This critical perspective addresses, more specifically, the analysis of the turning point or reconfiguration of the globalization process and its corresponding hegemonic multilateral system, as well as the implications of such changes for the integration schemes of Latin America and the Caribbean. These phenomena are set against the backdrop of the 2008 financial crisis in the United States and its subsequent transformation into a global crisis, which has not yet been fully overcome.

Among the most relevant aspects of this global crisis and accelerated transformations are, first, the exhaustion of the expansionary economic cycle based primarily on raw material extraction that Latin America experienced between 2003 and 2013, and the new scenario of global economic stagnation, made more unfavorable and uncertain by the sharp contraction of the global market and the emergence of protectionist trends that challenge multilateralism and free trade agreements (including mega-agreements like TPP-11 and TTIP). The main drivers of this situation have been the measures taken by the Donald Trump administration, such as the Brexit vote, which further weakens the institutions of the European Union. A further step in this direction is the recent trade war that the United States has declared against China, which will likely lead to greater currency volatility and slower global growth.

Second, one of the most significant tectonic shifts triggered by the outbreak of the global crisis is the marked intensification of the shift in economic dynamism from the Atlantic to the Pacific, and the emergence of the Asia-Pacific, the Indo-Pacific, and Greater Eurasia as regional epicenters of global economic activity, where China plays an increasingly prominent role. Likewise, the legitimacy of the rules and values ​​of so-called global “governance,” based on the Bretton Woods institutions (World Trade Organization, International Monetary Fund, and World Bank), began to be questioned with the emergence of new initiatives sponsored by emerging powers (BRICS, Asian Infrastructure Investment Bank, BRICS Bank, etc.) and of norms that do not necessarily conform to those traditionally established by the neoliberal order developed by the West, for example, with respect to its conceptions of sovereignty and human rights. 

Actors such as China, India, and Russia, among others, have also been showcasing economic models that offer alternatives to neoliberalism, more akin to variants of state capitalism, with higher growth rates and improved economic management. All these phenomena have increased the geopolitical importance of these emerging regions, giving rise to an international system characterized by various analysts as “post-Western” or “post-hegemonic.”

Third, the shifts in positions on regional integration exhibited by several Latin American countries can be explained by the development of the global crisis and its corresponding liberal order (and its governance model), as well as by the reconfiguration of global power relations; but above all, the political and social transformations underway in our societies must be considered. Several of these changes have been spearheaded by the new Latin American right, which advocates for globalization and closer ties with the old core powers, employing a supposedly “depoliticized” and “pragmatic” discourse. However, this approach is proving belated and often materializes in a contradictory and chaotic manner, opening the door to potential reversals in some cases.

The new governments are based on an open but partial “regionalism,” with a tendency towards resistant bilateralism; based on the promotion of large national and foreign private capital; aligned with the liberal order through the dominant policies, standards and practices of the decadent multilateral system, and in particular, determined by the Bretton Woods institutions and the OECD; and rooted in a polycentric conception of the global political system, but at the same time aligned with the Trump administration's security agenda for Latin America. 

This is evident in the decision by the governments of Argentina, Brazil, Chile, Colombia, Paraguay, and Peru to indefinitely suspend their participation in UNASUR and the cancellation of the CELAC biennial summit with the European Union, which was to be held in 2017; both decisions with the intention of replacing these spaces with the Lima Group and the fragmented OAS, which now coordinate their attacks on Venezuela in conjunction with the US government.

Regarding subregional integration schemes, the governments of Argentina and Brazil have attempted to revive the ailing MERCOSUR by promoting its reorientation toward the European Union and the European Free Trade Association, Canada, South Korea, and the Association of Southeast Asian Nations. Both countries, however, have encountered various difficulties in implementing an agreement between MERCOSUR and the European Union, due in part to growing social and political opposition to free trade in Europe. Meanwhile, some European and Asian nations are moving toward policies more focused on their domestic markets. 

In reality, today the main obstacles to “smart integration” do not appear to be the aspects mentioned above, but rather the extreme economic and institutional weakness of the very integration schemes that should facilitate such integration—a situation that extends to the Andean Community of Nations and even to the convergence between Mercosur and the Pacific Alliance. When an agreement is successfully signed (such as the TPP-11 after the US withdrawal), it turns out to be meager and almost insignificant. Therefore, so-called “smart integration” demands a large dose of pragmatism, as demonstrated by the attempts to deepen strategic agreements with China. At times, pragmatism seems to prevail over rhetoric.

When considering the commercial aspects of this regional integration dynamic, the current situation is far from encouraging when taking into account some of the benchmark indicators used to measure its scope and depth: the region suffered half a decade of falling prices for its export basket and weak growth in export volume, a situation that was supposedly overcome in 2017; Latin American foreign trade collapsed in 2015 and 2016; the level of intra-regional trade is low and has a chronic tendency to decline during periods of slowdown or recession; and extreme exchange rate volatility has had disastrous effects on trade and regional economies. As a result, the lackluster performance of foreign trade has had differentiated effects on the various countries and subregions of the continent, contributing to accentuating their differences (asymmetries) based on the productive and commercial orientation of the different economies.

Despite the evolution of such indicators, the ideological views of right-wing governments still seem to believe in the beneficial effects of globalization, ignoring its previous traumatic consequences. 

