The development of international scenarios after Seattle has also had important repercussions for Latin America. On one hand, the rise of an influential protest movement against globalisation and its effects focused world attention on themes traditionally deeply felt in the region, as well as in developing or ’emerging’ countries.Summing up,we maysay there has been a renewed awareness of the unevenly weighted relations between the North and the South of the world. Thus an appаrently no longer fashionable topicclearly still concerns major sections of world public opinion.
On the other hand, as never before in its history, the sub-continent has become the centre of a complex trade zone, characterised by the overlapping of several fronts: the launching of a new multilateral round of negotiations by the World Trade Organisation (WTo) is still the mostprobable general prospect, or at least the most desired, but after Seattle the possibility of fresh failure in Qatar has suggested a number of scenarios for the region:
- – hemispheric integration as part of the Free Trade Agreement of the Americas (FTAA);
– the conclusion of bilateral trade agreements with the European Union.Already established with Mexico, this kind of agreement is currently being negotiated by the Eu and MERCOSUR;
– the consolidation of the sub-regional economic integration processes – primarily MERCOSUR, currently undergoing a major internal crisis because of economic divergences between Brazil and Argentina, but still a regional bloc with solid prospects and significant results in terms of trade volumes. The Andean Community is also strengthening and, with it, the prospect of a South American Common market, which would be the outcome of the possible integration of the two groups;
– the possible alternative solution of signing bilateral agreements with the USA and the Eu,
eschewing membership of regional blocs: i.e. the Chilean model, which other countries in
the region would like to follow.
But it would be misleading to think that these possible alternatives only appeared on the scene after the failure at Seattle. The overall games are much more complex and must be seen in the context of the a ‘Spring’ in Latin America, or at as least part of it, a feature of the 1990s.After the so-called ‘lost decade’, all the countries in the region continued to pursue – with varying degrees of success – ambitious modernisation programmes for their economic and social systems, demonstrating that Latin America, far from being composed of countries destined to fail, has a future full of opportunities.
Thus we can talk of a new Latin America, albeit still beset by crude problems, but now on the right path. The first to recognise this new real situation was multinational and other enterprises (hardly surprising?),which invested en masse in the most promising countries in the region both in the framework of the privatisation processes and outside them.
When, in the 1990s, Brazil registered the most foreign investments among emerging countries after China, the reason was certainly not a sudden new-found love ofthe samba by international capital, but rather the success of the economic reforms pursued by Fernando Henrique Cardoso’s government and the solid long-term prospects of the Brazilian and MERCOSUR markets. Although a similar process affected Mexico, where a great deal of capital was invested, despite political unrest, it was because the international entrepreneurial community viewed the ongoing economic and social progress in the North American country as irreversible.
The current Argentine difficulties must not deceive us. The most ‘European’ Latin American country was the first to attract the attention of international business. The Argentine privatisations of the 1990s were cited as a model to be emulated by emerging countries. But today we are aware of the economic lessons of this first-generation of ‘wild’ privatisations. In Argentina, as in the USA and Britain, privatisation without clear transparent rules for the privatised sector often ran into serious problems of efficiency. In this first stage of the history of privatisations (1980s and 1990s), there was an attitude of almost blind trust in privatisation conceived as an absolute panacea and the emphasis was not on the modalities but rather on the gains to be made for the public coffers.After initial brilliant results, in the long run problems began to appear.
Argentina is a clear case in point. It privatised everything immediately, creating the illusion of having solved its problems overnight. But this ‘accounting’ approach to privatisation was not accompanied by a parallel process streamlining and modernising the economy and public sector, thus leading to the current impasse, with a crisis in competitiveness of the country as a whole, aggravated by the effects of the peso being bound to the dollar to the detriment of Argentine products on the international markets.
The Argentine problems can thus be explained by serious structural difficulties and solving them will take years of virtuous economic policies and sacrifice. It will be far from easy, but it seems that Argentina has learned its lesson: economic stabilisation and freezing inflation are not the ultimate objective,but only the initial step in the long path of reforms.
For years Chile was considered a paragon of sound economics and although its macroeconomic situation is still much better than its neighbours, paradoxically for this very reason the country must reckon with a certain lethargy in the country considered as a system.
