**Keep in mind that most of this comes from class lectures - things can and do get lost in translation. Anyway, this is part of what I think I learned:
Question 1
One goal of economic intergration is to promote free trade, by reducing barriers to international commerce. Some of these integration schemes have a positive impact on the economies of the Western Hemisphere´s poorer nations; other schemes treat them as not much more than another signature on the paper. Much depends on the agreement itself as well as the economic make-up of the particular member countries in relation to each other. Also, there are dangers that the benefits are really only short-term and in the long-term end up harming the economically challenged nations.
The essence of free trade in itself promotes specialization and division of labor. It allows and encourages each member to do what it does best, which generally should benefit all involved. Be cautious, though, of the danger of concentrating one commodity in one area. If disaster strikes the area, everyone losses that supply. Also, if that commodity declines in value, the area better have financial alternatives to sustain itself. This is especially true for poorer countries - those with few products to offer the world due to lack of skilled labor, lack of capital, lack of developed natural resources, failure to attract foreign investors, and perhaps also geographic obstacles, among other things.
Industrial substitution, a form of “closed integration,” is the integration stage where developing countries focus on developing their own industries. This may be through internal education as well as through foreign investment coming to the nation. Mild warning: beware of “Dutch disease.” This occurs when a small country finds a way to generate a large income but yet cannot sustain its supply of goods; the nation will find itself sucombing to rapid inflation. It will default on its foreign loans then. Yet, this too may actually stimulate foreign buyers to purchase from that market because the loaning countries do not get paid unless the debtor country has income to pay those bills. Thus, to get their money back they actually have to buy from that debtor country. This illustrates a twisted-positive, showing that every situation indeed carries more than one perspective.
Foreign investors can be attracted to less developed countries because of the lack of regulation. The labor force works long and hard, for little pay, and does not demand much beyond the meager wages. Then employers turn around large profits selling the finished products to developed populations. Poorer nations are utilized in this process but only receive a minimal benefit.
Public health and safety regulations, for example, certainly do not always make trade easier, though. Nowadays low standards in this arena are more often a barrier to international trade. Consumers are becoming more and more humanitarian conscious and swaying toward products of fair labor. Thus, employers are pushed to provide better working conditions and better benefits to their employees. Globalization and access to information through the world wide web is causing poorer countries to moreso realize their value to the world market and inquire into improved foreign employment. And this remains a win-win: the poorer populations get better treatment, and the product is still cheaper for the employer to manufacture.
In 1947 GATT (General Agreement on Tariffs and Trade) established the preferential trade agreement, with the necessary elements being (1) elimination of all trade barriers with member countries and (2) not increasing the barriers against non-members. This is less than full liberation of trade because tariffs with non-members can still vary per member country. It stipulates free trade along member borders only. GATT amended its articles in 1979 and said that less developed countries need not observe these guidelines. The point was to cater to the particular needs of these nations, by allowing the conditions of the agreement to sway in their favor. The PTA makes it easier to stimulate that challenged economy and thereby generally helps the poorer nations. Along the same lines as preferential treatment, the proposed Free Trade Agreement of the Americas, FTAA, incorporates special and differential treatment, SDT, options into its articles (Art. 13). SDT´s can be utilized on a case-by-case basis according to (a) sector, (b) subject and country, or (c) group of countries.
Vertical integration between “north” (developed) nations and “south” (developing) nations is a newer partnership perspective. NAFTA, the North American Free Trade Agreement, adopted in 1994, is the first example of such an agreement. NAFTA imposes a phase-out process on tariffs, setting various time frames for different products. This allows the “south” nation time to develop itself in a manner that it will be more likely to sustain, as opposed to requiring immediate changes which can throw the economy way off-kilter and potentially lead to economic crisis. Such a phased system helps the “south” nation more, and it is appealing to both players: the poorer nation improves itself and the wealthier nation secures an international market without having to relinquish its upperhand to an unqualified partner.
Some trade agreements further impose political requirements on their member countries, such as MERCOSUR´s democratic clause. At least theoretically this benefits poorer governments by forcing a popular voice in government. People with a say in how they are governed tend to care more about policies and feel more in control of the state´s actions. A trade agreement with such a provision is tinted with elements of helping the poorer nation help itself.
