Regional Integration in Latin America: Historical Developments, Current Challenges, Especially in Mercosur

Abstract

Regional integration in Latin America has a long history dating back the wars for independence in the 19th century. Notwithstanding, there is no need, for our purposes, to go back to the autonomist struggles of Simon Bolivar and other political and military leaders at the beginning of the 19th century, and to their premature attempts to forge an alliance between the many former Spanish colonies being liberated, because those efforts were most of a political nature and did not result in any institutional innovation at that time. At the beginning of the Eighties, a new wave of democratization touched Latin America, with the return to civilian and elected regimes, particularly in Argentina (1983) and Brazil (1985), which signaled a new emphasis on economic integration. But the European model of a common market was too much ambitious for Latin American countries, which were in a de facto preferential trade area, with the signing, a few years earlier, of the second Montevideo Treaty (1980), performing a flexible bilateral trade network among the members of the Latin American Integration Association (ALADI). The change from ALALC to ALADI was permitted by a decision under the Tokyo Round of multilateral trade negotiations (1979), which enabled developing contracting parties of the GATT system to exchange more limited trade liberalization than previously disciplined by Article 24 of GATT, which settled the rules for exceptions to the most-favored-nation clause, under the free trade or custom union formats. Mercosur was created in 1991, and since 1999 it is undergoing a structural crisis.