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Strategic regionalism and the remaking of thetriangular relation between the USA, the EuropeanUnion and Latin AmericaJosé Briceño Ruiz a ba Grupo de Integración Regional (GRUDIR) , Universidad de los Andes , Mérida, Venezuelab Centre de Recherches sur l'Amerique Latine et les Caraïbes , Institute d'Etudes Politiques ,Aix‐en‐Provence, France E-mail:Published online: 13 Dec 2007.

To cite this article: José Briceño Ruiz (2001) Strategic regionalism and the remaking of the triangular relationbetween the USA, the European Union and Latin America, Journal of European Integration, 23:2, 199-213, DOI:10.1080/07036330108429101

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STRATEGIC REGIONALISMAND THE REMAKING

OF THE TRIANGULAR RELATIONBETWEEN THE USA, THE EUROPEAN

UNION AND LATIN AMERICA

JOSÉ BRICEÑO RUIZ*

University of the Andes, Venezuela

(Received 7 May 1999; In final form 20 January 2000)

This paper analyzes the extent to which the United States' (US) proposal of establishinga Free Trade Area of the Americas (FTAA) has influenced the design of the newEuropean Union (EU) policy towards Latin America. The main argument is that FTAAis a modality of strategic regionalism affecting EU interests in Latin America in sectorssuch as commerce and investments. Similarly, FTAA can be used by the US to regulate,in a regional framework and according with its interests, sectors such as intellectualproperty, about which there is still no multilateral regulation. The EU has also promoteda strategic regionalism to defend its interests in Latin America's economic affairs. Thereasons for the emerging of this strategic policy and its evolution in the last few years arealso accounted for.

Keywords: Strategic regionalism; European Union; United States; Latin America

INTRODUCTION

The beginning of formal negotiations to establish a Free Trade Area ofthe Americas (FTAA) was approved in the second hemisphericsummit held in Santiago, Chile, in April 1998. The FTAA wasconsidered as "a wide-ranging agreement to reduce barriers of all typesthat hinder the flow of goods, services and investments in the WesternHemisphere. It will also set high common standards in areas such as

*Permanent address: Grupo de Integración Regional (GRUDIR), Universidad de losAndes, Mérida, Venezuela; Centre de Recherches sur l'Amerique Latine et les Caraïbes,Institute d'Etudes Politiques, Aix-en-Provence, France, e-mail: bricenoj@starmedia.com

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intellectual property rights, governmental purchasing and the regula-tion of competition, among others".1 In addition, the Action Plan ofSantiago included a compromise to liberalize trade on goods andservices among the nations of the Americas, to promote cooperationin science and technology, foster regional cooperation in energy anddevelop the necessary infrastructure in the region, especially intransportation and communications.2

One and a half years later, the first bi-regional summit between LatinAmerican and European leaders was held in Rio de Janeiro, Brazil, inJune 1999. In the Declaration of Rio, the Heads of State and Govern-ment of the European Union (EU), Latin America and the Caribbeandecided to promote a strategic partnership of political, economic,cultural, social and cooperative character between both regions.3 Also inRio, in the document "Priorities for Action", leaders of both regionsestablished an ambitious programme aiming to further the negotiationof investment agreements, regulation of intellectual property rights in allfields, and cooperation on issues such as trade, infrastructure, tourismand transport.

This paper argues that both the EU and the US are developingstrategic policies in Latín America. The FTAA is a project leading tothe expansion of US trade and investments as well to regulation ofcertain areas, such as intellectual property, according with the USview. As a response to this policy, the EU has also promoted a strategyto defend its interests in Latin America. The EU has designed politicaland economic strategies with a view to remaining an important actorin the region. The emphasis of the new EU Latin American policy onissues such as free trade, promotion of investment or intellectualproperty, excluded from the EU-Latin American agenda for decades,are considered here the key elements of this strategy.

