The Political Economy of New Regionalisms in the Pacific Rim

José Briceño-Ruiz, Philippe De Lombaerde, José Briceño-Ruiz, Philippe De Lombaerde

• Publisher: Routledge
• Year: 2019
• Print ISBN: 9781032240411
• eBook ISBN: 9780429954641
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Combining an analysis of regionalism from a systemic view with a domestic political-economy analysis, this book sheds light on the new dynamics and emerging configurations of regionalisms and interregionalisms in the post-Trans-Pacific Partnership (TPP).

Donald Trump's presidency has transformed trans-Pacific economic and political relations, contrasting sharply with President Obama's 'pivot to Asia' strategy. Unilateralism and bilateralism have returned to the center stage, at the cost of regionalism, interregionalism, and multilateralism. Understanding these new dynamics requires closer examination of the underlying domestic political economies. Examining ten country case studies of multi-actor agency at the national level, expert contributors argue that trans-Pacific relations should not only be explained in terms of the behavior of the major powers, but that medium powers, and even small countries, can exert influence and occupy strategic nodes and contribute to shaping a new international relations network.

Their findings will be of interest to scholars of international relations, international political economy, regionalism, and international economics.

1 The dynamics of institutionalized regionalism in the Pacific Rim

Comparisons, connections and interactions

José Briceño-Ruiz

Despite their particular historical processes and configurations of power, both Latin America and the Asia-Pacific are regions involved in the promotion of economic integration and cooperation. Debates on the model of economic integration that should be pursued, the geographical extension that regional processes should adopt, the role of external powers, and the relations of both regions with the world economy have accompanied the development of regionalism in those parts of the world.

Latin America is a region with a long historical tradition of regionalism but different views on regional integration and cooperation, frequently based on diverse theoretical (if not ideological) approaches, have emerged and co-existed in the last decades. The Southern Common Market (MERCOSUR) was created in the 1990s based on a logic of strategic regionalism. The Bolivarian Alternative for the Americas (ALBA) was established in 2004 as a purported anti-capitalist and anti-imperialist model of regionalism. And the Pacific Alliance was set up in 2012 as a manifestation of a new open regionalism. Thus, Latin American regional schemes have experienced transformations that are expressions of how the countries of the region understand economic development and the relations with the global economic system and with the hegemon in the Western Hemisphere (the United States).

In the case of the Asia- Pacific, the traditional role the United States (US) has played in this region after the end of World War II, and the recent emergence of China as a global power, have deeply impacted the development of regionalism. Moreover, the consolidation of the Association of South East Asian Nations (ASEAN) has been a crucial factor in the proliferation of initiatives of regional cooperation and integration in the economic and political spheres. However, as in the case of Latin America, diverse views on regionalism also co-exist in the Asia Pacific region.

Over the last few years, an interesting rapprochement has been taking place between both regions. Before the rise of the Chinese, the major Latin American trade partners in the Asia-Pacific were Japan and South Korea, but in the last decade China has not only become the major Asian partner for many countries in the region but it is even substituting the United States as the main trade partner, as in the cases of Chile and Peru. Additionally, the Latin American countries, especially those located on the Pacific shore, have been gradually creating a network of trade agreements with countries of the Asia-Pacific region. As a result of these interactions, the Latin American debates on regionalism are currently also influenced by those that are occurring in Asia-Pacific.

This chapter aims to analyze this complex dynamic of economic regionalism in Latin America and the interconnection with the events in the Pacific Rim. To achieve this objective, the chapter is divided into three sections. An evaluation of the current state of Latin America regionalism is presented in the first section. The second section examines the proliferation of regionalism, transregionalism and cross-regionalism in Asia-Pacific, as well as the role of the US and the increasing presence of China in those processes. Finally, the connections and interactions between the regional processes in Latin America and the Asia-Pacific are analyzed and compared.

