The negotiations for the Free Trade Area of the Americas (FTAA), though initially pushed by Latin American states in the early 1990s, quickly turned into a hegemonic project of the United States (U.S.) structured on accession to the North American Free Trade Agreement (NAFTA). Among other challenges, the U.S. encountered particular opposition from Brazil which cleverly used existing regional integration projects like Mercosul, as well as the possible merging of Mercosul with the Andean Pact to create a South American Free Trade Area (SAFTA), to increase its leverage against the U.S. in the FTAA negotiation rounds. This paper examines Brazil’s strategy and tactics applied to position itself as the leader of South America versus the U.S. hemispheric hegemon. Brazil’s tactics included the exploitation of limitations on U.S. commitment to the FTAA caused by domestic factors, coalition building among Latin American states to develop a common position in the FTAA, and countering U.S. demands with demands for reciprocity based on the assumption of equality between negotiating parties. In doing so, Brazil was highly successful in shifting the balance, which lay fully with Washington at the start of negotiation in 1994, to Brasilia by 1998 when the official FTAA talks were launched. As a consequence, the FTAA project became so unattractive to the U.S. that eventually it shifted its attention to “competitive liberalization” based on the pursuit of bilateral trade agreements and ultimately abandoned the FTAA altogether.
Applying process tracing of the FTAA negotiation process between 1994 and 2005, and combining hegemonic stability theory and neo-Gramscian notions of hegemony in IR, the paper argues that the case of the FTAA and Brazil’s opposition to U.S. dominance within it demonstrate the importance of “smaller state” consent and agency in the maintenance of a hegemonic system. Such consent only exists if and when the hegemon properly addresses the interests of the “smaller state”, which, as the paper demonstrates, the U.S. did not do with regard to Brazil’s interests in free trade in the Western Hemisphere. As a consequence, Brazil actively opposed the U.S., slowing down the negotiations and maximizing opposition to those U.S. demands it deemed unacceptable. Essential in Brazil’s opposition to the U.S. was its use of regional integration blocs through which it managed to increase its leverage vis-à-vis the economically much more powerful U.S. Importantly, and contrary to much of the existing literature on the FTAA talks, the paper argues Brazil was not opposed to free trade talks with the U.S. or to the FTAA project itself, but instead leveraged to its advantage the power shift taking place in South America in the 1990s, exemplified by the establishment of Mercosul and its effect on regional trade. Therefore, the case provides ample impetus for new considerations of the ways “smaller states” can actively challenge or contain hegemony through the enhancement of regional integration projects.
