Latin America and the Caribbean in the World Economy • 2009-2010 93 Chapter III The trade dimension of regional integration A. Introduction The state of trade integration initiatives in Latin America and the Caribbean varies significantly from one subregion to another and between different integration schemes. In particular, the region’s most ambitious trade integration initiatives have been seriously affected by divergent views on the issue —as evidenced, for example, by the abandonment of the project to establish a South American free trade area, conceived in 2005 under the then South American Community of Nations (SACN). Similarly, negotiations on setting up a free trade area under the Latin American Integration Association (LAIA) have made little progress since they began in 2004. The Bolivarian Alliance for the Peoples of Our America (CACM).1 It will also examine progress on more recent (ALBA) has been the most outspoken critic regarding initiatives such as the Latin American Pacific Basin Initiative the benefits of trade liberalization for the region. ALBA and the Community of Latin American and Caribbean and its associated initiative known as the Peoples’ Trade States, as well as recent efforts to strengthen trade ties Agreement were both established in 2004 in direct between countries in the region belonging to different opposition to the Free Trade Area of the Americas (FTAA) integration schemes. There follows a brief analysis of the project, now also discontinued. status of regional cooperation on physical infrastructure, This chapter will review recent trade developments given its importance for integration, not least in the area of (particularly in the past 12 months) within the main trade. Lastly, this chapter examines the main milestones subregional integration schemes in Latin America: the since the second half of 2009 as regards trade negotiations Southern Common Market (MERCOSUR), the Andean conducted by Latin American countries and integration Community and the Central American Common Market schemes with partners outside the region. 1 The situation in the Caribbean subregion will be addressed in chapter IV. 94 Economic Commission for Latin America and the Caribbean (ECLAC) B. Recent developments in the different subregional schemes 1. MERCOSUR For the most part, MERCOSUR has shown positive the liberalization programme in 2015, as provided under developments in the past 12 months. At its summit held in the 1997 Montevideo Protocol on Trade in Services (see San Juan, Argentina, on 2 and 3 August 2010, agreements table III.1). To date, the members of MERCOSUR have were reached on a number of measures to improve the exchanged views on the current situation and the process customs union, including the gradual elimination of double is still at the first stage. charging of the common external tariff from 2012, the In accordance with the provisions of the Montevideo adoption of a mechanism for distributing customs revenue Protocol, the seventh round of negotiations on specific and the adoption of a common customs code. These three services-related commitments was completed in December issues had been the subject of intensive negotiations in 2009 with the adoption of the States parties’ schedules of MERCOSUR since 2004. specific commitments. The schedules include commitments In addition, in December 2008 MERCOSUR adopted negotiated previously and their amendments. The six previous a Plan of Action to Further the Programme for the rounds of negotiations led to the consolidation of the existing Liberalization of Trade in Services. This plan of action restrictions, but did not bring about a significant liberalization has a four-stage timeline, the target being to complete of the market within the free trade zone (ECLAC, 2008). Table III.1 MERCOSUR: PLAN OF ACTION TO FURTHER THE PROGRAMME FOR THE LIBERALIZATION OF TRADE IN SERVICES Year Tasks Analyse the current situation in order to define least sensitive sectors (whose liberalization would not pose serious problems), as 2009 a well as those of intermediate and high sensitivity, and those whose regulatory frameworks could be harmonized or complemented. Consolidate the regulatory status quo of sectors where no commitments yet exist. Eliminate restrictions on market access and national treatment in the least sensitive sectors. 2010 Take steps to harmonize or complement regulatory frameworks in sectors where this is deemed necessary. Identify mechanisms to boost the share of less developed operators in the regional services market. Eliminate restrictions on market access and national treatment in sectors of intermediate sensitivity. Take steps to harmonize or complement regulatory frameworks in sectors where it is deemed necessary. 2012 Identify domestic regulatory measures that could constitute bureaucratic barriers to intra-zone trade, with a view to their elimination. Consider deepening MERCOSUR disciplines on domestic regulation. Eliminate restrictions on market access and national treatment in the most sensitive sectors. Finalize the process of harmonizing or complementing regulatory frameworks. 2014 Conclude the deepening of MERCOSUR disciplines on domestic regulation. Eliminate domestic regulatory measures that have been identified as bureaucratic obstacles to intra-zone trade. Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on MERCOSUR Decision No. 49/08, 15 December 2008. a First semester. A third positive development was the creation in provided by the MERCOSUR Structural Convergence December 2008 of the MERCOSUR Guarantee Fund for Fund (FOCEM), which has been in operation since 2007 Micro, Small and Medium-sized Enterprises, which aims and, as at 30 June 2009, had 25 projects approved for a to guarantee, directly or indirectly, the loans taken out by total of US$ 198 million (INTAL, 2009).2 micro, small and medium-sized enterprises involved in productive integration activities in MERCOSUR. Member 2 At the MERCOSUR summit held in August 2010, nine more projects States will make an initial contribution of US$ 100 million totalling close to US$ 800 million were approved, in areas such as (Argentina will contribute 27%, Brazil 70%, Paraguay 1% energy and physical integration, sanitation works and productive and Uruguay 2%). This new fund adds to the coverage integration. Latin America and the Caribbean in the World Economy • 2009-2010 95 As in the case of FOCEM, under the MERCOSUR With regard to trade negotiations with extraregional Guarantee Fund for Micro, Small and Medium-sized partners, the most significant development in the past year Enterprises (which has been established for 10 years, for MERCOSUR is certainly the resumption, announced with the possibility of extension subject to effectiveness), in May 2010 and brought to fruition one month later, of fund distribution is inversely proportional to contributions talks for an association agreement with the European made, which helps not only to promote the integration Union, which had been suspended since 2004 (see section of production chains in the MERCOSUR economies, but D). Between December 2009 and March 2010, the free also to reduce gradually the marked asymmetries between trade agreement (FTA) signed in December 2007 between them. In the same vein, a decision of July 2009 grants MERCOSUR and Israel came into force in Brazil, Paraguay national treatment to enterprises from or headquartered and Uruguay. This is the first time that MERCOSUR in any MERCOSUR country in contracts awarded in the has entered into an FTA with a partner from outside the framework of FOCEM-financed projects. region. An FTA was also signed with Egypt during the Another recent initiative with great potential is San Juan Summit in August 2010.3 the local-currency payment system introduced for One significant pending challenge for MERCOSUR bilateral trade. The system is expected to lower the is to expedite progress towards the elimination of non- transaction costs associated with using the dollar as tariff barriers to intra-zone trade including, especially, an intermediary currency, thereby boosting the share non-automatic import licensing.4 Progress in the recently of smaller enterprises in trade between MERCOSUR resumed negotiations with the European Union could countries (see chapter II). To date, this scheme has help to catalyse this process. been applied only to trade between Argentina and Another challenge is to make greater use of the Brazil, with as yet modest results, but it is being used mechanisms provided by MERCOSUR for the settlement of increasingly. In July 2009, the scope of the local-currency trade disputes between its members. In these cases, members payment system was extended to all transactions among tend to take unilateral action and discuss it only afterwards MERCOSUR States. with the partner involved (INTAL, 2010). The bilateral trade At the institutional level, in December 2009 a frictions between Argentina and Brazil mentioned in chapter significant step was taken towards the accession of II are an example of this. A third challenge is to incorporate the Bolivarian Republic of Venezuela to MERCOSUR the regulations issued by the MERCOSUR decision-making when the Brazilian Congress approved the country’s full bodies more fully into the regulatory framework of the member membership, which now remains to be approved only by States. It is estimated that over 50% of these regulations the Congress of Paraguay. have not been incorporated (INTAL, 2009). 2. Andean Community The period since 2006 has been a complex one for the spilled into the trade domain. Also during this period, the Andean Community, marked as it was by the withdrawal different views of individual member States of the Andean of the Bolivarian Republic of Venezuela, frictions between Community on the nature of integration and the role of trade member States over the negotiation of trade agreements with in development have become clearer. Taking into account the United States and the European Union (see section D), the added effects of the recent crisis, it has not been a good and recent political tensions which have sometimes time to progress from the existing zone of free trade in 3 MERCOSUR has preferential agreements with India (signed in 4 A 1999 arbitral award concluded that non-automatic import 2004 and in force since June 2009) and with the Southern African licences are compatible with the MERCOSUR regulatory system Customs Union (signed in 2008, currently at the ratification stage). only when the measures adopted meet the conditions or serve the These agreements have a more limited scope than a free trade purposes established in article 50 of the Montevideo Treaty of agreement, both because they cover fewer products and because they 1980, including the protection of public morality, security, human, involve reciprocal preferential tariffs, but not the total elimination animal and plant life and health, and national treasures of artistic, of bilateral trade tariffs. historical or archaeological value (see [online] http://www.sice. oas.org/dispute/mercosur/laudoI_s.asp). 96 Economic Commission for Latin America and the Caribbean (ECLAC) goods and services towards a more advanced level of trade into the integration process, in line with the concept of integration.5 In particular, the Andean Community has been comprehensive integration. These efforts are evident in moving gradually away from the customs union format: the 12 areas of the strategic agenda adopted in February member States have been exempted temporarily (since 2010 by the ministers of foreign affairs and trade of the 2007) from applying the common external tariff (CET) and Andean Community countries. Underpinning the agenda some member States have been negotiating individual trade is a recognition of member States’ diverse approaches agreements with third countries (LAIA, 2010). and points of view; on that basis, it seeks to preserve Despite this, the members of the Andean Community the achievements made over the four decades of the have been extending their cooperation and integration in Community’s existence and to advance pragmatically in a range of areas. Progress has been made in incorporating new areas on which there is consensus, such as economic social, political, production and environmental elements complementarity and trade integration (see box III.1). Box III.1 THE 2010 STRATEGIC AGENDA OF THE ANDEAN COMMUNITY On 5 February 2010, the ministers of foreign • Promote consideration of the 5. Social development affairs and trade of the Andean Community Amazon region in the Andean 6. Environment adopted a document entitled “Guiding integration process. 