Latin America: a region between union and division

After the collapse of their economies following the 1980s debt crisis, Latin American countries achieved a broad consensus about the preferred model of economic development and regional integration for more than a decade. Regarding economic integration, this consensus was expressed in theoretical terms in the proposal of a “new economic regionalism” fostered by the World Bank (De Mello, Montenegro and Panagariya, 1992; De Melo and Panagariya, 1992) and the Inter-American Development Bank (Devlin and Estevadeordal, 2001; IADB, 2002) or in the promotion of a Latin American version of the Asia-Pacific ideas of an “open regionalism” promoted by the Economic Commission for Latin American and the Caribbean (ECLAC, 1994). The core of all these proposals was that economic regionalism was a mechanism to further a better insertion of the region into the world markets.

As a result, most regional schemes promoted fast trade liberalization in the framework of building customs unions, as in the case of MERCOSUR, the Andean Community (CAN) and the Central American Common Market (the trade sub-system of the Central American Integration System – SICA). Influenced by the Uruguay Round and the North American Free Trade Agreement (NAFTA) model of regional integration, some schemes went beyond tariff reduction and included the regulation of issues such as intellectual property, services and investments. A crucial element of the new regionalism was the reduction of the role of the state in the promotion of economic integration, in particular the abandonment of the strategy of using the regional markets as a space for the promotion of industrialization as proposed by ECLAC in the 1950s (Moncayo, De Lombaerde and Guinea Ibáñez, 2012). Despite ECLAC’s attempts to include the idea of promoting the upgrade of production patterns in Latin America as a component of its approach to open regionalism, the development agenda was excluded from the agenda of new regionalism in the 1990s.

A particular feature of the new regionalism was the expansion of North-South agreements. NAFTA was the initial step in this direction that was followed by the US-led project of creating a Free Trade Area of the Americas (FTAA). This was a real change in the way to understand economic regionalism in the Western Hemisphere because after the failed proposal of creating a Pan-American custom union in 1889, most of the initiatives of economic integration were mainly among Latin American countries. The increased US involvement in the field of economic integration in the Americas in the 1990s aimed at diffusing the model implemented in NAFTA, in which free trade was just an element of the integration project but the main goal of which was to foster a “deep integration agenda”. The latter included the regulation, under a “WTO plus” logic, of issues such as investments, intellectual property, services, public procurement and labor and environmental issues related to trade.

Finally, Latin American regionalism in the 1990s was mostly associated with economic (i.e. mainly trade) issues, while political and social topics were secondary. This does not mean that political issues were not discussed within MERCOSUR, CAN and SICA, because, for example, these regional schemes were committed to defending democracy by approving democratic clauses. This notwithstanding, sensitive political issues such a security and defense, drug trafficking and conflict resolution were mainly discussed in the Organization of American States (OAS), the hemispheric space under the aegis of the United States.

In short, Latin American countries for more than a decade shared a common view on what economic regionalism was about. Despite certain nuances on aspects such the MERCOSUR’s reluctance to adopt a “deep integration agenda”, Latin American countries subscribed in general terms to a similar model of economic integration that was mainly conceived as a trade process that aimed to improve the region’s insertion into the global markets.

This scenario began to change gradually in 1999, when Hugo Chávez came to power in Venezuela with a discourse that rejected neoliberalism. The victories of Néstor Kirchner in Argentina and Luiz Inacio Lula da Silva in Brazil consolidated this turn to the left that was afterwards deepened by the rise to power of Evo Morales in Bolivia (2005), Rafael Correa in Ecuador (2005), Tabaré Vazquez in Uruguay (2005), Daniel Ortega in Nicaragua (2008) and Fernando Lugo in Paraguay (2008). This turn to the left was understood as an expression of the failure of the neoliberal model adopted in the 1990s, but it was not a general movement in the region because Colombia, Chile, Peru, Mexico and most of the Central American nations remained committed to the dominant hegemonic model of the previous decade.

