AFTA and MERCOSUR at the Crossroads: Security, Managed Trade, and Globalization

Small and medium-sized free trade agreements have inherent difficulties in growth and expansion in the global economy which amounts to more than US$30 trillion. Neomercantilist ASEAN's share of the global exports was 6.5 per cent in 2000, while that of neoliberal MERCOSUR was less than 2 per cent. Furthermore, the trade within ASEAN has not been growing for the past three decades, averaging about 20 per cent of the total volume. MERCOSUR'S average has been on par with ASEAN's. This article argues that the two regional markets have reached the optimum point of intra-regional trade creation under the existing political economy models. Post-11 September security issues are further complicating the regional integration. The two regions need to revisit the existing inter-state alliance structure and invent new security regimes. The alternative is not whether the two regions must retain neomercantilism or reject neoliberalism; rather it is how to blend the two systems so that the model can satisfy the domestic political needs and at the same time enable economic growth in the next phase of globalization.