Economy in Latin America


Economic integration in Latin America

By the late 20th century several organizations had been established to work toward such integration; they included the Central American Common Market; the Latin American Free Trade Association; the Andean Community of Nations; and the Caribbean Community and Common Market.

The Central American Common Market

On June 10, 1958, El Salvador, Guatemala, Honduras, Nicaragua, and Costa Rica signed a multilateral treaty aiming at free trade and economic integration. The Central American Common Market (CACM) provided for the establishment of a free-trade area within 10 years. The participating countries also agreed to the industrial integration of the region. These arrangements were completed by the signing on December 13, 1960, of the Treaty of Managua. Its aims were similar to those of the EEC, namely, the establishment of a common market within five years and the organization of integrated industrial development. Most barriers on the region's internal trade were then removed or reduced.

Economic integration in Central America has been hampered by disagreements and military conflicts in the area. Following a dispute with El Salvador in 1970, Honduras in effect withdrew from common market membership by implementing tariffs on imports from other member countries. In 1980, however, Honduras signed a treaty with El Salvador, settling their dispute and restoring Honduran participation in the common market trade agreements in 1981. During the 1980s, tensions between the revolutionary government of Nicaragua and its neighbours, as well as other disorders, disrupted trade between the nations of Central America. In an effort to promote freer trade in the larger region, the group began working on trade agreements with the Caribbean Community and Common Market (Caricom, see below) in 1991, and CACM negotiated an agreement with the Dominican Republic in 1998. Throughout this time, CACM also took steps to protect its interests against Mexico's increasing economic dominance in the region, especially after Mexico, Canada, and the United States signed the North American Free Trade Agreement.

The Latin American Free Trade Association and the Latin American Integration Association

On February 18, 1960, Argentina, Brazil, Chile, Mexico, Paraguay, Peru, and Uruguay signed a treaty setting up the Latin American Free Trade Association (LAFTA), predecessor to the Latin American Integration Association. By 1970 the seven signatories had been joined by Ecuador, Colombia, Venezuela, and Bolivia. The treaty provided for a 12-year transition period during which all obstacles to trade were to be eliminated. It was based on the principle of reciprocity and most-favoured-nation (MFN) treatment. Member states also committed themselves to progressive coordination of their industrialization policies. Special treatment was provided for agriculture and for the relatively least-developed member countries.

Liberalization of trade between the member countries was carried out initially through negotiation of product-by-product concessions. In 1967, however, the negotiations failed; they were postponed to 1968, when agreement was reached on a system of across-the-board automatic tariff reductions similar to those of the EEC. The eventual aim was that LAFTA be the first step in a process that would lead to a common Latin American market, but during the 1970s it became apparent that the geographic diversity and varying levels of economic development exhibited by the member countries were handicapping the formation of a true common market within the association's existing framework.

In the late 1970s negotiations were begun to establish a new framework for economic integration, and in 1980, 20 years after the creation of LAFTA, the Latin American Integration Association (LAIA; Asociación Latino-Americana de Integración) was formed. Unlike its predecessor, LAIA adopted an alternative to the concept of a free-trade area in that it opted for the establishment of bilateral preference agreements that would take into account the varying stages of economic development of the member countries. Cuba was admitted to LAIA in 1986 with observer status and became a member in 1999. In order to best negotiate bilateral preference agreements the member nations were divided into three categories. Although some countries were shifted to different categories over time, by the beginning of the 21st century the three tiers were: most-developed countries (Argentina, Brazil, and Mexico); intermediate-developed countries (Chile, Colombia, Peru, Uruguay, and Venezuela); and least-developed countries (Bolivia, Cuba, Ecuador, and Paraguay). Panama became a member of LAIA in 2012., in Latin America, the practice of glorifying a single leader, with the resulting subordination of the interests of political parties and ideologies and of constitutional government.

