GLOBAL SOUTH FOREIGN ECONOMIC POLICY: COMPARA TlVE ANALYSIS OF THE EXTERNAL RELA TlONS OF REGIONAL

INTEGRATION SCHEMES IN THE GREATER CARIBBEAN

RITA GIACALONE, Ph. D. GRUDIR-FACES-ULA MERIDA, VENEZUELA

Presently international relations are no longer the exclusive competence of the nation-

state as both internal regions and external schemes of integration assume new functions in

the international arena. The best example of this situation can be found in the case of the

European Union (EU), established in 1992, where, for example, the Spanish

communities (Cataluiia, etc.) have been recognized their right to enter into the discussion

of any foreign policy that affects them and also to lobby directly at the level of the

central institutions of the EU in Brussels. (Subra 1999) At the same time, Title V of the

Maastricht Treaty provides for a common foreign policy defined by the European

Council. But in practice, however, so far the European Union has failed to establish a

common external position on matters such as security policy or even on the Middle East.

(See Bustamante 1998) Hen (1 999) summarizes the present situation of foreign policy

making by the EU as divided between political and economic matters: while the

establishment of a common foreign policy is in the hands of the European Council,

external economic relations belong with the European Commission; while the first does

not seem to be able to progress, the second has been very successful. If we can draw any

conclusion from this example, it would be that while regional integration schemes are

very active in international relations, it is merely at the economic level.

The objective of this paper is to examine the regional integration schemes of the Greater

Caribbean in order to appreciate the degree and quality of their action in international

relations, both between them and with extraregional actors. Our hope is to contribute to a

better understanding of the role of actors different from the nation-state in international

relations. In this regards, we accept that integration schemes are made up by nation-

states but we will try to find out if by acting together in the international arena in order to

advance their collective economic interest these schemes assume a collective economic

policy that may differ from their national ones. In the following pages we will explore

this matter in the cases of the Central American Integration System, the Caribbean

Community (CARICOM), the Group of Three (G 3 ) and the Association of Caribbean

States (ACS).

I. FOREIGN ECONOMIC RELATIONS OF THE CENTRAL AMERICAN INTEGRATION SYSTEM, CARICOM, THE G 3 AND THE ACS:

The especial situation of Central America during the 1980s paralyzed both the process

and the discussion of integration in that subregion of the Greater Caribbean. It was only

in 1993 that this process was reactivated with the decisions taken in Guatemala to

promote trade among its members, establish a common external tariff, and coordinate

external negotiations. (Guerrero Borges 1993; Morales 1994) However, this reactivation

also created an ambiguous development as at the same time it was accepted that member

nations of the integration scheme could bilaterally negotiate economic accords with

extraregional actors. Thus in 1994 Costa Rica signed a free trade treaty with Mexico and

the so called nations of the Northern Triangle (El Salvador, Guatemala, and Honduras)

started negotiations towards the same objective. (Isa 1997; de la Ossa 1997) Also, in

december of 1997, Nicaragua and MCxico established a treaty that since july 1998 allows

for the free entry of certain Nicaraguan goods to its new partner's internal market. We

observe then that, regarding negotiations with Mexico, economic relations by the Central

American governments have followed mostly a bilateral form.

This is not the case in negotiations with the principal commercial partner of Central

America - the United States, where we find that those negotiations have been attempted

in a collective way. In may 1997, for example, the presidents of the Central American

nations got together with U.S. President Bill Clinton in San Jose, Costa Rica, and signed

a joint declaration that established a Trade and Investment Council among Central

American nations, the U.S. and the Dominican Republic. The aim of the Council is to

explore practical ways of enhancing cooperation in trade, investment and intellectual

property, in preparation for the negotiation of the Americas Free Trade Area (AFTA).

Also in 1997 there were collective discussions by the economic ministers of the Central

American nations regarding the possibility of establishing a free trade agreement with

Panama and the Dominican Republic, and of promoting economic relations with

Colombia and Venezuela. (INTAL mayo 1997: 6; junio 1997: 9) With the first nation a

framework agreement was established during the Presidents Summit Meeting in Panama

(july 1997), in which Central America was recognized as an unitary negotiator. (CEPAL

1998) The free trade agreement with the Dominican Republic was signed in april 1998.