CONTEXTUALIZING THE NEW EU POLICY:THE STRATEGIC NATURE OF THE FTAAAND THE NEW EU LATTN AMERICAN POLICY

Both the FTAA and the new EU policy towards Latin America areexamples of the new regionalism predominant in the post-Cold Warworld economic system. This new regionalism differs from previous

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proposals developed in the 1960s and 1970s. Though many of thepremises of the traditional theory of economic integration are useful toexplain and understand the current wave of regionalism, an analysis ofthe latter based upon traditional ideas would be a mistake. Conversely,a more adequate explanation of the issue should consider regionalismas a strategic response of states to the forces of globalization. AsAxline asserts, "although economic integration qualifies as an exampleof a bloc . . . it is the use of integration (or some other mechanismof regionalism) as part of strategic trade policy that defines its mostimportant role in the new regionalism. This role is captured by thecharacterization of new regionalism as a neo-mercantilist response tothe forces of globalization".4

The major forces behind this new sort of regionalism are the processof globalization and the transformation of the multilateral system oftrade derived from the relative decline of US economic hegemony.5

The contemporary world is undergoing a process of globalization ofideas and production, which results in two trends. On the one hand,it can be observed that information, technology and ideology havetranscended national boundaries, impacting in a significant way onknowledge and culture in almost every society. On the other hand,globalization of production, a consequence of the improvement ofcommunications and transportation technologies, has brought theworld economy closer to a single market. This has provoked intensivecompetition for markets among countries and transnational corpora-tions.6 As Yamamoto points out, the world economic actors need alarge market for their products and they need to combine their labour,capital and technology efficiently without regard to national bound-aries. "These considerations led to mega regionalism which provides alarge market and includes nations with heterogeneous characteristicsin terms of factors endowments".7

In response to the above identified trends the US has adopted anaggressive trade strategy since the 1980s. This country was a sort ofguardian of the multilateral system of trade represented by the GeneralAgreement on Trade and Tariffs (GATT). In particular, the USstrongly supported the non-discrimination principle, considered as themain pillar of an open world trade system. However, from the 1980sonwards, US governments began to employ discriminatory policiesagainst countries that failed to grant fair trade concessions to their

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products. The first step in this direction was the implementation ofsection 301 of the Trade Act of 1974, a decision that was followed bythe adoption of a regional economic integration strategy. The USstarted this strategy by subscribing to a free trade agreement withIsrael in 1986, followed by the Canada-US Free Trade Agreement in1988, then NAFTA in 1994, and now the FTAA and the Asia-PacificEconomic Council (APEC). This new US strategy responds todifferent factors. However, it is valid to argue that such a strategywould aim at achieving objectives such as the recovery of UScompetitiveness against Japan and the Asian countries, a decrease inthe US trade deficit, the liberalization of global trading system and theopening of markets for US companies.8

Both the process of globalization and the crisis of the multilateralsystem of trade explain the emergence of strategic regionalism. Thisis a response to the structural transformations of the internationaleconomic system. Regionalism is then a state-led project to managechanges in the distribution of power in the security, financial,production and knowledge structures.9 Though states are instrumentalto regionalism, they are not the only actors shaping it. Conversely, "tounderstand and predict the likelihood of international cooperationin any given instance, therefore, requires a more precise specificationof domestic societal interests in particular issue areas and the waysin which the latter constrain governments".10 In other words, govern-ments' goals are understood as being defined domestically. Thisassumption implies the opening of the traditional black box of aUnitarian nation-state to include non-governmental groups and partiesin the framework of analysis.11

Thus, regionalism is the consequence of the internal politicaldynamic in each country in what has been called a process offormation of national preferences. The study of regional integrationmust consider such a process and the extent to which microeconomic,geo-political and ideological motivations influence national prefer-ences. It could be argued that this process is led by domestic economicsectors which are internationally oriented. Their aim is to lobby theirgovernments to foster policies allowing them to be more competitivein the world market. Through these measures, firms aim to attackprotectionism, the violation of intellectual property or the restrictionof their activities abroad. Similarly, firms will demand the creation of

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regional blocs in order to achieve economies of scale and increase theirvolume of intra-industry trade. As Busch and Miller have asserted, "ascompetition for key international markets intensifies, internationallyoriented sectors will increasingly demand, and states will be morewilling to supply, regional trade arrangements".12 In other words,although this new sort of regionalism is implemented through thestrategic trade policy of nation-states, the corporate strategies of firmsare very influential in its creation.

