Transcript APEC OFFICIAL SYMPOSIUM Impact of Regional Economic Integration

APEC OFFICIAL SYMPOSIUM
Impact of Regional Economic Integration
in East Asia on APEC Trade Liberalization
Session IV
Experiences of Latin American
Countries
Fausto Medina-López
Deputy Representative, IDB Office in Japan
Tokyo, Japan – September 28, 2006
Outline
 LAC in World Trade
The Doha Round Faces an Uncertain Future
LAC Bilateral Agreements and the Need for
a Renewal of the Region’s Integration Process
Trends in Asia-Pacific (AP) – Latin AmericaCaribbean Relations (LAC)
 FTAs and Institutional Reforms for
Implementing Trade Policy: The Case of Chile
and CAFTA
LAC in World Trade
DOHA ROUND UNCERTAINTIES
From Trade to Cooperation
Between Latin America and the Caribbean
and Asia-Pacific
Trade Linkages
 Contrasts between LAC and AP are shaping their
current trade relations:
 Factor endowments
 Trade policies and policies outcomes
 Development strategies
 LAC imports from AP have grown faster
than exports
Trade
Patterns
 Inter-industry bi-regional trade
 LAC exports: raw materials / commodities
 AP exports: manufactured goods
LAC’s trade particularly dynamic with AP:
Growth of Latin America's Trade in 1990-2003 - By Partner
35
Avg Annualized Growth Rate (%)
30
25
Growth
Exports
19%
20
Growth
Imports
15
7.5%
10
5
0
World
-5
Latin
America
Source: UNSD, COMTRADE
Canada +
US
European
Union 25
Japan
Korea, Rep.
China
Asean
LAC’s trade with AP particularly dynamic in
the period 1996-2003
Latin America's Trade with Asia Pacific 1985-2003, by Periods
180,000
160,000
thousands US$
140,000
120,000
100,000
Exports
80,000
Imports
60,000
40,000
20,000
0
JAP
KOR
1985-1990
Source: COMTRADE
Other
AP
JAP
KOR
1991-1995
Other
AP
JAP
KOR
Other
AP
1996-2003
LAC Trade with AP (1990-2003)
 LAC global exports: 9 % p.a.
 LAC exports to AP: 6 % p.a.
But: China (21%) & S.Korea (9%)
 LAC global imports: 10 % p.a.
 LAC imports from AP: 15 % p.a.
Note: AP imports share of total LAC imports Up:
1990 = 8 %
2003 = 15 %
LAC Trade with AP (1990-2003)
Product Composition
 Share of Manufactures in LAC Total Exports: UP
1990 = 32%
2003 = 55%
 Share of Manufactures in LAC Exports to AP: DOWN
 Food, Fuels, Metals and Minerals represent now 2/3 of
LAC exports to AP
Pattern due to South America exports
Mexico and CA have increased Manufacturing
Exports to AP
Product Composition : Exports
Technology Content of Exports: Latin America to East Asia
1986
1990
Primary Products
Resource-based Mfgs.
Low-tech Mfgs.
1995
Medium-tech Mfgs.
High-tech Mfgs.
Other transactions
2000
2003
0%
20%
40%
60%
80%
100%
Source: WITS-World Bank
… Primary products have a dominant share in LA’s exports to Asia
Product Composition : Imports
Technology Content of Imports: Latin America from East Asia
1986
1990
Primary Products
Resource-based Mfgs.
Low-tech Mfgs.
1995
Medium-tech Mfgs.
High-tech Mfgs.
Other transactions
2000
2003
0%
20%
40%
60%
80%
100%
Source: WITS-World Bank
… Medium and High-Tech Manufactured products have a dominant
share in LA’s imports from Asia
AP Trade with LAC (1990-2003)
 LAC only represents only 2 % of AP
But it has experienced relatively dynamic growth
China UP 27 % p.a.
ASEAN Up 12 % p.a.
S. Korea Up 11 % p.a.
Japan Up 4 % p.a.
 Manufactures dominate AP global exports and represent more than
90 % of AP exports to LAC
 Some “head-to-head” competition in manufactured goods
in global markets
To promote these positive trends
possible avenues are……
 Promoting intra-industry trade
 Encouraging bi-regional production networks
 Expanding opportunities for trade in services
Fast growing AP region is still a
relatively unexploited export
market for LAC
Free Trade Agreements and The Spaghetti
Bowl (Asian Noodles)
Bi-Regional Integration : RTA / FTAs
 AP Rising interest in FTAs in the late 1990s
Concluded 20 – In Negotiation 25 – Planned 13
 Transpacific Trade Agreements also on the Rise
•APEC
•With U.S. (Singapore, Korea)
•With LAC:
– Chile-South Korea (2003)
– Mexico-Japan (2004)
– Panama-Taiwan(2004)
– Singapore-NZ-Brunei-Chile
– Singapore-Panama
–China-Chile
Other LAC-AP Bi-regional Accords in Negotiation
Singapore-Peru
Singapore-Mexico
 Taiwan- Guatemala
--Thailand-Peru
Japan-Chile
Current INTRA-regional
+ APEC (1989)
+ INTER-regional
(2003-2005)
