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Trade, the economy and politics in the region: we must unite or we will die
Hugo Cabieses Cubas*
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The Charter of Social Movements of the Americas, approved in Belem do Pará at the IX World Social Forum (January 2009) states: “It is necessary to collectively build a popular project of Latin American integration that redefines the concept of ‘development’ that is based on the defense of common goods of nature and life, that progresses towards the creation of an alternative to the predatory capitalistic model of civilization, that ensures Latin American sovereignty against the looting policies of imperialism and transnational corporations, and that assumes all emancipatory dimensions, facing the many forms of oppression generated by capitalist exploitation, colonial domination and the patriarchy, which reinforces the oppression of women.”

Six years later, it is worth asking some questions:  what integration processes have emerged or have been consolidated? What other processes have emerged in opposition to these attempts? What are the anti-neoliberal and post-neoliberal agendas of the organizations, parties and movements that seek a progressive integration process?
Integration movements 
Must be highlighted the integration efforts in the twentieth century by the Latin American Free Trade Association (ALALC), the Latin American Integration Association (ALADI), and the Latin American and Caribbean Economic System (SELA) in addition to the foundation of intergovernmental organizations such as the Andean Community (CAN) and the Southern Common Market (Mercosur). However, these efforts were limited to some commercial and economic aspects and did not express a real Latin American and Caribbean integration. The government of the United States, with its power and control, countered these efforts both through the Organization of American States (OAS) and its generated organisms, including the Inter-American Treaty of Reciprocal Assistance (Rio Treaty) and the Alliance for Progress (AFP), and more recently through the Free Trade Area of the Americas (FTAA), which failed to be created at the Fourth Summit of the Americas held in Buenos Aires in 2005.

In the twenty-first century, Venezuela’s President Hugo Chávez launched the Bolivarian Alliance for the Peoples of Our America (ALBA) that promotes Latin American and Caribbean integration projects through energy, economic, political, cultural and social agreements. Other prominent leaders in these integration efforts are those from the other nine countries of the continent with leftist and progressive governments: Néstor Kirchner and Cristina Fernández of Argentina, Evo Morales of Bolivia, Luiz Inácio Lula da Silva and Dilma Rousseff of Brazil, Michelle Bachelet of Chile, Fidel and Raúl Castro of Cuba, Daniel Ortega of Nicaragua, Salvador Sánchez Cerén in El Salvador, Rafael Correa of Ecuador and José Mujica and Tabaré Vázquez of Uruguay. These integration efforts led to the creation of the Union of South American Nations (UNASUR) and the Community of Latin American and Caribbean States (CELAC).
In an attempt to challenge the ALBA and UNASUR, the US government promoted and created in April 2011 the Pacific Alliance with the consent of the governments of Chile, Colombia, Mexico and Peru — all countries that have free trade agreements (FTAs) with the United States and other countries. In 2012 three of those four Latin American countries — Mexico, Peru and Chile — joined the United States, Japan, Australia, New Zealand, Malaysia, Brunei, Singapore, Vietnam, and Canada to form the Trans-Pacific Strategic Economic Partnership Agreement (TPP).
Ongoing discussions and integration focused on solidarity
The CAN and Mercosur has several countries with FTAs
and together one dating to 2004, which raises a key issue about whether this affects the integration of South America. For its part, Venezuela left the CAN in 2006, making us wonder whether more countries will follow this path — Peru has expressed its desire to do so several times — and it is not yet well known what policies Mercosur has in relation to the CAN.
Another key question relates to whether a common macroeconomic policy would be essential for the integration of South America, which the Pacific Alliance would no doubt oppose given the role that the TPP plays in South America. It is important to ask whether, in this context, the prioritization of FTAs between countries in Asia, the United States, Canada and the Pacific Alliance acts as a force against South American integration or if a convergence between the two blocs can still be achieved, a possibility which interests several countries, including some “progressive” countries whose foreign ministries have designed “inward and outward” strategies. These are the cases of Chile, Uruguay and even Ecuador.
The FTAs follow economic arrangement models created by the United States and the governments of the “developed” powers to serve the interests of transnational corporations that are involved in issues such as intellectual property, investment, government procurement, and other topics. These issues limit the economic policies autonomy of developing countries in our continent and in other continents.
Furthermore, the Pacific Alliance and the TPP are a neoliberal ideological creation of the United States, Europe and Asia to divide the economic, commercial, political, geopolitical and cultural integration of the Latin American and Caribbean countries embodied in the Bolivarian Alliance for the Peoples of Our America-Trade Treaty of  the Peoples (ALBA-TCP), UNASUR, CELAC, etc.