Finally, it must be clarified that strategic regionalism is notsynonymous with protectionism. Conversely, it could be instrumentalin promoting goals such as free trade. Nevertheless, "this is notnecessarily done in the pursuit of universal interest, but in the interestof the respective economic bloc, often headed by a rather illiberalgovernment-corporate alliance trying to penetrate the other blocswhich are blamed for being protectionist".13 It could be asserted that,after the creation of the WTO, strategic regionalism is itself in crisis.This line of argument fails to recognize that no multilateral agreementon crucial issues such as agriculture, environmental and socialstandards and, to some extent, services and intellectual property hasbeen achieved. This situation is the result of the lack of consensusamong the US, Japan, the European Union (EU) and even the ThirdWorld countries. In this scenario, the possibility of a regional strategyto regulate these aspects remains valid. If NAFTA, FTAA and thenew EU policy towards Latin America are analyzed in this theoreticalframework, one could easily describe them as expressions of strategicregionalism.

NAFTA, FTAA AND THE EUROPEAN RESPONSE

NAFTA is a manifestation of strategic regionalism. "NAFTA can beseen as a central tool of US strategy trade policy, whereby the UnitedStates uses the regional arrangements as a form of neo-mercantiliststrategic regionalism to take advantages of shifting comparativeadvantages, by providing its enterprises with a privileged position inthe global economy".14 The US government's decision to pursue thisstrategy was a consequence of very diverse factors. On the one hand, itwas part of the trend towards regionalism dominant in the late 1980s

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and early 1990s and, on the other hand, it was also a response of theUS political and economic actors to the difficulties of achieving keyobjectives during the Uruguay Round of GATT. In particular, thefinal results of GATT in issues such as services, intellectual propertyrights and agricultural trade were very disappointing for the USgovernment and firms.

The promotion of regional integration with its North Americanneighbours was, in fact, a mechanism to confront these challenges.Firstly, NAFTA was intended to exert pressure on the EU and Japan byindicating to them that, if the Uruguay Round failed, regionalism wouldbecome the cornerstone of US trade policy.ls By allowing the creationof an economic bloc capable of competing with the EU and Japan,NAFTA would be more directed towards achieving US interests outsidethe region than within it. Secondly, NAFTA allows the US to regulateaspects on which no multilateral agreement in the Uruguay Round ofGATT was achieved. NAFTA provides for 'managed trade' for sectorssuch as automobiles, textiles and agriculture in a way that implies aprotection against non-regional competition. Similarly, it establishesquite strict 'rules of origin' granting an additional protection to USproduction against extra-regional competition, particularly in areassuch as computers, automobiles and clothing. By the same token,NAFTA includes measures such as national treatment for investors,stricter protection for intellectual property rights and freer services. Thisregulation provides advantages to US companies in sectors such astechnology, computers and communications which are the mostimportant areas for high value-added production. In short, NAFTAis a clear example of strategic regionalism, the ultimate objective ofwhich is to confer an advantageous situation for US multi-nationalcorporations in global competition.16

Like NAFTA, the proposed FTAA is concerned with more thantrade. This is a project that includes aspects such as investments,intellectual property, the environment and external debt. FTAA hasbeen designed to regulate these areas based on US economic interests.The US is, without doubt, the most important economic partner ofLatin America. Despite the fact that trade between the US and LatinAmerica and the Caribbean has been quite irregular throughout thedecade, in general terms, an increase of trade can be observed.According to the USTIC,17 US trade with MERCOSUR has grown

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from USD 1,604 million in 1993 to around USD 9,700 million in 1998.Trade with the Central American Common Market (CACM) and theCaribbean Community (CARICOM) also grew in the same period. UStrade with CACM increased from USD 509 million to USD 800million, whilst trade with CARICOM climbed from USD 997'millionto around USD 2,000 million. Trade with the Andean Community haslikewise grown from USD 3,306 million in 1993 to USD 6,640 millionin 1997. In addition, US investments in the region also rose in the1990s from USD 4,232 billion to an all-time record of USD 17,825billion. According to the Economic Commission for Latin America,between 1990 and 1997 US investments increased in Argentina,Mexico, and Venezuela.18 Arguably, the FTAA is a strategy to deepenthis US predominance in Latin American trade and investments.