7. Tourism principles and Andean strategic agenda”, • Promote citizen participation in the 8. Security which will steer Andean integration in the integration process. 9. Culture coming years. The guiding principles are: • Value and embrace unity in cultural 10.Cooperation • Approach the potential and diversity. 11.Energy and natural-resources limitations of the Andean integration • Promote sustainable management integration process with realism and as an of biodiversity resources in the 12. Development of Andean Community historic opportunity. member countries. institutions • Preserve the common Andean • Strengthen the institutions of The third area relating to economic heritage by consolidating the the Andean Integration System complementarity and trade integration achievements made during 40 years for improved coordination and includes the following actions: of integration. efficiency. • Promote par tnerships and • Respect the diverse approaches • Strengthen regional cooperation economic complementarity with and points of view that constitute on security issues. the inclusive involvement of all the foundation of Community • Strengthen the common foreign relevant sectors. coexistence. policy. • Assess the common Andean • Promote the development of the • Create practical mechanisms for regulations on investment protection Andean market and trade by the coordination and convergence and promotion. developing new opportunities for of integration processes. • Assess the possibility of establishing economic and social inclusion. The 12 axes of the strategic agenda Andean regulations on the public • Take steps towards reducing are as follows: procurement of goods. asymmetries in the member 1. The participation of Andean citizens • Strengthen the Andean Agricultural countries through initiatives to in integration Health System and establish an promote economic and social 2. A common foreign policy Andean Food Safety System. development. 3. Trade integration and economic • Strengthen the Andean Quality • Work towards making the integration complementarity; promotion of System. process comprehensive. sustainable production, trade and • Continue the work on indicators • Forge closer physical and border consumption of external, fiscal and financial integration between the member 4. Physical integration and border vulnerability, and socio-economic countries. development indicators. 5 The liberalization of trade in services has been suspended in the of nationally-produced programming on national free-to-air Plurinational State of Bolivia since December 2006, in accordance television will be subject to special treatment and will continue to with Decision No. 659 of the Commission of the Andean Community be regulated by sectoral decisions on which, to date, the members (“Service sectors subject to further liberalization or regulatory of the Andean Community have not yet agreed (see [online] http:// harmonization”). Decision No. 659 also provides that financial www.comunidadandina.org/normativa/dec/D659.htm). services and the further liberalization of the minimum percentages Latin America and the Caribbean in the World Economy • 2009-2010 97 Box III.1 (cocluded) • Strengthen the macroeconomic • Continue working to consolidate the production, and promote exports and convergence programmes and free movement of goods, services consumption at the regional level. continue to share information and persons, taking account of • Continue to work on establishing a tariff and the work relating to the areas the domestic regulations of each policy for the Andean Community. covered by the Andean agenda, with member country. • Continue to develop a regulatory a view to preventing and addressing • Develop an Andean strategy to framework for the Andean Community international economic crises. identify markets, facilitate trade, boost that facilitates trade. Source: Andean Community, “Principios orientadores y agenda estratégica andina”, February 2010 [online] http://www.comunidadandina.org/documentos/actas/Agenda_ Estrategica2010.pdf. Against this background, significant efforts are under address challenges such as drafting a Community science way to develop Andean technical standards, strengthen and technology policy, coordinating joint actions on Andean agricultural health, food safety and quality systems, science and technology by Andean countries, updating the and facilitate trade. The Andean Council of Science and science and technology research and training programme, Technology met in July 2010 to define a work agenda to and creating a fund to finance projects.6 3. Central American Common Market (CACM) The economic and trade integration process in Central in the negotiation of an association agreement between America has been more dynamic over the past 12 months Central America and the European Union, which was than similar processes in South America. Having, with concluded in May 2010 (see section C). few exceptions, achieved mutual free trade years ago, Closer trade relations between Panama and the rest of the CACM members are now working to complete their Central America have gone hand in hand with increasing planned customs union. To this end, they are in the process integration in other areas. These include energy, with of harmonizing the 4% of their tariff universe that is Panama forming part of the Electrical Interconnection not yet subject to a common external tariff. Progress is System for Central America (SIEPAC), aimed at creating continuing on the modernization of the Standard Central a common Central American market for electric power. American Tariff Code, the development of Central American Panama is also coordinating efforts to develop a Central technical regulations for various products, the mutual American short-distance sea transport system (cabotage) recognition of sanitation records for food, beverages, (Martínez-Piva and Cordero, 2009). medicines, cosmetics and toiletries, and the establishment The future association agreement with the European of an integrated customs system. Union should boost Central American economic integration, The inclusion of Panama in the Central American as the Central American – Dominican Republic Free Trade Economic Integration Subsystem is also under way, with Agreement (CAFTA-DR) did previously. Under the terms effective completion planned for late 2011 (see box III.2). of its agreement with the European Union, Central America, As a precursor to the signing of the agreement on Panama’s as a subregion, made commitments in a range of areas (see admission to the Subsystem, from March 2010 the country box III.3), which should lead to a substantial reduction in participated actively (having previously been an observer) the remaining barriers to the free movement of goods. 6 See “Reactivan Consejo de Ciencia y Tecnología de la CAN y definen una agenda de trabajo”, 2 July 2010 [online] http://www. comunidadandina.org/prensa/notas/np2-7-10a.htm. 98 Economic Commission for Latin America and the Caribbean (ECLAC) Box III.2 ADMISSION OF PANAMA AS A NEW MEMBER STATE TO THE SECRETARIAT FOR CENTRAL AMERICAN ECONOMIC INTEGRATION The Council of Ministers for Economic The Ministry of Trade and Industry will on the outcome of the association agreement Integration (COMIECO) of Central America prepare and submit to the governments of talks between Central America and the and the Ministry of Trade and Industry of the five countries of SIECA, by April 2011, European Union, the signing of which Panama have signed a joint declaration on a draft protocol on Panama’s incorporation could involve a commitment to further the inclusion of Panama as a new member into the Central American economic regional economic integration that would State of the Secretariat for Central American integration process, which will contain include Panama as one of the Central Economic Integration (SIECA), and drafted the terms, conditions, modalities and time American parties. an accession protocol to be signed by 31 frames for proceeding with the inclusion of Panama took part in negotiations on December 2011. The protocol establishes Panama in the SIECA mechanisms. The the association agreement between Central the terms, time frames, conditions and provisions of the draft protocol will take America and the European Union, but in modalities for Panama’s inclusion in SIECA account of the FTA between Panama and order for the agreement to come into effect and the conditions for the adoption and Central America, as well as its bilateral for Panama, the country will first have to ratify entry into force of the protocol, which protocols. the SIECA accession protocol and adopt include Panama’s participation in COMIECO Once the negotiations for the the required Central American economic within the framework of the relevant legal accession protocol have been concluded, integration instruments. However, any instruments. it will be signed by the Government of delay in completing Panama’s admission to Between the signature of the joint Panama and those of the other SIECA SIECA will not delay the entry into force of declaration and 31 December 2010, Panama member countries, and procedures will be the association agreement between Central will carry out all the preparatory technical initiated for its ratification by the National America and the European Union for the activities required to join SIECA. These Assembly of Panama by December other member States of the economic activities are set down in the Technical 2011. The protocol for the inclusion of subsystem. Cooperation Agreement between the Panama in SIECA will enter into force Until Panama’s membership is Ministry of Trade and Industry of Panama after ratification by Panama and the States formalized, it will participate as an observer and SIECA, and include the holding of parties to the General Treaty on Central in the forums of the economic subsystem specific thematic workshops to engage American Economic Integration and its and its officials will be invited to attend national stakeholders from the country’s Guatemala Protocol. meetings of the SIECA forums as observers, public and private sectors in the debate, The terms, time frames, conditions and in particular, the meetings of the Council with the participation of delegates from the modalities for the inclusion of Panama in of Ministers for Economic Integration other Central American countries. SIECA may vary or be adjusted depending (COMIECO). Source: ECLAC subregional headquarters in Mexico, on the basis of information from the Secretariat for Central American Economic Integration (SIECA). Box III.3 REGIONAL COMMITMENTS SET FORTH IN THE ASSOCIATION AGREEMENT BETWEEN THE EUROPEAN UNION AND CENTRAL AMERICA Customs formalities - Agricultural inputs -Certain products identified as low • Single tariff mechanism (within two Sanitary and phytosanitary measures risk (within two years) years) • Ensure that European products benefit - Certain products identified as • Single administrative document for from the provisions of resolution medium risk (within five years) imports and exports (within three No. 219-2007 (COMIECO - XLVII) of Implementation of the provisions of the years) the Council of Ministers for Economic association agreement which relate to • Harmonization of customs legislation Integration on facilitating the movement economic integration and customs for malities and of animals, plants, and animal and • Progress reports on implementation requirements relating to imports plant products. and