A History of the FTAA

From Hegemony to Fragmentation in the Americas

Marcel Nelson

• Publisher: Palgrave Macmillan
• Year: 2015
• Print ISBN: 9781137412768
• eBook ISBN: 9781137412751
• Topic: Politics & International Relations
• Subtopic: International Business
• Index: Politics & International Relations

Providing a critical account of the collapse of the FTAA negotiations and alterations to power relations in the Americas, this book argues that the collapse was rooted in a "crisis of authority" prompted by growing opposition in the Americas to US leadership and the neo-liberal reforms that had been promoted by Washington since the 1980s.

Part I

Theoretical Framework

Introduction

The Free Trade Area of the Americas (FTAA) represented one of the most ambitious regional governance projects of the post–Cold War era. It was ambitious not only in terms of the geographical scope of the zone that would have been established, one that spanned the entire Western Hemisphere, but more important, in terms of the variation in the characteristics of the different participating countries. Specifically, the FTAA encompassed some the world’s most developed economies as well as some of its poorest, underdeveloped economies. For example, in 2005, the year the FTAA negotiations collapsed, the Gross Domestic Product (GDP) in millions of the combined states of South America, the Caribbean, and Central America amounted to US$2,698,103, while the GDP of the United States alone amounted to US$12,665,857.1 These differences were limited to not only objective criteria such as GDP but also significant subjective ones, such as historical experience and identity. Therefore, the negotiation of the FTAA was made up of a group of unlikely, dissimilar, and, in some cases, distant participants.

Given the extreme structural asymmetries—economic, social, and political—that characterized participating countries, to say nothing of the low degree of economic interdependence among many of them, it was all the more ambitious that the FTAA, during most of its negotiation, was conceptualized as being a single undertaking. This meant that, without exception, all participants would have to adhere to identical policies according to a single timeline. A retrospective gaze on the FTAA, negotiated between 1994 and 2005, could lead one to conclude that such a project represented the height of hubris and delusion. Indeed, these asymmetries have been the focus of many explanations for the initial paralysis and subsequent collapse of the negotiations.2 However, such a gaze does not countenance the strength of ideology in shaping the perspectives of the FTAA’s participants.

From the perspective of its initiators in 1994, the FTAA seemed as though it was an inevitability, given the triumph of capitalism and democracy augured by the collapse of the Soviet Union and the growing awareness of the concept of globalization. It is important to remember that the end of the Cold War was thought of as an opportunity by political and economic elites in Latin America to reinvigorate the region’s relationship with the United States—a relationship that was to be based on a mutual endorsement of liberal democracy and economic liberalization after what Latin American elites had perceived to be a period of neglect.3 The strength of the consensus that gripped the leaders of the Americas concerning the necessity and inevitability of a hemispheric free trade zone demonstrates the strength of ideology in view of material objective factors. Therefore, the collapse of the FTAA negotiation in 2005 was not simply the result of irremediable structural differences, even though these differences were present and influential, but more important of the rupture of the ideological consensus that clasped the Americas in 1994.

The ideological rupture that paralyzed the FTAA negotiations was the product of political mobilizations throughout the states of the hemisphere, whose effects echoed at the negotiation tables of the FTAA and eventually brought the negotiations to a standstill. This rupture was the product of a transformation that took place in the Americas during the decade in which the FTAA was negotiated. During this long period, there were, of course, inevitable policy shifts and changes in government. However, a pattern emerged within the polities of Latin America, beginning with the election of Hugo Chavez Frias in 1998 in Venezuela, which can be characterized as a leftist electoral wave. One cannot reduce the cause of this electoral wave to any one factor, though the growing opposition to the neoliberal reforms implemented throughout the 1980s and 1990s as a significant contributor to this development can be identified.4 Eventually, with the election of Luiz Inácio (Lula) da Silva in 2002 in Brazil, and in the wake of the Argentine Economic Crisis (1999–2002), there coalesced a group of states that were skeptical of, if not hostile to, neoliberalism in the form presented by the FTAA within the “Southern Common Market (Mercado Común del Sur—MERCOSUR) plus one” bloc that emerged in relation to the negotiations.5 The emergence of a pattern of social movement mobilization and electoral victories that came to be crystallized in the leftist tide at the national scale and the “MERCOSUR plus one” bloc at a regional scale burst the ideological consensus that made the FTAA seem inevitable and rendered its negotiation inoperable.