Several studies concur in asserting that FTAA initial impact on tradewould be an expansion of US exports to Latin America rather than anincrease in US imports from the region. The reason is that the "importduties eliminated by Latin America on imports from the United Stateswould be significantly larger than those eliminated by the United Stateson its imports from Latin America".19 As a result, a change in therelative prices of US products would occur and these would be cheaperin Latin America. Various economic projections agree that this tradeexpansion, caused by FTAA in its initial stage, would result from thediversion of trade from Europe and South East Asia. Hufbauer andSchott20 have demonstrated in a comprehensive study the predictedtrade diversion caused by FTAA. By projecting the possible tradeexpansion under FTAA, they estimate how much of the increased tradewould represent trade diversion. The conclusion is that about USD 5.7billion of Western European exports will be diverted annually by 2002; afigure that amounts to 3.5 per cent of projected Western Europeanexports. According to Pampillon,21 the participation of the EU in theLatin American and Caribbean commercial exchange has beendropping whilst that of the US has been increasing. This tendency willremain in the short and medium term and the US trade authoritiesforecast that, by the year 2010, US exports to Latin America will havegrown by 190 per cent, amounting to USD 232 billion.

FTAA would also have an impact on the flow of investments.Certainly, the US is the greater investor in Latin America but the EUhas increased its presence in three leading economies of the region:

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Brazil, Argentina and Chile. By reducing uncertainties regarding thecommercial policy in Latin America and facilitating access to the USmarket, the FTAA could promote a redistribution of the flow ofinvestments among partners. This clearly means that the USA willdisplace the EU from those countries in which the latter is the majorinvestor. Finally, it is valid to argue that the US will attempt toregulate sectors related to trade such as intellectual property, labourand environmental standards and agriculture.

The EU's Latin American policy is a strategic response to all thesechallenges created by the scenario of a FTAA.22 Certainly, this new EUpolicy is also closely related to the evolution of communitarian interestsin the world economy. The EU has tried to co-ordinate the developmentpolicy with other communitarian policies, in particular trade policy andthe Common Foreign and Security Policy (CFSP). It is fair to recognizethat these transformations in the EU's external relations have alsoaffected the design of the new Latin American policy.

However, the new EU Latin American policy has been influenced bythe increasing regionalism in the Americas. The EU aims to defend thegains in trade and investments achieved since the mid 1980s whichcould be reversed by a FTAA. It is not by chance that most of themechanisms producing these changes were established after PresidentBush's speech on the Enterprise for the Americas Initiative in 1991.The EU is intending to maintain its position in Latin Americaneconomic affairs. In the international system an actor's behaviourdepends upon the actions it expects the other actors to take. The EU isreacting to proposals jeopardizing its interests in Latin America.Certainly, EU decision-makers realize that the US maintains ahegemonic position in Latin America and current policy does notintend to modify this situation. The EU aspires to prevent the USimproving its economic position at the expense of recent Europeangains in the region. This explains the EU's emphasis on the promotionof trade and investment, two of the pillars of FTAA. These are thesectors in which the FTAA would have the most adverse effects onnon-regional actors. It also explains why the EU is so active in thosecountries and regions in which it has a strong economic interest(MERCOSUR, Chile, Mexico and Cuba). By contrast, Europeanpolicy towards Central America and the Caribbean and the Andeancountries is less aggressive.

