroi 2007). After the ‘lost decade’ of the 1980s, Southern Cone countries experienced healthy levels of growth during the 1990s, experiencing increases in trade within and outside the region. Since the early 2000s, however, a succession of international, regional and national crises have halted and even reversed the momentum of the Mercosul. The bloc is still to sign a trade deal (EU-Mercosul negotiations were opened in 1998 and are barely ongoing), and the 1990s peak in trade and investment has not been reached again.
Andean Community (CAN)
The Andean Community, formally established in 1996 with the Treaty of Trujillo, is the successor of the Andean Group (1969), created then as a response to LAFTA’s failures. It is today comprised of Bolivia, Colombia, Ecuador and Peru, with Venezuela and Chile being former members. The organisation presents the remarkable feature of primacy of law and majority voting in its supranational institutions. It was somewhat successful during the early days in cutting down trade tariffs, which fell by over 60% from 1969 to 1980
(Domínguez 2013). The rigidity of the body of law, however, quickly led to non-compliance (Mace 1988), and the creation of more supranational institutions (a Parliament and Court in the late 1970s) did little to push the integration process forward. Member-states entered armed conflicts soon after, and there was little policy coordination between countries. Intra-regional trade, already remarkably low from the beginning, languished at around 3% even after the creation of supranational bodies (Domínguez 2013). It was not until the late 1980s, via a succession of presidential summits and the foundation of the Andean Presidential Council in 1990, that integration would pick up pace again in the region. A wave of new presidents in the member-states and general improvements in political and social stability enabled the Andean Community to sign new treaties, create new bodies and establish new goals for integration. A free trade zone was established in 1993 and intra-regional trade peaked around 13% in 1998, hovering around 10% since (Ibid.). The organisation, however, has failed to stake its claim as an international agent ensuring peace and stability in the region: Ecuador and Peru went to war in 1995, and Colombia had conflicts with Ecuador and Venezuela over the FARCS into the 2000s. Venezuela left the Community to join the Mercosul in 2006, and, perhaps damningly, did not showcase a decrease in trade with CAN countries thereafter.
Whilst its degrees of supranationalism and institutionalisation are unprecedented in the Global South, an effective integration trajectory did not follow suit. The CAN’s very existence has come under threat with trade deals signed with the US by its two major players (Colombia and Peru), and the newly-created Pacific Alliance.
CARICOM
The Caribbean Community, founded in 1973 by the Treaty of Chaguaramas, superseded the Caribbean Free Trade Area (CARIFTA), formed in 1965, which had for its part replaced the botched 1950s’ West Indian Federation (WIF). The Community, today comprised of 15 countries, has its institutional roots in the ACP-model of negotiations between the European Economic Community and the former Commonwealth countries that lost preferential access to the British economy after the UK joined the EEC in 1973. As a result, the CARICOM is said to mirror to a large extent this model of intergovernmental cooperation to this day. Though a Secretariat was set up upon its foundation, intended to be the ‘nerve centre’ for coordination and regulation, power rests firmly with national
leaders in the Conference of Heads of Governments (CHG) (Hall & Chuck-A-Sang 2007) . The focus on economic integration and a very loose political coordination, mostly via intergovernmentalism, is said to also have historical roots: O’Brien (2011) argues that the colonial imprint left on Caribbean countries has shaped much of the CARICOM’s history, leading to a strong preference for national sovereignty and self-government.
The obvious reliance on national executives meant Caribbean integration was severely hindered by diverging national interests. During the 1970s, for instance, Guyana, Jamaica and Grenada were under socialist rule and had markedly different strategies to those of other members, and no CHG Summits were held from 1977 to 1985 (Payne 2008). The absence of a mechanism to enforce implementation of Conference decisions meant compliance was often spotty. Nonetheless, intra-regional trade grew up until the 1980s, averaging an increase of about 20% the 1960s (under CARIFTA) and 15% until the mid-1980s (Hall & Chuck-A-Sang 2007).
Whereas the CARICOM followed other Latin America ROs in opting for import-substitution and ‘closed’ regionalism, the late 1980s saw more converging national governments joining in the wave of liberalisation. Through the ambitious ‘Grand Anse Declaration’ in 1989, Caribbean governments envisaged the creation of a Caribbean Single Market (CSME) operating under vastly reduced external tariffs. The CSME, as well as a regional court, would finally come into existence in the mid-2000s.