Another change that took place was the reduction of the US involvement in the construction of a Western Hemisphere economic bloc. Since the announcement of the first draft of the FTAA agreement in Buenos Aires (2001), the differences between the US and its allies with MERCOSUR and Venezuela were quite clear. As a result, FTAA negotiations stagnated after 2001 to the point that in 2003, at the Ministerial Summit held in Miami, the countries accepted to follow a “two speed compromise”, according to which the countries could choose the extent to which they could advance with trade liberalization and the approval of a deep integration agenda. Thus, certain countries were willing to adopt WTO-plus norms while others were not. This implied a de facto abandonment of the principle of single undertaking (Carranza, 2008, 7) and, consequently, the creation of a real continental bloc was hindered. All this added up to a decreasing involvement of George Bush’s administration in Latin America after the terrorist attacks of 11 September. The Summit of the Americas of Mar del Plata (2005) meant the end of the FTAA. The role Chávez, Lula and Kirchner played in Mar del Plata allowed them to show the defeat of the FTAA as a victory against neoliberalism, the US and the NAFTA model of regional economic integration.

However, the US furthered the so-called “competitive liberalization” that made the FTAs the cornerstone of US trade strategy and not a mere ad hoc deviation from multilateralism (Solís and Katada, 2009, 7). By promoting the bilateral FTAs, the US was able to foster by other means the NAFTA economic model. All the bilateral FTAs promoted the deep integration agenda and trade liberalization recommended by the IADB, the World Bank and the US government. The bilateral FTAs are connected to regional integration because they exert influence on the nature of economic regionalism. Solís and Katada (2009, 1) assert that the “FTAs can work for or against the emergence of coherent regional blocs, and we must explore which conditions favor one outcome over the other.” Quiliconi and Wise point out that this “increased US reliance on bilateralism may provide the necessary structural foundation for regionalism to eventually flourish. This is based on their notion that bilateralism could gradually evolve into plurilateral regional-level agreements that exhibit new forms of cooperation” (Quiliconi and Wise, 2009, 109).

The US has subscribed bilateral FTAs with Chile, Central America and the Dominican Republic, Colombia, Peru and Panama. The content of the FTAs had a (potential) impact on the agenda promoted by regional integration schemes in which these countries participated. For example, the so-called “deep integration agenda”, which was on the table during the FTAA negotiations, has been implemented in the Western Hemisphere through these bilateral FTAs. The Pacific Alliance subscribed to that agenda, the CACM and the CAN partially accepted it, while MERCOSUR did not implement such a deep integration agenda. One could thus argue that the bilateral FTAs were the continuation of the FTAA agenda by other means, as can be seen by the fact that the regional schemes that adopted a model like that proposed in the FTAA were those that previously subscribed bilateral FTAs.

This process took place in a moment when China became a significant economic partner for most Latin American countries. Although China did not promote a continent-wide regional agreement like the FTAA or sub-regional agreements like the one proposed by the European Union (EU) to MERCOSUR, the impact of the increasing trade flows between Beijing and Latin America have had an impact on diverse countries of this region. additionally, China has also furthered a strategy of promoting bilateral free trade agreements, mainly located in the Asia Pacific region. Some Latin American countries have been involved in the network of FTAs promoted by Beijing, such as Chile that subscribed a FTA with China in 2006, Peru that signed an agreement in 2010 and Costa Rica that also signed in that year. These agreements are based on a model of economic integration mostly centered on the so called “old trade agenda” which is mainly about market access (Wise, 2012, 2), what distinguishes them from the US-led bilateral FTAs mainly concerned with the so-called trade-related issues.

Thus, it is undeniable that a shift took place from the mid-2000s regarding the approach to regionalism, especially in South America. As a result, initiatives such as the Bolivarian Alliance for the Peoples of America (ALBA), the Union of South American Nations (UNASUR) and the Community of Latin American and Caribbean States (CELAC) were created.

Estavadeordal, Giordano and Ramos (2015, 252) describe these changes as part of the “third wave of regionalism” that aimed “to correct the perceived shortcomings of the previous economic models”. For these pundits the way to understand such shortcomings is to differentiate among Latin American and Caribbean countries. For some governments, the problem was a suboptimal implementation of the economic reforms and the solution was to deepen integration and perfecting trade agreements with greater orientation towards external markets, as Colombia, Chile, Peru and Mexico did when they created the Pacific Alliance. Other countries contented the suboptimal implementation argument because the reform agenda had relied too heavily on the perfect functioning of free markets. In consequence, “the solution was to move the focus away from trade liberalization and towards functional cooperation”. This led to the creation of organizations such as the South American Community of Nations (SACN), later transformed into the UNASUR. Finally, another group of countries, the members of the ALBA, “openly rejected the free trade model” (Estavadeordal, Giordano and Ramos, 2015, 252).