There are a few notable trade agreement solutions which can cause great harm to a poorer nation. Specifically, intellectual property is an area with huge implications for poor nations. Trade agreements that include protections for IP rights hinder poor nations in providing medicinal drugs to their people at accessible prices. These nations simply do not have the technological development to recreate the drug from their own research, thus they cannot produce it cheaply because of the cost of royalties on the patent. Though in desperate need of the drug to stop the cycle of the disease among the population, protecting IP rights can financially prevent humanitarianism. The World Trade Organization (WTO) is trying to address this concern through TRIPS (Trade-Related Aspects of Intellectual Property Rights). Article 31 provides for compulsory licenses when circumstances are of national interest or public emergency (as well as for abuse of the patent). Yet not all countries agree with and abide by this term.
The United States has a list for countries lacking enforcement of IP rights. “Watch list 301” articulates those countries, and business people and investors tend to thereby steer clear of operating in these places. Poorer countries need foreign investments. This puts them in a bind – to balance the economy´s need for foreign intercourse and the population´s need for government care.
Another harm to poorer nations may be the abstract trade alignments of wealthier nations with each other. When the poor nations are completely left out of the agreements they miss out on the benefits and protections and can then fall prey to explotation from those wealthy teams.
At this point in world history, it seems that pretty much any trade agreement it signs will be a good move for a poorer country. Vertical integration is a positive aliance from the poorer nation´s perspective, and horizontal integration may not result in many benefits but nor is it likely to lead to any significant economic harm. North-north agreements may be the greatest danger to poorer nations, but international regulations are more and more designed to have overall positive impacts globally, as world leaders are realizing and anticipating the interdependence of all nations on an ever increasing scale. In summary, poor nations run a low risk of being harshly negatively impacted by their trade agreements – even if simply because they do not have much to lose.
Question 3
(note: pages cited refer to Professor Giacalone´s handout Mexico and the Western Hemisphere, edited by Carol Wise; unless otherwise specifially indicated)
The Americas are currently experiencing unilateral reform efforts, and intraregional trade and investment are rapidly increasing. This creates a strong pressure for deeper integration. International trade organizations will only survive if countries respect the rules of such organizations. The WTO can say anything it wants, but without authority to enforce its voice it doesn´t much matter.
Regional trade agreements are one means to obedience. The smaller number of member countries in regional agreements make their pacts more intimate and which is sometimes more powerful. If one member goes out of line, the reciprocity from the other member(s) can be an intense sanction. A global agreement can function smoother due to the peer pressure aspect of these smaller agreements.
On the flipside, though, regional agreements can also be a block on larger agreements. This is because the region may become totally invested in only its members and delete more competitive non-member trade options due to preferences granted to member nations. There can be peer pressure to turn down other agreements. Also, some of the policies already in force in the regional trade agreements could be in contradiction with clauses pushed for in the FTAA.
The Free Trade Agreement of the Americas, FTAA, is essentially an extension of 1994´s North American Free Trade Agreement. NAFTA joins the US, Canada, and Mexico in the first agreement of vertical integration of “north” (developed) nations and “south” (developing) nations. This was also the premiere free trade agreement between Latin America and non-Latin America. But these break-throughs did not come all at once. NAFTA actually resulted from two prior partnerships: the 1989 Canada-US FTA and the 1992 US-Mexico FTA. Various motivations led to the joining of these partnerships into one agreement. The United States wanted to secure its market, because it had slipped into national debt and there were issues of regional trade blocks with Europe and Asia. Mexico sought to consolidate exports to its principle market and to maintain and deeper economic reform. Canada just did not want to be left out.
Though the FTAA is an extension of NAFTA, each have distinct purposes, and currently North America does not have as much incentive to push for a hemispheric agreement. Both the public and the private sectors of the US will have to take leadership initiative in getting an FTAA signed. Canada will more than likely follow the US in any hemispheric decision. Mexico plays a unique role - being a Latin American nation in North America. Mexico has not expressed any major support for FTAA, and one theory is that Mexico would prefer to stay away from a full hemisphere agreement to avoid competition with other Latin American countries who produce similar export products. Less developed nations prefer the agreements with less members, because it is easier to secure special treatment. When there are various small, developing nations they cannot all get extra preferential treatment.
