The role of external actors upon regional integration: the US, the EU and

Mercosur.1

Andrea Ribeiro Hoffmann & Regina Kfuri

1-Introduction

This paper analyzes the role of major external actors upon processes of regional

integration. It focuses on the role played by the United States (US) and the European

Union (EU) upon the creation and development of Mercosur.

Theories of regional integration tend to undermine the influence of exogenous factors,

both structural and unit level, such as external actors.2 Classical integration approaches

such as federalism, neofuncionalism and intergovernmentalism, and more recent

approaches such as liberal-intergovernmentalism and multilevel governance, try to

explain regional integration mainly with endogenous factors (Kelstrup 1998 , Diez &

Wiener 2004). This might happen because these approaches explicitly, or not, were/are

mostly concerned with the creation and development of the EU, often considered a

unique case (Caporaso et al 1997). Attempts to analyze other processes of integration

with theoretical frameworks, and to develop comparative studies in regional integration,

such as by neofunctionalism in the 60s, were never very successful (Nye 1968,

Lindberg 1970). Andres Malamud showed how inappropriate these approaches are to

study Mercosur for instance (Malamud 2004 and 2005). Philippe Schmitter even argues

that in order to revive comparative studies in regional integration, new theoretical

approaches must be developed (Schmitter 2007). It follows that theories of regional

integration do not seem to be adequate to be used to study the role of major external

actors upon a “non-EU” process of integration such as Mercosur.

Apart from approaches of regional integration, scholars of International Political

Economy (IPE) got interested in explaining the so-called 2nd wave of regionalism in the

1990s (Breslin et al 2002, Hettne, et al 1999, Hurrell & Fawcett 1995, Mansfield & 1 Prepared to be presented at ECPR 2007, WORK IN PROGRESS, PLEASO DO NOT QUOTE 2 Although the European Union is not a Nation State, it is considered to be an actor in international politics for the purpose of this article. About the international actorness of the EU see for instance Bretherton & Vogler 1999 and Ginsberg 1999.

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Milner 1997, Vaeyrynen 2003). As Stephan Schirm (Schirm 2002) states, these

approaches are good at explaining why so many processes of regional integration started

or were strengthened in particular moments in time (i.e. in the 60s and in the 90s), but

they are not able to explain differences between processes of integration regarding, for

instance, their institutional design, efficacy or legitimacy. Although each IPE

perspective emphasize a particular variable or causal process, their common ground is

to consider economic globalization as the main driving force behind processes of

regional integration, or, “the regionalization of the world economy”. One unresolved

question of IPE approaches is the relationship between globalization and political

agency, specially that of Nation-States (Rosamond, 2000:180). Most of these

approaches would tend to undermine the potential differences between the role of the

US and the EU upon Mercosur, because both actors are seen as being in the same side

of globalization, they are the backbone of the liberal advanced capitalist world, host of

most multinational companies. One recent exception might be the approach developed

by Walter Mattli (Mattli 1999), which seems to present an adequate analytical

framework to explain the role played by the US and the EU upon the development of

Mercosur.

As most IPE scholars, Mattli attributes the impetus for integration to market actors,

however, as highlighted by Rosamond, the “added value of his contribution lies in his

thoughts about the external effects of regional integration. Actors excluded from the

initial delineation of the region are likely to lose market access and, therefore, to

undertake compensatory action. This has two historical variants. The first is to seek to

join the integration scheme, an option. The second is to set up a rival regional

organization” (Rosamond, op.cit. 184). Following Mattli, the development of Mercosur

would need to take into consideration not only the relevant market actors at the micro

level, but also, the fact that it was created after the EU, and NAFTA. In other words,

the EU would have had the effect of stimulating Mercosur to develop as a rival bloc,

while the US (through its engagement in NAFTA) could have had the same effect, or,

alternatively, the effect of stimulating Argentina, Brazil, Paraguay and Uruguay to join

it. As it will be seen below, the strategy advanced by the US to create the FTAA was

exactly from the gradual expansion of NAFTA, through bilateral agreements with the

newcomers. Such as the EU, NAFTA could have gone through a process of

enlargement. The reasons why NAFTA did not evolve into a FTAA, or if it will in the

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future are explained by Mattli with the role played by the hegemon power (Mattli, 1999:

50-7). In the case of the Americas, one important question would be the definition of

whether there is only one hegemon in the whole hemisphere, or whether Brazil can be

considered to be an hegemon in South America.

The existence and role of global and regional hegemon powers is also addressed by

Realist approaches of International Relations. These approaches do not attribute much

importance to processes of regional integration, since they are seen as temporary

phenomena (Mearsheimer 1990). Their “branches” intergovernamentalism and its

variations are more concerned with endogenous factors, or with the EU, as mentioned

above. Structural realist approaches, however, cannot be dismissed: they offer an

explanation based on the balance of power and global/regional hegemons to the creation

and development of processes of regional integration. Such as in the case of IPE

approaches, they are not good at explaining particularities, but they claim to foresee

broad trends of integration and disintegration among Nation-States in the long term. As

Mattli´s, realist approaches might be useful to understand the role played by the US and

the EU upon the development of Mercosur.

