The Future of Hemispheric Integration

From The Mark, March 7, 2012.

Canada and the United States were pointedly excluded from the Community of Latin American and Caribbean States (CELAC), a regional group that was formed in December 2011. The launch of CELAC symbolizes major transformations in the Western Hemisphere. U.S. influence is declining, China is stepping up, and Brazil is flexing its muscle as a regional actor.

Clustered around Brazil and the Common Market of the South (Mercosur) is the newly formed Union of South American Nations (UNASUR). The more radical Bolivarian Alliance for the Americas (ALBA) groups Ecuador, Nicaragua, Bolivia, and Cuba under the leadership of Venezuela. Importantly, CELAC brings together members of both UNASUR and ALBA, creating a potential alternative to the Organization of American States (OAS), which is trapped between conservative critics in Washington and hostility from leftists in ALBA.

My, how the neighbourhood has changed! When Canada joined the OAS and negotiated the North American Free Trade Agreement (NAFTA), market liberalization and democratization promised an era of hemispheric co-operation. Canada felt it could be a player without getting caught in conflicts between the U.S. and the debt-ridden and unstable nations in its backyard. The free-market model – based on policies of privatization, liberalization, deregulation, and free trade – was driven by the need to attract U.S. investors and gain market access through trade deals, and encouraged the prospect of deeper hemispheric integration.

When the Free Trade Agreement of the Americas was killed in a summit of the Americas in Argentina in 2005, three tectonic shifts were at work: a commodity boom led by explosive growth in China; shifts to the left starting with Venezuela’s election of Hugo Chavez in 1999; and 9/11, which diverted U.S. attention to the Middle East.

Today, through a series of initiatives on infrastructure, energy, banking, and telecommunications, Latin America seeks to leverage the resource-extraction boom into regional integration on its own terms.

Where does this leave Canada? Beyond pursuing a piecemeal approach to bilateral trade agreements (for example, Canada’s recently signed agreements with Honduras and Colombia), we can pursue a mix of three strategies.

First, we can work with the U.S., negotiating trade deals, co-operating on security and drug enforcement, and strengthening the existing OAS. This strategy entails a risk, however. The U.S. underestimates the importance of UNASUR and CELAC, which it regards as weak, underfunded, poorly organized, and ephemeral. But these initiatives reflect perceived problems with OAS and the region’s desire for greater autonomy from the United States. If we align with the U.S., Latin America will want distance from us, too.

Second, we can partner with Mexico to gain leverage in Washington, and try to make NAFTA a more attractive model for Latin America by reinforcing its institutions. It is puzzling that Mexico is not more central to Canada’s engagement with the hemisphere. It matters to the U.S., and is a pivotal player in the region. Mexico is in CELAC (but not in ALBA or UNASUR), and it, along with other Pacific nations that are more open to a free-trade agenda (like Chile, Peru, and Colombia), is a natural partner for Canada.

Moreover, Mexico and Central America face challenges arising from drugs, gangs, and violence that have security consequences for North America. And yet, the current North American “community” based around the under-institutionalized NAFTA is stalled and does not appear to work, much less serve as a model to address these issues. It is imperative, therefore, that Canada look farther south than Mexico, working to develop much more comprehensive mechanisms of policy co-ordination and innovation so that Canada, the U.S., and Mexico are better-equipped to confront common challenges.

This brings us to the final point: Canada can work with Brazil and emerging powers on the Pacific (Chile, Colombia, and Peru), support UNASUR as a complement – but not a competitor – to the OAS, and help build bridges inside the OAS. Building bridges beyond North America allows Canada to exploit its reputation as an honest broker and a reliable partner.

Beyond these three strategies, Canada can – and should – continue to make democracy a central part of its engagement with the Americas, working with countries like Chile, Peru, and Mexico to reinforce the effectiveness of the OAS’s Democratic Charter. Canada has proposed a compendium of best practices of democracy, and this could be a building block for developing a peer-review mechanism, a democracy rapporteur, or an early warning system.

Meanwhile, CELAC is competing for a role in the defence of democracy. Its democracy provisions, based on similar mechanisms in UNASUR, have teeth, but the focus is limited to preventing coups against executives rather than upholding the principles of representation, separation of powers, and the rule of law.

In short, Canada must adapt and prepare to navigate turbulent waters. This means recalibrating the balance between working with the U.S., cultivating North America, and building bridges to emerging institutions and leaders. If we’re not careful, Canada may find itself marginalized even as it seeks to be more engaged.

*Adapted from a presentation at a ministerial round table on the Americas, Department of Foreign Affairs and International Trade, Ottawa, Dec. 6, 2011.

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