Latin American trading blocs and the Western Hemisphere Free Trading Area (WHFTA): An impact assessment of CACM, ANPACT and MERCOSUR

After three decades of experiment with trading blocs, the general consensus is that the overall results of CACM, ANPACT and MERCOSUR have been unsatisfactory.;The most significant findings of this research are as follows: (a) Blocs do not promote traditional export diversification or complementarities. Policies on export diversification need to be in place in members countries so that complementarities may result within the bloc (e.g. ANPACT and MERCOSUR vs CACM). (b) Regional industrial planning helps to develop an industrial base that promotes increasing trade and competition in manufacturing goods within the bloc in the long run (e.g. CACM). (c) The flow and pattern of trade within customs unions should be clearly identified to evaluate the bloc contribution to the regional economy (Viner's argument confirmed). (d) GNP and population have significant impact on trade flow and composition with traditional and regional markets in developing countries (Belassa's arguments confirmed). (e) Growth in population reduces imports in consumer goods (mainly food) either from traditional markets or higher cost regional producers and increase imports from the lower cost producer within the bloc (e.g. Brazil imports from the United States, El Salvador from Nicaragua and Colombia from Ecuador). (f) Changes in GNP in small economies (pre-condition for take off type of economies) affect positively or negatively the import of intermediate goods mainly from producers within the bloc (e.g. Nicaragua and Salvadorian imports from Costa Rica). (g) Changes in GNP in bigger economies (self-sustaining type of economies) affect positively or negatively the import of capital goods from producers within or outside the bloc (e.g. Brazil and Chile). (h) Blocs do not have a significant impact on changes in the agricultural or mining sectors. Manufacturing and construction sectors, however, seem to react (positively or negatively) more quickly to changes on the GNP, population and negotiation technique adopted (Belassa's argument confirmed). (i) The negotiation technique adopted "across the board" does not benefit all members equally. However, bloc members with more complementarities among themselves seem to be more benefitted from this type of technique (e.g. Colombia and Venezuela). (j) The creation of a bloc reverses the negative influence of time in trade with "non friendly markets"...