It is beyond the scope of this paper to present a hard test of alternative hypotheses

derived from the relevant approaches mentioned above. The paper does not analyze the

variation of the dependent variable, i.e. the level of integration of Mercosur, for the

period, it, therefore, can not even affirm if there is a correlation between the chosen

independent variables and the successes or failures of the process of integration. It only

presents a preliminary empirical research which could be used to test such hypothesis.

The empirical research consists of a comparative analysis about the efforts done by the

US and the EU to try to influence the processes of integration in Latin America, in

particular, of Mercosur. In order to do this, the paper, first, provides a historical account

of policies in favor and against regional integration in Latin America3 in the external

relations of the US and the EU, and finally, highlights the common trends and the

differences in the approaches of the US and the EU towards regional integration in Latin

America, in general, and Mercosur in particular.

3 By Latin American integration this paper means processes of regional integration within Latin America, be it a sub-regional process, such as Mercosul, or regional process encompassing the whole region such as the ones advanced by the project of the Free Trade Area of the Americas.

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2-Latin-American integration in the US foreign policy

The end of the Cold War allowed the US to change the emphasis of its foreign policy

towards Latin America from security to economic and normative issues, such as

democracy (Purcell 1997). The 1990s witnessed the so-called “second wave of

regionalism”, with the strengthening of the process of integration in Europe with the

conclusion of the Treaty of Maastricht and the creation of the European Union in 1992,

and the revival and creation of new blocks around the globe (Herz & Ribeiro Hoffmann

2004).

In the Americas, US President George Bush announced the Enterprise for the Americas

Initiative in 1990, whose main pilar was supposed to be a free trade area in the whole

region. In 1994, the project to create the Free Trade Area of the Americas (FTAA) was

approved by 34 Presidents present to the Cupula de Miami.4 In the same year, the US

became part for the first time in history of a process of regional integration: the North

Free Trade Agreement (NAFTA).

Feinberg (Feinberg 2003) highlights that the FTAA project represented a change in US

foreign trade policy. From the end of the Second War until the 1990s, it had promoted

free trade in universal and non-discriminatory basis, in the context of the GATT. For

decades, the US had been hostile to regional arrangements, seen as discriminatory and

less efficient than the multilateral negotiations, and until the 80s, it had only two free

trade areas, with Canada and with Israel, both considered special cases.

Payne argues that new regionalism offered the US a device through which to negotiate

the tensions generated by global liberalization, as well the opportunity to construct a

new framework for inter-American relations (cited in Grugel 2004: 606). Grugel adds

that the result of this policy change was the reconfiguration of the hemisphere relations,

4 The Summit of the Americas Process hold its Second Meeting in Santiago (1998), Third in Quebec (2001), Fourth in Mar del Plata (2005), and a Special Meeting took place in Monterrey in 2004. For more see http://www.summit-americas.org. About the FTAA process see http://www.sice.oas.org/ftaa_e.asp and http://www.ftaa-alca.org/

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“as the US sought to position itself as the hub of increasing privatized and open

economies” (op.cit).

For many actors from civil society, and scholars such as Pinto & Guimaraes (Pinto e

Guimarães 2005) the Initiative of the Americas signifies the revival of the Monroe

Doctrine of 1823, which declared Latin America as a zone of influence of the US. As

the FTAA project advanced, and agreements started to be concluded, a movement

against it became gradually perceptive. 5

According to the Declaration of Miami, the FTAA should be built upon the already

existing regional agreements. This strategy was reinforced in the following ministerial

meetings in Denver and Cartagena, but as Moniz Bandeira states, the US preferred to

develop the FTAA from an expansion of NAFTA, by the incorporation of each new

state in bilateral negotiations. Chile was supposed to be the first country in this process

(Bandeira, 2004). In 1991, 26 Framework Agreements between the US and Latin

American Countries were signed (ref)

As Bandeira, Feinberg emphasizes that the option to regionalism, however, turned

gradually into an option to bilateralism: “the rush to regionalism soon was joined by a

gradual slippage into bilateralism. At the Miami Summit, the three NAFTA amigos

announced their intention to negotiate the admission of Chile, as a first step toward

expanding NAFTA into the hemisphere-wide FTAA negotiations, that morphed into

bilateral talks” (op.cit: 1021).

The Brazilian government (Collor administration) took, in the beginning, a favorable

position, but defended that the negotiations should be conducted in bloc, and not

bilaterally, as a means to counterbalance US negotiation power. In this context,

Argentina, Brazil, Paraguay and Uruguay signed a Framework Agreement with the US

in 19... in the format 4+1. Albuquerque states that according to officials who followed

closely the negotiations of the “4+1 Agreement”, Brazil had to do greater concessions in

order to reach a consensus with its partners, but considered it to be a success since it

managed to negotiate it in bloc. The result was that the US in practice, and quite

5 One of the main NGO´s network against it was the Continental Platform for Latin America (http://www.cidse.org/)

5

unexpectedly, recognized an entity that was not even existent yet, Mercosur

(Albuquerque 1996:11)

It was in this context that one of the priorities of the Brazilian foreign policy became

the strengthening of Mercosur. In 1996, Chile and Bolivia concluded free trade

agreements with the bloc, and also became “associated countries”.6 The incorporation

of Chile was very important since it was considered to be the most stable and

development economy in the region. In early 1990s it showed interest to become part of

NAFTA, but the US Congress failed to approve a fast track to President Clinton

negotiate the agreement.

