IBERO-AMERICA: Trade Prompts Reforms Within Nations

By Humberto Márquez Reprint | | Print |

Humberto Marquez

CARACAS, Nov 7 1996 (IPS) - The Ibero-American Trade Summit set to take place in Chile later this month, will address institutional reforms within nations in accordance with new international trade flows, according to Carlos Moneta of Argentina, permanent secretary of the Latin American Economic System (SELA).

“Governability, the summit’s main theme, implies the adaptation of internal regimes in order to favour the new and free flow of trade and investment”, Moneta said in an interview with IPS.

These flows, in turn, are the result of the globalization of the economy “with both desirable and undesirable consequences”. Latin American countries are among those which have received some of the desired benefits and are attempting to avoid undesirable ones, “which someone should be concerned with”, the expert warned.

The framework for governability — which Ibero-American heads of state will discuss in Santiago on the 10th and 11th — is globalization, described as “a process which has until now been limited to the economic sphere, but which is expanding to politics, society and culture”.

Among its desirable effects, globalization allows for a “greater homogeneity in tastes, objectives and forms of production”, as a result of the increase in international trade and removal of barriers various kinds of exchange.

But in order for that to happen, it is necessary to have more open regimes, which implies measures for liberalization and changes in the systems of norms and interests “even beyond national borders”, said Moneta.

Regarding these kinds of measures, countries of the industrialized North have made important advances by “favouring the free flow of trade and investment. These changes, however, have been limited in terms of labor, and “in technology, only according to criteria that favors their interests”, he observed.

According to the head of SELA — a forum which brings together 27 of the region’s nations — governability is, in synthesis, “a political corollary to the paradigm that includes a representative liberal democracy and a free trade system”.

In the case of Latin America and the Caribbean, the process “comes from the outside” and requires uniformity of norms. For that reason, it is not unusual for it to form “a continuum” transcending borders and penetrating nations.

Globalization thus operates as a frame of reference for the processes of political and administrative decentralization “because now, national governments must share power”.

They share power with supra-national institutions — such as organizations for economic integration — but also with regional and municipal governments as well as “non-governmental social actors of all kinds, within a complex system in which the role of each one is still not clearly defined”, said Moneta.

In his opinion, “it is natural to see the mobilization of these actors below the level of the national government, as the processes of integration begin to generate their own structures of relations”.

One such example are border areas, in several regions across the Americas, but especially in the European Union, “in which regions are increasing their political and economic power”.

On the other side of the spectrum, deregulation of the financial system — in addition to the instantaneous technology of the end of the century — makes “the flow of capital 30 to 40 times faster than that of the trade of commodities”.

Other cases Moneta refers to are the increase in interest rates in the United States — which in turn increases the debt in Latin America — and the rapid movement of capital, “which can threaten even industrialized countries and could mean disaster” for developing nations.

“We lack the effective mechanisms for world governability that combine trade, finance and currency”, if one excludes the Group of Seven, which brings together the most developed industrial nations, he said.

Ibero-American nations (which include Latin America, Spain and Portugal) could lobby for a multi-lateral system of early alert which is “not asymmetrical and not restricted to the Group of Seven, to protect nations in sudden crisis”, said Moneta.

In the same way that the United Nations has a Security Council geared for political actions, it could also establish an Economic Security Council “to serve as a system of early alert and avert crises”.

This council would include the World Trade Organization, the World Bank and International Monetary Fund and UNCTAD – the U.N. Conference on Trade and Development – to give it a “development perspective”.

The upcoming Ibero-American Summit will be the sixth since 1991. These meetings could promote the idea of a new economic council, said Moneta, taking advantage of the fact that they bring together both a developing region and 2-15 members of the European Union, and have committed themselves to political cooperation.