programmes of work relating (within five years) • Guarantee that the Central American to customs procedures, technical Technical barriers to trade authorities will check the certificate barriers to trade and agreed sanitary • Mutual recognition where harmonized issued by the European Union for and phytosanitary measures. regulations exist plants and animals and derived Competition • Recognition of records products at the import point. A sanitary • Adoption of regional standards and • Adoption of specific technical regulations or phytosanitary inspection may be establishment of a regional competition and conformity assessment procedures conducted at that point. Once the authority (seven years). (within five years) on: product has been forwarded, it may Government procurement - Food and beverages be subject to subsequent random • Reasonable efforts to establish a single - Medication and like products inspections at the point of entry to point of access, at the regional level, - Standardization measures the destination country. for public procurement. Source: Presentation by Juan Carlos Fernández, Executive Director of the Secretariat for Central American Economic Integration (SIECA), at the Workshop on Opportunities for Convergence and Regional Cooperation in Latin America, Santiago, Chile, ECLAC, 8 July 2010. Latin America and the Caribbean in the World Economy • 2009-2010 99 4. Latin American Pacific Basin Initiative Since its creation in 2007, the Latin American Pacific Basin Cumulation of origin is without doubt technically Initiative has been exploring initiatives to achieve trade complex, given the different origin regimes in trade convergence between its 11 members.7 The discussions have agreements between the member countries of this initiative not yet covered the subject of tariff convergence, that is, the and the fact, as noted earlier, that some members still creation of a free trade area, reflecting the fact that the matrix lack preferential trade agreements with other members of preferential trade relations between the members of the of the group. Nevertheless, cumulation of origin could Latin American Pacific Basin Initiative is still incomplete contribute significantly to greater integration of the (see table III.2).8 As an alternative, negotiators have pursued production chains of the Latin American Pacific Basin convergence through cumulation of origin, that is, allowing Initiative economies by giving producers and exporters inputs from any of the Latin American Pacific Basin Initiative in each member country access to a broader range of member countries used in products traded between the suppliers while maintaining their preferential treatment member countries to qualify for preferential tariffs. in destination markets. Table III.2 MEMBER COUNTRIES OF THE LATIN AMERICAN PACIFIC BASIN INITIATIVE: NETWORK OF PREFERENTIAL TRADE AGREEMENTS, JULY 2010 El Salvador Costa Rica Guatemala Nicaragua Honduras Colombia Ecuador Panama Mexico Chile Peru Colombia X Costa Rica X Chile X Ecuador X El Salvador X Guatemala X Honduras X Mexico X Nicaragua X Panama X Peru X Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the Foreign Trade Information System of the Organization of American States (OAS) [online] http://www.sice.oas.org. Agreement in effect Negotiations concluded Under negotiation 7 Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, distinguish between the different types of agreements currently in Honduras, Mexico, Nicaragua, Panama and Peru. effect. While some of these are FTAs with almost universal product 8 The table overestimates the degree of free trade among the members coverage, others cover a more limited number of products and grant of the Latin American Pacific Basin Initiative since it does not preferential margins instead of eliminating tariffs. 100 Economic Commission for Latin America and the Caribbean (ECLAC) At the fifth Ministerial Meeting of the Latin progress in these negotiations is expected to become American Pacific Basin Initiative, held in Puerto clearer at the next ministerial meeting, to be held in Peru Vallarta, Mexico, in November 2009, members agreed in October 2010. to begin negotiations on convergence, starting with Whatever advances are made in the recently launched cumulation of origin and advancing in parallel on other negotiations among the Latin American Pacific Basin topics, including technical barriers to trade, sanitary and countries, it should be recalled that the ultimate objective phytosanitary measures, customs formalities, services, is Latin American convergence. Only that will enable the dispute settlement and trade remedies.9 The negotiations countries to leverage the benefits of convergence towards will be based on two modalities: (a) existing agreements broader markets and greater production chain integration, between the countries of the Latin American Pacific and make Latin America and the Caribbean more attractive Basin Initiative, and (b) a new agreement for gradual as a potential economic and trading partner compared with convergence towards free trade between all the members. other regions (particularly Asia). As a result, the ongoing The process is envisaged to be flexible, allowing each process in the Pacific Basin should be seen as a step towards country to advance in both modalities. The degree of that goal, not an end in itself (ECLAC, 2010a). 5. Community of Latin American and Caribbean States This new body, which brings together all the Latin American the region adopted the Cancún Declaration, which contains and Caribbean States, was created during the first Unity a programme of work covering a wide range of areas. Summit of Latin America and the Caribbean, held in the Box III.4 outlines the content of the Declaration that relates Mayan Riviera, Mexico, in February 2010. This group will specifically to trade. For example, to continue pursuing supersede the Rio Group and the Summit of Latin America integration initiatives at various levels (regional, subregional, and the Caribbean on Integration and Development. Its role multilateral and bilateral) as a means to advance towards includes promoting policy coordination and the improved the objective of setting up a common economic forum positioning of Latin America and the Caribbean in relation to for Latin America and the Caribbean, although it does major international developments, as well as communication, not indicate how such convergence will be reached. The cooperation, linkages, coordination, complementarity and Declaration similarly urges trade ministers to seek consensus synergy between subregional bodies and institutions. on measures to stimulate intraregional trade in goods and Also during the first Unity Summit of Latin America services. It remains now to be decided how these general and the Caribbean, heads of State and Government from mandates will be translated into concrete action. 6. Recent bilateral negotiations in the region (a) Between Mexico and the Plurinational State 2010, replacing the free trade agreement the two countries of Bolivia had shared since 1995. The Plurinational State of Bolivia withdrew from the previous agreement in December 2009, In May 2010, Mexico and the Plurinational State considering the chapters on investment, services, intellectual of Bolivia signed a new Economic Complementarity property and government procurement incompatible with Agreement (No. 66), which came into force on 7 June the country’s new Constitution, which had entered into force in February 2009. The scope of the new agreement is limited to trade in goods and leaves unchanged the 9 See the Puerto Vallarta Declaration [online] http://www.arcodelpacifico. liberalization commitments agreed under the previous org/pdf/Declaracion_Puerto_Vallarta.pdf. free trade agreement. Latin America and the Caribbean in the World Economy • 2009-2010 101 Box III.4 TRADE-RELATED CONTENT OF THE CANCúN DECLARATION Trade seek consensus on the measures 18. Furthermore, we entrust our trade 15. R e i t e ra t e t h e i m p o r t a n c e o f needed to maintain and increase, ministers to continue working towards promoting the greater integration for the benefit of the countries of the creation of a fairer and more of our economies as a means of the region, the levels of trade and equitable multilateral trade system achieving higher levels of growth and access to markets with a view to that is able to satisfy the needs of economic and social development, stimulating intraregional trade in developing countries, especially as well as guaranteeing the more goods and services, since this least developed countries. In that effective involvement of the region in represents an important way of regard, the urgent need to conclude the global economy by taking steps compensating for the drop in the negotiations of the Doha Round towards the reduction of technical demand in the rest of the world. of negotiations of the World Trade barriers to trade. Furthermore, we entrust them to Organization (WTO) should be 16. Continue to promote integration implement measures to boost the emphasized. initiatives at the regional, subregional, market access of exports from 19. Show our recognition to the Economic multilateral and bilateral levels that developing countries, especially Commission for Latin America and are open to international trade smaller economies and landlocked the Caribbean (ECLAC) for its in the belief that they will enable developing countries. We want to contributions to policies leading to the establishment of a common create the conditions that enable the development and integration of economic forum for Latin America and those countries to obtain a greater countries in Latin America and the the Caribbean. and more equitable share of the Caribbean and express support for 17. Instruct our trade ministers or market so that they can reap the its thirty-third session to be held at their equivalents to draw up and benefits of intraregional trade. the end of May in Brazil. Source: Declaration of the Unity Summit of Latin America and the Caribbean, Mayan Riviera (Mexico), 23 February 2010 [online] http://www.europarl.europa.eu/intcoop/eurolat/ key_documents/Cancún_declaration_2010_es.pdf (b) Between Colombia and Panama and Colombia adoption in April 2010 of five decisions on areas such as the and Central America inclusion in the tariff reduction programme of previously excluded products (mostly agricultural or agro-industrial) In March 2010, Colombia and Panama opened and on making the rules of origin applicable to the iron negotiations with a view to signing a bilateral FTA to replace and steel, textiles and clothing sectors more flexible. the existing Partial Scope Agreement between the two countries, signed in 1993. The scope of the existing agreement is very (d) Between Central America and Mexico limited, granting reciprocal tariff preferences on only about 300 products. By contrast, the FTA now being negotiated During the tenth Summit of Heads of State and would eliminate tariffs on a substantial number of products, Government of the member countries of the Tuxtla in line with the stipulations of the World Trade Organization Mechanism for Dialogue and Coordination, held in June (WTO). The agreement would be comprehensive, with 2008, the participants established that negotiations should chapters on issues including cross-border trade in services, begin on convergence of the trade agreements in force telecommunications, maritime services, investments, between the member countries, with a view to advancing government procurement, dispute settlement and cooperation towards an association agreement in Meso-America. In on environmental and labour issues. In addition, the FTA accordance with that mandate, negotiations have been under signed in August 2007 between Colombia and the Central way since November 2009 with a view to converging the American countries referred to as the Northern Triangle (El three FTAs currently in force between Mexico and Central Salvador, Honduras and Nicaragua) has been in effect for America —between Mexico and