Hemispheric Integration
Myron J. Frankman
1998
Scheduled to appear in World Economic Affairs

The integration of Latin America is a dream that dates back at least to the time of Simon Bolivar and the liberation of the Spanish colonies in the first quarter of the nineteenth century. Going back further, one finds that at the earliest stages of the conquest by Spain, its American territories were originally divided into only two administrative units. These were multiplied in number as settlement and economic activity increased. After independence, further pressures for subdivision persisted, some successful and other repelled by force of arms in civil wars. Regardless of outcome, it was neither a hemispheric nor continental vision that prevailed.

The nineteenth century variety of globalization with its treaties of friendship, commerce and navigation and their most-favored nation clauses served as an inertia-driven impediment to initiatives to forge links between the newly independent Latin American countries to either complement or supplant links with the major trading powers of that time, notably the United States and the United Kingdom. The Venezuelan born, Chilean-based legal theorist Andres Bello was one of those who labored in vain for a legal regime that would facilitate Latin American integration. As successive bilateral treaties were negotiated by South American countries with the US and the UK, often in haste in hopes of better securing their newly-won independence from Spain, Chile found that its neighbors were not free to negotiate preferential accords. A similar process stifled incipient efforts by the countries of Central America to integrate economically and politically.

A myriad of organizations bringing together the countries of the Americas have been created throughout the twentieth century, starting with the precursors of the Pan American Union and the Pan American Health Organization Major boosts to the bringing of the Americas much closer together came with the advent of air transport and with the little noted episode of pervasive central planning of hemispheric economic activities from Washington during the Second World War. Markets were abandoned in favor of fixed-price purchasing agreements proposed by the US for the acquisition of Latin America's strategic raw materials. As a complement to these accords, allocation of scarce petroleum, rubber, shipping space and capital equipment for new investment was all directed by US war-time agencies.

The insistence of the US on the dismantling of controls and a return to free markets at the War's end spawned in Latin America a vision of industrialization based on import substitution and regional integration intended to lead to the eventual creation of a Latin American Common Market, an idea developed in a 1952 publication of the United Nations Economic Commission for Latin America (ECLA). Even prior to that, Raul Prebisch, the first director of that UN regional organization had decried the fact that, with respect to one another, the Latin American nations had become a set of water-tight compartments. While the grand vision of Prebisch and ECLA was ahead of its time, it served to redirect the attention of Latin Americans to a variety of regional initiatives.

The impetus to integrate was greatly strengthened by developments in the 1950s in Europe. Unrealistic anticipations flourished as a consequence of the minimization of the differences between the two regions. "Europe", whether of the six of the 1950s or of the more recent fifteen, is a compact region tied together by a dense systems of roads, rail and telecommunications; Latin America was and still is barely integrated internally in these regards. Four of the countries of Latin America are each larger (Brazil, Argentina, Mexico and Peru) than the combined area of the original six members of the European Common Market and the area of another two (Colombia and Bolivia) each falls slightly short of the area of the original six. Brazil's area is more than two and one-half time larger than that of Europe of the 15 and Argentina is only ten percent smaller than the size of EU-15.

The simplest economic models of foreign trade assume zero transportation costs, which implies that economic activity takes place at a point in space and that geography doesn't matter. As the time and cost of moving ideas, services, goods and people decrease, distance ceases to be either the impediment to export growth or the protection to local monopoly -- two sides of the same coin -- that it once was. While surface transport may still account for the lion's share of the volume of trade between the countries of Latin America, it is not the principal integrating agent today: air and telecommunications are the leading factors in integration as we approach the new millennium. For the "late integrators", able to jump to the technological frontier of trade in services, distance may no longer be a conditioning factor.

Trade integration is a hydra-headed process. Integration in one area carries with it cooperation and integration activities in a dozen others. Trade agreements in their initial stages are regimes of exception, carrying with them volumes of rules that make complex, that which is intended eventually to be simplified. What starts as an endeavor to free the movement of goods is followed by the integration of legal communities which address in the first instance the harmonization of trade codes, but, once the habit of interaction is established, carry on to standardize treatment in other domains, including the rights of the common individual.