The strategies defended by the US and Brazil to create the FTAA (expanding NAFTA

through bilateral agreements vs building blocks) became more and more politicized.

The US and Mercosur began to negotiate agreements with other members of the Andean

Community: Venezuela, Colombia, Peru e Equator. Brazilian interest was to build a

concentric circle around Mercosur, encompassing other members of ALADI in South

America to create a South American Free Trade Area (ALCSA). This strategy was

promoted by Brazilian Foreign Minister Celso Amorim during the Itamar Franco

administration (1992-1995). According to Amorin, the ALCSA idea had a double

meaning since it indicated that Mercosur would not be an end in itself, that it was a step

towards a greater process of integration, but also, that the emphasis to Brazil was the

South America, and not Latin America. (Moniz Bandeira, 2004, p. 114). 7

According to Bernal-Meza (Bernal-Meza 1998), the US began to be concerned with

Mercosur already in the early 90s. Some reasons were the perception that it was loosing

its relative position in the region to the EU, and the that Brazil was aspiring greater

influence in the region and in the world politics in general. Bandeira argues that this led

the Clinton administration to antagonize FTAA and Mercosur (Bandeira, 2004, p.116).

He quotes a statement of the US Secretary of State, Madeleine Albright, in a speech to

the Committee of External Relations of the Senate, when she referred to Mercosur as

“prejudicial to the US interests”. The statement was removed from the official version

6 About the status of associate countries see Herz & Ribeiro Hoffmann 2004:?? 7 For the foreign policy of Fernando Henrique Cardoso and Luis Inacio da Silva administrations towards integration see for instance Vigevani & Cepaluni (2007) and Lima (2003).

6

of the statement announced by the speaker of the Department of State, but it as linked to

the press (Moniz Bandeira, 2004, p. 132) “The perception in Washington was that

Mercosur presented a menace to the creation of the FTAA. (Moniz Bandeira, 2004,

p.134, free translation by authors).

The events of September 2001 led to a new change in the US foreign policy, and the

deviation of attention from Latin America. The FTAA process, that was already facing

opposition from the civil society and suffering from the lack of agreement between the

US and Brazil, was put into a hold. Since then, the Americas became a “patchwork of

bilateral agreements” (Grugel 2004: 606)

In 2002, Bush managed to get a fast track from the Congress, renamed as Trade

Promotion Authority (TPA). Since then the US has intensified its efforts to conclude

bilateral agreements with Latin American countries. After 15 years, in 2003, a

agreement with Chile was signed.8 In the same year negotiations were concluded

with Central American countries, creating the US-Dominican Republic-Central

American Free Trade Area (US-DR-CAFTA). The agreements were already ratified by

most parts, except Dominican Republic and Costa Rica, where they have been resisted

by the opposition and social movements. 9

Negotiations were also concluded with Peru, Colombia and Panama, but the agreements

are not yet in force. Peru ratified it, but not Colombia and Panama. The US Congress

did not approve any of them, and the topic became highly political. The Democrats,

who have a majority in the House of Representatives since the mid-term elections of

November 2006 have an overall more protectionist attitude, some oppose free-trade

agreements in general, others say they can support them if they include tough labor and

environmental provisions (Mercopress Jan 29, 2007). The majority chief in the Senate,

Democrat Harry Reid said recently that the FTA with Peru had greater chances of being

ratified, although he admitted not favoring the signing of this kind of agreement

(Mercopress Feb 9, 2007).The US Secretary of State Condoleezza Rice is making an

effort to convince the Congress, and stated recently that “FTAs are an essential 8 About the negotiations and the contents of the agreement see http://www.bilaterals.org/rubrique.php3?id_rubrique=20 9 About the debates regarding the ratification in Costa Rica see http://www.bilaterals.org/article.php3?id_article=7225

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instrument of President George Bush´s foreign policy and during his time in office

Congress has ratified agreements with twelve countries” (Mercopress Feb 9, 2007). She

also affirmed that Bush administration considers free trade a powerful instrument to

promote development, to help reduce poverty and ensure democratic governance (ibid).

In this regard, the White House confirmed already that it will request Congress to renew

the TPA that expires in July 2007 (Mercopress Jan 29, 2007). The situation in Colombia

is even more polemic. A very critical statement against the Agreement from Joseph

Stigliz on the 5th of February gave strength to the opposition argument that the

agreement is not fair nor free, since agriculture is not contemplated.10

Many specialists, such as Caro (Caro 2006), argue that after concluding agreements

with two countries from the Andean Community, the US seeks now to conclude

agreements with Uruguay and Paraguay. In January 2007 the US concluded a

Framework Agreement with Uruguay that does not established a free trade area, but can

be considered a first step in that direction. The rapprochement with the US is taking

plane in a moment of dissatisfaction of Uruguay with Mercosur. Together with

Paraguay, it has been criticizing the block for being slow in promoting policies to

diminish the internal asymmetries. In the ceremony of conclusion of the Agreement,

U.S. Trade Representative Ambassador John Veroneau, reaffirmed US intention to

establish bilateral agreements with Latin-American countries: “United States is very

proud of our strength the economic ties in South America, as many of you may know, we

have free trade agreements with Chile, from where I just came, with Central American

countries and the Dominican Republic, and we have three recently completed free trade

agreements with Peru, Colombia and Panama that we look forward to the U.S.

