By Robert J. Berg
Consultant
Mr. Chairman
Honorable Ministers
Distinguished Participants:
The Latin American case is too important and too relevant not to be covered in this important Forum.
In preparing for this Forum ECA's Executive Secretary met with top Latin. American officials about lessons in regional integration. I have known these people for decades, and they have a lot to say. They are pleased that even indirectly they can provide added salsa to Forum. With five decades of efforts to integrate, and many false starts, integration is an emerging fact in Latin America today.
I want to review some recent developments and suggest from the master of regional integration in Latin America, Enrique Iglesisas, lessons learned so far from his experience as Mr. Integration for Latin America.
First, let me report a few recent developments
Regional integration in Latin America has not precluded other trade agreements, but has helped prepare countries to better integrate with the world economy and their neighbors, often in ad hoc arrangements. In recent years, for example, there have been trade agreements between Mexico and the EU, Chile-Ecuador, CARICOM-Dominican Republic, and , of course, NAFTA.
Plan Puebla-Panama, a new agreement is bringing together Central America in a way which Mexico cannot dominate the cooperation. Only the six Yucatan states of Mexico are involved with the Central American Countries in this plan. The area covered shares a common ecology, many cultural linkages and similar needs of small economies surrounded by bigger markets. The plan is supervised by the heads of state, includes numerous sectors of cooperation, proposes electrical and road grids, and includes support of NGOs furthering cultural solidarity.
Another example of cooperation across borders of partial pieces of dominant states is the consultative process between governors of states located on either sides of the US-Mexico border. They have done a lot together over the years, but in a quiet way maximizing administrative cooperation rather than formal treaties.
In South America, the dynamic transport minister of the dominant state, Brazil, has led his colleagues to agree on a master plan of transport linkages. Each link has its own secretariat to generate the needed feasibility studies and to work on financing issues.
These secretariats as well as Plan Puebla are being supported by the Inter-American Development Bank, which has an entire and very dynamic department called Integration and Regional Programs.
Finally, a continuing development is that in Latin America, similar to here, peer pressures keep raising the bar for performance. Perhaps NEPAD will be doing that here regarding governance. OAU has been doing this on other fronts. The Organization of American States raised the bar in its last summit by saying that democracy was now the norm and that there would be strong pressures against states which do not support democracy. Similarly, the bar is being raised on education. Until recently the goal was universal basic education. Now Iglesias is working to raise the bar so that the norm is universal secondary education. So, consensus on norms and raising the bar on norms is a vital function of integration, working to make political and economic progress in regions.
Iglesias has written and spoken a lot in recent years about the lessons he has learned in fostering integration over the last decades of many trials and errors. I have culled 10 lessons, which, knowing Enrique, I know he would offer to you not as commandments, but as brotherly advice.
1) Iglesias believes that integration is not an end in itself, but an instrument to support a strategy of economic growth, in Latin American's case, making economies more open, more market based, more socially equitable and more democratic. It is important to be explicit and serious about stated goals. They are not window dressing. Indeed, clear objectives and benchmarks must be derived from clear goals.
2) Sustained Political Vision and Regional statesmanship is essential, particularly in the countries with the largest markets, to anchor agreements. Leaders must keep in mind what the goals of integration are and their leaderships must keep being refreshed on how to lead integration. As part of their leadership, they need to keep nourishing and underlining the region's vision of an integrated entity.
3) Integration works better when it works in tandem with an overall strategy of structural reform and liberalization. Integration works best when it works with and completes reforms to open up economies so that there are policies favoring market economies.
4) A healthy, strong multilateral system supports integration and vice versa. You need institutions like a well working WTO to keep the global rules fair. And the main institutions, like regional development banks and other regional entities must really be devoted to fostering integration.
5) Institutional frameworks matter. In Latin America the institutions used to be grandiose in scope, too costly and underfunded. Institutions need to fit the actual programs they are promoting, not the big wishes which cannot be achieved. States must institutionally strengthen so that they can be capable in negotiations and in creating and implementing policies of harmonization.
6) Regional integration plus structural reforms have together led to confidence to move into a wider range of cooperation, such as is no seen in Plan Puebla-Panama.
7) Launching an Integration Initiative is easier than sustaining them. ECA's new ARIA report indicates that this has happened since 1997 in SADC, COMESA and ECOWAS. Obtaining a regional market is therefore central for momentum. Even so, the agenda after regional markets are established increasingly impinges on domestic policies offering continuing, even larger challenges to solidarity.
8) Integration must be grounded in the rule of Regional and Multilateral Law. Ad hoc implementation, unpredictable administrative rulings and rulings that bend the law have been a persistent problem. Recent progress in transparent rule of law has been good, but vigilance must be continual as bad habits have a way of returning.
9) Automatic and universal liberalization with Negative Lists works Best. In Latin America they have tried using positive lists and it has not worked well.
10) In Latin America there must be capabilities to evaluate better regional integration. Iglesias sees monitoring, such as ECA's ARIA report, as a first step. The next step after good monitoring is good evaluation. In Evaluation one wants to assess impacts, such as the investment responses, the environmental impacts and the effects of new regional norms.
I think now our friends in Latin America, particularly in the Inter-American Development Bank, would urge you to be cautions about integration. They would advise us to attempt the doable and to avoid the mistakes they have made. They offer to share advice with us, to help us build up our technical capabilities and they offer us regular dialogue as brothers in the same endeavors.
But they also celebrate our growing solidarity, they wish us good luck and they do warmly thank you for interest in their experiences. In Short:
Un gran Abrazzo
Buenos Suerte y Muchisimas Gracias[ADF3]