The fact that the negotiation of the FTAA went from being perceived as an inevitability sustained by powerful state and corporate interests to collapsing in paralysis as a result of political mobilizations at the local level in many of the hemisphere’s states demonstrates the continued saliency of agency even in the most remote and peripheral areas of the world. This book will demonstrate how developments at the local level, or scale, can have significant ramifications within the most insulated institutional arenas at the supranational level. This will be done by illustrating the degree to which the growing opposition to neoliberalism in the Americas had an impact on the evolution of the FTAA negotiations. Notably, it will be argued that the growing reaction against neoliberalism can be linked to specific dynamics that directly impacted the progression of the FTAA negotiations.

Literature Review

The failure of the FTAA negotiations has prompted diverse analyses that have attempted to explain the failure to obtain an agreement before the 2005 deadline. The literature that addresses this issue can be divided into two broad categories. Literature in the first category tends to emphasize the economic asymmetries in the hemisphere, usually located within the paradigms of international relations and international political economy. Literature in the second category tends to focus on the role of social movements in the evolution of the agreement as an indication of a growing discontentment with the FTAA. With respect to the former, there is no doubt that economic asymmetries of the hemisphere played an important role in preventing a successful conclusion of the negotiations. However, this literature collectively fails to identify the conjunctural crisis of authority that was imparted directly upon the state actors in the negotiations process itself and the pivotal role of such actors in the ultimate failure of the FTAA negotiations by 2005. In relation to the former, there is also no doubt that the important mobilizations, notably through the Hemispheric Social Alliance (HSA), contributed in no small way to the sense that the FTAA did not have broad societal support throughout the hemisphere. Nevertheless, this approach ignores the institutional infrastructure that was put in place precisely to absorb such mobilizations and the events that took place in these institutions that had a determining effect on the final outcome of the negotiations. Both these approaches to explaining the FTAA negotiations lay bare the need to analyze the negotiations in a dialectical manner that connects institutions and social relations.

Literature on the Hemisphere’s Structural Asymmetries

Nicola Phillips’s “Hemispheric Integration and Sub-Regionalism in the Americas” is an excellent example of a structural approach to explaining the evolution of the FTAA negotiations as the behavior of states and relates to the multiple subregional trade agreements in the hemisphere.6 She explains that the difficulty in reaching an agreement was due to the stipulation that the FTAA integrate the region’s different subregional agreements. Each of these agreements, according to Philips, have distinct relationships to the global economy and that countries acceded to these subregional agreements for very different reasons, whether for protection or for access to specific markets. Therefore, for Philips, integrating these different agreements, in the midst of a high degree of heterogeneity of interests and motives, into a single one represented a very difficult proposition. Phillips’s analysis sheds light on the geopolitical dynamics that would render the FTAA difficult to negotiate in terms of the hemisphere’s structural incongruities.

