The political economy of Latin America's trade liberalization with the United States: What can we learn from the Uruguayan experience

This dissertation addresses the question of why some policymakers in Latin America have decided to pursue free trade agreements with the United States and some haven't through an in-depth study of the Uruguayan case. The decision whether to pursue an FTA is important because it embodies a trade-off between market access and loss of policy space and, as a result, has important developmental consequences. This dissertation approaches the question with two different theoretical frameworks, Robert Putnam's two-level game theory and Kenneth Shadlen's theory on the political economy of regional and bilateral trade agreements in the Americas. Putnam's theory stipulates that policymakers will pursue an FTA if they assess it to be convenient (both for the country as a whole and for their own self interest). It can also be inferred from Putnam's theory that because actors are rational, they will only pursue an FTA if there is domestic support for an agreement and if the counterpart is willing to go along. Shadlen, on the other hand, argues that policymakers would rather not pursue an FTA because they believe the costs outweigh the benefits, unless certain market conditions make the pursuit of an FTA "irresistible". This dissertation shows that none of the two theories can account for the Uruguayan case---where two different presidents pursued an FTA in recent years. However, it also shows that if Putnam's theory is amended to allow for the possibility that policymakers have misperceptions (about the environment, about domestic support and about the willingness of the counterpart), then the theory can account for the Uruguayan case. This dissertation, therefore, contributes both to theoretical knowledge in the area of the political economy of FTAs, as well as to a deeper understanding of the political economy of trade policy in recent Uruguayan history.