Riggirozzi and Tussie (2012) have described these new initiatives as post-hegemonic regionalism, a new type of regional governance beyond the Washington Consensus. For Riggirozzi, since the mid-2000s, Latin America has offered alternative pathways to region building to those previously considered the norm. Regionalism has remained to a large extent driven by economic calculations, but

the new political economy of Latin American regional governance represents a conglomerate of projects in which issues of commerce, political integration and trans-societal welfare are reclaiming – perhaps even re-inventing – some of the principles of collectivism and socialism that have previously characterized the political tradition of the region.

(Riggirozzi, 2010, 1)

In other words, Tussie and Riggirozzi argue that the existence of a unique and hegemonic narrative on regionalism disappeared after the rise to power of left-wing governments. New narratives emerged and were accompanied by the promotion of a new regional agenda beyond free trade, the so-called “post-liberal” policies that aimed at rescuing the development agenda, strengthening the social dimension of regional schemes, advancing a new political agenda in issues such as defense and security and promoting functional integration and cooperation in areas such as infrastructure and energy (Sanahuja, 2010).

Whether we were before post-hegemonic/postliberal regionalism or a “third wave of regionalism”, what was clear in the first decade of the new century was a renovated scenario of Latin American regionalism. Some countries remained committed to open regionalism and decided to sign bilateral FTAs with extra-regional partners, while others adopted post-liberal policies accompanied with a narrative about post-hegemonic regionalism. This shows the complexity of Latin American regionalism that could hardly be simplified by pointing to a continental (i.e. Atlantic vs. Pacific) divide. This argument was presented by newspapers such as The Economist (18 May 2013) or The Wall Street Journal (3 January 2014). This argument deserves some considerations.

Latin American regionalism after 2003 was more than regional economic integration. In consequence, it is necessary to evaluate the whole process by including, in the explicative framework, the initiatives of political and functional cooperation. If schemes of regional political and functional cooperation such as UNASUR and CELAC, as well as the relatively less publicized Mesoamerican Project or the Association of Caribbean States are included in the analytical framework, the thesis of the Atlantic vs. Pacific divide was even weaker. For example, UNASUR included members of the Pacific Alliance, while MERCOSUR and ALBA advanced common political efforts in the solution of political crises or in the development of the Program for the South American Infrastructure (known in Spanish and Portuguese as IIRSA). The members of UNASUR created the South American Defense Council (SADC) and a Council for Health Issues. Beyond South America, Nicaragua is a member of the Mesoamerican project, an initiative that substituted the Plan Puebla Panama.

Certainly, the region was fragmented in terms of the economic model underlying regionalism: on the one hand, some countries we...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of tables
• List of contributors
• Acknowledgements
• Introduction
• 1. The dynamics of institutionalized regionalism in the Pacific Rim: Comparisons, connections and interactions
• 2. Chile: Asia-oriented globalization versus Latin America-oriented regionalism
• 3. Relations with Asia in Peru’s trade agreements
• 4. The political economy of Colombia’s integration in the Pacific Rim
• 5. To join or not to join the Pacific Alliance? Costa Rica and Panama in a comparative perspective
• 6. The long shadow of NAFTA: An economic geography of Mexico’s integration into the Pacific Rim
• 7. Canada and trans-Pacific regionalism
• 8. The development of Japan’s trade policy in the Asia-Pacific
• 9. Changing patterns in China’s trade and foreign direct investment policy and its involvement in Asia-Pacific economic integration
• 10. Understanding Singapore’s trade policy in the Pacific Rim
• 11. Australia’s Asia-Pacific regionalism
• Conclusions
• Index