This, however, has not prevented Santiago from moving with considerable skill and ease on the international scene – a necessity for a small-sized country (in terms of population), half of whose gross national product depends on exports.
The other countries in the region are characterised by similar, more or less successful processes. But the road taken seems fairly clear and even rigorously taking into account all the differences, we can now speak of Latin America entering the twenty-firstcentury with renewed economic credibility.
And this new dimension enables Latin America to play a greater role in international relations. Economic credibility brings greater international credibility, more obviously in the case ofthe larger countries, like Mexico or Brazil, but also for other countries.
While LatinAmerica now attracts interest as a market, arguably for the first time in its history, it also seems to have its own voice, and is no longer simply a passive protagonist of its own destiny. The age of dependence has ended, and the sub-continent has shown that it has a lot to say and offer in the age of interdependence and globalisation.
Having said this, we should not like to give a misleading impression ofungrounded optimism. The region still has very serious problems, everywhere there is a social gap between the educated elite, an integral part of the First World, and the much larger sections of the population still on the sidelines of the modern world. Reducing this gap is still the great challenge for Latin America in the twenty-first century. Only a determined move towards social policy by the ruling elites throughout the region will enable them to tackle this problem and the signs so far in this sense are not always encouraging.
Once vacillating and subjugated by political power, the Latin American civil societies made giant steps forward in the 1990s and in a certain sense have forced the ruling oligarchies to heed their demands.
Part of this phenomenon is due to the wide scale of the privatisation processes in countries where the state presence has always been very strong and heavy-handied. The withdrawal of the state’s long hand has forced once passive citizens to take on responsibility for collective problems. In Europe something similar happened, but in an economic context and with much greater available resources. In this sense, the reawakening of Latin American civil society has something almost heroic about it, yet is still real and tangible.
The ongoing experience in Latin America involves several themes: social development, education, the struggle against crime and drugs, environment, and access to new technologies. In twenty-first-century Latin America citizens simply no longer expect magical solutions from the state, but have come to adopt a hands-on approach.
Thus the phenomena is not only explained by a defensive attitude (i.e. replacing the failed state) but is also the outcome of a virtuous process. The Latin American countries have shown they really can function and have built up a sense of confidence in their populations that was often missing in past.
While criticism of the perverse effects of globalisation are now found worldwide, Latin America certainly led the way in this process. On one hand, the insistence on an objective diffidence in the dominant Us-based model – adored and hated by Latin Americans – and, on the other. the existence of serious imbalances in the continent, aggravated by growing globalisation (the striking contrast in Latin American cities shock European visitors), have definitely been grist to the mill of those criticising certain aspects of globalisation.
If globalisation reaps many victims, then most of them live in the South of the world.
Not surprisingly, in Latin America critical but constructive approaches to globalisation have emerged, such as the Porto Alegre Social Forum, which, when launched this year, caught the attention of half the world.
With hindsight, we can say that Porto Alegre set the tone for worldwide movements criticising various aspects of globalisation. The subsequent spiral which took some fringes of the anti-globalisation movement from Prague to Genoa wrongly debased themes of great interest and relevance through the use of violence.
The Porto Alegre Social Forum was a product of the Latin American Left and it was a positive constructive example of how to tackle major themes peacefully. Its great merit was as a sounding board speaking out and saying things that many had thought without having the courage to articulate.
Although the Social Forum also expressed anxieties present in Latin American society for some time, the governments in the region, boosted by the relative success of the reforms and spurred on by an increasingly dynamic and demanding society, had the courage to put on the international agenda topics of great importance for Latin America and for emerging and developing countries in general. Incidentally, these themes also turned out to be of interest to many industrialised countries.
Some time after the practical end of the nonaligned group, countries which in the past had often sought an independent role on the international scene found themselves in the front line over themes also arousing considerable sympathy in the North of the world, especially in Europe.
Let’s look at some examples.The struggle by South Africa, India and Brazil for access to low-cost medicines against Hiv and otherendemic diseases through the partial suspension of intellectual property rights is a very delicate theme because it threatens one of the foundations of the market economy. But at the same time it is obviously a just cause, given that tackling this kind of problem requires bold mechanisms, based on solidarity.