Congress passing in the near future.”11

Recently, the former US Trade Representative, Robert Zoellick, published an article at

the Wall Street Journal proposing the creation of a Association of American Free Trade

Agreements (AAFTA) as an alternative project to the defunct FTAA. Regarding the

project, he stated that:

10 http://www.bilaterals.org/article.php3?id_article=7069 11 Available at http://uruguay.usembassy.gov/usaweb/2007/07-131EN.shtml

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“The AAFTA could shape the future of the Western Hemisphere, while

offering a new foreign and economic policy design that combines trade,

open societies, development and democracy. In concert with successful

immigration reform, the AAFTA would signal to the Americas that,

despite the trials of war and Asia's rising economic influence, U.S. global

strategy must have a hemispheric foundation.

Successful and sustainable international strategies must be constructed

across administrations. Ronald Reagan called for free trade throughout the

Americas, opened U.S. markets to our Caribbean neighbors, and

completed an FTA with Canada. George H.W. Bush completed

negotiations for a North American FTA, offered trade preferences to the

Andean countries, negotiated peace in Central America, and freed

Panama. Bill Clinton secured the passage of NAFTA, launched work on a

Free Trade Area of the Americas, and backed Plan Colombia.

George W. Bush enacted FTAs with Chile, the five states of Central

America and the Dominican Republic. He also completed FTAs with

Colombia, Peru and Panama. If Congress passes these agreements, the

U.S. will finally have an unbroken line of free trade partners stretching

from Alaska to the tip of South America. Not counting the U.S., this free

trade assembly would comprise two-thirds of both the population and

GDP of the Americas.

The AAFTA would draw together these 13 partners to build on the gains

of free trade. It could also include the island states of the Caribbean Basin

Trade Partnership Act. Starting with a small secretariat, perhaps in Miami,

the AAFTA should advance hemispheric economic integration; link

development and democracy with trade and aid; improve working and

environmental conditions; and continue to pursue the goal of free trade

throughout the hemisphere. It might even foster cooperation in the WTO's

global trade negotiations.” (Zoelick 2007)

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Mostly important, he refers directly to the ever clearer division in South America: “The

U.S. cannot afford to lose interest in its own neighborhood. The pied pipers of populism

in Latin America are taking advantage of the genuine frustrations, especially in

indigenous communities, of people who have not been able to climb the ladder of

opportunity. We should not let these populists dictate the debate.” (Zoellick 2007).

One of the persons to which he is referring to is obviously President Hugo Chavez of

Venezuela. Chavez proposed a project together with Fidel Castro to counteract the

FTAA in December 2004 called Bolivarian Alternative for the Americas (Alternativa

Bolivariana para las Americas - ALBA).12 Bolivia joined it in April 2006, briefly after

the election of President Evo Morales. The same day, the three countries signed an

Peoples Trade Treaty (Tratado de Comercio entre los Pueblos).13 Nicaragua joined in

January 2007, and Dominica, Saint Vincent and Antigua in February.

Another project of regional integration which is being institutionalized in the region is

the South American Community of Nations (Comunidade Sul-Americana de Nações –

CASA). Its founding treaty was concluded in December 2004 in the city of Cusco, Peru,

by the Presidents of twelve South American countries (all, except the French Guiana).

The first CASA Presidential Meeting took place in Brasilia, Brazil, in September 2005,

and the Second in Cochabamba, Bolivia, in December 2006. 14 The process constitutes

of a commercial convergence between Mercosur and the Andean Community (CAN),

Chile, Surinam and Guyana, and one of its main axes is the support to the Initiative for

South American Infrastructure Integration (Integración de la Infraestructura Regional

Suramenricana – IIRSA), launched in August 2000 during the First Meeting of South

American Presidents. For the period of 2005-2010, 31 projects were approved, and most

are being implemented. 15

12 For the full text of the agreement and more information about ALBA see http://www.alternativabolivariana.org/ 13 About the difference between the Peoples Trade Treaty and a Free Trade Treaty see http://www.bilaterals.org/article.php3?id_article=4617 14 For more information see http://www.comunidadsudamericana.com/ 15 For more details see http://www.iirsa.org/

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TABLE 1: Free Trade Agreements among the US and Latin American countries

Country Date of signature Entry into force

Mexico+ December 1992 January 1994

Chile June 2003 January 2004

Dominican Republic* August 2004 No yet

El Salvador* May 2004 December 2004

Honduras* May 2004 March 2005

Guatemala* May 2004 March 2005

Nicaragua* May 2004 October 2005

Costa Rica* May 2004 Not yet

Peru December 2005 Not yet

Colombia February 2006 Not yet

Panama December 2006 Not yet16

Uruguay

Source: Adapted from data at SICE (http://www.sice.oas.org/Trade/usa_e.ASP) and

Bilaterals.org (http://www.bilaterals.org)