CACM
The Central America Common Market was founded in 1960 was part of the ‘old’ regionalism that was taking hold in Latin America, initially comprising Guatemala, Honduras, El Salvador and Nicaragua, with Costa Rica joining in 1963. The project received substantial assistance from the United States, at the time concerned about possible communist influence exerted by Cuba (Mattli 1999a). The CACM succeeded in the early days in bringing down barriers to intra-regional trade by automatically reducing tariffs and establishing a common external tariff covering 98% of goods by the mid 1960s (Dominguez 2013). It was, by the end of the 1960s, the “underdeveloped world’s most successful regional integration effort (Wynia, 1970, p319). However, the project concerned mostly economic matters, and trade liberalisation was concentrated in depoliticised areas of the economy that presented few political costs. The growth in intra-regional trade was
mostly within specific industries for non-durable consumer goods, thus accounting for a small part of economic growth in the region at the time. Couched in the import-substitution model, the Central American Market was a trade-diverting area. Though institutions proliferated, they did not experience a matching increase in the level of scope or authority, leading Schmitter (1970) to label the process ‘spill-around’: more organisations were created, but the level of delegation did not follow suit, thus differentiating the process from the neofunctionalist idea of ‘spillover’.
Political instability would assail the region for the next two decades, starting with the ‘Football War’ between El Salvador and Honduras in 1969 and causing the latter to withdraw from the agreement. Though intra-regional trade resisted relatively well until 1980, at which point intra-regional exports were around 28%, further conflicts in the 1980s would severely damage the Common Market, causing intra-regional trade to plummet to around 10% (Domínguez 2013). Nicaragua, El Salvador, Guatemala, Honduras and Costa Rica were all directly or indirectly involved in armed conflicts, and it was not until greater political stability and democracy returned to the region in the 1990s that the CACM would experience a revival.
In 1991 countries signed the Protocol of Tegucigalpa, bringing under the same umbrella the vast array of institutions and agreements. As peace returned to member-states in the 1990s, there was again political will on the part of national leaders to push ahead with integration. Intra-regional trade peaked at around 25% in 2008 and it continues to be the highest in Latin America. The CACM is also comparatively successful in the area of trade deals, having signed agreements with several countries as a full bloc (most notaby, with the European Union). Notwithstanding, individual members have also pursued economic agreements on their own, and, though no inter-state was has taken place since 1990, several member-states have engaged in militarised conflict in the 1990s and early 2000s.
Part B
Hypothesis 1: Extra-regional relations are a greater force than
intra-regional factors for integration in Latin America
The primacy of extra-regional relations is fundamentally couched in a historical lack of regional economic interdependence shown by Latin American regional organisations,
standing in contrast with the European Union and NAFTA. Accordingly, I start by presenting the levels of intra-regional trade (as a percentage of total trade) for the four cases studied here, as well as their main trade partners. In order to account for possible year-specific variations, I have used an average of the past five years, taking data from Trade Map. The peak for the intra-regional trade share is in brackets, as well as the year when this high occurred. The only exception to this is CARICOM, where for the year 2015 some countries did not report their trade data. As a result, I have excluded this year from the calculation for CARICOM.
Table 2. 5-year average (4-year average for CARICOM) trade statistics. 2013-2017. Data from trademap.org
* Data taken from www.caricomstats.org
Two relevant observations can be made here. Firstly, and as expected, levels of intra-regional trade are markedly low in Latin America. By way of comparison, the figure is around 45% for NAFTA, and over 60% in the European Union (Domínguez 2013). Secondly, the US dominates trade relations with the CACM and the CARICOM, with both organisations having intra-regional trade as their second highest share of total trade. In contrast, China has a far bigger importance for the Mercosul and the Andean Community in the period analysed. In identifying the relevant extra-regional players we can focus on relations between ROs and their biggest trading partners in order to analyse whether extra-regional relations have been the prime motivation and reason for integration in Latin America. I will start with the cases of CARICOM and CACM, due to their similarities, then discuss the Andean Community and finish with the Mercosul, given the latter’s defining feature of having a clear hegemon in its membership.