Mario Carranza also looks at the FTAA impasse in terms of geopolitics and the lack of congruency between state interests.7 Particularly, Carranza focuses on the disagreement between the United States and Brazil over agricultural subsidies as the source of the impasse that led to the failure to adopt the FTAA. He puts forth the problem that the economic sectors where Brazil was the most competitive were the ones that were the most protected by the United States. Accordingly, Carranza explains that the United States was more motivated than Brazil in negotiating the FTAA as it had more to lose. Specifically, it faced increasing limits on its access to Latin American markets due to subregional and extrahemispheric trade agreements. The elites of major Latin American countries, such as Brazil and Argentina, did not feel the impetus to pressure their states for a hemispheric trade agreement, as they would face more stringent competition from North American firms as a result of the FTAA. Additionally, Carranza argues that this was amplified by the widespread civil society opposition to the FTAA in Latin America as well as the growing number of leftist heads of state in the region, which was spurred by a growing challenge to neoliberalism in the Americas. He argues that those factors amplified the structural asymmetries between both countries. The latter element is added as an appendage to the structural element of his argument without, however, examining how they relate to one another.

These analyses bring forth valid points in terms of describing the disjunction of interests between the countries that were participating in the FTAA. However, pointing to the economic asymmetries and lack of economic interdependence between key states in the hemisphere cannot account for the dynamic character of the negotiations. For example, Jorge Mario Sanchez-Egozcue and Regueiro Bello’s argument cannot account for the fact that Argentina’s position shifted during the negotiations from being aligned with the United States to aligning itself with Brazil. Additionally, Carranza’s argument cannot account for the fact that the main impetus for the FTAA came not from the United States but from Latin America, though the FTAA may have advantaged the United States disproportionately. The same criticism can be leveled at Phillips’s argument. This points to a need to look at not only economic asymmetries in explaining the difficulties facing the FTAA negotiations but also the social and ideological factors that shaped the evolution of the FTAA negotiations.

Literature on Social Movements and the FTAA

Some of the literature that addresses social movements provides a linear account of a double movement in the hemisphere against liberalization. This approach tends to posit the expansion of market forces as coming from “above,” via the hemisphere’s different governments, and the opposition as coming from “below,” via coalitions of different social movements and organizations attempting to enforce a regulation of market expansion. An example of this type of literature includes Kevin Danaher and Jason Mark’s work, which situates the opposition to the FTAA as being part of a growing opposition to the extension of corporate power in the hemisphere.8 Danaher and Mark explain that the growing discontent with trade agreements emerged from a growing sense among disparate social movements in North America that the North American Free Trade Agreement (NAFTA) needed to be blocked. Danaher and Mark’s interpretation of events looks at the battles that were won within the United States in terms of successes in blocking fast-track authority in Congress and these successes’ impact on the negotiations of the Multilateral Agreement on Investment (MAI) and the FTAA. Furthermore, the “Battle in Seattle” in 1999, the demonstrations challenging the meeting of the World Trade Organization (WTO), is portrayed by Danaher and Mark as the culmination of these efforts, as the moment in which the antiglobalization movement stepped into the mainstream. This approach to examining the relationship between social movement mobilization and the evolution of the negotiations can broadly be characterized as a reaction to the expansion of corporate rule.

Articles by E. Timothy Smith, William Smith, and Roberto Patricio Korzeniewicz provide a more detailed and sophisticated analysis of the relationship between opposition to the FTAA and the negotiations process itself.9 Smith and Korzeniewicz specify that there were two negotiation processes occurring simultaneously: the Summit of the Americas process and the FTAA process. Both processes were closely related and interdependent but retained a degree of autonomy from one another. The Summit of the Americas consisted of a series of ongoing comprehensive summits attended by heads of state that discussed and monitored a series of issues such as education and the FTAA. The FTAA process was formally included under the Summit of the Americas process and was accountable to it, but the authors indicated that much of the negotiations took place at the ministerial level with an agenda and negotiation framework much different from the Summit of the Americas. Using a neoinstitutionalist framework, Smith and Korzeniewicz emphasize the fact that civil society organizations had very different opportunities for participation in both processes. Despite nominal openness to civil society organizations at the Summit level, a growing disenchantment permeated the “insider” groups with whom they engaged. There were no monitoring or enforcement mechanisms, for example, to ensure accountability regarding the resolutions and promises agreed to in the different plans of action that were adopted at the end of each Summit. Essentially, the authors explain that the de facto exclusion of civil society organizations from the FTAA negotiations contributed to the momentum of “outsider” civil society organizations after the first successful alternative People’s Summit of the Americas in Santiago in 1998. This was compounded by a growing opposition movement throughout the hemisphere, which culminated in the election of leftist governments. E. Timothy Smith’s article employs a similar argument but emphasizes to a greater degree how the WTO meeting in Seattle propelled the antiglobalization movement into the mainstream and invigorated anti-FTAA protests.10 To different degrees, both articles focus on the HSA as a transnational coalition of civil society organizations and on the growing opposition to the FTAA as part of a broader “double movement” against the expansion of neoliberal policies.