(INTAL febrero 1998: 8; mayor 1998: 7) Moreover since 1995 conversations have

been held with Chile with the same objective, but so far with no success. (CEPAL 1998:

3 6)

During an official visit of Paraguayan President Juan Carlos Wasmossy to Costa Rica in

january of 1998, trade possibilities between Central America and MERCOSUR

(Argentina, Brazil, Paraguay, and Uruguay) were explored. Three months later during

the I1 Summit Meeting of the Americas in Santiago de Chile, a framework agreement

with the objective of opening formal negotiations was signed. (INTAL enero 1998:lO;

abril 1998: 6) This was an important step in economic relations between the two

integration schemes as previously only bilateral agreements between Argentina and

Costa Rica and Argentina and El Salvador existed.

Within this overview of the external relations of the Central American Integration

System, we will pay special attention to its negotiations with CARICOM. Historical

obstacles to the development of closer relations between the two have been both the

border conflict between Guatemala and Belice - which was solved in 1984 -- and,

presently, the question of the banana access to the European market. The latter emerged

from the establishment of the European Union in 1992, a moment when preferential

agreements that Great Britain and France had previously applied to their former colonies

had terminated. (For more detail see Briceiio Ruiz 1996: 28) The Lome IV Banana

Protocol (1990) attempted to protect preferential access to the European market for this

product coming from the ACP (African Caribbean, and Pacific) nations. Accordingly the

Central American nations, which collect a good part of their income from banana

exports, considered themselves discriminated by the EU. Recently the World Trade

Organization (WTO) has accepted the claims of non ACP banana producers against this

practice and recognized their right to apply sanctions against the EU.

The question of preferential access of ACP bananas to the EU market interferes in

external economic relations between Central America and CARICOM, as the latter

benefits from European preferential market access and the former feels discriminated

against by that policy. In spite of this, other developments have helped improve relations

between these two schemes of regional integration. The most important of these was the

signing of the North American Free Trade Treaty (NAFTA) in 1993. The entry of

Mexico into a free trade agreement with the United States and Canada had a deep impact

on the preferential trade arrangement-the Caribbean Basin Initiative (CBI) -- previously

established by the United States in the 1980s, as part of its security policy within the

Caribbean region. Both the Federaci6n de Entidades Privadas de CentroamCrica y

Panama (FEDEPRICAP) and CARICOM considered themselves negatively affected

because Mexico would become a much stronger competitor in export of goods and

services to the U.S. and also would be more attractive for investments coming from the

northern nation. As a result, Central America and the Caribbean islands felt threatened by

a displacement from their previous preferential position vis a vis the U.S. goods,

services, and capital markets. This has helped to produce a common attitude towards

negotiating a new economic deal with the U.S., and also with Canada. Thus both Central

American and CARICOM governments have been asking officially for a parity position

with Mexico concerning their respective goods entering North American

markets.(Giacalone 1 998)

Presently, with the aim of strengthening a common negotiating capacity with the U.S.

government, both Central America and CARICOM have been working on forging

stronger links between their two subregional integration schemes. Some of these

proposals have originated from their respective private sectors; others are governmental

in nature, and most have obtained the support of U.S. negotiators who prefer to tackle

regional policy in a single negotiation. As the result of periodic meetings of Central

American and Caribbean foreign ministers, in 1992 the General Secretary of CARICOM

called for a regional integration scheme including both subregions. (Latin America

Regional Report-Caribbean February 27, 1992: 5-6) Finally, in a meeting in Costa

Rica in november 1996, the framework for a free trade agreement between the two

schemes was put in place. (Latin America Regional Report-Central America March

1997: 1; Caribbean Update January 1997: 1)

If we look now at the external relations of CARICOM in the 1990s we find that between

1989 and 1994 this scheme was revitalized by the decision to establish a West Indies

Commission with the aim of of proposing mechanisms to update the functioning of the

Caribbean Community at all its levels. One of the final recommendations of that

Commission's Report in 1992 was the beginning of talks with independent nations and

autonomous territories near to and within the Caribbean Sea. Its principal objective was

to create a new and all-encompassing organization of regional integration, the

Association of Caribbean States, where CARICOM would be the core or nucleus.

Besides the creation of such a scheme in 1994, between 1992 and 1998 the most

outstanding achievement of CARICOM's external relations has been its widening, in

which it has allowed the entrance of Surinam, in july 1995, and Haiti, in july 1997. The

Dominican Republic is also preparing for CARICOM membership.