In this context it is imperative to analyze the integration alternative with a different logic than that used to discuss the FTAs with the United States and the European partnership agreements. This is the case of ALBA, a treaty with a focus on solidarity and complementarity and that goes beyond the commercial understandings of the capitalist powers who added agreements on patents, protection of investments or government procurement.
This ongoing proposal is focused on the cultural integration of basic services like education and health, on political integration, the creation of the Bank of the South as a development bank, and on the creation of defense mechanisms such as the formation of a defensive unit between the armed forces of Brazil, Venezuela and Argentina as a point of departure that is independent of the Rio Treaty.
Likewise, this framework also proposes ways to meet energy and development finance needs with our own resources and develop experiences in higher education, medicine and literacy, such as the programs “Yes I Can” and “Operation Miracle” in the health sector — programs which are innovative, concrete and practical.
As Peruvian economist Óscar Ugarteche points out, the integration process of our America swings between the northern-driven Pan-Americanim and the regionalism proposed by those in the south of the continent. 
“The latest versions of early 21st century [integration] continue to be either of these two matrices: the Pacific Alliance is Pan-American; the Andean Community, Mercosur and ALBA are regionalists. What defines integration as Pan-American is the bias for the United States (FTAs in the 21st century), and what is defined as regionalist is the indifference to any particular economic pole using the aggregation of neighboring markets,” says Ugarteche.1
“Another theoretical aspect to consider is whether integration is liberal or mercantilist. The proposed customs unions are seen as mercantilist while free trade agreements are seen as liberal. Thus there is: 1) mercantilist Pan-Americanism, 2) liberal Pan-Americanism, and 3) mercantilist regionalism,” continues Ugarteche, who finally asks, “How is it possible that for 180 years, Latin America’s economic integration is always truncated”?
Of what we have written so far, we conclude that the left and the progressive forces should work toward integration in a comprehensive manner with perspectives on trade, politics, society, culture as well as defense issues, emphasizing four main areas: 1) the fight against poverty and inequality, 2) expansion and strengthening of public and social property in strategic areas, 3) the democratic planning of development and the use and management of natural resources with respect for the environment, and finally, 4) the construction of an effective and participatory popular democracy with citizen and social control over the State and economy. 
There is therefore a need to return to using more active strategies in the productive sector. It is true that these policies involve risks of failure and are rent-seeking, but these problems are not limited to this approach. The development of these new activities is a learning process in which, in a sense, the “winners” are “created” instead of being elected ex-ante.
The new activities that will be promoted depend on domestic capabilities, should be conducted in close collaboration with the private sector and must consider technological modernization as a core principle. And they must be accompanied by competitive exchange rates — the component that has been missing in Brazil, the only country that has recently returned to using active strategies in the productive sector.
Needless to say, the need for a clear definition of technological modernization is essential, given the prospect of sluggish global trade and the clear evidence that Latin America is no longer a region with abundant unskilled labor.
In conclusion, Latin America continues to be, on average, as exposed to “commodity risk” or the “Consensus Commodities” as it was four decades ago, making it very vulnerable to a sharp decline in commodity prices. At the same time, greater diversification (given that exports of other products have grown even more) means that many of these countries may have more flexibility to cushion shocks of this nature.
However, as José Antonio Ocampo of the Economic Commission for Latin America and the Caribbean (ECLAC) argues, this is not the case for net exporters of energy and metals, who are now particularly vulnerable to a global economic slowdown, given both their greater dependence on raw materials and the highest concentration of their exports in these resources, especially considering that this increased concentration is focused on those products whose prices are more sensitive to the global economic cycle.
The access of China to the World Trade Organization has shaken policies and beliefs. While its low labor costs and high competitiveness pose risks to the exporters of manufactured products in the region, its appetite for raw materials and foodstuffs has let China to favor the provision of raw materials from Latin America and the Caribbean. Trade with China, however, has been concentrated in a small basket of “commodities”: copper, oil, iron ore, soybeans and wood. The new growth engine could deepen our historical focus on raw materials, characterized by strong price volatility.
We have to make great efforts to ensure that this focus on raw materials is not deepened and to prevent an excessive dependence on a single engine of growth. If this is not done, the dependence on a few basic commodities will intensify, countries will continue to be overexposed to trade shocks and the inequality-generating forces that result from international asymmetries will not be tamed.
*Peruvian economist. Coordinator of the Sustainable Development, Climate Change and Indigenous Rights Department of the Drugs and Human Rights Research Center (CIDDH). Former Vice-Minister of Strategic Development of Natural Resources for the Ministry of the Environment. Current advisor to the President of the Regional Government of Cajamarca, Peru.
1 Ugarteche, Oscar. “La integración y la arquitectura financiera en el tiempo”  in América Latina: Cuestiones de fondo,  ALAI No. 500, Quito, Dec. 2014.


CELAC is an intergovernmental organization for political dialogue and agreement that permanently joins 34 Latin American and Caribbean countries. /Blog do Planalto
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