The combination of very low intra-regional trade, the influence of the remnants of colonialism and the region’s special relationship with Britain, the existence of Less Developed Countries (LDCs) and a dependence on raw goods and resources means the CARICOM has been particularly susceptible to extra-regional factors. Payne (2008) points out that foreign policy coordination was one of the main goals of the CARICOM (upon
Mercosul CAN CACM CARICOM
Intra-regional trade 14% (25% in 1998) 11.5% (13% in 1998) 16% (25% in 2008) 12% (16% in 1999*) Main trading partners EU 17% China 16% US 14% US 24% China 15% EU 14% US 39% EU 9% US 37% EU 11%
superseding the CARIFTA, which was almost exclusively concerned with trade), especially because the British accession to the then European Economic Community (EEC) in 1973 meant possibly important changes for the region’s trade relations: former colonies enjoyed preferential agreements with Britain, that were bound to be superseded upon the latter’s accession into the EEC. “For nearly two decades”, Payne argued, “the EEC question had been the fulcrum upon which the Commonwealth Caribbean seemed to turn” (Ibid., p177). In the early 1970s, then, Caribbean countries agreed to negotiate with the EEC as one bloc, and a united voice remained even after the region was incorporated into the ACP (African, Caribbean and Pacific) model of negotiation.
The matter of negotiating with Europe gave a new impetus to integration and motivated countries to cooperate and coordinate their policies. Additionally, by joining forces and pooling sovereignty Caribbean states managed to gain concessions they would not have achieved if negotiating individually. An example of this is how the CARICOM council gathered to express its dissatisfaction at aid from the European Development Fund being unevenly distributed amongst ACP countries and within CARICOM itself, with the United Kingdom in charge of its allocation. The Council maintained a united voice on the matter and managed to increase the allocation of funds to the Community, and took the role of distributing the funds itself. This was an important development for the Community because, due to provisions in the Treaty of Rome, LDCs had automatic association with the EEC, thus opening the Caribbean internal market to foreign competition that the Most Developed Countries (MDCs) could not compete with. Notwithstanding, LDCs won concessions and the MDCs managed to carve out a cohesive approach to negotiating with the EEC.
In spite of these developments, extra-regional factors in the 1970s and early 1980s also negatively influenced Caribbean integration. The oil crisis of the early 1970s had devastating effects for LDCs and MDCs alike, with the exception of Trinidad: the only oil-exporter in the region, the country managed to profit from the high in oil prices. As it will be discussed in the following section, this shift in balance in favour of Trinidad did not turn the country into a ‘benevolent’ hegemon, whilst at the same time creating ideological and economic splits in the Caribbean. The crisis affected the region so badly that Jamaica and Guyana had to restrict imports from CARICOM itself, prompting resentment in the Community. The region’s unity was tested again when the US-funded Caribbean Basin Initiative (CBI) did not include Grenada because of its left-wing orientation. Indeed, Cold
War politics almost meant the complete disintegration of the CARICOM, especially when MDCs disagreed over the question of a possible invasion of Grenada. Mistrust and resentment amongst political leaders grew substantially, and, as mentioned before, no Conference of Heads of Governments was called from 1977 to 1985.
By the late 1980s, however, the international economic and political context would again spur a new wave of integration in the Caribbean. The imminent formation of a Single Market in Europe via the Single European Act in 1987 made countries fearful over losing preferential access for their exports - most notably, banana - into one of their big exporting markets, as well as being left behind by the emergence of the new political economy. The European Community started the process of reviewing the Lomé Convention, that had regimented its relations with ACP countries since the 1970s: the US would win a WTO case against the existence of this preferential agreement afforded by Europe to poorer countries in 1996 (Young & Peterson 2013), judging it to be discriminatory. Additionally, the Canada-US bilateral agreement, that would give birth to NAFTA in the mid-1990s, reinforced this broad sense that the CARICOM was being marginalised by these new economic developments: a Regional Negotiating Machinery (RNM) was set up in the late 1990s especially to negotiate deals with the US and the EU (Ibid.).
As a response to changing conditions in its extra-regional relations, the Community advanced with the Grand Anse Declaration in 1989 and several other presidential summits targeted at reviewing the organisation and proposing new policies and goals for the future. Amongst these were the establishment of a long-awaited Common External Tariff (CET), the end to all remaining trade barriers, a common currency and new supranational institutions to enforce community-wide rules and settle disputes. Though not all of these plans were realised (and the ones that did would take longer than expected), the roots for this new thrust for integration lay in this period of intense executive action and cooperation. The CARICOM also turned to widening its sphere of influence and action by engaging with the ‘wider Caribbean’ and other countries in Latin America, most notably by the creation of the Association of Caribbean States (ACS), including a dozen of other countries in the Caribbean basin, and the signing of free trade agreements with Venezuela, Mexico, Colombia and the Dominican Republic in the 1990s. Membership of CARICOM was also extended beyond the English-speaking sphere, with Haiti and Suriname joining the Community in the mid to late 1990s. Although internal developments did not stop, the bulk
of integration experienced by the CARICOM during its renaissance took place vis-à-vis its extra-regional concerns. (Payne 2008).