Myanmar
Cambodia
Dominican
Republic
Nicaragua
El Salvador
Russia
Indonesia
Bhutan,
Maldives,
Nepal, Pakistan
Panama
Guatemala
Honduras
Costa
Rica
Philippines
Viet Nam
Laos
Malaysia
Thailand
Bangladesh
Indi
Sri a
Lanka
USA
Brunei
Darussalam
Brazil
Singapore
New Zealand
Paraguay
Argentina
Uruguay
Chile
Mexico
Japan
People’s Rep. of
China
Peru
Hong Kong,
China
Korea
Chinese Taipei
Australia
Fiji, Solomon
Islands,
Vanuatu
Canada
Colombia
Bolivia
Papua New Guinea
Fed. States of Micronesia,
Marshall Islands, Kiribati, Palau,
W. Samoa,Tonga, Vanuatu, E.
Timor,
Cook Islands, Nauru, Niue, Tuvalu
ASIA
Ecuador
Venezuela
Bahamas
Haiti
Dominica, Suriname,
Jamaica, St. Lucia, Belize,
St. Kitts & Nevis, Grenada, Barbados,
Guyana, St. Vincent & the Grenadines,
Antigua & Barbuda, Trinidad & Tobago
AMERICAS
UNDER NEGOTIATION
Dominican
Republic
Myanmar
Cambodia
Nicaragua
Russia
Indonesia
Bhutan, Maldives,
Nepal, Pakistan
Costa
Rica
Brunei Darussalam
Viet Nam
Laos
Panama
Guatemala
Honduras
USA
Philippines
Malaysia
Bangladesh
El Salvador
Thailand
India
Sri Lanka
Brazil
Singapore
Paraguay
Argentina
Uruguay
New Zealand
Chile
Mexico
Japan
People’s Rep. of China
Peru
Hong Kong, China
Korea
Chinese Taipei
Fiji, Solomon Islands,
Vanuatu
Australia
Colombia
Bolivia
Ecuador
Venezuela
Papua New Guinea
Fed. States of Micronesia,
Marshall Islands, Kiribati, Palau,
W. Samoa,Tonga, Vanuatu, E. Timor,
Cook Islands, Nauru, Niue, Tuvalu
ASIA
Canada
Bahamas
Haiti
Dominica, Suriname,
Jamaica, St. Lucia, Belize,
St. Kitts & Nevis, Grenada, Barbados,
Guyana, St. Vincent & the Grenadines,
Antigua & Barbuda, Trinidad & Tobago
AMERICAS
From Trade to Cooperation
Between Latin America and the Caribbean
and Asia-Pacific
Cooperation
 Trade cooperation has been accompanied by closer political
and private sector cooperation
 APEC: incorporating initiatives beyond trade – security
 FEALAC
 PBEC
 PECC
Some Political Economy Considerations for
Cooperation
 Cooperation Needs a Focal Point to Begin:
- Coordination problems
- Commitment problems
- Sovereignty Issues
 Trade is a good focal point
- Economic ties endogenously create demand for
cooperation (externalities)
- Attracts attention of well-organized interest groups
 Institutional Development is crucial to sustain a TRADE and
COOPERATION Nexus
Some final remarks….
 To promote cooperation:
 Trade can serve as effective first step
 Incremental approach is advisable
The deeper and more comprehensive the cooperation
the more the formal institutional demands
Programmed budgets and financing is needed: role of
regional financial institutions
FTAs and Institutional Reforms: The
Cases of Chile and CAFTA-DR
Implementing Trade Policy in LAC: The
Cases of Chile and CAFTA-DR
 The multilateral approach to trade liberalization (WTO) is the
best trade policy, but in the context of Doha’s problems, FTAs is a
second best option
But negotiating a FTA is not an easy task, nor is the process of its
implementation
Chile has an extensive network of FTAs with countries within
and outside LAC and has developed a vast experience
Central America and the Dominican Republic are relatively
newcomers to the game and faced serious problems in the
preparation for negotiations of CAFTA-DR; during negotiations;
in the process of internal ratification of those agreements and will
face more issues during their implementation
FTAs Have Become More Complex In Recent Times
 Following economic reforms initiated in the 1980s, LAC
embarked in the 1990s on an intensive integration process:
 From old ALADI model (trade liberalization of goods, simple
rules of origin, import substitution approach, partial tariff
reduction, disperse tariff structures, European-type integration,
supra national bureaucracies and weak dispute-settlement
mechanism)
To more recently NAFTA-type model (liberalization of goods,
services, investments, intellectual property, government
procurement; negative lists and automatic schedules; complex
ROO; export-led strategies; lower tariff protection; no
bureacratic institutional arrangements; members driven)
Implementation Issues
 Prior to the beginning of negotiations certain conditions are
established and amendments to laws required (intellectual property
rights) or elimination of certain trade barriers
During negotiations, several legal reforms may be introduced in
order to prepare overall legal framework to the new set of
obligations (environment, labor, etc.)
Before the agreement becomes effective some changes in legislation
may be introduced to ensure consistency of domestic law with new
provisions
Internal consultations have to be made before embarking, during
the negotiations and when the agreement is approved: Some vocal
groups might oppose the ratification
Protection of vulnerable sectors (traditional agriculture) and
producers
Lessons Learned
 Do not rush: Prepare well before getting involved in the process;
be clear about what you want and expect to agree
Get trade capacity-building: Develop the appropriate
institutions
Introduce the required institutional reforms and new legislation
Be clear about dispute settlement mechanisms
Thank you!
Muchas Gracias!!!
Fausto Medina-López - Deputy Representative, IDB Office in Japan