+together with the US and Canada, Mexico belong to the North America Free Trade

Area (NAFTA)

* together with the US these countries belong to the US-Dominican Republic-Central

American Free Trade Area (US.DR-CAFTA)

16 About the debates regarding the ratification in Panama seehttp://www.bilaterals.org/rubrique.php3?id_rubrique=139

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3-Latin-American integration in the European Union foreign policy17

3.1-The EU foreign policy towards Latin America

EU tendency to support processes of regional integration elsewhere, and relations with

other collective actors has been receiving attention in the literature (Grugel 2004; ref).

Some scholars are developing frameworks to study the characteristics and consequences

of birregional relations, or “inter-regionalism” (Schmitter & Malamud 2007).

This tendency became noticeable from the mid-to-end of the 80s, until then, EU official

policy towards Latin America consisted mainly of bilateral commercial treaties, the so-

called “First Generation Agreements” 18 , such as the ones concluded with Argentina in

1971, Uruguay and Brazil in 1973, and Mexico in 1975. However, one example of

support given by the EU to collective actors in Latin America still in the 70s was the

Inter-Parliamentary Dialogue between the European Parliament and the Latin American

Parliament (Parlatino). The Dialogue was very active and was replaced by the Euro-

Latin American Parliamentary Assembly (EUROLAT) in 2006. 19

In the mid-to-end 80s, the EU began to develop a new strategy to act in the international

politics. The interesting to note is that the approach was regional, i.e. interests and

policies were not defined for each country individually, but for regions or sub-regions

when existent. In the case of Latin America, the first relevant document was

Communication from the Commission to the Council named ‘Orientations for a

strengthening of the relations between the Communities and Latin America’ (COM (84)

105). This document set out proposals to promote closer cooperation in specific areas

and access of Latin American countries to the European Investment Bank (EIB). Also in

1984, the Institute for European-Latin American Relations (IRELA) was created to

promote interregional relations with support of the European Commission and the

17 This session relies heavily on the publication Ribeiro Hoffmann (2002), although it modifies the emphasis and updates empirical information. The term foreign policy means here policies relating to Latin America of all kinds, both regarding the 1st and 2nd pillar. The term UE is used also for EC and EEC for simplification. 18 What characterize First Generation Agreements are their conventional bilateral and technical structure and their reference to possible reciprocal cooperation. In practical terms, however, these treaties only extended the Most Favoured Nation (MFN) status to its signatories. See Lamothe, 1996, p.650; Calderón, 1996, p.682. 19 See http://www.europarl.europa.eu/intcoop/eurolat/default_en.htm

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European and Latin American Parliaments.20 In this context, the second round of

agreements concluded with Latin America already included some with other blocs, such

as the Andean Pact (1983), and the Central American Common Market (1986). 21

In 1986, the Commission sent a communication to the Council on the state of affairs in

Latin America and proposals for the development of a new policy, based on the

recognition of the heterogeneity of the region, and in support of the sub-regional

integration processes (COM (86) 720). The Council responded supportively and during

the Hague Summit, in June, declared its interest in strengthening the bi-regional

relations, emphasizing the new dimension of Latin America in the Community given by

the accession of Portugal and Spain.

After joining the EU, Spain assumed a very active role in promoting Latin America,

even if the concept of Spain as a ‘bridge’ between Latin America and Europe, fostered

by then Foreign Minister Fernando Morán, and based on the concept of ‘Hispanidad’ -

stressing common cultural values-, had to be replaced by the more modest role of

‘catalyst for change and supporter’ of Latin American interests. Spain managed to get

key Latin America-related positions into the European institutions, such as the

Commissioner for Latin American affairs Abel Matutes, in 1989, and the Commissioner

for development cooperation Manuel Marin, in 1993.22 Portugal has also had a long

term special relationship with Latin America but its links have been more restricted to

Brazil. Within the EU, Portugal joined to a large extent the Spanish effort to promote

closer relations with Latin America, but with lesser “enthusiasm”. As in the context of

the Iberoamerican Summit (see below), Portugal showed some reluctance in joining 20 IRELA was closed down in 2002 due to allegations of financial misconduct. 21 The Andean Pact was created in 1969 between Venezuela, Colombia, Equator, Peru and Bolivia, and the Central American Common Market was originally created in 1960 between Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica and revitalised after the Central American crisis, when Panama became a member as well. 22 The increased interest of Spain to develop closer relations with Latin America began under the regime of General Franco. The consensus on the priority accorded to Latin America among Spanish political parties is reflected in the Constitution of 1978, in which Art.56.1 of Title II states that “As a Chief of State and the symbol of its unity and permanence, the King shall moderate the regular functioning of its institutions and assume the highest representation of the Spanish State in international relations, particularly with the nations of its historical community…” with “historical community “ referring both to Europe and Latin America. These priorities are reflected in the structure of the Spanish Foreign Ministry, which created, in 1985, the Secretariat of State for International Cooperation and for Iberoamerica, alongside with its other two divisions, the Secretariat of State for the EC, and the General Secretariat of Foreign Policy. For more about relations between Spain and Latin America see for instance, Schumacher, 1995; Berrocal, 1981; Guzman, 1981; García, 1996, pp.707-711; Baklanoff, 1996, p.110; Atkins, 1995, pp.89-90; Durán 1997; Cavalcanti 1994, 1996.