It should be noticed as well that during the last two years CARICOM has made progress

in its quest for deepening regional integration. The liberalization of goods has spread to

liberalization of services and capital, and the free movement of professionals is starting to

develop, product of new protocols incorporated into the original Chaguaramas Treaty

signed back in 1973. But even if internal changes such as the creation of a Supreme

Court of CARICOM have occupied a good deal of the subregional agenda in the last two

years, most of the discussions have centered on CARICOM's external relations. The

subjects that attracted more attention were the end of preferential agreements established

with Europe under the Lome Accords, the negotiation towards the establishment of a

hemispheric free trade area (AFTA), and the erosion of the Caribbean Basin Initiative and

CARIBCAN ( a preferential trade agreement with Canada), after the implementation of

NAFTA.

During 1996 CARICOM started conversations with participation of representatives of the

private sector, of non governmental organizations, and of members of its diaspora in the

developed countries, aimed at formulating collective positions concerning four areas of

economic interest: 1) the renegotiation of the IV LomC Convention which will expire in

the year 2000; 2) the establishment of an AFTA before the year 2005; 3) discussions

with the WTO regarding the banana question; and 4) the possibility of opening up

economic relations with other integration schemes. Let us have a look at the most

important actions in these multiple external fronts.(Giacalone 1999)

At the end of 1996, after Bill Clinton was reelected as president of the U.S., CARICOM

met to discuss a mechanism to obtain parity with Mexico in trade and investments from

that country. This was a central point of its economic foreign policy in the sense that most

of the maquila industry created in CARICOM nations since the 1980s were thought to be

more apt to relocate in Mexico after the signing of the NAFTA. With their minds set

upon this goal, in may 1997 the chiefs of government of CARICOM met in Barbados

with President Clinton. Product of that meeting was a document titled "Society for

Prosperity and Security in the Caribbean", which also included aspects related to

cooperation in the fight against drug traffic in the region. However, the U.S. kept up its

claim against the preferential access of ACP bananas into the European market in the

WTO, and did not approve financing for a regional investment fund. CARICOM

members wanted this as a measure to balance the negative effects of the end of the

provisions of the Section 936 of the Internal Revenue Service of the U.S., which until

september of 1996 had allowed American companies to deduct part of their taxes if they

invested or traded with the Caribbean from Puerto Rico. Only a year later the U.S.

government accpeted to widen the scope of Caribbean products included in the Caribbean

Basin Initiative (CBI) originally signed in 1983. (INTAL abril 1998: 7)

In the case of the renegotiation of the IV Lome Convention, CARICOM established a

common position with the Dominican Republic and Haiti (within the so called

CARIFORUM). As part of this deal there were discussions about the creation of a free

trade agreement between CARIFORUM and the UE, but this type of agreement could not

prevent the entry into European markets of rum, sugar, etc., from non Caribbean nations.

CARICOM also supported the inclusion of Cuba among the ACP countries recognized by

the UE in the Lome Conventions. This was part of a collective foreign policy decision to

rearticulate Cuba into the region, and get a foothold within that market before any further

political or economic opening of the island would turn Cuba into a strong competitor in

the areas of trade, foreign investment, tourism, and the like. As part of this strategy,

CARICOM-Cuban relations were promoted by a mixed commission which held

discussions about trade, investment, agriculture, tourism, human resources development,

and others. During the months of july and august of 1998 Cuban President Fidel Castro

visited Barbados, Grenada and Jamaica, and during those visits met not only with

government officers but also with representatives of the private sector of those nations.

At the same time CARICOM has made public its decision to negotiate its entry into

NAFTA or an eventual AFTA collectively, and , equally, has conducted its dealings with

Venezuela in 1992, with Colombia in 1994, and with the Dominican Republic in 1998,

when a free trade treaty with this nation was established. (Caribbean Insight september

1998: 1, 12; Latin American Monitor-Caribbean september 1998: 2) To conclude this

quick overview of the external economic relations of CARICOM we should mention that

within the institutional reorganization of this scheme a Council of Foreign and

Community Affairs has been formed. This specialized body will conduct relations not

only among the CARICOM members but also between them and other international

organizations and/or countries. (INTAL enero 1998: 10)