This issue would have dragged on foryears in the chambers of the WTo onlv to end with a victory for the multinational drug companies, if the world climate had not dramatically changed over the last year, and if there had not been strong international pressure in favour of the claims made by the countries of the South.
Brazil and its allies would never have had their way, if they had not received significant support from the European Union, whose Access to Medicines initiative is wholly in line with the claims of emerging countries (and very far from the United States’ position).
On the subject of climatic change and biosecurity (see the Kyoto and Cartagena protocols) as well as biodiversity (see the convention on biological diversity at Rio in 1992) the Latin American countries, and especially Brazil on the strength of its good health and economic and strategic influence, abandoned its previous world ambitions and took on a much more realistic role as leader of the sub-continent, defending with strong stances, critical of the extreme freemarket visions of the United States and Japan.
In the United Nations conferences, Brazil and the Latin American bloc have usually shown considerable unity, due not only to their common culture, butalso shared objective interests. In this context there is also considerable agreement with the African and Asian countries, enabling countries like Brazil or Mexico to be part of the leading group of developing countries. In the recent Durban conference, the Latin American countries played asignificant role. Without being in the front line on such topics as the claims associated with slavery, nor the theme of the ideological definitions of racism, led by Brazil, Latin American took on the role of broker, and exercised considerable influence in reaching a final compromise.
At last Latin America tends no longer to unreservedly accept social and cultural models imported from abroad, but develops its own positions and defends them on the international scene by creating alliances of variable geometry often involving convergences with emerging African and Asian countries, but also with the Eu.
There are of course also significant differences, for example, on the subject of accepting GM food, rejected by Brazil but wholly acceрted by Argentina. In general, however, Latin America today has its own personality and
stance towards the G8.
Latin America is also showing great dynamism in the cultural field. An awareness of the theme of ‘cultural exception’ is growing and the idea of access to a multilingual information society has developed fast in a region speaking Spanish and Portuguese (the second and fourth international language in the world, respectively). Although the information society tends to be global in its content, it can not be so only in English, but must also reach the majority of popиlations in theirnative tongues. Here, too, there are common denominators with the Asian countries and Europe, by definition multicultural, and friction with the mono-cultural Us globalising model.
But what is the Latin American position on economics vis-à-vis the G8?
On the strength of its renewed credibility, which seemed to have been lost for good in the 1980s, Latin American countries are now objectively in line with the other emerging countries in demanding the democratisation of international trade based on growing access to the developed world markets and a revision of the Wro mechanisms, now leaning heavily in favour of industrialised countries, so that they are better balanced in favour of the South.
Very few Latin American countries are part of the Less Advanced Countries group which benefited from the debt forgiveness decided by the G7 in Cologne (1999). But perennially beset by severe problems of financial instability, Latin America is very aware of the need to design a new architecture of the international financial system to promote stability in emerging countries.The crises in Mexico (1994), Brazil (1990) and Argentina have highlighted the financial fragility of even the strongest countries in the region, still dependent on the flow of international capital and often penalised by market speculation not always based on objective elements in the countries involved.
The international financial community responded positively to the subsequent Brazilian and Argentine appeals by conceding an ad hoc financial packet, but the problem is still far from being solved and is a priority for the Latin American governments. But apart from the above-mentioned specific contributions, it seems unlikely there will be a definition in the near future of stabilisation mechanisms for the monetary markets, which continue to fluctuate violently, as they have done since 1973.
While the problem of foreign debt, although still not solved, is no longer as crippling as it once was, the Latin American countries have found that the path of growth, the key factor in economic development, now depends on access to international markets.
The Uruguay Round gave rise to a sweeping trade liberalisation process for industrial goods and some services. The emerging countries, mainly agricultural producers, now ask for a counterpart for their great effortto open up their economies in the 1990s. This is particularly true for some Latin American countries, who opened up considerably to international capital and enterprise and would be ready to export farm produce to European, North American and Japanese markets, if the liberalisation of the Uruguay Round were to be followed by a significant liberalisation of the agricultural markets in the next trade round. The United States, the Eu and Japan all have various mechanisms severely limiting the import of agricultural products from the biggest producers (united in the socalled Cairns Group). They also grant subsidies to exports (USA and Eu), thus penalising the Cairns countries even on third-party
markets.
