Economic Integration of the Americas

Regional Economic Integration

Regional integration of the Americas affects most countries in North America, South America and the Caribbean. The movement has formal origins in early trade agreements and blocs such as NAFTA and MERCOSUR. The regional integration today is focused on building stronger links between the nations of the Americas to lower trade barriers and foster economic growth between these nations (Lavranos, n.d.). Talks are aiming towards a free trade area with at least 34 countries included (The Economist, 2011). The nations involved are the U.S., Canada and 32 other nations in the region, the notable exceptions being members of an anti-America bloc that includes Venezuela, Cuba, Bolivia and Ecuador (The Economist, 2011).

Subgroups exist within these many countries. Several smaller trade pacts form the backbone of the existing groupings -- Mercosur, NAFTA and the Andean Community (excluding Ecuador). These countries have already signed many different trade agreements around the world, creating strong linkages with everybody from Pakistan (deal with Mercosur) to the Caribbean nations (via the Canada-CARICOM fta) (Estavadeordal, 2012). The Pacific nations are also involved in deals of their own, the most significant being the Trans-Pacific Partnership.

These earlier deals the basis of the imperative for the regional integration of the Americas. There are already strong linkages between these many countries. Members of the major trade blocs have deals in place throughout the region, so there are ultimately very few countries in the Americas that are not already linked in some way. The imperative to create an EU-style common market among 34 member states is driven by the size of the market in North America, the desire to share in the natural resources of these common markets, and the desire to reflect the historic integration of the region. The ties are already there, but the issue at hand now is how to leverage these ties in a way that increases the global competitiveness of American nations.

Economic integration would involve signing a trade deal to remove the barriers to trade between member states. Most of these states are members of the WTO and therefore committed to lowering trade barriers in general, but a formal agreement would solidify this commitment, and give firms within the region equal footing with respect to market access throughout the Americas. A formal deal will be necessary to address specific issues, such as dispute resolution mechanisms, timelines, and any specific industry issues that might arise -- such as the need for some nations to protect specific industries (such as defense in the U.S.).

The economic integration of the Americas is an ongoing process, and as yet there is no overarching formal agreement. The impact on international business at this point is merely speculative. The impact will be, as the level of integration increases, that there will be more opportunities for business. The Americas will move closer to being one market for business, which will improve the ability of companies throughout the region to invest in opportunity where it exists. In a region where many markets have been subject to significant government interference over the decades, economic integration represents a significant opportunity for the free market to deliver sustained growth.

The benefits of such an organization would lie primarily in trade. Unlike in the EU, there is little likelihood that the movement of people will be nearly as free as the movement of capital and goods. The political will in the north simply isn't there. But trade will be freer, and that should encourage an increase in trade, increased investment throughout the region, and a greater level of cooperation at the governmental levels with respect to critical issues such as security, energy and food.