Legal Journals

Columbia & Venezuela: Commerce Cures

By Eric Engle

The lesson of the last century is clear: Free movement of goods, capital, labor, and services builds peace through prosperity and interdependence. In the wake of the Second World War, a whole host of institutions were established to prevent another global economic crash risking another global war: The UN, GATT/WTO, EU, the IMF, and the World Bank - the Breton Woods Institutions. These post-war international institutions expanded on similar efforts of pre-war national economic institutions  (SEC, FDIC, SSA, NLRB, etc.). These international institutions have grown more powerful, adaptive, and complex over time. They passed the test in 2009: the longest and deepest global recession since 1929 didn?t spark another global war!

The problem facing the contemporary international legal system is the extension of this system of peace through commerce, the rule of law, and human rights to the third world. Free trade builds peace through prosperity; economic integration creates common interests which make war unprofitable. The post-Westphalian world breaks the link between state territory and market share and places commerce and human rights, not war, at the center of the system. The free movement of goods, capital, enterprises and labor helps end poverty by building prosperity. Migrant laborers are a demographic necessity in the first world due to declining birthrates and increasing life expectancies. Immigrants remit wages home, alleviating poverty. The logic of the free market applies labor markets. Regional free trade areas and bilateral free trade agreements are key foreign policy tools.

The current tension between Colombia and Venezuela is an example. Currently there are border tensions between Venezuela and Colombia due to narco-traffickers, U.S. bases in Colombia to combat them, and fears by Venezuela of a U.S. inspired coup. The U.S. and Brazil have tried to use their “good offices” to ease tension between Colombia and Venezuela, hopefully with good effect.

However… if Venezuela and Columbia were economically integrated through free trade, whether via bilateral or regional agreements, the risk of war they now face would be unthinkable.

The best way to help the poor in Venezuela is through regional trade liberalization: Venezuela has moved to join MERCOSUR (application pending) and had been a Member State of the Andean Community prior to seeking entry into MERCOSUR. Colombia, too, recognizes free trade as key to growth and is a Member State in the Andean Community. MERCOSUR and the Andean Community in turn are in a cooperation agreement with a view to further merging. Venezuela could be a bridge between these two trading blocs ? or a barrier; the U.S. could hinder economic integration - or help it.

The diplomatic problem facing Washington is tactical and strategic: tactically, Washington wishes to combat drugs, not topple a possibly friendly government, that?s simply bad for business. Strategically, Washington should see the MERCOSUR-Andean Pact as a potential first step toward an eventual Free Trade of the Americas zone. But, because of the war on terror and lingering cold war mentalities, the U.S. has remained trapped in a self-destructive zero-sum national security state view of the world. Unilateralism, or at best bilateralism, is still characteristic of U.S. foreign policy: The U.S. has bilateral free trade agreements (FTA) with 14 countries, and is negotiating FTAs with three others: one of which is Columbia. However, lacking linguistic and legal expertise in regional trading bodies, Washington has been unable to deftly influence the relations of South American states, either with respect to each other or the U.S.

Perhaps paradoxically, the best way to end war is to end poverty; the best way to end poverty is through the free movement of goods, capital, labor, and services. The U.S. has not taken that approach to the war on terror, with unfortunate economic consequences. By focusing on fear instead of hope, on war instead of development, the U.S. misses many opportunities. Rather than seeing Venezuela and Colombia in zero-sum national security terms, the U.S. should look at trade with a view to normalizing relations to and within South America to encourage economic development in South America through regional economic integration.

Will the promise of peace come true? Or will we instead see dark dictatorships based on fear and violence? It depends on whether Washington can open its eyes and see beyond fear ? to Hope.

By Eric Engle

Full post as published by Harvard International Law Journal Digest on November 15, 2009 (boomark / email).