Trade, whether in goods or services, is but one element in the forging of an eventual Latin America that may be a unity in more ways than is Europe, as there are fewer national languages in the region. The population of the Spanish speaking countries of Latin America is equal to 86 percent of the total population of the eleven language EU-15, while the population of Portuguese speaking Brazil exceeds by 75 percent that of the German speaking countries of the EU-15, its largest linguistic group.

The diverse, non-trade, facets of integration are critical complements that accelerate the process of cross-border community building. Hemisphere wide-conferences which bring together practitioners, professionals and scholars in all fields of human endeavor are all part of forging an additional level of identity. It is the thickening web of cross-border contacts, of associations, of memories that is creating Latin America as a social reality, rather than merely a geographic one. From the standpoint of the individual, feeling oneself to be Latin American, does not make one any less a Bolivian or a Venezuelan. Even adversity plays its role. Exiles returning home after an extended stay elsewhere in the region, are part of the shaping of a multi-leveled sense of loyalty, to which the preoccupation with trade growth gives scant attention. Nonetheless, many former exiles bring back as well important business connections and valuable familiarity with the economic context in the country which had given them haven.

Our epoch is one in which private and public functions historically associated with a national unit are migrating to either sub-national or supra-national levels. These do not replace, but rather redefine, nations and their central governments. A redefined state is not necessarily a weaker one. Regional integration which takes account of disparities in the capabilities of its member states may be able to offer compensation otherwise unavailable and relief from the necessity to balance external accounts irrespective of the social and environmental consequences. Parlatina, the Latin American Parliament, with its seat in Sao Paulo was created in 1964, less than a decade after the initiation of the European Parliament.

Parlatina brings together parliamentarians from 19 of the region's countries in search of common solutions to social problems. In recent months the Parlatina has addressed issues relating to the situation of the young, the rights of indigenous peoples and education. The President of the Parlatina has even called for educators to assist in constructing a clear Latin American identity. Latin American studies, which were once found only in northern universities are now finally making their appearance south of the Rio Grande. In 1989 an additional regional parliamentary body, the Amazonian Parliament, encompassing the eight South American countries that share the Amazon basin, was created. Its members include designated democratically elected representatives of the national parliaments of member countries.

Economic integration in the Americas is in practice an expression of diversity, multiplicity and of subsidiarity. As the encompassing visions have moved from an earlier dream of a Latin American Common Market, to the Latin American Free Trade Area with its ultimately unreachable goal of abolishing tariffs between members by 1972, to today's real possibility of a Free Trade Area of the Americas by 2005, the practice of integration has moved to a plethora of bilateral and multilateral sub-regional treaties and undertakings and overlapping sets of regional accords. Rather than a two-speed process of integration as in Europe, one finds in Latin America a variety of speeds and initiatives. Latin America has moved from a geographic conception to an ever-more complex network of physical and human interconnections.

Working together tends to promote common values. As in Europe, the restoration and strengthening of democratic institutions has become a central concern of Latin American governments, which have begun to tie the maintenance of democracy with advances in integration. In early 1996 the threat of a coup in Paraguay led the Presidents of the other Mercosur countries to forcefully declare that a suspension of democratic processes in Paraguay would be countered by a suspension of Paraguay's membership in the Mercosur.

Shared values and amicable relations hold the promise of enlarging regions over which stable peace and cooperation prevail and where the opportunity for generalized well-being exists. The existence of nationalities does not have to give rise to either belligerent nationalism or beggar-thy-neighbor competition. The values of mutual aid and solidarity that were once carefully cultivated to extend no further than one's national boundaries can easily be conditioned to complement the variety of other cross-border expressions of integration.

Trade agreements may make the headlines, but people engaged in systematic interaction across frontiers is the substance of lasting institutional and societal change. That change is proceeding apace today in Latin America, untracked by our conventional indicators, but very much evident in a multiplicity of manifestations to the even moderately attentive observer.