Free Trade Experience in Latin America and the Caribbean

Abstract

The various Latin American and Caribbean free trade agreements have not been successful. This is due to a number of underlying elements within the region and, more recently, to unfavorable external economic conditions. The oil shocks and the external debt crisis placed intra-Latin American trade at a low priority. Overlapping and inaction now beset the Latin American Association for Integration, the Andean Pact, the Central American Common Market, and the Caribbean Community and Common Market. Recent bilateral and multilateral initiatives in Latin America have failed to clarify the issues. Mexico is seeking integration with the United States and Canada. The Enterprise for the Americas Initiative, on the other hand, envisions a vague hemispheric free-trade area. As certain Latin American countries become increasingly capable of exporting manufactures on a competitive basis to world markets, intraregional trade will also develop, provided joint ventures are carried out, tariffs are lowered, and nontariff barriers are eliminated within the region.