The Group of Three, made up by Colombia, Mexico, and Venezuela, has only acted in a

concerted way in its relations towards Central America and the island Caribbean, and

most of its activities have taken place within the ACS, of which it was one of the most

enthusiastic proponents. In august 1996 a G 3 meeting in Caracas made the decision to

apply a "social diplomacy" towards the Caribbean region, understood as the development

of programs granting technical cooperation in the fight against poverty. (INTAL august

1996: 17) Two months later another seminar added a call for representatives of the

private sector of the Group of Three nations and of CARICOM and Central America to be

invited to participate in those programs. In september of 1997 the ministers of commerce

of the G 3 members discussed with businessmen the possibility of establishing a free

trade area with their Central American and Carribean neighbours. (ALADI. Secretaria

General 1998c: 37)

In spite of all these discussions, which thus far have not been translated into action, the

most notorious characteristic of the external relations of the Group of Three is that they

are conducted individually by each of the nations involved, with no collective mechanism

or even informal discussion. A good example of this situation is provided by the

liberalization of trade with Chile, liberalization that was negotiated and signed by means

of three different treaties: one in 1996 between Mexico and Chile, and two in 1997

between Colombia and Chile and Colombia and Venezuela. (INTAL diciembre 1996:

13). Even within the process of negotiations between the Andean Community of Nations

(formerly Andean Pact), of which both Colombia and Venezuela are members, and the

MERCOSUR, Colombia and Venezuela sometimes supported different positions.

Mexico has maintained its own system of external trade relations with Chile, Bolivia,

Ecuador, Peru, and MERCOSUR, with diverse success, but has not called for a joint

negotiation of the same even in those cases where the bilateral process has failed, as with

MERCOSUR. (ALADI. Secretaria General 1998c: 4 1-42)

In the case of negotiations with the European Union, Colombia and Venezuela have

taken advantage of the General System of Trade Preferences offered to the Andean

nations as part of a program aimed at erradicating the drug economy in those nations.

Mexico, however, has had its own conversations with the European Union, intent on

creating a free trade area. Furthermore, in december 1997 both the North American

nation and the European scheme of regional integration signed an Agreement of

Economic association, Political Concertation and Cooperation, similar to that signed by

the European Union with both MERCOSUR and Chile. (ALADI Secretaria General

1998c: 58)

The lack of coordination among the three governments in their external economic

relations can be linked to the fact that the Group of Three has established a free trade

treaty with a small bureaucratic machinery. Another characteristic of this group is that

there is not even a mention of the possibility of moving towards the establishment of a

common market or a common external tariff in the future, although Colombia and

Venezuela have already established the latter. Even in the negotiation of an eventual free

trade area for the whole hemisphere, the G 3 has no collective participation mechanisms.

Colombia and Venezuela deal with this external front through the Andean Community of

Nations, while Mexico is already part of NAFTA, so their objectives are divergent - the

two Andean countries want to enter into a similar deal with the U.S., while Mexico's

interest in widening NAFTA into AFTA may not be so strong.

In july 1994 the Association of Caribbean States came into existence as a result of the

recommendation of the West Indies Commission in 1992. From the point of view of

external economic relations, its importance does not rest so much in the establishment of

links with extraregional economies as with the furthering of economic relations among

the three regional organizations: CARICOM, the G3, and the Central American

Integration System, it comprises. As an international mechanism the ACS tends to

facilitate a space for member nations and subregional schemes to negotiate common

positions. Functional cooperation among its members is a very important element in the

ACS and there is hope that with time it will help develop common negotiating positions

towards external actors. In the case of negotiations of Central America and CARICOM

with the U.S. for parity with Mexico, the ACS is, however, handicapped by the fact that

the U.S. government does not recognize it as a valid interlocutor due to the membership

of the Cuban government.

A Committe of Trade Development and External Relations has been formed, however

most of its actions deal with the liberalization of trade within the ACS itself, so the

organization has not acted as a player in outside negotiations. It is interesting that, in spite

of this, the ACS has signed a cooperation agreement with the Latin American Economic

System (SELA) and with CARICOM. Both have been granted observer status in the

ACS, and CARICOM has also obtained the right to join in any consultation or dealing of

the ACS with any other organization.

In summary, in the Greater Caribbean, besides external relations managed by the nation-

states, we observe the existence of a network of external relations, mostly of an

economic nature, being established by the subregional integration schemes of that region.