Costa Rica, between all the signatory countries since March 2010. Mexico and Nicaragua, and between Mexico and the Northern Triangle— into a single agreement. (c) Between Colombia and Mexico This type of initiative has obvious benefits: it facilitates progress towards the creation of a wider economic space In August 2009, after almost two years of negotiations, in Meso-America, promotes the integration of production Colombia and Mexico reached an agreement to broaden between Mexican and Central American enterprises their bilateral FTA, the G2.10 The agreement led to the and reduces transaction costs. Progress on cumulation of origin, for example, would enable Central American 10 Previously known as the G3, until the Bolivarian Republic of enterprises to incorporate inputs from different countries Venezuela withdrew from the agreement in 2006. in the subregion into the products that they export to 102 Economic Commission for Latin America and the Caribbean (ECLAC) Mexico without losing access to the tariff preferences • The coverage of this agreement will be comprehensive established in the existing agreements. Agreement on and all products, services and other trade issues the text of the instrument, as well as on the common set will be taken into consideration. of rules of origin to be applied to trade between the six • Sensitive areas in both countries will be recognized countries, is expected to be reached in 2011. and special treatment will be granted to vulnerable There is already an incipient link, through cumulation sectors. of origin, between Mexico and the signatory countries of • Real market access will be ensured by dealing swiftly CAFTA-DR. Following an amendment to this agreement and effectively with specific problems and non-tariff in 2008, the United States allows the application of barriers. Among other measures, a mechanism that preferential rates to a certain quota of clothing made in contributes to legal certainty and the predictability Central America and the Dominican Republic with Mexican from the point of view of economic agents in both fabric, while Mexico does likewise for a certain quota countries will be established. of clothing made in Central America and the Dominican • The parties will follow the negotiating principles Republic using raw materials from the United States. that the substance of the negotiations will dictate the duration of the process and that nothing will (e) Between Peru and Mexico and Peru and be agreed until everything is agreed. Central America According to the joint press release issued at the end of the meeting held in May, Brazil and Mexico are In 2006, Mexico and Peru opened negotiations with seeking a strategic agreement on economic integration to a view to the adoption of an FTA to replace the Economic go beyond trade and address matters of cooperation and Partnership Agreement currently in force between the technology exchange, as well as to design an architecture two countries, which dates from 1987. Negotiations that will promote the integration and development of are at an advanced stage with an agreement remaining the Latin American and Caribbean countries in order to to be reached on the treatment of only a few sensitive enhance the region’s competitiveness and its presence in products. In addition, in April 2010, the Peruvian international markets.12 authorities announced that in August 2010 they would A comprehensive trade agreement between Brazil and launch negotiations for FTAs between Peru and each of Mexico could energize the overall economic integration the Central American countries.11 process in Latin America. They are the region’s largest and second-largest economies, respectively, as well as (f) Between Brazil and Mexico the most populous countries and the leading exporters of goods and services (see table III.3). The volume of bilateral The rapprochement between Brazil and Mexico in trade between the two, however, is not in keeping with recent months represents a new development with a large these magnitudes: in 2009, Mexico was the destination potential impact for strengthening Latin American economic of 1.8% of Brazil’s total goods exports and the source integration. It is the result of a decision adopted by President of 2.2% of its total goods imports, while Brazil was the Lula da Silva and President Calderón in August 2009 to destination of 1.1% of Mexico’s total goods exports and explore the options for deepening their countries’ bilateral the source of 1.5% of its total goods imports. economic and trade relationship. Although neither country A trade agreement between the two countries could help has announced the beginning of talks, in May 2010 they to diversify the structure of Mexico’s foreign trade, lessening agreed on the terms of reference for the negotiation of its dependence on the United States market (which received a possible strategic agreement on economic integration. 81% of Mexico’s exports in 2009). This, in turn, would help The terms of reference are as follows: to lessen the knock-on effects on Mexico’s economy of drops • The agreement will be broad. In addition to tariffs, in United States demand. These effects were seen during the it will cover areas including services, investment, recent global financial crisis when Mexico’s GDP shrank government procurement and intellectual property. by 6.5% in 2009, the largest fall in the region. 11 See “El Perú iniciaría con Panamá negociaciones para un TLC 12 Secretariat of Economic Affairs of the Government of Mexico, con Centroamérica”, El Comercio, 20 April 2010 [online] http:// “Comunicado de prensa conjunto México-Brasil”, Boletín de elcomercio.pe/noticia/464709/peru-iniciaria-panama-negociaciones- prensa, No. 52, 12 May 2010 [online] http://www.economia.gob. tlc-centroamerica. mx/?P=124004# [date of reference: 19 May 2010]. Latin America and the Caribbean in the World Economy • 2009-2010 103 Table III.3 BRAZIL AND MEXICO: ECONOMIC WEIGHT IN THE REGION, 2008 (Percentages and millions of dollars) Population Exports GDP (millions of Agriculture a Manufacturing a Services b Total (percentages) inhabitants) (percentages) (percentages) (percentages) (percentages) Brazil 34 30 22 23 26 23 Mexico 19 27 16 44 16 31 Andean countries c 22 15 38 9 10 19 Caribbean countries d 7 5 3 4 12 5 Central America e 7 4 2 4 13 4 Southern Cone f 12 19 18 17 23 18 Latin America and 100 100 100 100 100 100 the Caribbean Total 570 2 804 477 339 926 534 080 115 116 989 122 (millions of (millions of (millions of (millions of (millions of (millions of inhabitants) dollars) dollars) dollars) dollars) dollars) Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of balance of payments statistics from the International Monetary Fund (IMF), and United Nations, Commodity Trade Database (COMTRADE). a Data for Antigua and Barbuda, Honduras, Nicaragua, and Saint Kitts and Nevis are from 2007. b Data for Trinidad and Tobago are from 2007. c Includes the Bolivarian Republic of Venezuela, Colombia, Ecuador, Peru and the Plurinational State of Bolivia. d Includes Antigua and Barbuda, Bahamas, Barbados, Belize, Cuba, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname and Trinidad and Tobago. e Includes Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. f Includes Argentina, Chile, Paraguay and Uruguay. One issue to be clarified over the coming months is which has so far favoured joint negotiations involving how a possible trade agreement between Brazil and Mexico all four members. The only exception to this was when would relate to the trade agreements currently in force Uruguay signed an FTA with Mexico in 2003. This is a between Mexico and MERCOSUR and its member countries. comprehensive agreement which includes commitments Mexico signed Economic Complementarity Agreement on cross-border trade in services, investments, competition No. 54 with MERCOSUR in July 2002, whose objectives policy, intellectual property and dispute settlement. include the creation of a free trade area between Mexico and MERCOSUR. While the Agreement does not contain (g) Between MERCOSUR and Chile and MERCOSUR commitments on liberalizing trade or offer guidance on and Colombia measures to that end, it does state that the following can be considered part of the agreement: (i) existing or future In May 2009, following more than two years of agreements between Mexico and each of the members negotiations, MERCOSUR and Chile signed an agreement of MERCOSUR; (ii) the agreement between Mexico and on trade in services, which took the form of an additional MERCOSUR on trade in the automotive sector (also from protocol to their economic complementarity agreement. The 2002); and (iii) future agreements between Mexico and new agreement liberalizes trade in services between the MERCOSUR. It stipulates that all these other agreements parties in a wide range of sectors, including architecture, will remain in force until the implementation of the free engineering, editorial, construction, advertising and trade agreement between Mexico and MERCOSUR. distribution services. Since 2009, MERCOSUR and It will also be necessary to assess the implications of Colombia have been engaged in negotiations on trade possible bilateral negotiations between Brazil and Mexico in services, and the possibility of Ecuador joining this for the external negotiations strategy of MERCOSUR, process in the future remains open (LAIA, 2010). 104 Economic Commission for Latin America and the Caribbean (ECLAC) C. Regional infrastructure: physical integration during the crisis 13 The recent international economic crisis significantly US$ 75.087 billion investment in the project portfolio, affected the world’s economies and global trade and its US$ 6.209 billion (8.3%) was allocated to projects that negative repercussions extended to the infrastructure sector have since been concluded, US$ 37.660 billion (50.2%) to and transport services. Regional integration processes in projects that are being executed, and US$ 24.998 billion Latin America would therefore be expected to slow, in (33.3%) to projects still in the preparatory phase, with line with previous experiences. However, an assessment of the remainder set aside for projects still undergoing the physical dimension of integration (infrastructure and profiling. services) shows that the most significant initiatives in this Accordingly, even if only concluded projects and area have made substantial progress despite the crisis. those currently being implemented are considered The Initiative for the Integration of Regional Infrastructure concrete progress, the overall progress in 2010 remains in South America (IIRSA) and the Meso-America Project significant: 236 projects (46.1% of the portfolio) and in Central America are good examples of the progress US$ 43.869 billion invested (58.5% of the portfolio’s made in terms of positive integration at the regional level total estimated investment). (Cipoletta, 2009).14 An analysis of progress in the project Figure III.1 shows the level of progress on IIRSA portfolios of both initiatives is presented below. projects from 2007 to 2009 compared with GDP in the A regional perspective determines the selection subregion covered by IIRSA for those years. It can be seen of IIRSA projects, which must be agreed on by all that, although the international economic crisis affected 12 South American countries. As at February 2010, the the subregion during that period and led to an economic project portfolio included 512 transport, energy and standstill in 2009, concrete progress was made in terms communications infrastructure projects, split between nine of physical integration. areas of integration and development and representing an estimated investment of US$ 75.087 billion. Figure III.1 In early 2010, concrete progress was being made INITIATIVE FOR THE INTEGRATION OF REGIONAL INFRASTRUCTURE IN SOUTH AMERICA (IIRSA): on 382 (74.6%) of the 512 projects in the IIRSA PROJECT PORTFOLIO PROGRESS AND ANNUAL portfolio: 52 projects (10.2%) had been concluded, VARIATION IN GDP AND PER CAPITA GDP 184 (35.9%) were being executed and 146 (28.5%) IN MEMBER COUNTRIES, 2007-2009 a (Percentages, at constant 2000 prices) were at the active preparation stage. Of the estimated 8 80 74.1 74.6 6.7 75 6 68.1 70 5.5 5.4 65 Level of progress Annual variation 13 This section was prepared by the Infrastructure Services Unit of 4 4.2 60 the Natural Resources and Infrastructure Division of ECLAC. 