Economic Size and the Changing International Political Economy of Trade: The Development of Western Hemispheric FTAs.

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Genna, G. Int Polit (2010) 47: 638. https://doi.org/10.1057/ip.2010.28


Why are some free trade agreements (FTAs) in the western hemisphere successfully negotiated and implemented while others seem to stagnate during negotiations? FTAs are more likely to develop when there is an asymmetrical power relationship and potential partners are satisfied with projected trade patterns. The European Union (EU) and United States have been successful in negotiating agreements with the Caribbean and Central American (CCA) countries. However, current bilateral and multilateral trade talks between the EU, the Common Market of the South (MERCOSUR), and United States are at a standstill. Although all four sets of trade negotiations include dissatisfactory conditions for the Latin American countries, the two negotiations with the CCA countries were successful completed, but the two involving MERCOSUR countries have not. These results are partially due to two factors: the economic size differential between the CCA countries and MERCOSUR vis-à-vis the EU and United States, and MERCOSUR's growing economic ties with China. MERCOSUR's medium-size economy and ties with China allows it to forgo FTAs with the EU and United States until more favorable conditions are met. However the CCA countries’ immensely smaller size and economic ties with China do not allow for such abstention.