Of all of them the scheme that seems to have the most organized mechanism of external

negotiation is CARICOM, which since its establishment in 1973 has included among its

objectives the promotion of a joint foreign policy. Though member countries of this

scheme have many times disagreed among themselves and followed diverse foreign

policies, in the 1990s they seem to have agreed in certain areas such as relations with

Cuba, links with new economic partners, and common strategies vis-a-vis the U.S.and

the European Union. Two other elements, however, are present in the region and

question the positive aspect of a trend towards increasing intraregional links: the first is

that the most important links in terms of their overall economic and political potential-

those between CARICOM and the Central American Intergration System - are not fully

advanced yet due to the divisive influence of the banana question, and that both the G 3

and the ACS have not been able to act in a concerted way in their external relations.

While the countries of the G 3 have continued their individual foreign policies in political

and economic matters, the ACS have not even attempted to build a stronger negotiating

capacity with extraregional elements.

At the same time, the cooperation that we observe in the field of economic foreign policy

making in the Greater Caribbean is mostly a reactive mechanism of the subregional

schemes in front of the collective positions assumed towards them by the largest

economic players, the U.S. and the European Union, which seem to prefer to deal with

one subregional interlocutor instead of many. In fact the U.S. and the EU have the

capacity to select their economic interlocutors which weakens the possibilities of the

ACS (not recognized by the U.S. due to the presence of Cuba) and of the G 3 (whose

members are at the same time part of stronger schemes such as Mexico of NAFTA and

Colombia and Venezuela of the Community of Andean Nations). In this sense,

Vacchino (1999) points out that the EU has established economic links with those Latin

American and Caribbean integration schemes that have similar objectives to those of the

EU. (i.e. the consolidation of democracy in MERCOSUR). We may also add the

existence of links that derive from historically established relationships such as with

CARICOM, member of the ACP nations, with Central America, due to the San Jose

Agreement set in motion during the 1980s as a way to counterbalance the Caribbean

Basin Initiative of the U.S., and with the Andean nations, due to the programs aimed at

controlling drug production and trafficking.

1I:ANALYSIS AND DISCUSION:

Romero (1997: 18-21) summarizes the present debate around the role of the nation-state

in international relations by stressing the interpretations of the so called multivariate

diplomacy or multidiplomacy school and of the "two worlds" or paradiplomacy. For the

first group of authors international relations have a strong component of domestic

politics, which suggests a close interrelationship between actors and processes of the

domestic and international fields. This situation implies that international relations

conducted by nation-states are being widened and democratized, but are not being erased

by globalization. A contradictory position is that of Rosenau (1990) for whom there are

two tiers of international relations: those of the nation-state system and those of multiple

non governmental actors whose authority coexist with that of the State.

If we try to see which of these interpretations seems more adjusted to the behavior of the

regional intergation schemes of the Greater Caribbean, we may summarily conclude that

none of them seems to strictly answer to the behavior described in the cases of the

regional integration schemes already described. Probably, because as always these

interpretations have been constructed from the experience of the developed world and

thus have little relevance for the actual behavior of developing nations and economies of

the Greater Caribbean. At the same time, our overview makes us believe that the first

interpretation - the widening though not necessarily the democratization of international

relations - can be more relevant than the second one.

The process of establishing collective economic relations by means of an integration

scheme may both limit and widen the possibilities of nation-states and non-governmental

actors. It limits them because in order to reach some level of consensus among its

member, they often have to give up or even sacrifice elements of their individual foreign

policies. But it also widens its scope because it may facilitate the action of actors such as

the private sector, whose representatives gain strength by associating with representatives

of similar sectors of other member countries. The internal action of most of the Greater

Caribbean regional integration schemes seem to support this situation, with the exception

of the Group of Three and the Association of Caribbean States.

As a result, we may conclude that, though international relations and international policy-

making have not abandoned the realm of the nation-state, regional and subregional

integration schemes are active in the field of external relations, especially regarding

economics, in a process that may help widen the scope and participation of non-

governmental domestic actors in economic foreign policy. So far, however, this

phenomen does not seem to have been internalized by the officers of those schemes

except for the few cases where they are beginning to develop specific agencies to deal

with the matter of foreign policy. Another conclusion is that, if we were to extrapolate

from the experience of the European Union concerning coordination of foreign policy

making in security and other more politically sensitive matters, not many advances will

be seen in this field in the near future within the Greater Caribbean.

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