Requiem or Revival?: The Promise of North American Integration

Chapter 1. No Turning Back: Trade Integration and the New Development Mandate

Since the Uruguay Round of negotiations of the General Agreement on Tariffs and Trade (GATT) in 1986, hemispheric and subregional trade negotiations have proliferated and have interacted with this more established multilateral venue in unpredictable ways. First was the uncharacteristic willingness of the United States to venture outside of GATT in search of bilateral free trade agreements (FTAs). Frustrated with the slow pace of the Uruguay Round, the United States launched bilateral accords with Canada and Israel in the latter part of the 1980s. The Canada-U.S. deal, in turn, invoked Mexico ’s request to negotiate a similar bilateral agreement with the United States, which resulted in a second anomaly—and the main focus of this book: the 1994 launching of the North American Free Trade Agreement (NAFTA). NAFTA was unprecedented in that it linked a middle-income developing country seeking to lock in ambitious market reforms and thus willing to forgo developing country status at the negotiating table (Mexico) with a small but highly developed market of the Organization for Economic Cooperation and Development (Canada) and the the wealthiest and most competitive market in the world (the United States). Concomitant with the launching of NAFTA, new subregional schemes were being created, such as the four-member South American Mercosur bloc 1 No Turning Back Trade Integration and the New Development Mandate carol wise 1 01-8201-8 ch1.qxd 7/13/07 4:29 PM Page 1 (Argentina, Brazil, Paraguay, Uruguay), and preexisting schemes in Central America, the Caribbean, and the Andean region were revived. A third surprise was the apparent compatibility of these arrangements, both within the Western Hemisphere and also in terms of ongoing multilateral trade goals; like Mexico, countries further to the south were ready to jettison long-standing protectionist biases in favor of trade and investment liberalization. Finally, as NAFTA’s negotiators secured commitments that reached beyond GATT’s accomplishments in such areas as services, investment, intellectual property rights, and dispute settlement, NAFTA spurred GATT’s members to return to the multilateral negotiating table and wrap up the Uruguay Round accord in late 1993, albeit with equivocal results. From there followed the 1995 creation of the World Trade Organization (WTO), meant to replace, expand on, and better enforce the provisions of GATT. Later that same year, the Clinton administration announced its intention to negotiate a free trade agreement among all thirty-four democratically elected countries in this region. It was envisioned at the outset that the Free Trade Area of the Americas (FTAA) would subsume NAFTA and the other emerging subregional accords into one large hemispheric bloc, while also exerting pressure for further progress at the multilateral level.1 In less than a decade more regional and subregional deals had been negotiated than ever before.2 These apparent synergies and virtuous cycles among global, hemispheric, and regional integration instilled considerable optimism that items on the “old” (market access for agricultural and industrial goods) and “new” (services, investment, and intellectual property rights) trade agendas could be constructively addressed by the WTO. A new round of multilateral trade talks was thus launched in Doha, Qatar, in November 2001, the ninth in a series that dates back to the founding of GATT in 1947 and the first since the formalization of trade negotiations under the WTO. In recognition of the need to more firmly address issues of vital importance to developing countries, most of which had been sold short or ignored in the Uruguay Round,3 this ninth set of negotiations came to be known as the Doha Development Round. This designation reflected the explosion in the number of developing countries that were now active in international trade, many of which are recent members of GATT/WTO.4 This explains the heightened pressures from nongovernmental organizations (NGOs) for a true development orientation of the kind witnessed at the WTO’s ill-fated Ministerial Conference in Seattle in 1999. 2 Carol Wise 01-8201-8 ch1.qxd 7/13/07 4:29 PM Page 2 Yet despite the WTO’s expressed commitment to negotiate a Doha package that would directly address North-South asymmetries and work to incorporate developing countries into the global trading system on more equitable terms, the Doha Development Round collapsed in mid-2006.5 The outcome was the continued reticence of the developed countries to offer authentic concessions on the old trade agenda—market access for agricultural and labor-intensive manufactured goods...