Developing nations are attracted to the regional and subregional agreements because of the greater probability of a more immediate increase in trade and flow of capital. And bilateral deals on any level virtually guarantee market access. The Latin American trade agreements are generally south-south, and as Mauricio Boquero-Herrara noted in his article “Latin American Update: Something is Going on in Latin America: “differential treatment and the concession of preferences to less developed members is a principle that is an important feature of the Latin American approach to economic integration (p3; 12 L. & Bus. Rev. Am. 613).” And in another article, “Open Regionalism in Latin America: An Appraisal,” this same author talked about how as nations progress through development, so too will the motivations for their trade agreements progress. Underdeveloped countries focus on developing their own industry. More industrialized nations seek to widen and secure the market for their products (p2, 11 L. & Bus. Rev. Am.139). Further citing to this second mentioned article:
“REGIONAL Integration in Latin America comprises four important features, which can be described as the granting of differential treatment and preferences, politically led processes, highly institutionalized structures and forums, and antithetic positions towards external markets. ... Differential treatment is considered not only a peculiarity, but also a principle of economic integration in the region. It may, however, create complexities and bring about weaknesses and legal uncertainty. Political direction could become political intrusion. Institutions, structures, and forums may turn dysfunctional, and external relations could be based on policies that leave the region vulnerable to external shocks (p1).”
While US trade agreements reflect a concept of deep integration, Latin American trade agreements “have been formulated in part as a strategic counterweight to US influence (p304).” North America signs trade agreements to advance and secure its interests in services and intellectual property. Latin America´s primary interests are market access, dispute settlement, and trade facilitation. A successful FTAA will have to figure out a way to align these goals. The FTAA will not be realized if and until NAFTA and MERCOSUR can come to agreement – meaning that the US and Brazil must both decide that FTAA will benefit them each enough for their respective reasons that the partnership is worth it to them. Many scholars say this is very unlikely; it is impossible to have two hegimons in one multi-member trade agreement.
Utlimately, it seems that regional agreements area necessary for the creation of international trade agreements, evident from the fact that CUSFTA and the US-Mexico FTA joined into NAFTA and now the FTAA is an effort to extend from there. These smaller partnerships establish common grounds and use baby steps toward larger-scale alignments. However, these smaller agreements actually block a larger agreement, by locking out the non-members. And note that once a large-scale trade agreement is adopted and has force to extract obedience, then these smaller agreements may be more or less obsolete.
Question 6
Trade agreements can no longer focus on solely economic points. Globalization has ignited the humanitarian concern for all aspects of life. Thus, issues such as the protection of human rights, socio-economic status, immigration, and environment are making their way into international trade agreements.
To most fully address all societal aspects of trade, a common market is the best economic integration scheme to push for. This is full liberation of trade among member countries, equal tariffs along all non-members borders, along with free circulation of people, capital, and services. (The next step beyond this would be to implement a common currency, as with the European Union.) Yet even with such a signed agreement, reality still reveals barriers. Public health and safety, for example, can be a barrier. Countries with less regulation and lower standards are much less appealing to the international work force (though employers may prefer it, especially from a financial standpoint). Thus, to attract the necessary labor, countries are pushed to adopt better standards of health and safety. The intestines of commerce [jobs + workers + supplies + demand for the product] work to better the process as a whole.
The Universal Declaration of Human Rights (1948) laid the international foundation of guarantee on basic human rights and defined those rights to include health, food, clothing, housing, medical care, social services, and “security in the event of unemployment, sickness, disability, widowhood, old age, or other lack of livelihood in circumstances beyond his control.” Certainly this applies according to different standards in various countries. Each government generally decides how its country will respect and fulfill these aspects of life on Earth. Many Latin American nations have implemented complete and free public health care, for instance. There is typically also a private sector of health services. The same caliber of doctors practice in each sector, though the private division tends to have better supplies and facilities. There can be an incredible wait list on the public side.
The protection of human rights can be intimately related to whether the particular country is monist or dualist. The monist nations hold international law as the ultimate force domestically. Dualist nations allow international law to coexist with domestic law, but the national Constitution will always prevail. Monist nations note the Vienna Convention on the Law of Treaties (1969), which lays out concurrent duties of nations to respect (a negative obligation, to refrain from certain acts), to protect (an obligation concerning third parties), and to fulfill (a positive obligation, to affirmatively provide access to rights). These duties are subject to several levels of enforcement, domestic remedies being the most immediate. Once domestic methods are exhausted, an issue may go to various specialized Committees; i.e., Torture, Race, Women, Child, etc. The American Convention on Human Rights also deals with international human rights violations. It has a Commission that issues public orders and a Court to issue sentences. Ultimately, these avenues only have as much force as the particular country gives to international law, and most Latin American nations do indeed hold international laws supreme over their own domestic laws.