14 55 IIRSA was established in 2000 as a cooperation mechanism between 2 50 12 South American countries for the exchange of information and coordination of sectoral investment policies and plans. Its objective is to 41.3 45 promote physical integration in the areas of transport, communication 0 0.0 40 and energy and seek to foster sustainable development in the region. 35 -1.0 The work of the Meso-America Project began in 2001, under the -2 30 Puebla-Panama Plan, but it was officially relaunched in mid-2008. 2007 2008 2009 2010 February Its objective is to promote the regional integration of the south-south- IIRSA projects that are at an advanced stage east of Mexico and Central America (as well as Colombia and the or have been concluded Dominican Republic, which joined later) through the implementation Annual variation of per capita GDP Annual variation of GDP of infrastructure and social projects to boost development and make the region more competitive, and thereby have a positive impact Source: Economic Commission for Latin America and the Caribbean (ECLAC), on on the countries’ populations. Under the Meso-America Project, the basis of information from the Initiative for the Integration of Regional Infrastructure in South America (IIRSA), February 2010, and from ECLAC. cooperation, development and integration activities are being a The GDP figures correspond to the annual total for the 12 countries of the Initiative coordinated in various thematic areas, including transport, energy, for the Integration of Regional Infrastructure in South America (IIRSA). Information telecommunications, trade facilitation and competitiveness, health, is given for 2007-2009 and early 2010 so that different periods during the Initiative can be compared with the business cycle in the region (boom period, beginning of environment, natural disasters and housing. the crisis and trough). Latin America and the Caribbean in the World Economy • 2009-2010 105 Estimated investments in IIRSA portfolio projects promotion of private investment in infrastructure, and that can be considered advanced or concluded totalled trade and transport facilitation. Two projects in particular US$ 21.2 billion in 2007, US$ 55.6 billion in 2008, (in addition to the 512 projects in the portfolio mentioned US$ 68.2 billion in 2009 and US$ 68.9 billion as at above) are linked to the sectoral integration processes and February 2010.15 Those figures represented 35% of total are part of the IIRSA Implementation Agenda based on estimated investments for the IIRSA portfolio in 2007, Consensus 2005-2010:16 Exports through Postal Services 81% in 2008, 91% in 2009 and 92% as at February 2010, for SMEs and Implementation of a Roaming Agreement which represents a positive trend in progress on regional in South America, with estimated investments totalling integration infrastructure projects. This upward trend is US$ 2.9 million (see [online] http://www.iirsa.org [date seen not only in the amounts invested, but also in the of reference: February 2010]). number of projects considered at an advanced stage or In sum, IIRSA has achieved significant progress in concluded in those years: 145 in 2007 (41% of all IIRSA the planning and implementation of physical integration projects), 350 in 2008 (68%), 378 in 2009 (74%) and projects at the regional level, even during periods of 382 as at February 2010 (75%). economic crisis; however, much ground remains to be Also noteworthy is the growth in estimated investment covered to attain the proposed objectives. A more efficient in the IIRSA portfolio as a whole in recent years. The way must be found to reconcile the high priority afforded amount more than doubled from US$ 37.4 billion in 2005 to developing the portfolio of infrastructure projects with to US$ 75.1 billion in February 2010. the need to address the shortcomings in formulating and In addition to making advances on the project achieving the objectives of the sectoral processes, given portfolio, IIRSA has developed other tools to support its that these processes are vital to energizing and boosting objectives. One of these is the methodology for analysing the efficiency of the infrastructure markets for integration the productive integration and development potential of in the region. As well as making a concerted effort to raise value added logistic services, which will be used to identify society’s awareness of IIRSA, the initiative must seek the contribution of IIRSA projects to the integration of greater complementarity with the economic and political production in their area of influence and to ensure that dimensions of regional integration in South America and sufficient logistic services are made available to the build effective institutions to implement sustainable policies productive sector, as a user of infrastructure. Another and systematize the regulatory framework in order to make tool is the Strategic Environmental and Social Evaluation regional physical integration goals viable.17 (EASE) methodology, a new environmental and social One of the most significant advances in the Meso- planning instrument that will make it possible to assess America Project was the development of the International the combined impact of the projects in the portfolio. Meso-American Road Network (RICAM), designed Work has also been done on a methodology to evaluate to improve the internal and external connectivity of transnational integration projects with a view to identifying, the region’s economies by building, upgrading and in an objective and transparent manner, the cost-benefit maintaining 13,132 kilometres of highways over five implications for each country of multinational projects. regional road corridors. This methodology is being developed with the support of As at June 2009, the estimated investment in the ECLAC, and is in the final phase of development. network totalled US$ 7.192 billion and the construction As part of its work plan on sectoral integration and modernization works were 50% complete, equivalent processes aimed at identifying regulatory or institutional to 6,629 kilometres of highways. Prominent recent barriers to the development of basic infrastructure in the achievements include the inauguration of the highway subregion, IIRSA has produced numerous studies and between Guatemala and the state of Tabasco (Mexico) in analyses on the standards and regulations governing the October 2009 and the modernization of the border crossing provision of infrastructure services. Sectoral integration processes are under way in relation to maritime, air 16 The consensus-based implementation agenda comprises an initial and multimodal transport, border crossings, energy selection of 31 high-impact projects on physical integration and integration, funding instruments and information and sustainable development in the region, chosen from the IIRSA portfolio and agreed on by all the governments. The aim is to communications technologies (ICT). These processes stimulate the funding and implementation of the chosen projects are aimed at convergence of the relevant regulations in the short term. The estimated investment in the Agenda is and standards, competitiveness in service provision, US$ 10.4 million (see [online] http://www.iirsa.org [date of reference: February 2010]). 15 This includes projects that have been concluded, that are being 17 To that end, in 2010, IIRSA was incorporated into the structure of executed or that are at the pre-execution stage (the latter includes the Union of South American Nations (UNASUR), specifically in the pre-feasibility, feasibility and investment phases). Projects that the framework of the work of the South American Infrastructure are at the profiling stage are excluded. and Planning Council (COSIPLAN). 106 Economic Commission for Latin America and the Caribbean (ECLAC) point between the two countries. Other major works In summary, what stands out with regard to physical concluded in 2009 were the River Hondo international integration initiatives in the region (specifically IIRSA bridge (between Mexico and Belize), La Amistad border and the Meso-America Project) is that such integration crossing bridge (between El Salvador and Honduras), works now exist (in the past there were virtually the international bridge over the River Sixaola (between none) and, what is more, were still being built even at Costa Rica and Panama) and a new international bridge the height of the economic crisis. Regional physical between El Salvador and Guatemala. integration is progressing and being consolidated and As part of the modernization of customs and border extended and drawing-board projects have become crossings, progress has been made on applying the Meso- concrete works. These advances not only strengthen American Procedure for the International Shipment of the economic and political integration processes under Goods (TIM) at El Amatillo border crossing between El way in the Latin American and Caribbean region, they Salvador and Honduras, with reductions of up to 75% also facilitate the economic and social development in transit time. of its countries. D. Negotiations with partners outside the region 1. Overview Between the second half of 2009 and the first half of The flurry of negotiations in the last 12 months with 2010, many countries in the region continued to conduct parties from outside the region represents the continuation of trade negotiations with partners from outside the region, a process that Chile and Mexico began in the 1990s, joined whether as part of their respective subregional schemes or by several countries in the region during the 2000s. A wide individually. A major factor in this was the scant progress network of varied agreements has thus been taking shape, in the Doha Round during the period, as well as the virtual especially since the second half of the past decade, linking standstill in the more ambitious trade integration projects the region not only to its traditional markets outside the within the region. region (the United States and the European Union), but also, increasingly, to the Asia-Pacific region (see table III.4). 