Latin American political parties have often been constituted by the personal following of a leader rather than by adherents of certain political beliefs or proponents of certain issues. Thus the popular term for such parties or their members has been often derived from their leaders-e.g., Peronistas (the followers of Juan Perón, Argentine president in 1946-55, 1973-74) or Fidelistas (the followers of Fidel Castro, Cuban leader who came to power in 1959). The archetypical demagogue and focus of personalismo in Mexico was General Antonio López de Santa Anna, who dominated Mexican political life between 1821 and 1855. The Dominican Republic and Ecuador in particular have suffered from personalismo, but the phenomenon has been rather pervasive throughout Latin American history.

Personalismo is related to the phenomenon in Latin America called caudillismo, by which a government is controlled by leaders whose power typically rests on some combination of force and personal charisma (caudillos). During and immediately after the Latin American independence movement in the early 19th century, politically unstable conditions led to the widespread emergence of such leaders; thus the period is often referred to as the "age of the caudillos." The flamboyant leader of the independence movement, Simón Bolívar, was one such ruler (of Gran Colombia, his ephemeral political creation). Although some nations, such as Argentina and Chile, developed more regular forms of constitutional government in the latter 19th century, caudillismo remained into the 20th century a common feature of Latin American states and prevailed in such countries as Argentina, during Perón's regime-as a form of political bossism-and in others as outright and brutal military dictatorship, as with the regime of Juan Vicente Gómez in Venezuela (ruled 1908-35). The latter was a ruler in the Venezuelan tradition, following the pattern of such strongmen as José Antonio Páez, who controlled the country in 1830-46 and again in 1860-63. Among other well-known caudillos of the 19th century were Juan Manuel de Rosas of Argentina, Francisco Solano López of Paraguay, and Andrés Santa Cruz of Bolivia. In such countries as Argentina and Mexico, during periods of weak central government, regional caudillos operated in their own localities in much the same way as did those on a national scale.This is where your text starts. 

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The Andean Group and the Andean Community of Nations

In 1966 Bolivia, Chile, Colombia, Ecuador, Peru, and Venezuela-all members of the Latin American Free Trade Association-agreed to form a regional subgroup. The Andean Group began its official existence in June 1969 without Venezuela, which had withdrawn. By 1973 Venezuela had decided to join, but Chile withdrew in 1976. The Andean Group began negotiating free-trade agreements with the Mercado Commún del Sur (also known as the Southern Market, or Mercosur; a trade community comprising Argentina, Brazil, Paraguay, and Uruguay) in 1996, and in 1997 the group became known as the Andean Community of Nations (CAN). Among the Andean Community's aims are the acceleration of economic integration between member countries, the coordination of regional industrial development, the regulation of foreign investment in member countries, and the standardization of some agricultural and economic policies. Further negotiations with Mercosur resulted in a treaty establishing a free-trade zone from Mexico to Argentina that went into effect on July 1, 2004.

The Caribbean Community

Established in 1973 by 12 Caribbean countries, the Caribbean Community and Common Market (Caricom) is the successor to the Caribbean Free Trade Association (Carifta), which was founded in 1968 by five former British colonies (Antigua, Barbados, Guyana, Jamaica, and Trinidad and Tobago), all of which joined the new organization. The organization attempts to encourage economic integration in the Caribbean region and achieved partial agreement to a common external tariff and protective policy for the community in 1978. It became the Caribbean Community in 2001.

Caribbean economic integration had been curtailed between 1976 and 1978, partly because of import restrictions imposed by Jamaica and Guyana, and partly because of dissatisfaction among the less-developed countries, which claimed that they were not receiving their fair share of trading revenues. By 1980 Jamaica and Guyana had removed their import restrictions, and the Caricom Council had endorsed several measures to improve the status of the less-developed countries within Caricom. These countries, however, remained dissatisfied, and in 1981 the seven former members of the West Indies Associated States (Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts-Nevis, Saint Lucia, and Saint Vincent and the Grenadines) formed a subregional economic integration organization, the Organization of Eastern Caribbean States, though they retained their Caricom membership.

In succeeding years Caricom added new member countries, with the Bahamas joining in 1983 and Suriname joining in 1995. Joining as associate members were the Turks and Caicos and the British Virgin Islands (1991), Anguilla (1998), and the Cayman Islands (2002). Haiti was asked to join Caricom as a provisional member in 1997, and it became a full member in 2002.

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