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In other words, the EU is developing a dual-approach strategytowards Latin America. The cornerstone of this strategy is thedifferentiation of countries or regions according to their degree ofdevelopment and the weight of EU interests in their economies. Thus,countries or regions where EU economic interests are secondary willonly receive development aid. By contrast, "the more developed anddynamic countries will be valuable partners in mutual interests".23

This group embraces those in which the EU has important interests.MERCOSUR and Mexico are the EU's largest partners and,

consequently, the new policy has been centred on efforts to strengthenrelations with them. The EU subscribed to an Interregional Frame-work Cooperation Agreement with MERCOSUR in 1995. The aimsof this treaty are the promotion of closer political cooperation,the progressive and reciprocal liberalization of all trade and thepromotion of investments.24 The agreement also includes a compro-mise to cooperate in intellectual property matters in order toencourage investment, the transfer of technology, trade and allassociated economic activities, and to prevent distortion of trade.The promotion of a new relationship with Mexico is part of an EUstrategy to deal with the concerns raised by the creation of NAFTA.The Economic Association, Political Coordination and CooperationAgreement, signed between Mexico and the EU on 8 December 1997,was a compromise to encourage the development of trade in goods,services and investments, taking into account the sensitive nature ofcertain products. To achieve these aims, representatives of Mexico andthe EU started discussions about the liberalization of trade in 1998.These discussions the EU concluded in July 2000 when/and mexicosigned a free trade agreement.

By contrast, EU policy towards Central America, the Caribbeanand the Andean Community has been remarkably less ambitious.Although the commercial preferences with the Andean Communityand Central America have been widened, no proposal on future freetrade has been presented. Similarly, the European Investment Partnerand AL-Invest programmes have not excessively favoured theseregions. It is fair to recognize that the EU has maintained a significantpolitical dialogue with Central America. Similarly, the EU hascollaborated with the Andean Countries in their war against drugtrafficking. Nevertheless, if recent initiatives towards these countries

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are compared with those towards MERCOSUR, Mexico and Chile, itis quite obvious that EU involvement is minor. This is because EUinterests in these regions are not significant. Commercial relations withChile are more important than those with Central America; exchangewith Chile represented 3,776 million ECU and 3,761 ECU in 1993 and1994, respectively. By contrast, exchange with Central Americarepresented 2,607 ECU and 2,970 million ECU in the same period.Similarly, EU trade exchange with Mexico reached equivalent levels tothose with the Andean Community. Trade between the EU andMexico amounted to 8,212 ECU and 9,385 million ECU in 1993 and1994 respectively, whereas trade with the Andean Communityrepresented 8,614 ECU and 10,011 million ECU in the same period.25

Cuba is a special case because of the EU's important role in therestructuring of the Cuban economy. European firms are the largestforeign investors in the island, particularly in sectors such as tourism,and do not confront US competition. The EU's intention has been toestablish closer relations with Havana by negotiating a frameworktrade agreement like that established with MERCOSUR and Mexico.This aim has been difficult to achieve due to the failure of the Cubangovernment to include the so-called democratic clause in the agreement.Nonetheless, the conflict with the US over the Helms-Burton Act hasshown the EU's commitment to maintaining its presence in the Cubaneconomy. This legislation affected the EU's growing trade andinvestment relations with Cuba. As a result, the EU adopted variousplans to neutralize Helms-Burton's effects on European nationals. InJuly 1996, the EU Council of Ministers decided to impose entryrestrictions on US businessmen if EU nationals were denied entry to theUS. Similarly, the Council recommended the compilation of a 'watchlist' of US companies claiming under article III of Helms-Burton. InNovember 1997, the Commission passed the 'Anti-Boycott Regulation'which: (1) requires EU companies to provide information to theCommission if they were affected by any third-country extra-territoriallegislation; (2) ensures non-recognition of judgements of third-countrycourts under such legislation; (3) prohibits compliance with thislegislation in the recovery of properties in EU courts. Finally, the mostoutstanding EU response against the Helms-Burton was its decision toappeal to a WTO panel to examine the compatibility of this legislationwith the multilateral legislation of trade.

