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Competitiveness in Latin America and the Caribbean: The Role of Regional Integration

Competitiveness in Latin America and the Caribbean: The Role of Regional Integration. REDIBERO Annual Meeting Cancun, October 2009 Antoni Estevadeordal Manager Integration and Trade Sector. Outline. Part I: Towards a single market: Regionalism in LAC

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Competitiveness in Latin America and the Caribbean: The Role of Regional Integration

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  1. Competitiveness in Latin America and the Caribbean: The Role of Regional Integration REDIBERO Annual Meeting Cancun, October 2009 Antoni Estevadeordal Manager Integration and Trade Sector

  2. Outline • Part I: Towards a single market: Regionalism in LAC • Part II: A Changing Environment for LAC Trade Integration Strategies • Conclusions

  3. Part I Towards a Single Market: Regionalism in LAC

  4. Global Regionalism... (RIAs notified to the WTO, 1950-2006) ~ 1994

  5. LAC Integration 15 years ago…1994… UR-GATT (April 94) Canada USA NAFTA (January 94) Dominican Republic Bahamas Haiti Mexico (CARICOM members but not in CSME) Antigua & Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Lucia, St. Kitts & Nevis, St. Vincent & the Grenadines, Suriname, Trinidad & Tobago El Salvador Guatemala Honduras Nicaragua Costa Rica CARICOM CSME CACM G-3 Panama G-3 Venezuela G-3 Colombia ACN Ecuador FTAA (December 94) Brazil Peru Bolivia Paraguay Chile Uruguay ACE 35 Argentina MERCOSUR (December 94) Source: Integration and Trade Sector, IDB

  6. LAC Integration menu: “pizza” Canada USA Dominican Republic Bahamas Haiti Mexico Antigua & Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Lucia, St. Kitts & Nevis, St. Vincent & the Grenadines, Suriname, Trinidad & Tobago El Salvador Guatemala Honduras Nicaragua Costa Rica Panama Venezuela Colombia FTAA Ecuador Brazil Peru Bolivia Paraguay Chile Uruguay Argentina Source: Integration and Trade Sector, IDB

  7. LAC Integration menu: “ravioli” NAFTA Canada USA Dominican Republic Bahamas Haiti Mexico ? ? ? Antigua & Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Lucia, St. Kitts & Nevis, St. Vincent & the Grenadines, Suriname, Trinidad & Tobago El Salvador Guatemala Honduras Nicaragua Costa Rica CARICOM CSME ? CACM Panama Venezuela Colombia ACN Ecuador Brazil ? Peru Bolivia ? Paraguay Chile Uruguay ? Argentina MERCOSUR Source: Integration and Trade Sector, IDB

  8. LAC Integration menu: “spaghetti bowl” EFTA EU, EFTA NAFTA EU Canada Canada-CRI EU-CARIFOUM EPA USA Japan CAFTA-DR Dominican Republic Bahamas Haiti Mexico (CARICOM members but not in CSME) Korea China Antigua & Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Lucia, St. Kitts & Nevis, St. Vincent & the Grenadines, Suriname, Trinidad & Tobago El Salvador Guatemala Honduras Nicaragua Costa Rica CARICOM CSME CACM G-3 Panama Chile- Cent. Amer. Venezuela Colombia ACE 59 ACN Ecuador ACE 59 Thailand ACE 59 Brazil Peru Bolivia ACE 36 Trans-Pacific SEP Paraguay Singapore ACE 58 Chile Uruguay ACE 35 Argentina Brunei N.Z. Australia MERCOSUR Source: Integration and Trade Sector, IDB

  9. LAC Integration into the future… EFTA EU, EFTA NAFTA EU Canada EU-CARIFOUM EPA USA Japan CAFTA-DR Dominican Republic Bahamas Mexico Korea (CARICOM member but not in CSME) China Antigua & Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Lucia, St. Kitts & Nevis, St. Vincent & the Grenadines, Suriname, Trinidad & Tobago El Salvador Guatemala Honduras Haiti Nicaragua Costa Rica CARICOM CSME CACM G-3 Panama Chile- Cent. Amer. Venezuela Colombia ACN Ecuador ACE 59 Thailand Brazil Bolivia Peru ACE 36 Trans-Pacific SEP Paraguay Singapore ACE 58 Chile Uruguay ACE 35 Argentina Brunei N.Z. MERCOSUR Australia Source: Integration and Trade Sector, IDB

  10. The good and bad news on how we did it…

  11. Preferential Liberalization as a “building block”… Source: Integration and Trade Sector, IDB

  12. Preferential Liberalization as a “building block”… Source: Integration and Trade Sector, IDB

  13. Preferential Liberalization progress… 2008 2015 100 Share of intra- regional trade Liberalized ~ 85 % 90 80 70 RTAs Period 90 - 95 60 50 95 - 00 40 00 - 08 30 20 10 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025 2005 2021 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2022 2023 2024 Source: Integration and Trade Sector, IDB

  14. The complex world of Rules of Origin…Number of RoO Criteria Combinations (RTAs-APEC) Complex, Older, Latin… Simple, Younger, Asian..

