The Future of Hemispheric Free Trade: Towards a Unified Hemisphere?

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I. INTRODUCTION

Although the push for free trade among neighboring nations has been a reality for some time, as evidenced by the implementation of bilateral treaties between nations, the concept of free trade itself has taken on global proportions. The original bilateral trade agreements between neighboring countries have ballooned to encompass whole regions, and countries are implementing new treaties to cross hemispheric boundaries. Now that this commitment to increased free trade has been established, the only real questions are: "What form [free trade] will take, and who will be the traders?".(1) In 1992 the North American Free Trade Agreement (NAFTA).(2) between the United States, Canada, and Mexico, opened the doors to free trade among those nations. Many assumed that NAFTA's growth would naturally continue, linking its original members with Latin American nations, and eventually culminating in a hemispheric free trade agreement.

For a time, NAFTA's promise seemed plausible, with the Latin American nation of Chile taking the necessary steps to become the trade group's fourth member.(3) However, NAFTA-Chile negotiations have stalled,(4) and current U.S. passivity regarding this issue has significant implications for the future direction of free trade in the Western Hemisphere. Many believed that an economically integrated hemisphere would occur through the NAFTA trade bloc vehicle.(5) However, now that the idea of expanding NAFTA has burned out, a more united Southern Hemisphere is emerging. Latin American nations are forming bilateral and multilateral trade agreements among themselves, in addition to forming trade ties with countries beyond Latin America. Some Latin American countries have united in trade blocs, comprised of larger groups of nations, which threaten to take over NAFTA's position as the leader of the crusade for hemispheric free trade. The Southern Cone Common Market (MERCOSUR)(6) exemplifies the potential rival NAFTA may face.

It is the U.S. leadership role in NAFTA that places NAFTA in such a strategic position with regard to future hemispheric economic integration.(7) Until recently, NAFTA was poised to be the vehicle to greater hemispheric free trade; however, because the United States has "dropped the ball" on its membership negotiations with Chile, NAFTA may have lost its leadership position.(8) In fact, Chile's path has inadvertently become an important indicator of the route that may be taken to accomplish a unified hemisphere.(9) When Chile, a country with one of the fastest growing world economies,(10) a population of 13 million, a gross domestic product (GDP) of US$97 billion,(11) and a 1995 GDP growth of 8.4%,(12) felt NAFTA's scorn, it realized that it could take its business elsewhere: instead of waiting to join NAFTA, it has joined MERCOSUR as an associate member.(13) This new union strengthens an already growing MERCOSUR by enlarging affected consumers to 220 million, which is almost half of the Latin American population. It also increases the combined GDP to US$1 trillion, almost 65% of the combined Latin American gross national product (GNP).(14) Chile's membership "makes it [MERCOSUR] a potentially powerful counterpoint to NAFTA,"(15) and it could give MERCOSUR the additional momentum it needs to assume the role NAFTA seems to have abandoned in moving towards a more unified Western Hemisphere.(16)

Of course, taking over NAFTA's role does not mean that hemispheric free trade must occur through a trade bloc such as MERCOSUR. It is possible that achieving the dream of hemispheric integration will take much longer to realize than initially planned. The rapid hitching of all the Latin American nations to either NAFTA or MERCOSUR is not necessarily the best means for achieving a more united economic hemisphere. Instead, freer trade and hemispheric integration might occur as it has occurred for years: at a slower pace, through bilateral and multilateral trade agreements between nations, and through the linking of regional and sub-regional trade organizations. …