In the quest for universal human rights, the main push is for “progressive realization.” Nations must be able to demonstrate that they are always moving toward complete human rights guarantees for their population. This of course carries an obligation of non-regression: under principles of reasonableness, cannot reduce a right that the people already enjoy. The key issue on enforcing international human rights is the establishment and recognition of a minimum core. The world needs to agree on the basic essential rights incumbent upon every government to respect and/or provide. And to comply, a country must demonstrate every reasonable effort.
Further, Latin American nations are constitutionalizing amparo (or its equivalent, by various designators). [Argentina: 1994 Constitution, Art 43 + statutory law 16986 (1966); Mexico: Constitution, Art 107; Brazil: “mandado de seguranca”; Dominican Republic: by way of the American Convention on Human Rights, Art 25.] Amparo makes any violation of human rights judicially actionable. It applies against state action and against private party action. It protects constitutional rights, as well as statutory and treaty rights. Standing is granted broadly; exhaustion is typically required. Some nations authorize judges to declare the challenged norm unconstitutional only as applied to the parties at issue; other countries have more recently empowered judges to declare unconstitutionality across the board. This ties into trade agreements because as countries progress through PTA´s to FTA´s to Customs Unions to Common Markets, so too will their domestic rights likely flow. As citizens interact with other governments, they will increasingly request and demand equitable treatment by the member nations, such as the “MERCOSUR citizen” going through the Brazilian airport (textbook p239).
Ideally the specialization and division of labor enabled through trade agreements would better the socio-economic status of all member populations. However, reality is moreso that the gap between income of skilled laborers versus non-skilled laborers will increase even more. As Manual Chavez articulated in his 2006 law review article “Trade and Environment in Latin America: When Institutions, Transparancey and Accountability are Essential:
“Trade, by itself, does not bring prosperity... Unemployment, inflation and a steady and constant consumer price index has left most workers with a negative impression and experience concerning globalized trade. ...[and] because the rewards of trade and globalization are concentrated within the top 20 percent of each nations population, the remaining populations within each Latin American country see little incentive to support trade and globalization (p5,7).” (14 Mich. St. J. Int´l. L. 225)
There are just too many other elements which are necessary to achieve equality on a grander lever: education (being the biggest variable), natural resources, geographic location, etc. To force equality is unfortunately all too often to cater to the lowest common denominator. This is a dangerous method and conceivably leads to the inside-out destruction of civilization (read Ayn Rand´s “Atlas Shrugged”).
Common markets are the trade agreements which would economically provide open immigration (though there are still other boundaries – such as political). Overall, if any of the trade regimes functions toward the goal of increasing domestic economic productivity by opening international trade, then immigration will not be such an economically motivated life move. Immigration will no doubt still occur, but the financial incentives and barriers will not be such prevailant reasons for it; instead people will move between countries for reasons such as geography, climate, career fields, etc. – rather than mere salary necessities.
As for the environment, the less regulation, the more appealing it is to business because waste disposal costs can be minimal. Trade agreements lean toward increasing regulation, though, through provisional requirements among member nations. Less regulated nations will increase their standards in order to sustain the agreements with developed partners such as the United States. Further, environmental law is rounding out its approaches. It now takes concern of (1) natural environment, (2) man-made environment, and also (3) cultural environment. This means that all aspects must be considered: nature in itself, artifical constructions, as well as the values that mankind puts on environment.
The United Nations has held progressive conferences in this forum. Stockholm, 1972: environment formally recognized as a global concern. Rio de Janeiro, 1992: non-governmental organizations become forcibly active in environmental issues. Johannesburg, 2002: private industry and banks emerge as actors in the scene of environmental protection. Since 1992 sustainable development has been the motivated method. This label calls for practices that are economically sustainable while being environmentally friendly and socially just. In other words, the practices must generate a profit, must not negatively impact the environment, and all people must have access to basic rights. After private industry and banks stepped up their involvement, they adopted the Equator Principles (2003), laying out environment management standards. It is the financial force of these players that pressures businesses and governments to comply.
To conclude, I think that trade agreements will find it necessary to include additional provisions – not just the economics of commerce – in order to deal with socio-economic divisions. Even still, the rich will tend to get richer and the poor poorer, but decreasing the barriers on international trade can increase the individual´s opportunities to a ´better´ life. This can be successful on a per person basis, if that person makes it happen, by choosing to step up and individually take what life has to offer. Reducing trade barriers can enable a population to realize the various options out in the world...
