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REGIONAL INTEGRATION IN LATIN AMERICA

REGIONAL INTEGRATION IN LATIN AMERICA. Luis Ángel Madrid April 2010. The LA region. Background. Six years of economic bonanza 2002-2008 (induced by China’s appetite for natural resources $ commodities ) Grappling with the g lobal recession of 2008-2009 (how to be counter-cyclical)

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REGIONAL INTEGRATION IN LATIN AMERICA

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  1. REGIONAL INTEGRATION IN LATIN AMERICA Luis Ángel Madrid April 2010

  2. The LA region

  3. Background • Six years of economic bonanza 2002-2008 (induced by China’s appetite for natural resources $ commodities) • Grappling with the global recession of 2008-2009 (how to be counter-cyclical) • Structural problems: the world’s highest rates of inequality and public insecurity (poverty & unemployment) • In which direction in the near future? Populism or market economics?

  4. World Economic Forum in LA • A stronger cooperation and integration in Latin America is needed • The entire process has been jeopardized by ideological and political differences • Trade should is being used as political weapon Cartagena, April 7-8th 2010

  5. TOPICS • Latin America at the WTO: ignorance or pessimism? • The regional environment: many steps backwards? • Thepreferred venue: bilateralism within and without.

  6. Multilateralism: the wto

  7. Everybody member of WTO, but major players?

  8. Tariff profiles of LA

  9. REGIONALISM

  10. In the 90s: rising integration • FTAA (ALCA): launched by presidents G.H.W. Bush (Enterprise of the Americas Initiative, 1990) & Clinton (First Summit of the Americas, 1994) • APEC (1993) • WTO (1994)

  11. THREE MODELS OF INTEGRATION [ALADI, LAIA (1961,Treaty of Montevideo, 1980)] • Andean Community (1969 & 1996) & CACM (Protocol of Tegucigalpa, 1991) • MERCOSUR (Treaty of Asuncion, 1991 & Treaty of OuroPreto, 1994) • NAFTA (1992)

  12. ANDEAN COMMUNITY

  13. Intra-regional trade (exports)

  14. Problems • Lack of progress in further economic integration: the common tariff an elusive goal • Deep political differences: Bolivia & Ecuador vs. Colombia & Peru • Countries unable to obey common rules • Venezuela left in 2006 • Everyman for himself: free trade agreements with multiple external partners • New integration schemes in LA: UNASUR, ALBA

  15. mercosur

  16. Intra-regional exports

  17. Challenges • Weak institutional structures and nature of the process: state driven • Venezuelan membership: stalled in Paraguay because the democratic clause • Huge imbalances: in 2008 Brazil exports US $193 b., Argentina US $68.3 b.; Uruguay US $5.9 b. & Paraguay US $4.3 billion • The echoes of 2 crisis: 1998 & 2001

  18. BILATERALISM

  19. EE.UU: the most controversial partner • Mexico: entered into force January 1st 1994 • Chile: entered into force January 1st 2004 • CAFTA-DR: signed in August 2004 • Peru: entered into force January 1st 2009 • Colombia: signed November 2006 • Panama: signed June 2007

  20. European Union • Mexico: March 2000 • Chile: November 2002 • Colombia & Peru: concluded April 2010 • CAFTA: in negotiations • MERCOSUR: in negotiations

  21. ASIA & AFRICA • Australia: Chile (2008) • China: Chile (2005) • Japan: Mexico (2004); Chile (2005) • Korea: Chile (2003) • India: MERCOSUR (2004); Chile (2006) • Israel: Mexico (2000); MERCOSUR (2007) • P4: Chile (2005) • SACU: MERCOSUR (2000) • Turkey: Chile (2009)

  22. Among Latin American • ALADI: regional & bilateral (AAP) • 86 AAP among ALADI members (Mexico, Chile, CAN & MERCOSUR) and other LA countries (incl. Cuba, Guyana, Surinam) • But some few directed to free trade (art. XXIV GATT 1994)

  23. Conclusions • NAFTA led the way with the US, but fraught with problems (Colombia, Panama, Ecuador, Venezuela, MERCOSUR) • European Union in similar situation (plus CAFTA) • China the major question: Brazil signed several mineral agreements on April 15th 2010; clashing interest remain (undervalued yuan undermines Brazilian industry, Brazil closed economy & bid for the SC).

  24. Manythanks

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