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Foreign Affairs
Finding Allies in the Back Yard: NAFTA and the Southern Cone
By Felipe A.M. de la Balze
Felipe A.M. de la Balze is Director of the Argentine Council on Foreign Relations and Professor of International Economics at the Foreign Service School and at the Advanced School of the Ministry of Defense in Buenos Aires. His recent books include Mercosur: Entre la Retorica y el Realismo.
The United States — preeminent but not hegemonic — cannot maintain its global leadership without the cooperation of like-minded nations that share its interests and values. In fact, in the coming years, American preeminence will likely remain stable only in regions where the United States has signed agreements with countries that have congenial economic and sociopolitical systems.
Fortunately, creating agreements based on the promotion of regional economic growth, integration into the world economy, and the consolidation of democracy is feasible under certain circumstances. Witness the successive expansions of the European integration project (now the European Union), which incorporated Italy in the 1950s, Spain in the 1970s, and then Greece, Ireland, and Portugal in the 1980s.
Now a similar opportunity for integration exists in the Southern Cone of South America. A core group of countries — Argentina, Brazil, Chile, and Uruguay — have made great strides in recent years and are poised, despite their short-term economic problems, to make steady political and economic gains over the next decade. The right incentives are critical, however, to ensure that these nations become fully democratic, market-oriented allies of the United States.
To this end, the best incentive the United States can provide is an expansion of the North American Free Trade Agreement (NAFTA) to the Southern Cone, making these South American nations members of the pact alongside the United States, Canada, and Mexico. But economic integration will not succeed without a compelling political rationale as well: namely, the promotion of democracy and regional security that could follow the creation of a "super NAFTA." Such a comprehensive treaty system would offer great advantages to all its participants, helping to stabilize and enrich the Americas, and would further the process of hemispheric integration.
Integration Express
A seven-state NAFTA, incorporating democratic and security accords as well as economic agreements, would offer a wide array of benefits to the entire hemisphere and could eventually integrate other Latin American countries. Before joining, however, a number of potential members — particularly Andean states such as Bolivia, Colombia, Ecuador, Peru, and Venezuela — would need to be brought up to speed. These countries need help in addressing endemic problems such as economic instability, low per-capita income, illiberal democratic practices, and narcoterrorism. In much of South America, public services remain poor. Bureaucracies stifle innovation; legislatures are feeble and, along with judiciaries, are sometimes corrupt. Bringing economic growth and social stability to South America will require not only a vibrant private sector and functioning markets but also public education for the young, job training for the unemployed, public health care for the poor, and courts and police that treat all citizens alike. Improving government and reducing corruption, therefore, will be an essential condition for expanding NAFTA.
Again, Europe provides a good precedent for how to accomplish these tasks. The European Union and NATO have successfully employed both carrots and sticks to encourage candidates in central and eastern Europe to undertake the political, military, and economic modernization that membership requires.
A new, comprehensive set of agreements between the United States and . . .