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This conflict was suspended in May 1998 when the EU and USannounced an agreement in which European nationals were excludedfrom the sanctions of the Helms-Burton legislation. This was, in fact,a victory for the EU and vindicated its decision to defend its interests.The Helms- Burton affair confirms that the EU is not just resisting theUS policies in Latin America. Conversely, this problem demonstratesthe EU's willingness to challenge the US, if it is necessary in order todefend its investors in Cuba.

CONCLUSION

This paper demonstrates that both the US and the EU are developingstrategic policies in the Americas. The FTAA is a project designed toredefine international economic relations of the US in its traditionalzone of influence. The ultimate purpose of these initiatives is to createa regional space where US trade and investments would receivepreferential treatment. This would take the form of establishingregional regimes on issues on which there have not been agreement inthe WTO, such as agriculture or intellectual property. Similarly, EUpolicy towards Latin America is also a manifestation of strategicregionalism. In other words, it is partially a response to the negativeimpact of the FTAA on its volume of trade and flow of investmentstowards Latin America.

Certainly, these strategic policies can be affected by changes in theinternational economic system or in the attitudes of internal actors. Forexample, the launching of the Enterprise of the Americas Initiativewas linked to the difficulties in the Uruguay Round of GATT. The USgovernment wanted to show its allies that, if multilateral negotiationsdid not progress, the US would opt for promoting a regional strategy.However, the conclusion of the Uruguay Round and the creation ofthe WTO affected the US government's enthusiasm for regionalism,the FTAA included. The beginning of the Millennium Round and thefailure of the Summit of Seattle in December 1999 could reactivatethe FTAA. On the other hand, internal political factors may also affectthe evolution of FTAA. The failure of the US Executive to obtain 'a fasttrack agreement' to negotiate FTAA shows that there is no consensus inUS political circles on the need to continue a regionalist strategy. This

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rejection of FTAA in certain US political sectors is, to a large extent, theresult of the perception within the US of the cost and benefits ofthe FTAA. A conflict of interest clearly exists here because, whereascertain national economic groups and US multinational firms supportthe FTAA, elsewhere environmentalists and Labour unions refuse toaccept any extension of NAFTA to the rest of the Western Hemisphere.

Similar problems can be observed within the EU. The EU is not amonolith. The policy formation process in the EU is a quite complexprocess in which very different political and economic actors partici-pate, in particular the Commission, the European Council andeconomic groups. Their perspectives and interests in a particularpolicy issue very often differ. Such a situation normally generatesintense debate in the Commission and the Council about the rationaleof certain decisions, as in the discussion of the new EU policy towardsLatin America.

EU interests in Latin America vary from country to country. Spain,France, Germany, Italy and the United Kingdom are importantinvestors in the region, especially in MERCOSUR. These countriesalso have significant commercial links, with some countries of thisregional group; for example Germany is the first Brazilian tradepartner. These countries have, therefore, decided to promote closerrelations with Latin America as a response to an FTAA. By contrast,EU members such as Greece, Ireland, Denmark or Sweden havelimited economic relations with Latin America and do not considerthemselves much affected by a future FTAA.

Furthermore, it must be remembered that EU policy also reflectsthe interests of EU internal political actors. There is also a diversityof opinions about the relevance of enhancing EU-Latin Americanrelations. Thus, European corporations with important investmentsin Latin America support the promotion of a new strategy in thisregion. If an FTAA were eventually established, the US corporationswould enjoy a privileged position in the whole Western Hemisphereand would be able to displace EU investors. Consequently, EUcorporations defend their current status in the region by lobbyingfor new trade and investment agreements. Conversely, agriculturalgroups strongly reject free trade with Latin America, a region whoseagricultural exports are quite competitive in world markets. For thisreason, countries with important agricultural lobbies, such as France,

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Finland, Ireland or Denmark, are opposed to free trade with LatinAmerica. By contrast, Germany or Spain, countries with significantinvestments in the industrial sector and banking, are interested infostering relations with that region.

