Florida State University Libraries Honors Theses The Division of Undergraduate Studies 2013 Regional Integration in South America: A Comprehensive Analysis Towards a New Wave of Integration Jesid Acosta Follow this and additional works at the FSU Digital Library. For more information, please contact [email protected] Abstract: This thesis deals with regional integration in South America. The intent of this thesis is to help explain the new wave of integration in the region through an internal perspective of its particular circumstances. Utilizing integration theories, historical analyses and institutional comparisons through the use of standardized methods of fair evaluation we investigate the important characteristics of South American regionalism. To give the reader a greater understanding of the complexity of regional integration attempts in the region we take a comprehensive approach to the many sub-regional attempts in the past: how they started, their goals and their current status. From this approach we draw some lessons for the future of regional integration in South America. Key Words: Regional Integration, South America, CAN, MERCOSUR, UNASUR, ALBA THE FLORIDA STATE UNIVERSITY COLLEGE OF SOCIAL SCIENCES & PUBLIC POLICY REGIONAL INTEGRATION IN SOUTH AMERICA: A COMPREHENSIVE ANALYSIS TOWARDS A NEW WAVE OF INTEGRATION By JESID ACOSTA A Thesis submitted to the Department of International Affairs in partial fulfillment of the requirements for graduation with Honors in the Major Degree Awarded: Spring, 2013 The members of the Defense Committee approve the thesis of Jesid Acosta defended on April 23, 2013. ______________________________ Dr. Dale Smith Thesis Director ______________________________ Dr. Alex Aviña Outside Committee Member ______________________________ Dr. Onsurang Norrbin Committee Member Table of Contents Chapter Page I. Introduction……………………………………………………………………………1 Conceptual Background and the South American Experience………………..2 II. Background.....………………………………………………………………………...8 The First Attempt at Regional Integration…………………………………….9 Institutional Development for Regional Integration………………………….14 The Andean Community of Nations (CAN)………...............................17 The Southern Common Market (MERCOSUR)...…..............................21 Lessons Learned from Independence and Integration Attempts……………..23 III. Institutional Comparison: CAN and MERCOSUR…………………………………..25 Decision-Making Bodies……………………………………………………..26 Dispute Resolution Bodies…………………………………………………...29 Representative and Consultative Bodies…………………………………….30 Institutional Organization……………………………………………………31 IV. Comparison of Outcomes…………………………………………………………....36 The Effects of Institutional Growth………………………………………….38 The Fourth Wave of Integration: Post-Neoliberal Integration……………….41 V. Conclusion……………………………………………………………………………45 Appendix……………………………………………………………………………………..52 References……………………………………………………………………………………61 Regional Integration in South America 1 INTRODUCTION Governing structures have been a necessity to society as far as the history of civilizations recalls. While many regions have seen the disintegration of governing structures into a variety of nation-states with different shapes, sizes and cultural make-ups; there have also been some outstanding examples of integration. In the last couple of centuries economic shocks, international media, multi-national organizations and many other characteristics of our globalized world have shown that people are dependent on another despite their differences in national governments, cultures or borders. If dependency is inevitable it may be reasonable for national entities to converge into larger government structures with federal-like systems that will benefit the region by increasing the economic growth, diplomatic powers and social development of its people. South America, a continental region within the Latin American culture is a particularly interesting region where one could expect to see more integration. The countries of South America share many characteristics in common: similar colonial experiences, the dominant influence of Catholicism, similar ethnographic make-ups and Latin-based languages. Given the many similarities among the South American countries why do we not see a larger degree of integration in this region? South America has attempted to integrate this region since these nations became independent. Until this day, however, no sustainable advances have been made. Regional integration is a very complex process whose success depends on many factors. The regional political and economic instability caused by recurrent internal wars, coup d’états and economic crises have greatly hindered the regional integration attempts in the past. Despite of the challenges the integration interests have not waned in the region and have created a proliferation of regional integration schemes focusing on economic integration. Attempts for integration in the Regional Integration in South America 2 past have been very ambitious and although some positive results have come out of these schemes, their attempts at economic integration have been less impressive. Integration in South America must be customized to meet the necessities of this region. If regional integration is going to be achieved, it must seek to implement pragmatic integration projects and build a regional identity, which will draw the democratic nations of South America to seek further integration. The argument that I present in this thesis explains the lack of achievements in the South American regional integration, drawing lessons from its past experiences, and from the experiences of the European Union (EU). In 1950s the most advanced attempt at economic integration was made in Europe with the EU. Since then we have seen a vast growth of other regional integration attempts around the world. Studies made by scholars have tried to explain the lack of advancement of regional integration in other regions, seeking to recommend better methods for integration. The attempt of this thesis is to do a similar analysis as those made by other scholars, but with a more comprehensive understanding of the many factors that affect the effectiveness of the South American integration. Two factors to which we are particularly interested in highlighting are the different backgrounds of this region which makes these integration experiences different, and the role that institutions play in determining the effectiveness of these integration attempts. In order to do this, we will first give some conceptual background on regional integration. At the end of this chapter we will set up the format in which we will study the South American integration experience in this thesis. CONCEPTUAL BACKGROUND AND THE SOUTH AMERICAN EXPERIENCE Regional Integration in South America 3 According to Walton Mattli (1999), regional integration is a process of “providing common rules, regulations and policies for a region”(p. 44). The best way to understand the application of this process is through the conditions explained by Andres Malamud’s (2004) demand and supply analysis: [The] first necessary factor behind a good regional integration is a “demand condition (Mattli, 1999, p. 43) for integration, be it called economic interdependence (Moravcsik, 1998) or increasing transactional activism (Sweet & Sandholtz, 1997). The second also necessary factor- but allegedly like the former, not sufficient- is a “supply condition”(Mattli, 1999) i.e., either institutional arrangements or regional leadership, or both.… [However] supply conditions may suffice, under certain circumstances, to account for origin, re-launching and (partial or provisional) success – and, unquestionably, also for stalemate or reversal notwithstanding favorable demand conditions (p. 9) Many of the characteristics used to explain the integration process by Malamud are derived from the EU-experience. Theories such as intergovernmentalism, neofunctionalism and social constructivism were some of the earliest and most encompassing theories from where these studies of regional integration derived. The rationale of intergovernmentalism relies on states as the main actors in the decision- making process of regional integration. In this view, the achievement of regional integration depends on the levels of economic interdependence as a necessary condition for the further advancement of integration. This theory does not attempt to explain the evolution of integration as a continuous path but rather as a collective process of individually made decisions that are independent from any previous agreements (Moravcski, 1998). The rationale of neofunctionalism in contrast focuses on regional integration as a process built on the spillover effects that could be captured by further integrating policies and customs of a group of states. This theory does not explain what caused the inception of this process; it focuses on the development of the process (Schmitter, 1970). In this approach the main actors are not states but Regional Integration in South America 4 rather the supranational bodies and interest groups whose bargaining advances further integration (Malamud, 2004). The social constructivism rationale focuses on the creation of regional awareness and regional identity as a form of drawing communities together in an cohesive manner. The intended target for regional integration “depends on a sustainable… sense of community [that is] based on mutual responsiveness, trust and high levels of ’cognitive interdependence’” (Caballero,