While in the case of the Eu, the 1992 CAP reforms and the Berlin financial agreement of 1999 gave rise to a gradual reduction in subsidies, especially those granted to exporters, the United States is undergoing a considerable escalation in agricultural protectionism.
In the view of the Latin American countries. especially big agricultural producers like Argentina, Brazil and Uruguay, the fresh round of Wro negotiations, due to be resumed at Doha in November after its failed launch in Seattle, should firstly focus on liberalising agricultural trade, a genuine priority, but should also revise the mechanisms used for protectionist purposes and strongly biased in favour of industrialised countries (such as anti-dumping measures and intellectual property rights).
Only in that eventuality – the Latin Americans claim – will it be possible to talk about further reductions to industrial tariffs and the further liberalisation of services and public tenders. The Latin American resolve, inspired, however, by a constructive spirit, is accompanied by the even more rigid stance of the emerging Asian countries (India, Indonesia, and Malaysia), which are very unwilling to support the launch of a fresh round of negotiations.
Before Seattle, these objections from emerging countries would have been relegated to the background. The three big blocs of international trade, and especially the USA and the Eu,would practically have decided the fate of world trade on their own. But this is no longer the case, and the consensus of a dozen key emerging countries has now become indispensable. Here we are talking about Brazil, Mexico and Argentina for Latin America, plus India, Indonesia, Malaysia, Singapore, South Africa and Egypt (in addition to developed countries like Canada, Australia and a few others).
It is very difficult to foresee any significant progress being made in the negotiations or even if they will take place, without obtaining an overall prior consensus from this ‘club’.
But if, despite all these efforts, it turned out to be impossible to set up a new round of multilateral negotiations, what would be the repercussions for Latin America?
As mentioned at the beginning of this article, it would be a mistake to depict alternative scenarios as second best to the multilateral round of negotiations. In fact, while the United States and the European Union are now engaged in ambitious initiatives in Latin America, these processes actually began in the early 1990s, and coincided with the beginning of economic stabilisation and structural reforms in the region.
Since the signing of the Treaty of Asunción (1991) instituting MERCOSUR, the European Union has given the new South American sub-regional bloc considerable political support as well as offering economic cooperation. This approach led to the signing of the agreement for inter-regional cooperation in Madrid (1995), and one of its clauses made provisions for setting up trade liberalisation negotiations between the two blocs, when the necessary conditions were fulfilled. The significant evolution of economic relations between the Eu and MERCOSUR (in the second half of the decade, the Eu was the foremost trade partner and the foremost investor in the South American bloc) has laid the basis in avery short period for setting up negotiations, with the aim of creating the first ever Inter-regional Association Agreement in the history of international relations.
At the time of the first Euro-Latin American summit at Rio de Janeiro (June 1990) the launch of negotiations was approved, and although they initially ran into difficulties, after five rounds of talks a draft agreement was proposed by the Eu, and MERCOSUR should respond with a counter-proposal by the end of October.
The conditions thus exist to conclude the agreement over the next two years, and the next Euro-Latin American Summit in Madrid (June 2002) should establish a schedule for the talks to create an ambitious common economic area involving the fifteen Eu members and the four MERCOSUR Countries, plus Chile,with which the Eu is simultaneously negotiating an equivalent agreement.
In addition to the trade agreement, there will also be a political agreement and an accord in the field of cooperation, both integral parts of the Association Agreement.
As regards the United States, the launch of the ambitious project to create a hemispheric common market (FTAA, or ALCA in Spanish) dates back to the administration of President Bush senior.
The process made little progress during the Clinton administration, but in the second half of his term of office, he acknowledged the growing strategic importance of markets in the region, which the USA can no longer consider as their own, while there were difficulties in the multilateral framework (the Seattle failure).
The United States have always preferred a strategic multilateral approach to trade agreements, basically fighting shy of signing bilateral regional agreements which, however have been a feature in practically all world regions.
