Postneoliberal regionalism in Latin America has failed to live up to the expectations of its proponents and analysts in the late 2000s and early 2010s. Several causes explain its disappointing result, but a relatively understudied cause may be found in the US policy of competitive liberalization. This policy not only aimed at securing US economic and trade interests but also served as a counterweight against emerging postneoliberalism and as a tool for reaffirming US hegemony. This article presents a case study of one example of competitive liberalization in action, the US-Peru FTA, in order to assess how the policy functioned and contributed to curbing the posthegemonic moment in Latin America. It observes a combination of coercion and the political influence of beneficiaries of free trade, and it considers how these dynamics worked to strengthen US influence, both in Peru and in the wider regional political economy.

The U.S. is no longer providing leadership in trade policy. In recent years, we have seen a sharp turn toward a rapid proliferation of bilateral preferential trade agreements, accords that are likely to undermine the World Trade Organization (WTO). By pursuing a strategy of ‘competitive liberalization’ both on a sectoral basis under the Bill Clinton administration, and then a policy of seeking bilateral arrangements under the George W. Bush administration, this article argues that American administrations have undermined the coalition for free trade in the United States. Consequently, protectionist industries including textiles, steel, and agriculture have made further liberalization more difficult and thus the prospects for promoting continued trade liberalization have grown dimmer.