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what it saw as primarily a Spanish initiative, which might be a legacy of its historical

fear of remaining in the shadow of its bigger neighbour.23

In 1987, another bi-regional dialogue was created, the Rio Group Dialogue, established

as a development of the success of the Dialogue of San Jose, but with the main

difference that is was not created to solve a crisis situation, but rather to establish a

permanent forum for political dialogue. The Rio Group Dialogue was institutionalised

in 1990 by the Declaration of Rome, and turned out to be the main forum for meetings

between the EU and Latin America at the ministerial level, where security but also

economic issues are often discussed.24

In 1993, the European Investment Bank was authorised to finance projects in Latin

America and in 1995, the Madrid European Council adopted the document ‘European

Union and Latin America: the present situation and prospects for a closer partnership

1996-2000’ (COM (95) 495), proposed by the Commission, in which the EU advanced

a new strategy for its relations with Latin America, based on a differentiated approach

in correspondence to the necessities of each country or sub-region.

In the 90s, a new round of agreements (Third Generation) was signed with individual

countries: with Argentina and Bolivia in 1990, Venezuela and Uruguay in 1991, Chile

in 1990, 1996 & 2002, Mexico 1991 & 1997, Paraguay and Brazil in 1992; and sub

regions, with the Andean Community and Central American Common Market in 1993,

and Mercosur in 1995. Negotiations with Mercosur for a new (association) agreement

started in 1999. The main new aspects of these agreements were that they were broader 23 A major multilateral cooperative initiative including Portugal and Brazil is the Community of the Portuguese Speaking Language Countries (CPLP), created in 1996. The idea came up in 1989 during the First Meeting of the Heads of State and Government of the Portuguese Speaking Countries in Sao Luis, Brazil, when the Portuguese Language International Institute, based in Cidade da Praia, Cabo Verde, was also established. The Community, on the contrary of what its name suggests, does not focus only on linguistic matters; its objectives include political-diplomatic coordination and economic cooperation. It has a legal personality, an institutional framework and a budget financed by the member-states and private contributions to support the implementation of its objectives. Some of its achievements include cooperation with Timor-Leste, the mediation in the conflict in Guine-Bissau in 1998; the forgiveness of the external debt of Mozambique vis-à-vis Brazil in 2000, and the development of projects against AIDS, and transfer of technology. About the CPLP see Saraiva, 2001, and for a general historical background of the relations between Brazil and Portugal see Magalhaes, 1999 and Cervo & Magalhaes, 2000. 24 The Rio Group was created in 1986 by Brazil, Argentina, Paraguay, Uruguay, Colombia, Mexico, Peru and Venezuela as an intergovernmental group to promote peace, democracy and integration of Latin America. Bolivia, Chile, Equator and Panama jointed it afterwards. For more see for instance Saraiva, 1996, ch.6. For the final declaration of the meetings until 1996 see IRELA, 1996, and EU DG External Relations homepage.

14

in scope and included political conditionality regarding democracy, the environment

and human rights by means of the so-called democracy clause, and they could be

renegotiated with total flexibility, as set out in the so-called ‘evolutive clauses’.25

Third Generation Agreements must be seen in the context of the creation of a vast

network of institutionalised relations in the EU since the beginning of the 1990s. The

EU has signed agreements with most countries in the world under the name of

cooperation, association, partnership, ‘European’ agreements, etc. The particularities of

the agreements with Latin American countries are best understood when contrasted with

the ones signed with other countries or regions. Although they are all very similar in

structure, and contain the democratic and the evolutive clauses, while the agreements

with the ACP, CEE, former Soviet and Mediterranean countries contained from the

beginning specific legal commitments regarding topics such as trade in goods,

competition, etc., the agreements with Latin American countries were originally

“empty”. 26 Some of these agreements, such as the one with the Andean Community,

remained without substantial commitments, but others, such as those with Mercosur,

Chile and Mexico were “filled” later, either by the conclusion of a new agreement, such

as the one with Chile of 2002 and the one under negotiation since 1999 with Mercosur,

or straight in the same agreement such as the case of Mexico, with the incorporation of

Decision 2/2000, promoting the liberalisation of trade in goods, and Decision 2/2001,

promoting liberalisation of trade in services and FDI.