American analysts and companies have warned incoming President George W. Bush about this situation, and he decided to push forcefully along the road of regionalism, without relinquishing the possibility of launching a multilateral round this year.
The prospect of a Common Market of the Americas has re-emerged, and the thirty-four countries in the region at the Americas Summit in Quebec (April 2001) established a calendar and structure for negotiations, which are due to be completed by 2005.
These negotiations, however, must tackle numerous difficulties, not least the influence of the American lobbies. This makes it difficult to foresee President Bush being allowed a broad negotiating mandate (the Trading Promotion Authority, previously known as the ‘fast track’).
But there is another fundamental difference between the FTAA as conceived in the early 1990s and the present set-up. At that time the negotiation process was clearly Us led, with little chance of the Latin American countries exercising significant influence on the talks, but the renewed strength of some countries, especially Brazil, and the re-balancing influence of the European Union have shuffled the cards. The Latin American countries have much more room for manoeuvre and, as in the case of Brazil, intend to make the most of it.
This does not mean that the FTAA will not be created, but it will probably no longer simply be the mirror image of NAFTA (North America Free Trade Agreement). It will be a wide-ranging ambitious agreement with the United States being forced to grant concessions on important issues (access to markets, sanitary regulations, the use of anti-dumping measures, and farm subsidies).
In fact in the run up to Quebec, Brazil already successfully imposed its time-scale on the United States and its closest allies (i.e. Chile and Uruguay), which had pushed for a conclusion to the agreement in 2003, before the end of Bush’s term in office. This was a wholly unrealistic prospect, given the complexity of the talks. But, attracted by the illusion of striking a quick deal with the United States, many Latin American countries had been willing to accept it.
The Brazilian position, supported by other countries like Venezuela and Argentina, albeit with some reservations, is that fast negotiations would only result in imbalances in favour of the United States. The Brazilians believe the USa showshould their willingness to conclude the agreement by granting real concessions.
Another very important point for Brazil is the consolidation of MERCOSUR. Although since 1990 the regional bloc has been beset by an internal crisis, basically due to the incompatibility of the Argentine and Brazilian exchange systems, and now aggravated by the Argentine crisis, this takes nothing away from the fact that it is a significant common market. Here Brazil has acquired considerable political influence, which it obviously does not wish to give up. Hence the decision to negotiate as a bloc in the FTAAtalks (a move viewed coolly by Uruguay and to some extent also by Argentina).
That MERCOSUR still counts for a lot, despite its internal problems, is demonstrated by the fact the USA, in tackling the difficulties of multilateral negotiations (WTo), and hemispheric negotiations (FTAA), have agreed to set up a dialogue called 4 + 1 with MERCOSUR on trade issues of common interest. These are not fully-fledged negotiations, but talks acknowledging an important role for MERCOSUR, often denied by the Usa in the past.
The future of Latin America in the new century will depend on the evolution of these situations as well as the 4 + 5 negotiation between MERCOSUR and the Andean Community, which could lead to the creation of a South American Common Market, as a premise for the FTAA.
Clearly anyone who still sees Latin America as reed rocked by winds much stronger than itself will have to change their mind in light of the foregoing observations.
The new Latin America is still beset by enormous problems, but now has its own voice and personality. Within the region, countries like Brazil and Mexico, but also Chile and Venezuela have cards up their sleeves which they are now in a position to play.
Given the crisis in the G8 model over the last two years, it is unlikely that the organisation will continue in its present structure and ways of working. The idea of an ‘executive board’ of rich countries (G7) or armed countries (Russia) exercising world leadership alone is now losing ground, or has been abandoned completely.
The G7 must be widened and in fact some countries already participate in a G20, the first meeting having been held in Berlin in December 1999.
In addition to the members of the G8, the participants in this new forum are Argentina, Brazil, Mexico, Australia, South Africa, Turkey, China, India, Indonesia and South Korea plus the Presidency of the European Union and the Bretton Woods institutions. Although the G20 has still not attracted as much media interest as G8, the international community will probably head in this direction, without, however, forgetting to include in the wider group mechanisms for the involvement of excluded countries and civil societies.
In this picture, Latin America has already cut a fine figure and it will surely continue to make its own voice heard in the process to define new worldwide balances.