  15. LAC Integration “today’s special”: lasagna Canada USA EU-CARIFOUM EPA Dominican Republic Japan Bahamas (CARICOM member but not in CSME) Mexico Korea Antigua & Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Lucia, St. Kitts & Nevis, St. Vincent & the Grenadines, Suriname, Trinidad & Tobago El Salvador Guatemala Honduras ? Haiti China Nicaragua CARICOM CSME Costa Rica Panama ? ? ARCO Venezuela Colombia ? Brazil Peru Bolivia Thailand Paraguay Ecuador Uruguay Chile Singapore Argentina Australia Brunei N.Z. Source: Integration and Trade Sector, IDB

  16. The good and bad news on what happened…

  17. Trade liberalization impacts on the volume of trade …

  18. On the diversification of exports …

  19. On the importance of trade in the domestic economy …

  20. On Foreign Direct Investment ...

  21. “Global Integration” DEFICIT

  22. “Regional Integration” DEFICIT

  23. “National Integration” DEFICIT México: Regional Contributions to export growth By state (1993-2003) Fuente: Sector de Integración y Comercio, BID

  24. Part II A Changing Environment for LAC Integration Strategies

  25. A changing environment for LAC integration strategies… Increasing importance of private sector logic over state-led integration… Increasing importance of external forces on external integration strategies… Increasing importance of non-traditional trade costs (transportation, logistics, information)… Increasing importance of recalibrating the world trading system…

  26. A changing environment for LAC integration strategies… Increasing importance of private sector logic over state-led integration…

  27. Private Dynamics: National & Regional Production Networks Contract Manufacturers in the Electronics Sector (firms sample) 1990 s Source: Sturgeon (2005)

  28. Private Dynamics: Global Production Networks Contract Manufacturers in the Electronics Sector (firms sample) 2000s Source: Sturgeon (2005)

  29. A changing environment for LAC integration strategies… Increasing importance of private sector logic over state-led integration… Increasing importance of external forces on integration strategies…

  30. China, India, LAC…

  31. China, India, LAC… Shares in World Exports of Goods (%, Current US$) Source: Integration and Trade Sector, IDB

  32. APEC region liberalization 2008% of product items free by 2008, by bilateral RTA relation NAFTA JPN-MYS KOR-PHL

  33. …advances toward 2013% of product items free by 2008 and 2013

  34. …and further by 2020% of product items free by 2008, 2013, 2020

  35. Asia-led integration … North America Mexico Europe Intra-regional Regional Asia ARCO-Pacific Chile Source: Integration and Trade Sector, IDB

  36. Transpacific corridors: Changing patterns … Source: Integration and Trade Sector, IDB

  37. A changing environment for LAC integration strategies… Increasing importance of private sector logic over state-led integration… Increasing importance of external forces on external integration strategies… Increasing importance of non-trade issues…

  38. Beyond Tariffs: Trade costsin LAC… Source: Integration and Trade Sector, IDB

  39. Today’s transport costs are yesterday tariffs …

  40. Information costs …the role of export promotion agencies...

  41. Colombia: Export growth and Institutional Support (2003-2006) Average growth of the number of markets Average growth of the number of products Information costs …the role of export promotion agencies...

  42. A changing environment for LAC integration strategies… Increasing importance of private sector logic over state-led integration… Increasing importance of external forces on external integration strategies… Increasing importance of non-traditional trade costs (transportation, logistics, information)… Increasing importance of recalibrating the world trading system…

  43. Recalibrating the world trading system… Regional Blocs WTO Bilateral FTAs Source: Integration and Trade Sector, IDB

  44. Conclusions

  45. Regional Integration and Regional Competitiveness…Conclusions… • Emerging New Global Dynamics (Asia…) and new Private Sector Logic (FDI, Services, Outsourcing, Global Supply Chains, Multilatinas…)  ADJUST Regional Integration Frameworks… • Emerging New Inter-Regional Cooperation Priorities (Energy, Migration, Financial Cooperation, Regional Infrastructure…)  EXPAND Regional Integration Agenda… • Emerging New Regional Dynamics (RTAs..)  CALIBRATE World Trade Architecture…

  46. Competitiveness in Latin America and the Caribbean: The Role of Regional Integration REDIBERO Annual Meeting Cancun, October 2009 Antoni Estevadeordal Manager Integration and Trade Sector

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