25 The agreements with Mexico of 1997 (after the incorporation of Decisions 2/2000 and 2/2001), Chile of 2002, and the Association Agreement with Mercosur under negotiation since 1999 are sometimes referred as a 4th generation, since they include FTAs, unlike the other agreements. See Lamothe, 1996, p.651; Calderón, 1996, p.682; García, 1996, pp.725-732 CEPAL, 1999, p.8; COM (95) 216 final; Devlin et al, 2002. 26 For this distinction and more details see Torrent, 1998, p.213-228. According to this author, the logic behind the conclusion of empty agreements is their political meaning. One political reason pointed out as for the conclusion of these agreements is that they were seen as a strategy by the EU to reinforce its presence in the world and consolidate the international legal personality of the Community as distinct from its Member-States vis-à-vis 3rd Parties. Another reason is that these agreements attended to the interests of the Commission to expand its competences and to the Council’s to justify its work, since most agreements - full or empty - created bilateral institutional arrangements such as joint Committees, Commissions and Sub-Commissions which meet periodically to manage the relations. In addition, this close management is also useful for the EU in that it is used as a basis for the establishment of unilateral policies of development cooperation. Although they are legally independent from the agreements, the fact that they are managed together contributes to the (mis)perception of 3rd Parties that the cooperation programmes owe their existence to the agreements and were therefore negotiated, instead of unilaterally decided and implemented.

15

Table 1: EU Bilateral (and Bi-regional) Agreements

Type Partner

and date of

conclusion

Legal

commitmen

ts

Trade Treatmen

t of

foreign

firms

Capital

movements

Financi

al

protocol

Cooperati

on

Andean

Community

1993

No no no no

Cooperati

on

CACM

1993

No no no no

Cooperati

on

Argentina

1990

No no no no

Cooperati

on

Uruguay

1991

No no no no

Cooperati

on

Brazil

1992

No no no no

Cooperati

on

Paraguay

1992

No no no no

Cooperati

on

Mercosur

1995

no no no no

Associatio

n

Mercosur

under

negotiation

since 1999

FTA goods

and services

Probably

yes

Probably

yes

Probabl

y no

Cooperati

on

Chile 1991,

1996

no

no no no

Associatio

n

Chile 2002 FTA goods

& services

yes yes no

16

Cooperati

on

Mexico

1991

No no no no

Associatio

n

Mexico

1997

FTA goods

& services

yes yes no

‘

European’

CEEs FTA

asymmetric

al calendar

National

treatment

yes Non

quantifie

d,

mention

s

PHARE

Partnershi

p & Coop

(PCAs)

Russia 1994

Ukraine199

4, Belarus

1995

MFN National

treatment

yes Non

quantifie

d,

mention

s TACIS

Euro-Med

Associatio

n

Tunisia

1995, Egypt

2001,

Lebanon

2002, etc

FTA

asymmetric

al calendar

confirm

GATS

obligation

s

FDI Non

quantifie

d does

not

mention

MEDA

Lome-

Cotonou

ACP Non-

reciprocal

preferences

(WTO

waiver)

Non

discrimina

tion

no Quantifi

ed from

EDF

funds

Source: Based on Torrent, 1998, Ch.8 and updated by author.

Apart from the development of the relations with specific countries and sub-regions in

Latin America, in the end of the 90s the EU developed an approach to Latin America as

a whole. In 1999 the Commission prepared a document entitled ‘Prospects of a new

association - European Union/Latin America in the 21st century’ (COM (99) 105),

which provided an overview of bi-regional relations, and proposed the main objectives

17

of the EU for the ‘First Summit of European Union-Latin American-Caribbean Heads

of State and Government (EU-LAC Summit) to be held in Rio de Janeiro in June that

year.

During the First EU-LAC Summit, the 48 participant states signed the Declaration of

Rio containing 69 points about the general principles which should guide the bi-regional

relationship in the political, economic and cultural spheres. The Declaration also created

a bi-regional group, which should meet regularly, and contained a Plan of Priorities to

Action establishing 48 priorities for the implementation of cooperation programmes.

Negotiations for the conclusion of a trade liberalisation agreement with Mercosur, and

one with Chile were launched. A Second Summit of European Union-Latin American-

Caribbean Heads of State and Government took place in Madrid in 2002, a Third in

Guadalajara in 2004, and a Fourth in Vienna, in 2006.27 In the documents approved and

declarations the EU always emphasise the importance of the sub-regional integration

processes.

3.1- The EU foreign policy towards Mercosur

The EU foreign policy towards Mercosur evolved initially in the framework of its

policy towards Latin America, but has progressively received a different treatment. On

one hand, it is considered an emergent market together with Chile and Mexico, and on

the other hand, it is seen as the most successful project of regional integration, with a

special appeal to the European Union, who sees it as a receptive region to implement its

“integration model”. 28

The first treaty the EU signed with Mercosur was the Inter-Institutional Cooperation

Agreement between the European Communities and Mercosur of 29th May, 1992. This

agreement was intended principally as a vehicle for technical assistance, personnel

training, and institutional support for the integration process (Art.2), seen as the best

strategy to promote social and economic development and political stability in the

27 About the Rio Summit see for instance IRELA, 1999a and 1999b; Maior, 1999; Stuart, 1999; and about the Madrid Summit Gratius, 2002. 28 About the idea of exporting the EU model see for instance Torrent, 2002, pp.208-213.