2. Negotiations with the European Union The sixth Summit of Heads of State and Government from must now be signed and ratified, and may enter into force Latin America and the Caribbean and from the European in early 2012. These instruments follow in the footsteps of Union, held in Madrid in May 2010, had particularly the October 2008 agreement between the European Union significant outcomes in the area of trade. The negotiation and 15 countries of the Caribbean that are members of of an association agreement between the European Union the Caribbean Forum of African, Caribbean and Pacific and the five countries of the Central American Common States (CARIFORUM) and the association agreements in Market (CACM) plus Panama was successfully and formally place with Chile and Mexico. The European Union thus concluded, as was a comprehensive trade agreement between continues to pursue its strategy, adopted in the mid-1990s, the European Union, Colombia and Peru. Both agreements of forging closer ties with Latin America. Latin America and the Caribbean in the World Economy • 2009-2010 107 Table III.4 LATIN AMERICA AND THE CARIBBEAN (COUNTRIES AND SUBREGIONAL SCHEMES): TRADE NEGOTIATIONS WITH PARTNERS FROM OUTSIDE THE REGION INITIATED OR CONCLUDED SINCE 2005 Country or subregional scheme Partner Type of agreement a Status as at August 2010 Subregional schemes Caribbean Community (CARICOM) b European Union AA Signed in October 2008. Provisional application Canada FTA Under negotiation Negotiations with Colombia and Peru Andean Community European Union AA concluded in March 2010 c Central American Common Market (CACM) European Union AA Negotiations concluded in May 2010 d MERCOSUR Egypt FTA Signed in August 2010 In force between Israel and Uruguay, Israel Israel FTA and Paraguay, and Israel and Brazil Signed in December 2008; ratification SACU e PTA process under way European Union AA Negotiations relaunched in May 2010 Country Chile TPP f AA In force Australia FTA In force China FTA In force Japan AA In force Malaysia FTA Negotiations concluded in May 2010 Turkey FTA Signed in July 2009; ratification process under way Viet Nam FTA Under negotiation Signed in November 2008; ratification Colombia Canada FTA process under way Signed in November 2008; ratification EFTA g FTA process under way Signed in November 2006; ratification United States FTA process under way Republic of Korea FTA Under negotiation Costa Rica China FTA Signed in April 2010; ratification process under way Singapore FTA Signed in April 2010; ratification process under way Dominican Republic Canada FTA Under negotiation European Union h AA Signed in October 2008 Panama Canada FTA Signed in May 2010; ratification process under way United States FTA Signed in June 2007; ratification process under way Singapore FTA In force European Union AA Negotiations concluded in May 2010 i Peru TPP AA Under negotiation Canada FTA In force China FTA In force United States FTA In force EFTA FTA Signed in July 2010 Republic of Korea FTA Under negotiation Japan AA Under negotiation Singapore FTA In force Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information and Organization of American States (OAS), Foreign Trade Information Service [online] http://www.sice.oas.org. a AA: association agreement. PTA: preferential trade agreement. FTA: free trade agreement. b The other party to the agreement with the European Union is the Caribbean Forum of African, Caribbean and Pacific States (CARIFORUM), which is made up of 14 countries from the Caribbean Community (CARICOM) plus the Dominican Republic. c The Plurinational State of Bolivia withdrew from the negotiations in June 2008. Ecuador withdrew in July 2009 and then announced its intention to re-embark on negotiations in February 2010. d Panama is also a party to this agreement. e Southern African Customs Union. f Trans-Pacific Strategic Economic Partnership Agreement. g European Free Trade Association. h In the context of the Association Agreement between CARIFORUM and the European Union. i In the context of the Association Agreement between Central America and the European Union. 108 Economic Commission for Latin America and the Caribbean (ECLAC) The decision to resume negotiations for an association of all agricultural imports into the European Union in agreement between the European Union and MERCOSUR, 2009 came from that same group.19 The main goods that suspended since October 2004, was also confirmed at the MERCOSUR is interested in exporting to the European Madrid Summit. The first round of talks following this Union include agricultural products such as sugar, beef and decision took place in June 2010. However, the main factors dairy products, which are highly protected in that market. that led to the suspension of negotiations almost six years ago Despite the difficulties described, one element that may (the marked sensitivities of the European Union regarding augur greater progress in the negotiations this time is the agriculture and those of MERCOSUR in industry) still remain, sustained increase in China’s share of the region’s foreign as demonstrated by the positions taken by the two parties during trade. According to ECLAC projections, if this trend continues, the Doha Round of the World Trade Organization (WTO).18 China could take the place of the European Union as the This negotiation is much more complex than those that the region’s second largest trade partner after the United States European Union has entered into with other Latin American (see figure III.2). In this context, achieving preferential access and Caribbean countries, given that in 2008 half of all exports to MERCOSUR for its exports would allow the European to the European Union from Latin America and the Caribbean Union to make up, at least partially, for the cost advantages came from MERCOSUR countries (see table III.5) and 20% generally associated with Chinese products. Table III.5 EUROPEAN UNION: TRADE WITH LATIN AMERICA AND THE CARIBBEAN, MEXICO AND SELECTED SUBREGIONAL INTEGRATION SCHEMES, 2008 (Millions of euros and percentages) Trade with the European Union imports a European Union exports a European Union a Millions Millions Millions Percentages Percentages Percentages of euros of euros of euros Andean Community 10 998 0.7 6 925 0.5 17 922 0.6 Southern Common Market (MERCOSUR) b 47 724 3.1 33 484 2.6 81 209 2.8 Central American Common Market (CACM) 4 462 0.3 2 413 0.2 6 875 0.2 Mexico 13 814 0.9 22 082 1.7 35 896 1.3 Latin America and the Caribbean c 96 740 6.2 79 836 6.1 176 576 6.2 Source: Statistical Office of the European Communities (EUROSTAT). a Does not include trade between countries of the European Union. b Does not include the Bolivarian Republic of Venezuela. c Includes the Andean Community, MERCOSUR, CACM, Bolivarian Republic of Venezuela, Chile, Cuba, Dominican Republic, Haiti, Mexico and Panama. Figure III.2 LATIN AMERICA AND THE CARIBBEAN (16 COUNTRIES): SHARE OF THE UNITED STATES, EUROPEAN UNION AND CHINA IN FOREIGN TRADE, 2000-2020 a (Percentage of total) (a) Exports (b) Imports 60 50 United States United States 50 40 38.6 33.1 40 26.1 30 28.4 30 20 19.3 16.2 20 14.7 European Union European Union 13.8 14.0 13.6 10 10 9.5 China China 7.6 0 0 2002 2003 2007 2000 2005 2008 2001 2006 2009 2004 2020 2012 2013 2010 2011 2015 2017 2018 2016 2019 2014 2002 2003 2007 2020 2000 2005 2008 2006 2009 2001 2004 2012 2013 2015 2017 2018 2019 2010 2011 2016 2014 Source: Economic Commission for Latin America and the Caribbean (ECLAC), La República Popular China y América Latina y el Caribe: hacia una relación estratégica (LC/L.3224), Santiago, Chile, April 2010. a Includes: Argentina, the Bolivarian Republic of Venezuela, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Panama, Paraguay, Peru, the Plurinational State of Bolivia and Uruguay. Estimates and projections based on GDP growth rates from 2000 to 2009 in Latin America and the Caribbean, the Asia-Pacific region, China, the United States, the European Union and the rest of the world. The growth in trade is expected to reflect the long-term growth rate of the economies. 18 Days before the Madrid Summit, a group of 10 member States of 19 See European Commission, Directorate General for Trade [online] the European Union with strong agricultural interests (Austria, http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/ Cyprus, Finland, France, Greece, Hungary, Ireland, Luxembourg, regions/mercosur/ [date of reference: 2 June 2010]. Poland and Romania) formally expressed their opposition to the resumption of negotiations with MERCOSUR, arguing that it would endanger European agriculture. Latin America and the Caribbean in the World Economy • 2009-2010 109 3. Negotiations with the Asia-Pacific region Over the last decade, Asia has grown in importance destination country to record an increase in exports from substantially as a trade partner for Latin America and the the region in 2009, a year that was marked by the global Caribbean (see table III.6). As noted in ECLAC (2010c), crisis (see figure III.3). This is evidence of the strength of the region’s trade with Asia in 2009, particularly its the Chinese economy during the crisis, when it sustained exports, fell by less than it did with the rest of the world. demand for various commodities exported by the Latin This was largely because China was the only leading American and Caribbean region. Table III.6 LATIN AMERICA AND THE CARIBBEAN: MAIN EXPORT DESTINATIONS AND COUNTRIES OF ORIGIN OF IMPORTS a (Percentages of total) Exports 2000 2006 2007 2008 2009 Latin America and the Caribbean 19.0 16.4 17.2 18.4 17.2 Asia 5.0 9.7 11.3 11.8 14.5 China 1.1 3.4 4.6 5.0 6.9 United States 61.0 47.6 44.0 41.4 39.8 European Union 11.8 12.8 13.8 13.7 12.8 Imports 2000 2006 2007 2008 2009 Latin America and the Caribbean 15.1 18.9 19.1 18.9 18.8 Asia 10.9 22.2 23.0 23.5 24.9 China 1.8 8.4 9.6 10.4 11.8 United States 55.0 32.4 30.3 29.0 29.2 European Union 12.1 12.8 13.3 13.5 13.8 Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information, Statistical Office of the European Communities (EUROSTAT), United States International Trade Commission (USITC) and International Monetary Fund (IMF), Direction of Trade Statistics. Figures for 2000 are from the United Nations Commodity Trade Database (COMTRADE). a Data for 2006, 2007, 2008 and 2009 are from national sources. Data for the Caribbean were constructed using mirror statistics from the United States, the European Union and Latin America. Figure III.3 LATIN AMERICA AND THE CARIBBEAN: ANNUAL RATES OF VARIATION IN TOTAL EXPORTS AND IMPORTS WITH SELECTED PARTNERS, 2007-2008 AND 2008-2009 a (Percentages) (a) Exports (b) Imports Latin America and Latin America and -28 24 -26 21 the Caribbean the Caribbean Other Asian countries -13 18 -25 19 Other Asian countries 5 26 -15 32 China China Asia -5 21 -21 24 Asia European Union -28 15 European Union -23 24 United States -26 9 United States -25 17 World -23 16 World -25 22 -40 -20 0 20 40 -40 -20 0 20 40 2008-2009 2007-2008 Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information, Statistical Office of the European Communities (EUROSTAT), United States International Trade Commission (USITC) and International Monetary Fund (IMF), Direction of Trade Statistics. a Data for the Caribbean were constructed using mirror statistics from the United States, the European Union and Latin America. The December figure for the Bolivarian Republic of Venezuela was estimated, following the trend of the previous three months. The data for the Bolivarian Republic of Venezuela are national totals to which the structure of the IMF Direction of Trade Statistics was applied. 110 Economic Commission for Latin America and the Caribbean (ECLAC) The growing importance of Asia as a trade partner, in between countries or groups of countries in the region addition to its economic buoyancy, has led several Latin to create a relationship with the Asia-Pacific region that American countries to develop preferential trade links with will reinforce trade and investment links and strengthen the Asian region. These links are relatively recent and to production and technology ties. Satisfying the needs date involve essentially the countries of the region that of the vast Asian market may often need partnerships are on the Pacific coast (see table III.7). The most active between the region’s exporting countries. A similar countries in this regard have been Chile and Peru, in South approach may also help to attract Asian investment. The America, and Costa Rica, in Central America. In April 2010, creation of the Latin American Pacific Basin Initiative Costa Rica signed an FTA with China (the first between is a preliminary step in this direction (ECLAC, 2009a, the Asian powerhouse and a Central American country) 2010a, 2009b). and another with Singapore. In December 2009, Colombia Another scheme that offers some potential as a and the Republic of Korea embarked on negotiations for platform for building closer ties between Latin America an FTA, the first negotiations of this kind that Colombia and the Caribbean and the Asia-Pacific region is the Trans- has entered into with an Asian country. Pacific Strategic Economic Partnership Agreement. As While bilateral trade agreements can benefit the this initiative is now being led by the United States, it is partner countries, a more coordinated strategy is needed analysed in greater detail in the next section. Table III.7 LATIN AMERICA AND THE CARIBBEAN (SELECTED COUNTRIES): PREFERENTIAL TRADE AGREEMENTS WITH COUNTRIES IN THE ASIA-PACIFIC REGION, JULY 2010 a Latin American country Agreements in force Agreements signed Agreements under negotiation Australia, Republic of Korea, China, Chile b Malaysia d and Viet Nam India, Japan, TPP c Colombia Republic of Korea Costa Rica China and Singapore El Salvador Taiwan Province of China Guatemala Taiwan Province of China Honduras Taiwan Province of China Mexico b Japan Republic of Korea e Nicaragua Taiwan Province of China Panama Taiwan Province of China, Singapore Peru b China, Singapore, Thailand Republic of Korea, Japan, TPP c Source: Organization of American States (OAS), Foreign Trade Information Service [online] www.sice.oas.org. a Excludes trade agreements with Canada and the United States. b Member of the Asia-Pacific Economic Cooperation forum (APEC). c Trans-Pacific Strategic Economic Partnership Agreement. d Negotiations concluded in May 2010. e Negotiations suspended since June 2008. 