The Impact of International Trade Agreements in the Legal Systems of the American Continent

By Ayllon, Sergio Lopez | Houston Journal of International Law, Spring 1997 | Go to article overview
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The Impact of International Trade Agreements in the Legal Systems of the American Continent

Ayllon, Sergio Lopez, Houston Journal of International Law

I. Introduction

This article explores the impact of international trade law on the legal systems of the American continent, particularly those of Latin America. My principal argument is that formal legal systems and culture, in general, are undergoing a substantial transformation process. This is a result, in part, of the demographic growth, industrialization and urbanization, and the changes in the models of economic development and globalization.(1) In this process, international trade agreements at the multilateral or regional level play a key role and are centrally placed to observe the change. This process generates a growing tension between traditional practices and new social expectations regarding the law. The result of this process remains uncertain.

My argument has two parts. First, I discuss the changes produced by new economic development models and the role of the legal instruments of economic integration. Second, I focus on some of the innovations introduced by these instruments and the problems created by their implementation.

It is inevitable that in an exposition of this nature, generalizations are utilized that do not acknowledge the specificity of processes in each country or region. On the other hand, I frequently refer to the experience obtained from the North American Free Trade Agreement (NAFTA).(2) I justify the foregoing because the NAFTA is an excellent example to demonstrate the problems resulting from the interaction between the civil and common law systems.(3) This interaction is increasingly frequent and arises from the importance and influence of countries belonging to common law tradition in the American continent, specifically the United States and Canada.

II. The "New Face" of Free Trade

At the end of the seventies, Latin America experienced a series of "crises" as a result of complex dynamics, both national and international. The closed, "self-sufficiency" model followed by most of the Latin American countries, which focused on export substitution reached its limits during this decade -- resulting in external debt, high inflation, public deficit, and a lack of international competitiveness.(4) Beginning in the eighties, with a variety of nuances in each country, the politics and strategies of economic development were revised. This resulted in the liberalization of economies, sale of public enterprises, deregulation, and trade liberalization.(5) In addition to democratization and respect for the human rights movements, these policies converged to create a modification of the role of the state.

As a result of changing economic models and increased trade liberalization, Latin American countries began to gradually integrate into the international trade and economic system. At the same time, they were competing to attract external capital flows. Currently all the countries of the continent are members of the World Trade Organization (WTO) along with various agreements and organizations for multilateral economic cooperation.(6) Simultaneously, regional integration ceased to be merely rhetoric, as demonstrated through the different agreements that have been created or revived in recent years.(7) The substitution of the Latin American Association of Free Trade (ALALC)(8) by the Latin American Integration Association (LAIA)(9) was the prelude to a greater process. Today, the free trade zone of North America (NAFTA), the Common Market of the South (MERCOSUR),(10) the Andean Group,(11) the free trade zone of the Group of Three,(12) the revitalized Central American Common Market,(13) and the Caribbean Community(14) are reality in the hemisphere.

In addition to these larger regional agreements, a number of bilateral agreements are already in force or in the process of negotiation. For example, Mexico has bilateral trade agreements with both Costa Rica(15) and Bolivia.(16) The United States also has bilateral trade and commerce agreements with various countries of the region.

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