War and peace: a different type of interdependence in Central America
The Central American Common Market, in spite of similarities with the Caribbean case, has a few distinguishing features. Not only has the region been extremely dependent on trade with the US and reliant on American funds for its own institutions, it has also been ravaged by conflicts since the late 1960s until the 1980s. Military conflicts and ideological differences in the late 1970s (chiefly concerning Nicaragua’s socialist government) led Central American countries to engage in trade war and retaliations. This damaged intra-regional trade and forced countries to pursue trade with third-countries, currency devaluation and government subsidies (Mace 1988). War also meant an increased budget allocation towards military capacity, and a deterioration of the region’s infrastructure. Concurrently, the United States, once a type of external benevolent hegemon (to be covered in the next section) who acted as a paymaster for the CACM’s institutions, shifted its foreign policy towards the region and started to oppose Central American integration by the early 1980s. American aid, integral to the CACM, continued to flow, but this time destined at improving the military and police capability of countries in the region. Rather than fostering integration by funding intra-regional debts and providing structural adjustment as rehabilitation strategy, the Reagan administration attempted to enforce economic liberalism, backed by the IMF and the World Bank. An example of this is the aforementioned Caribbean Basin Initiative, that afforded free duty access to the American market for Caribbean and Central American exports (Sánchez Sánchez 2009).
As a result of inter-state conflicts, deteriorating relations, enforced liberalism and lack of financial aid, Nicaragua and Costa Rica both defected from intra-regional trade and sought trade relations with external partners as a way to supply their industrial needs. Nicaragua, for instance, sought relations with other socialist republics who would not demand immediate payment, given the country’s balance of payments. In Costa Rica, imports from the US increased by over 50%, displacing intra-regional trade (Fuentes 1989). America’s actions, coupled with internal problems, made the region particularly sensible to extra-regional factors, that at the time proved to be hindering for integration.
However, the integration-conducive context of the late 1980s and early 1990s that gave new impetus to Caribbean integration did not elude Central America. Similar concerns regarding isolationism in an era of increased competition would act as catalysts for national governments to cooperate and push forward with integration in the 1990s. Unlike the Caribbean countries, for instance, Central America was not included in the ACP countries that were afforded preferential treatment by the European Community, making the creation of an European Single Market an even bigger threat. The US policy towards regionalism in the Americas also took a sharp turn after the end of the Cold War, becoming less concerned with security politics. This was, perhaps counter-intuitively, concerning for CACM countries because the region did not have any particular importance to the global power anymore, who could choose to focus on larger economies in Latin America. As a result, “reforming Central American integration was (…) an attempt to reengage both the US and the EU in Central American Affairs” (Sánchez Sánchez 2009, p137), which was evidenced by a unified pressure from Central American governments to be afforded similar benefits to those of Mexico within NAFTA, and the Andean countries in the EU. Countries found a way to cooperate in converging interests vis-à-vis external relations, and the CACM succeeded in signing free trade agreements with EFTA, the EU, Mexico, Chile and the Dominican Republic (SICE-OAS n.d.)
It would be wrong, however, to attribute the relaunching of Central American integration solely, or even mostly, to these external relations. The peace process the region underwent in the late 1990s, argues Sánchez Sánchez, was paramount to rebuilding trust between member-states and, more importantly, creating interdependence. Crucially, however, this interdependence was not of an economic persuasion. As a way to achieve peace countries became interdependent in the realm of security politics, leading to political convergence and cooperation. National governments joined forces to tackle guerrilla and other Cold War-related conflicts within the region, and foreign aid, conditional on cooperation to achieve peace, was provided to assist in the region’s rebuilding, increasing the costs of defection. Ironically, an anti-US stance would prove to benefit integration, as it united countries against the American funding of guerrilla groups that attempted to destabilise governments in the region.