4. Negotiations with the countries of North America (a) United States States Congress for ratification. This is because of concerns expressed by members of Congress and a number of circles In contrast to the progress made in the region’s trade in the United States that shed doubt over the approval of negotiations with Europe and Asia, there have been no major the agreements. In the case of Panama, the concerns relate developments in negotiations with the United States since to the transparency of the tax system and certain aspects of the signing of the FTAs between the United States and Peru labour regulations, although a few months ago other obstacles (April 2006), Colombia (November 2006) and Panama were also raised. As for the FTA with Colombia, several (June 2007). It is particularly worrying that these last two members of Congress have made its approval conditional agreements, as well as the FTA signed with the Republic of on the adoption of measures to strengthen the protection Korea in June 2007, have yet to be submitted to the United of labour rights in that country. Latin America and the Caribbean in the World Economy • 2009-2010 111 The United States authorities have stated that they are Rather, it is a strategic move to make TPP a vehicle for working with the governments of Colombia and Panama trans-Pacific economic and trade integration. There is to overcome these obstacles, but have not indicated when some concern in the United States regarding the prospect they might submit either agreement to Congress. It seems that the various economic integration initiatives currently unlikely that this will happen before the United States being implemented or under consideration could lead to midterm elections, to be held in November 2010 (Van the creation of an exclusively Asian bloc. This would be Grasstek, 2009). the case if an initiative on an East Asian FTA, which would The aforementioned elements appear to indicate bring together China, Japan, the Republic of Korea and the that the region is a low priority for United States trade 10 member countries of the Association of Southeast Asian policy. In general, trade was not a priority issue during Nations (ASEAN), came to fruition. Another initiative that the first year of President Obama’s administration, but is under consideration, put forward by Japan, is to set up the 2010 Trade Policy Agenda, presented in March a larger free trade area that would also include Australia, 2010, seems to point to a more important role for India and New Zealand. These two projects are commonly trade in the economic recovery.20 The Agenda refers referred to as ASEAN+3 and ASEAN+6, respectively to the goal of doubling exports in the next five years, (ECLAC, 2009a, 2010a). which President Obama announced before Congress According to the United States trade authorities, in January 2010.21 although it has little economic weight now, TPP offers To date, the current administration’s main the potential to build a trans-Pacific community that could initiative in relation to trade negotiations has been the counteract the centripetal tendencies now being seen in announcement by President Obama in November 2009 East Asia. The United States is thus seeking to secure its that the United States would enter into negotiations to economic interests in Asia, the most dynamic region in join the Trans-Pacific Strategic Economic Partnership the world economy, which accounted for more than 60% Agreement (TPP).22 This agreement, also known as of the United States trade deficit in 2009 (see table III.8). P4, was signed in 2005 between Brunei Darussalam, To that end, the United States has expressed its intention Chile, New Zealand and Singapore, and took effect the to make TPP a twenty-first-century agreement that sets following year. TPP is the first free trade agreement a high standard on trade matters and on labour and to link three continents (America, Asia and Oceania). environmental protection issues, and which other countries Negotiations to bring the United States into TPP began from the Pacific basin could join in the future. in March 2010. Australia, Peru and Viet Nam are also In terms of obtaining preferential access to new markets, participating in those negotiations, while other countries the TPP negotiations are currently of limited appeal to the from both Asia and the Americas are considering joining two Latin American participants. Chile, a founding member the process.23 of TPP, has bilateral FTAs in place with Australia, the United The motives of the United States for joining TPP are States and Peru, and is currently in negotiations with Viet Nam. not related to seeking new markets in the short term, since Peru has bilateral FTAs in force with Chile, the United States the other seven participating economies are relatively and Singapore, while the other four participants (Australia, small and the United States already has current FTAs Brunei Darussalam, New Zealand and Viet Nam) together with four of them (Australia, Chile, Peru and Singapore). represented only 0.5% of its total exports in 2008. 20 22 The opening of negotiations to bring the United States into TPP See “The President’s 2010 Trade Policy Agenda” [online] http:// www.ustr.gov/2010-trade-policy-agenda. had already been announced at the end of the Bush administration 21 To meet this objective, the National Export Initiative was created (September 2008) by the United States Trade Representative at by Executive Order in March 2010. An Export Promotion Cabinet that time, Susan Schwab. The decision was ratified by the Obama was set up to develop and coordinate the implementation of the administration towards the end of 2009, following a review of Initiative. In order to meet the aims of the Initiative, action must be United States trade policy. 23 As at June 2010, Viet Nam had not yet indicated whether it would taken, for example, to promote trade in goods and services, increase the financing available to SMEs for trade and reduce barriers to participate definitively in the negotiations. access to third markets (see [online] http://www.whitehouse.gov/ the-press-office/executive-order-national-export-initiative [date of reference: 12 July 2010). The last area will involve the negotiation of new trade agreements, particularly with countries in Asia, and the entry into force of pending agreements. 112 Economic Commission for Latin America and the Caribbean (ECLAC) Table III.8 UNITED STATES: TRADE DEFICIT, TOTAL AND BY SELECTED REGIONS AND COUNTRIES, 2007-2009 (Millions of dollars and percentages) 2007 2008 2009 Country/region Millions of Percentage Millions of Percentage Millions of Percentage dollars of total dollars of total dollars of total World 790 991 100.0 800 006 100.0 500 997 100.0 Latin America and the Caribbean 101 508 12.8 86 478 10.8 45 820 9.1 Asia-Pacific 404 399 51.1 392 557 49.1 310 781 62.0 China 256 270 32.4 266 333 33.3 226 826 45.3 Source: United States International Trade Commission (USITC). Other Latin American countries that have expressed Aside from the opportunities it presents, the expansion an interest in joining the TPP negotiations, or have been of TPP poses risks for the countries of the region involved cited as potential members, are in a similar situation to in the process. As noted above, the United States is Chile and Peru. For example, Costa Rica has FTAs with the seeking to use TPP to set higher standards on issues such United States (its main trading partner) and Chile, and in as intellectual property and labour and environmental March 2010 signed an agreement with Singapore, while the protection. Countries in the region that have already remaining TPP participants (Australia, Brunei Darussalam, negotiated these issues in their respective FTAs with New Zealand, Peru and Viet Nam) together represented a the United States run the risk of having to make new mere 0.6% of its exports in 2009. Although Colombia’s concessions in politically sensitive areas in connection FTA with the United States has yet to enter into force, the with a wide range of public policies. country has arrangements in place with Chile (bilateral) and Another initiative which warrants mention although, Peru (in the framework of the Andean Community). The strictly speaking, it falls outside the realm of trade, is other five participants in the TPP negotiations (Australia, Pathways to Prosperity in the Americas, launched by Brunei Darussalam, New Zealand, Singapore and Viet Nam) the United States in 2008. This initiative “links Western represented only 0.4% of its exports in 2009. Lastly, Mexico Hemisphere countries committed to democracy and open has FTAs with the United States (North American Free Trade markets in an initiative to promote inclusive growth, Agreement) and Chile, and is currently in negotiations with prosperity, and social justice.”24 Its partner countries Peru. The other five participants in the TPP negotiations (in addition to the United States) are Canada, Chile, represented only 0.5% of its exports in 2009. Colombia, Costa Rica, Dominican Republic, El Salvador, In short, for the countries of Latin America, TPP in Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru its current form is not a particularly attractive medium and Uruguay. All of these countries, apart from Uruguay, for gaining access to new key markets, except to the have negotiated FTAs with the United States. extent that it promotes cumulation of origin across all the The initiative reflects a certain change of vision agreements already existing between the eight countries in the approach of the United States to Latin America that are party to the negotiations. From the trade viewpoint, and the Caribbean, and the recognition that while trade the appeal of TPP depends on new economies, especially spurs economic growth for the countries in the region, Asian countries, joining the negotiations. This does not the gains have not been equitably shared. Pathways to seem likely in the short term, however, owing in large Prosperity seeks to close this gap by empowering small part to the constraints associated with the leadership of farmers, small businesses, craftspeople, workers, women, the process by the United States. The credibility of United indigenous communities, Afro-descendants, young persons States negotiators is diminished by the uncertain approval and vulnerable groups to participate effectively in the prospects of outstanding agreements (all with countries from global economy. To this end, the initiative’s aims include the Pacific basin) and by the absence of Trade Promotion deepening cooperation to expand access to financial Authority (TPA). Under TPA, the United States Congress services, ensure the effective enforcement of fundamental temporarily renounces its powers to introduce amendments labour rights and decent working conditions and expand to trade agreements negotiated by the Executive Branch educational opportunities. However, to date these objectives and may vote only for or against such agreements. TPA is have led to limited concrete action, consisting mainly considered essential for concluding any trade negotiations, since otherwise Congress can subsequently, at its discretion, 24 See [online] http://pathways-caminos.org.dnnmax.com/Home/ modify what has been