18

region.29 The agreement created a Joint Consultative Committee with members from the

European Commission and Mercosur’s Common Market Group to develop and

intensify the inter-institutional dialogue and promote and assure the cooperation

initiatives of the agreement (Art.7). A number of cooperative programmes were

implemented such as the support to Mercosur’s Administrative Secretariat and technical

cooperation regarding customs norms, and animal and vegetable health.

In October 1994, the European Commission prepared a detailed document entitled ‘For

a Strengthening of the EU Policy towards Mercosur’ (COM (94) 428), in which it

elaborated a long and a short-term strategy to guide its foreign policy towards

Mercosur. In its conclusions, the Commission declared that despite the achievements

enabled by the Inter-Institutional Agreement, this treaty was an insufficient instrument

to promote the necessary strengthening of the EU's relations with Mercosur, and

proposed the elaboration of an interregional cooperation framework agreement, which

would, in a first stage, prepare the basis for bi-regional commercial liberalization and

continue to support the integration process, and, in a second stage, create a free-trade

area. The two stages would be institutionalised by two independent agreements,

although the second would be negotiated under the principles stated in the first. The

European Council approved the Commission's strategy during the Summit in Essen, in

December 1994, and, shortly later signed, together with the Commission and the

Mercosur member-states, a Solemn Joint Declaration formalising the intention to begin

negotiations. In April 1995, the Council requested the COREPER to analyse the

Commission's document, and in October the Economic and Social Committee sent a

reply adding some proposals and emphasizing the promotion of the participation of

sectors of civil society in the process of negotiation of the agreement (ESC Opinion

1176). The European Parliament also supported the Commission's proposal and added

some suggestions as well, such as including a political dialogue between members of

the Joint Parliamentary Commission of the Mercosur and the European Parliament in

the institutional dispositions of the agreement (Resolution of 16-5-1995).

The Interregional Cooperation Agreement between the European Community and its

Member States and Mercosur and its Member States was signed on the 15th of

29 Grabendorf, 1999, p.103.

19

December of 1995, and entered into force in July 1999. It is a typical empty Third

generation agreement: very broad, containing 9 titles and 36 articles, which cover

political, economic and cultural aspects of the bi-regional relations, but with no

substantial commitments. On the positive side the agreement established a forum for

regular meetings at the ministerial level with the establishment of a Cooperation

Council to supervise the developments of the negotiations towards the second stage of

the agreement. The Cooperation Council is composed of members from the European

Commission and from the Common Market Council and the Common Market Group of

Mercosur (Art.25), and assisted by a Joint Commission of Cooperation (Art.27) and a

Commercial Sub-Commission (Art.29).30

During the 1st EU-LAC Summit in Rio de Janeiro, in June 1999, both sides decided to

open negotiations to liberalise bilateral trade. The negotiations went through an initial

phase of exchange of information and interests, and in 2001, the tariff offers began. The

Chapters on Political Dialogue and Economic Cooperation were concluded, but an

impasse was reached regarding agricultural products, government procurement,

intellectual property and services. Both parts agreed to conclude the negotiations about

these items at the WTO multilateral negotiations first, but when these were interrupted

in 2006, bi-regional talks restarted.

4-Comparing US and EU role in the development of Mercosur

After the historical account of policies in favor and against regional integration in Latin

America and Mercosur in the external relations of the US and the EU, this section tries

to identify common trends, and differences in the approaches of the US and the EU

towards regional integration in Latin America, in general, and Mercosur in particular.

The main conclusions are, first, that the EU has continuously supported regional

integration in Latin American in general and in the Southern Cone in particular. It

favors a particular from of integration: economic and political integration with the

support of strong institutions, ideally supranational, and including a conditionality to

normative aspects such as democracy and human rights , but has not tried to impose its

30 For detailed analysis of the agreemetns see for instance Kinoshita, 2001, and Torrent, 1998, p.224-227.

20

own “model” at any cost, it has often respected the particularities of each process of

integration. The reasons for that position were not deeply explored in the article, but the

literature analyzed suggests that the EU seeks to dialogue with other processes of

regional integration and other collective actors both for normative and practical reasons.

For practical reasons because both parties share the same advantages and disadvantages

of being a collective actor, and for normative reasons because it has promoted

multilateralism in the world politics as a means to achieve stability and peace in the

international realm.

The US , in its turn, has supported regional integration in Latin America, but only one

particular type, and one particular project: the FTAA, which should develop from an

expansion from NAFTA through the conclusion of bilateral agreements with other Latin

American countries. Substantively, integration has been limited to economic issues,

mainly trade. Institutionalization was not desired.

Looking at Mercosur, the two different approaches become very clear: the bloc has

received support from the EU from the beginning: international recognition, 1992 and

1995 agreements, financial support to regional programs and institutions such as the

Secretaria and the Parliament, support in internal crises (tariff offer in 2001). The US in

its turn has never supported Mercosur as an institution nor concluded a agreement with

it, alighted the 4+1 Framework Agreement has a positive effect to the block. In addition,

the negotiations strategy to FTAA was disfavourable to Mercosur. Recent efforts to

conclude bilateral agreements with Uruguay and Paraguay are damaging the process,

and if it succeed, it might cause a major step back if not real

fragmentation/disintegration.

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