Interestingly, this presents a peculiar example of a process of integration from a theoretical standpoint. From a neofunctionalist perspective, security politics would ‘spill-over’ into economic cooperation as countries started to cooperate towards improving the region’s
economy and infrastructure, ravaged by war. Whilst integration is expected to start with high levels of economic interdependence that would eventually lead to political integration and cooperation, the reverse happened in Central America. Moreover, the fact that integration reached the so-called ‘high politics’, supposedly unlikely to be successfully integrated according to intergovernmentalists, is also remarkable.
Defection and withdrawals in the Andean Community
Given its historically low levels of intra-regional trade (the lowest amongst all cases discussed here) and its creation as a response to the failures of LAFTA, extra-regional concerns have long been at heart of the Andean Group/Community. Indeed, a perception that the larger economies of Brazil, Mexico and Argentina dominated LAFTA and drew most of its benefits motivated Andean countries to group together and form the then Andean Group in 1969 (Mattli 1999a). If individually the Andean countries were small in size, population and economy, the Group put together constituted 25% of the total population of Latin America at the time, such that the one of the Pact’s main goals was to "protect small and medium-sized South American republics from their large neighbors" (Fontaine 1977, 60), by bargaining as a group. Nonetheless, the Andean Group was for decades a highly protectionist project couched in high external tariffs. Its first decade fell under the wave of ‘old’ regionalism in the Global South, that attempted to protect developing economies from stronger markets in order to achieve development. For instance, as Dominguez (2013, p74) describes, the group decided, in 1970, to “regulate foreign direct investment in member countries, prohibiting foreigners from investing in activities that competed with existing firms and mandating compulsory divestment of majority control by international companies twelve to fifteen years after entry”, being the only policy of its kind in the world. The non-complementary nature of the Andean economies (with countries mostly exporting raw goods) meant possible gains from an enlarged market were not significant. Intra-regional trade, however, did come close to 20% in the organisation’s first decade (Fontaine 1977).
The Andean Group’s attitude towards foreign direct investment was a good measure of its sensibility to external factors, as was the proposed CET. Colombia, for instance, was willing to accept foreign investment but decided to accept the prohibitive regulation because it prioritised the internal market at the time. Bolivia, for its part, was not made to choose between the Group and foreign partners. The country was simply allowed to ignore
regulations surrounding the (high) external tariffs due to its being the weakest economy in the bloc and being heavily reliant on foreign markets for the purchase of raw goods. Similarly, it also ignored the regulation on foreign direct investment. Chile, however, presents a contrasting example. The country took a sharp turn towards economic liberalisation after the 1973 coup, which meant Chile was no longer willing to abide by the protectionist measures of the Group, namely prohibitions on foreign direct investment and a extremely high CET. This prompted the Chilean exit from the project, in a clear display of the tensions between intra and extra-regional relations. Further, the rise in oil prices in 1979 would bring price instability to the region, and a reduction in intra-regional trade of over 50% in the early 1980s (Hixson 2011).
Whilst the late 1980s and 1990s would, unsurprisingly, bring a new wave of Andean integration couched in unilateral liberalisation and ‘open’ regionalism, the extra and intra-regional dichotomy would play again an important part in the process of integration. The CET, for instance, would present a point of contention in the 1990s, with Fujimori’s Peru refusing to compromise on a flat external rate due to its commitments with the Asia-Pacific Economic Cooperation Forum (APEC). Further, and similarly to the Chilean withdrawal in the 1970s, the 2000s brought tensions between Venezuela and Colombia, resulting in the former’s exit from the Community. Venezuela’s Hugo Chávez bemoaned the Colombian government’s acceptance of US aid in the fight against the guerrilla-group FARC, and the latter’s desire to form a free trade agreement with the superpower. At the time the US accounted for 39% of Colombian exports (Trade Map n.d.), and the latter’s decision to push ahead with trade negotiations resulted in Venezuelan retaliations and eventual withdrawal from the Community altogether. Even though foreign policy coordination was a top priority in the transformation from Andean Group to the Andean Community in the 1990s, with a regional Foreign Relations Council being formed in 1997, CAN countries established separate FTAs: Colombia has since signed agreements with the US, the EU, the Mercosul and others. Bolivia, for its part, decided to join the Mercosul in 2015, whilst Peru and Ecuador also signed agreements with the EU, China and other extra-regional powers (SICE-OAS n.d.).
Brazil as a Rambo actor in the Mercosul
Created during this new wave of open regionalism, the Mercosul has been founded with a recognised function of establishing size and stability gains in the region and improve the