These examples of articles that examine the role of social movements in the unraveling of the FTAA are quite prescient in identifying the shift that took place in the social formations of the hemisphere during the decade that the agreement was negotiated. Nevertheless, these analyses miss the specific impacts that these mobilizations had on the different areas of the institutional framework of the negotiations. Specifically, the FTAA negotiation framework was designed to insulate the negotiations from such mobilizations through the establishment of an inner track made up of thematic negotiation groups. Importantly, this inner track allowed the negotiations to progress despite important disagreements until 2003. As we will see, the work in the inner track stopped as a result of the actions of state representatives from Latin America that were motivated by political mobilizations in their countries.

An Ideational Analysis of the FTAA

Zuleika Arashiro’s Negotiating the Free Trade Area of the Americas presents a convincing riposte to the lacunae in the literature presented in the previous section by emphasizing the role of ideology and agency as determining factors in the failure of the FTAA negotiations. Like the approach employed in this book, Arashiro does not deny that material, structural economic factors provide a context where policymakers take decision but rather emphasizes the role of ideas in shaping the perception of those material, structural factors and the definition of interests.11 With respect to the FTAA, as in other trade negotiations, Arashiro emphasizes that ideology played an important role in critical conjunctures during the negotiation in motivating the actions of key states. Additionally, in order to begin to appreciate the role of agency and conjuncture in trade negotiations, the author argues that one needs to look at domestic politics, as opposed structural macroeconomic explanations, to explain and understand the behavior of states. As such, the author points to the incompatibility of the views of decision makers within the United States and Brazil in relation to their “countries’ foreign trade policy in the Western Hemisphere.”12 Notably, policymakers opted for trade bilateralism in the hemisphere rather than providing the leadership required for successfully negotiating a single undertaking hemispheric agreement.13

Arashiro’s masterful and subtle account of the negotiation of the FTAA puts forward the importance of ideas and institutions, which is consistent with the theoretical framework that will be presented in this book. However, these ideas and institutions are presented in a way that is seemingly divorced from social relations. Specifically, her account provides detailed appraisals of the institutional contexts of Brazil and the United States, as well as the dominant ideological currents therein but only gives a superficial account of the diverse currents of civil society in each country. In Arashiro’s ideational-institutional account, institutions and ideas are not put into a dialectical relationship with civil society and social relations. To be fair, in the account provided, ideas and institutions sometimes come into contact with civil society. For example, Arashiro argues that polarization around the FTAA negotiations during Lula’s presidency reduced his government’s ability to compromise during the negotiations.14 That being said, there is no theoretical or systematic account of the contact between institutions, ideas, and civil society. Therefore, in order to account for institutional transformations or changes in policy, the author relies on “politically influential individuals” that can either be located within or outside of the state that can “mobilize the institutional apparatus” as the locus for change.15 Indeed, one should not discount the role that individuals can play in bringing about change, but such agenc...

Table of contents

• Title Page
• Copyright Page
• Dedication
• Contents
• Acknowledgments
• Abbreviations
• Part I: Theoretical Framework
• Part II: The Evolution of the FTAA Negotiations
• Part III: Case Studies
• Part IV: Regionalism after the FTAA
• Conclusion
• Notes
• Bibliography