A large part of this paper's analysis was made in terms of EU andUS regional strategic interest. However, the position of LatinAmerican countries, in particular that of MERCOSUR, towards theFTAA is quite important for understanding this triangular relation-ship. When former President Bush announced the Enterprise for theAmericas Initiative (EAI), there was general enthusiasm for theproposal in Latin America. This enthusiasm diminished when somecountries realized that the distribution of costs and benefits fromhemispheric integration could be quite unequal. MERCOSUR is acase in point, where a regional scheme has developed its ownnegotiation strategy towards the setting up of FTAA. MERCOSURrejects the US proposal of a WTO-plus regulation of intellectualproperty or an indiscriminate liberalization of services and govern-mental purchasing. These differences between MERCOSUR and theUS have important political implications. As the US is the leader ofthe process and a world power, MERCOSUR strategy has been tosearch for allies beyond the Western Hemisphere. The promotion ofcloser relations with the EU is evidence that MERCOSUR decision-makers are also thinking in strategic terms. By negotiating with theEU, MERCOSUR is including an external actor in the process ofregionalization of the Western Hemisphere as the only mechanism tofind an equilibrium in relation to the US. Thus, a convergence betweenthe strategies of MERCOSUR and the EU has naturally emergedbecause of the similar interests they are aiming to defend. Thisscenario of the making and remaking of new and old alliances and thefostering of intra-regional and inter-regional links has made LatinAmerica a field of experimentation of the new regionalism of the post-Cold War world.

Notes

1. Action Plan of Santiago (1998).2. ibid.3. Declaration of Rio de Janeiro, 1999.4. Axline (1994), p. 22.

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5. Hegemony is used here in the sense given by the theory of hegemonic stability.Accordingly, the USA has been the hegemon or dominant power in the worldeconomy system, assuming the leadership designing of the institutions regulatingglobal economic affairs. This hegemony has been gradually undermined since themid 1980s. Certainly, the US has had a strong economic performance duringthe 1990s whilst the economies of some E U countries have stagnated. However, thisdoes not imply an automatic return of the US hegemony. The difficulties inestablishing a common agenda of negotiations for the Millennium Round in theSummit of Seattle of the World Trade Organisation (WTO) demonstrated that theEU, for example, has power to challenge the US.

6. Axline (1995); Yamamoto (1996).7. Yamamoto (1996), p . 30.8. Yamamoto (1996), p . 34; Hawkes (1996), pp. 142-57.9. Strange (1988).

10. Moravcsik (1994), p . 37.11. Pfetsch (1994), p . 24.12. Busch and Milner (1994), p . 270.13. Hettne (1997), p . 94.14. Axline (1996), p. 13.15. Hurrell (1995), p . 266.16. Axline (1996), pp. 13-14.17. Sec USITC. Electronic version, http://dataweb.usdt.gov/scripts/Regions.asp18. ECLAC (1998).19. Boeker (1993), p . 136.20. Hafbauer and Schott (1995).21. Pampillon, (1998), p . 284.22. It is crucial to understand here that the new regionalism is a complex process

developing simultaneously at various levels: the global system level, the interna-tional level and the intra-regional level. This is a process in which the behaviour ofa bloc has an impact on the behaviour of other regions, a factor that has producedthe proliferation of many interregional integration initiatives such as those of theEU with Latin America. See Hettne and Söderbaum (1998).

23. European Commission (1995), p . 13.24. Bulletin of the European Union (12/94), p. 119.25. European Commission (1995), p . 25.

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Andrew Axline, W. (1995) Globalization, Marginalization and Integration, The NewRegionalism and Developing Countries. Working Paper No. 950P, Department ofPolitical Science, Faculty of Social Sciences, University of Ottawa, Canada.

Andrew Axline, W. (1996) NAFTA, Strategic Regionalism and New Patterns in LatinAmerica Integration, Working Paper No. 9603P, Department of Political Science,Faculty of Social Sciences, University of Ottawa, Canada.

Paul H. Boekker (1993) 'Gains for the United States from Hemispheric Free Trade',Annals of the American Academy of Political and Social Science, No. 526, March,pp. 111-33.

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