However, given the current realignment of the continental political map, the trend is toward the exhaustion of the "challenging Latin American regionalism" associated with that cycle which favored intergovernmental political cooperation (UNASUR and CELAC) and an active role for the state in social protection. Initiatives of this type of regionalism focused on complementarity with globalization and existing free trade agreements. Paradoxically, they did not challenge the dominant economic patterns or existing subregional frameworks, with the sole exception of ALBA-TCP, which generated enormous expectations due to its underlying principles. But it currently faces very serious problems that have led to its virtual stagnation. 

Eleven years after the start of the 2008 economic and financial crisis, global trade is practically stagnant, only avoiding a recession thanks to the contributions of developing countries. The superficiality with which mainstream economists attempt to explain this phenomenon is striking.

International experts are concerned that global trade has not yet recovered the dynamism it exhibited during most of the post-war period, showing indicators that remain well below their pre-crisis levels. Furthermore, it is growing more slowly than global Gross Domestic Product (GDP). According to consensus estimates, global GDP growth will slow from 3,7% in 2018 to 3,5% in 2019 and 3,6% in 2020. 

Upon closer examination of these factors, it can be said that “in general, the literature agrees that the persistent weakness of global economic activity is the main factor behind the slowdown in trade.” This situation is reflected in the reduced dynamism of investment, one of the most import-intensive components of aggregate demand. Furthermore, as a second factor, most authors also agree that the contraction of global transactions “is partly attributable to a slower pace of expansion of global and regional value chains.” This is due both to the “maturation of these chains” and to the “shortening of chains in some key economies, especially China,” which now produces many inputs that it previously had to import. A third explanatory factor is the “slower pace of trade liberalization” due to the application of certain regulations (local content requirements, for example) and the failure of important trade negotiations. Added to this are the protracted crisis plaguing the WTO and the uncertainty generated by the Proposed referendum on United Kingdom membership of the European Union.

A combination of factors has contributed to slow global growth. These include new tariffs and retaliatory measures affecting the most traded goods, weakening global economic growth, volatile financial markets, and the imposition of tighter monetary conditions in developed countries. This situation has been exacerbated in the last 12 months by the trade war between the United States and China, which shows no signs of abating in the short term. 

The slow growth of global trade and the rise in protectionism are set against the backdrop of rapid tectonic shifts in the global accumulation pattern over the last decade and a half, moving away from the historical North-South hierarchical dominance. According to a WTO report, more than half of developing countries' total exports, in terms of added value, are linked to global production chains, demonstrating that the fragmentation of global production has accelerated, especially in Asia. In fact, the proportion of trade among developing countries based on global value chains has quadrupled in the last 25 years. Also during this same period, developing countries, primarily thanks to Latin American economies, increased their share of global agricultural exports from 27% to 36%, which experts describe as reflecting the "new role of raw materials in development strategies." 

Despite the above, it is important to point out that Latin America and the Caribbean need to increase their limited intraregional trade and productivity levels as key points to move towards sustained and inclusive economic growth.

These transformations in global accumulation have not found support within the multilateral trading system. The failure of the Doha Round, initiated in 2001, highlighted the profound disagreements among its members. Developing countries resisted the dominance of the United States and its allies, expressed through their government support for agriculture and manufactured goods, among other sectors. This landscape changed when the United States government, led by Donald Trump, challenged these negotiations and, ultimately, multilateralism and the WTO. 

The current crisis at the WTO reflects the confluence of three key events: (i) growing polarization in global power relations between rich and poor countries, powerful and weak nations, emerging powers and declining ones; (ii) the widespread politicization that manifested itself in the Brexit referendum in the United Kingdom and then the debate on free trade agreements in the United States presidential elections; (iii) the choice of the Donald Trump administration for bilateralism and protectionist policies that have blocked multilateralism and lately unleashed a trade war with China. 

All of these factors called into question not only the WTO and the Bretton Woods system in general, but also the very theoretical foundations of free trade. Its key idea—that it only creates winners and that all nations benefit—was being refuted. Even the concept of “comparative advantage,” a pillar of free trade theory that had naturalized the international division of labor between manufacturing and raw material extraction countries, was being contradicted by the reality of “emerging” economies. Furthermore, US bilateralism leads to an understanding of trade relations between countries based on force and constant threats, highlighting the importance of geopolitics.

Alternatively, China and other Asian countries are emerging with the capacity to propose regulations and rules that foreshadow a new form of regionalization, or more broadly, of the global system. These rising forces recognize the magnitude of current challenges and set “long-term” goals with the conviction and resources to achieve them. They declare themselves to be defenders of multilateralism and free trade. 

The consequences of global stagnation and this ideological fracture have been devastating for South America. On the one hand, since the end of 2013, its production and trade have shown their worst performance in decades, including intraregional trade, which by 2016 had accumulated four consecutive years of decline, recovering slightly in subsequent years. On the other hand, the governments, now mostly right-wing, insist on the primary export model and 'open regionalism,' whose ideological foundations are being questioned.

Given that this theorizing of free trade has been fundamentally Eurocentric, the responsibility for these failures must be sought first and foremost in European or North American currents of thought. In this sense, any attempt to explain the current dilemmas of Latin American integration—and more specifically, South American integration—from such perspectives would be counterproductive. On the contrary, this attempt must be made from our continent with theories that take as their primary reference point its own reality and participation in global capitalism. Other actors from outside the Atlantic region, specifically China and other Asian countries, can contribute to this important task.