Liberalization of World Trade:Latin America

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New Latin America Model

NAFTA, the free trade agreement between Canada, USA and Mexico celebrated ten years of its existence. The negotiations about the establishment of CAFTA (Central American Free Trade Agreement) are almost over and trade diplomacy is asking the question if SAFTA (South American Free Trade Agreement) is possible. Negotiations about the free trade zone of Americas were held in mid February this year. Liberalization has found a fertile ground in trade relations of the new continent, but initiatives from this part of the world are felt as far away as India. Also, initiatives for the establishment of free trade zone between 20 developing economies are revived.

For more than five years there are talks of connecting two existing systems of free trade - MERCOSUR (Southern Cone Common Market) and Community of Andean Nations (CAN), which includes Bolivia, Columbia, Ecuador, Peru and Venezuela. At the meetings of MERCOSUR group held in 1997 and 1998 such a possibility was mentioned and the Andean countries supported it with a lot of enthusiasm, but as it turned out only verbal.

This initiative was brought up again in the year 2000 at the Summit of South America, and last year, improving and strengthening connections between South American countries became the highest political priority after Brazilian president Lula de Silva took office. Speaking often and very precisely about the need of strengthened unity of South American countries he made his first official trip abroad to a great neighbor - Argentina. It was the first time that president of the state went in search of support to his governments politics south, among neighbors, and not by tradition north - to Washington.

With plenty of enthusiasm he proposed that MERCOSUR expands to Chile and Bolivia, as associated members. By connecting MERCOSUR and Andean...