negotiated. AboutPathways/Background/tabid/89/language/en-US/Default.aspx. Latin America and the Caribbean in the World Economy • 2009-2010 113 of meetings aimed at promoting networks (for example, (b) Canada of women entrepreneurs) and exchanging information and good practices. Canada has FTAs in force with Chile, Costa Rica, In conclusion, the United States does not currently Mexico (in the context of the North American Free Trade appear to have a clear trade strategy towards the region. Agreement) and Peru (since August 2009). In the past To date, its only clear strategic move as regards trade 12 months, significant efforts have been made to extend negotiations is TPP, a trans-Pacific project in which this network. To this end, for example, the Canadian the participation of the Latin American and Caribbean Parliament adopted legislation to implement the FTA countries is not the main objective from the United States’ between Canada and Colombia (signed in November 2008) perspective. The priority that the United States has afforded in June 2010 and an FTA was signed between Canada TPP seems to reflect, among other things, an interest and Panama in May 2010. The country is also engaged in in establishing a counterbalance to the evolving Asian joint negotiations with El Salvador, Guatemala, Honduras regional architecture. The United States is thus seeking to and Nicaragua. Lastly, on various occasions Canada has participate more actively in the process of Asian expansion, expressed an interest in increasing its links with the Latin in order to avoid discrimination against products, services American Pacific Basin Initiative by participating as an and investments of United States origin. observer at some of its ministerial meetings. E. Conclusions As stated at the beginning of this chapter, the current The overall dynamic of economic and trade integration climate in South America is not conducive to bringing to initiatives in Latin America may change over the coming fruition the ambitious trade convergence initiatives that months depending on developments in the talks the region’s were launched in the mid-2000s. This limits the scope two largest economies, Brazil and Mexico, have been for progress towards a larger integrated economic area, holding since August 2009 on possible negotiations for even though this would promote the further development a strategic economic integration agreement. A decision to of intraregional trade, with all the associated benefits, open negotiations in 2010 could galvanize integration efforts including a larger presence of manufactures and SMEs throughout the region by linking the largest economies and greater potential for integrating production systems. in South America and Meso-America. This situation contrasts with that in Meso-America, where Nonetheless, difficulties in progressing towards intensive negotiations are taking place to enhance current liberalization of intraregional trade must not prevent agreements or replace them with more comprehensive enhanced regional or subregional cooperation in other schemes, and to create larger economic areas by combining areas where equally urgent action is needed to deal with existing arrangements. the competitiveness challenges facing Latin America and Another trend that has started to take shape more the Caribbean. Among these, ECLAC has identified the clearly over the last year is the creation or strengthening following eight priority areas: (i) the development of of preferential ties between Central America (including infrastructure for integration; (ii) measures to support Panama), Colombia, Mexico, Peru and Chile. As the trade (progress with the trade facilitation agenda and network of trade agreements between these countries ensure adequate financing, especially for intraregional becomes more complete, it will provide greater leverage trade); (iii) efforts to strengthen the social component for initiatives aimed at gradual trade convergence between of integration; (iv) a renewed effort to deal with the members of the Latin American Pacific Basin Initiative. asymmetries between countries and regions; (v) regional As a first stage, this could take the form of agreements to cooperation on innovation and competitiveness; (vi) a allow cumulation of origin between these 11 countries. joint strategy for enhancing ties with the Asia-Pacific Connecting the various bilateral agreements would foster region; (vii) regional coordination in discussions on integration of production among the members of the Latin international financial system reform; and (viii) regional American Pacific Basin Initiative and reduce the transaction cooperation to address climate change (ECLAC, 2009b, costs associated with trade between those countries. 2010a). In this context, one issue being addressed 114 Economic Commission for Latin America and the Caribbean (ECLAC) in the main subregional integration schemes is trade Negotiations with partners from outside the region can facilitation, in recognition of its importance as a factor create strains within subregional integration schemes, as in competitiveness (for a brief comparison of activities has been demonstrated by the talks between countries of the in this regard within the various schemes, see annex Andean Community and the United States and European table III.A-1). Union.25 Agreements negotiated by countries of the region Most countries in Latin America and the Caribbean individually with non-regional partners (particularly have continued to actively pursue negotiations for trade developed countries) may conflict with obligations they agreements with partners from outside the region, especially have accepted in their regional or subregional schemes, the European Union and, increasingly, Asian countries. with potentially significant implications for the latter. This These intensive negotiations are without doubt fuelled situation poses a major challenge to Latin American trade by lack of progress in the Doha Round, but could also be integration, and there are no obvious solutions. Indeed, it seen as a response to the abandonment or stagnation of seems clear that several countries will continue to pursue the main trade integration projects in the region. It will be negotiations with extraregional partners. Consequently, it particularly interesting to follow developments over the seems that the different subregional schemes must retain coming months in the recently resumed MERCOSUR- some scope for flexibility and even variable geometry so European Union talks. that this situation can be accommodated. 25 On 5 February 2010, the Plurinational State of Bolivia filed several complaints with the Andean Tribunal of Justice, calling into question certain commitments made by Colombia and Peru in relation to intellectual property under their respective FTAs with the United States in contravention of Decision No. 486 (Common Regime on Industrial Property) of the Andean Community. At the same time, the Plurinational State of Bolivia also filed several complaints against Colombia, Ecuador and Peru for non-compliance with Decision No. 667 of the Andean Community, which provides that the Andean Community shall negotiate with the European Union as a bloc. However, on the initiative of the Government of the Plurinational State of Bolivia, Decision No. 738 was adopted on 1 July 2010, which annuls Decision No. 667. It is thus recognized that, where it is not possible to negotiate as a Community, member countries may hold bilateral negotiations with third parties. As a result, the aforementioned complaints were rendered void. 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Crisis and opportunities for America and the Caribbean (ECLAC), December. 116 Economic Commission for Latin America and the Caribbean (ECLAC) Annex Table III.A-1 LATIN AMERICA: TRADE FACILITATION MEASURES IN THE VARIOUS INTEGRATION SCHEMES, JULY 2010 Central American Latin American Integration Southern Common Subject Andean Community Economic Integration Association (LAIA) Market (MERCOSUR) Secretariat (SIECA) Digital certificate In progress since 2004. The LAIA manual form In 2009, it was agreed In El Salvador, of origin Technical trials are being is used. In Colombia, that paper certificates of electronic certificates conducted in Argentina, the electronic format has origin would be gradually of origin are issued for Brazil, Chile and Colombia. been used since 2005. replaced by electronic Colombia, Guatemala ones. Pilot project in and Honduras through Brazil and Uruguay. the Integrated Foreign Trade System (SICEX). Digital signature In progress since 2004. At the national level, Included in the Digital In Guatemala, this has recognition this has been used in MERCOSUR project been regulated under Colombia since 2005, carried out in conjunction domestic law since 2008, in Peru since 2000 with the European Union. in Nicaragua, since 2010, (established by law), and and in Costa Rica, since in Ecuador, since 2008. 2009. A bill on this issue was drafted in El Salvador in February 2009. Harmonization of National technical regulations adopted on the basis of international standards Significant progress technical standards in all countries. With regard to technical standards, all three schemes are has been made and and regulations involved in the Pan American Standards Commission (COPANT). work is in hand on outstanding regulations. Harmonization Not addressed. The 2009 plan of work Common standards are Significant progress made of sanitary and includes activities to compulsory as soon as in harmonizing the criteria phytosanitary establish and implement they are adopted and and procedures for the standards an Andean Food Safety enter into force when they application of sanitary and System and update have been incorporated phytosanitary measures. existing standards. into domestic legislation A list of products exempt in each State party. from certification has been established. Integrated It has been established The border integration and Once approved by Regional telematics border control that national administrative development policy (1999) MERCOSUR, the platform for the electronic procedures at border defines the areas for border standards are compulsory, exchange of information crossings will be integration. but their entry into (in progress). compatible and carried Moderate progress to date. force is subject to out simultaneously, their incorporation into where possible. domestic legislation. Implementation and Not addressed. The unified customs Following the resolution Customs code in force in harmonization of document and the of 97% of the disputes Guatemala, El Salvador, customs procedures harmonization of customs associated with defining Honduras and Nicaragua (code, regulations procedures entered into the customs code, the (95.7% harmonized). The and single manual for force on 1 June 2010. code may be adopted at ratification process is customs procedures) the MERCOSUR summit under way in Costa Rica. on 2 and 3 August 2010. El Salvador, Guatemala and Honduras have made further progress towards harmonizing procedures. Transparency and Not addressed. Information System on Awaiting adoption of the An information system dissemination of the the Andean Integrated integrated tariff at the on the Central American integrated tariff Tariff (ARIAN). summit in August 2010. tariff has been set up. Enhance or establish The International Customs On 9 April 2010, the draft The International Customs In the plan of work for regulations on Manifest/Customs Transit of the new version of Manifest/Customs Transit July-December 2010, customs transit Declaration is used. the Community customs Declaration is used. there are plans to sign transit regulations, which the customs procedures will be more effective, for international was completed. land transport. Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information provided by the Secretariat for Central American Economic Integration (SIECA), the Latin American Integration Association (LAIA), the Southern Common Market (MERCOSUR) and the Andean Community.