Hemispheric Integration

Hemispheric integration refers to the process by which a majority of countries in the Americas are liberalizing their trade regimes, thereby contributing to the establishment of a hemisphere-wide free trade area. At present, liberalization has taken the form of numerous and coexistent bilateral and multilateral free trade agreements (FTAs) and customs unions. However, formal negotiations concerning a proposed Free Trade Area of the Americas (FTAA) have been underway since April 1998. The FTAA, if realized, will mark a significant step in the integration of the Western Hemisphere's economies.

The initial step toward hemispheric integration was taken in June 1990, when then President of the United States George H. W. Bush launched the Enterprise for the Americas Initiative (EAI), an ambitious project to establish a free trade area stretching from Anchorage to Tierra de Fuego. In addition to promoting extensive trade liberalization with the goal of establishing free trade throughout the Western Hemisphere, the EAI also envisaged the negotiation of agreements with selected Latin American countries that were to encourage market-led reforms and stimulate private investment and to relieve indebtedness to the United States, thereby releasing revenues for environmental programs. The North American Free Trade Agreement (NAFTA)—negotiated by the governments of Canada, the United States, and Mexico and launched in 1994—was to form the hub around which enlargement of the free trade zone would proceed. Since April 1998, the formal negotiations envisaged under the EAI have proceeded under a general agreement among thirty-four countries, which created a timetable for a series of multilateral summits aimed at introducing the FTAA by 2005.

Although the FTAA is also concerned with establishing a continental free trade zone, like the European Union (EU), it differs in that it is proceeding through the incorporation on already existing bilateral FTAs and regional trade associations, such as the Andean Community, the Caribbean Community and Common Market (CARICOM), the Central American Common Market (CACM), the Mercosur, and, of course, the [Page 410]NAFTA. More recent FTAs and multilateral initiatives, such as the Central American Free Trade Agreement (CAFTA)—signed by the governments of the United States, Guatemala, El Salvador, Honduras, Costa Rica, Nicaragua, and the Dominican Republic in May 2004—are being negotiated with the view to future incorporation within the FTAA.

Although the FTAA was intended to come into effect by December 2005, recent negotiations have failed to result in a consensus. Several Latin American countries have recently elected Leftist governments opposed to various aspects of the hemispheric integration agenda, such as the U.S. government's continued subsidizing of domestic agriculture, and some Leftist Latin American governments—notably that of Hugo Chávez's Venezuela—are currently opposed to the entire principle of free trade. The FTAA negotiations have been tabled to resume in 2006.

The current agenda for hemispheric integration has also come under fire from a variety of civil society critics. Some see the FTAA, in particular, as a U.S.–led project aimed at locking the contracting countries' economies into an essentially neoliberal framework. The uneven impact of the NAFTA in development terms is often used an example of how the supposed benefits of free trade are by no means certain to materialize. Labor and environmental activists, in particular, have pointed to the potential “race to the bottom” in working and environmental protection standards as Latin American countries compete for investment from the United States. Initiatives such as the Plan Puebla Panama—a multibillion-dollar project aimed at, among other things, improving infrastructure links between the southern Mexican states and the Central American isthmus—are seen as being integral to the current hemispheric integration agenda. However, activists have opposed such projects on the grounds of their environmental costs and the impact on local communities, which include many indigenous subsistence farmers with no legal claim to lands being cleared or flooded for infrastructure development purposes. Meanwhile, there is a vocal anti-FTAA lobby within the United States. The EU is cited as a major regional initiative that, they argue, has eroded the sovereignty of its member states and made borders meaningless. They oppose the potential migration of jobs from the United States to other countries in the Americas where labor costs are lower. They also fear the increased influx of migrant labor into the United States.

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