Potential of the Latin American Region
· The second fastest growing region in the world.
· The region accounts for nearly 5% of world trade.
· Rich in natural resources.
· The recent liberalisation process has resulted in integration of these economies with the global economic system.
· Privatization and liberalisation of financial markets.
· In many countries inflation has been controlled and the debt crisis has been overcome.
· Reduction of tariff/non-tariff barriers.
· Activation of regional trade arrangements such as MERCOSUR, ANDEAN PACT, CARICOM, etc. A list giving details of intra-regional trade arrangements is at Annex-I.
INTRA-REGIONAL TRADE ARRANGEMENTS IN LAC
A number of regional trade arrangements (RTAs) exist in LAC. The important ones are:
1. MERCOSUR (Southern Cone Common Market)
2. Andean Pact (Andean Common Market)
3. CACM (Central American Common Market)
4. CARICOM (Caribbean Community)
5. EAI (Enterprise for the Americas Initiative)
6. LAIA (Latin American Integration Association)
7. NAFTA (North American Free Trade Agreement)
MERCOSUR(Southern Cone Common Market)
· Set up in 1991, members are Argentina, Brazil, Paraguay & Uruguay.
· Venezuela has also become a full member in July 2006.
· Objective is to form a common market through co-ordinating fiscal and exchange rate policy, and accelerating economic development
· Intra-regional trade is being gradually liberalized
· Tariffs on 90% of intra-regional trade has been removed
· Brazil & Argentina have eliminated intra-regional tariffs, Paraguay and Uruguay are expected to follow.
· Common external tariff(CET) ranging from 0-20%
· India has signed a PTA with MERCOSUR.
Andean Community of Nations (CAN)
· Set up in 1969, revived in 1990
· Members are Bolivia, Colombia, Ecuador, Peru and Venezuela
· Objective is to form a common market through harmonization of social and economic policies, and joint programmes
· By 1993, tariffs had been eliminated in almost all products
· CET ranges between 5-20%, except for Peru
· For Peru, CET is at a flat rate of 15%
CACM (Central American Common Market)
· Set up in 1961, revived in 1990.
· Members are Costa Rica, El Salvador, Guatemala, Honduras & Nicaragua.
· Objective is to form a custom union.
· Agriculture goods are excluded from trade liberalisation; a common price band for key agro-products is in place.
· Many restrictions to intra-regional trade have been lifted.
· CET ranges between 5-20%.
CARICOM (Caribbean Community)
· Set up in 1973
· Members comprise 15 Caribbean countries (Antigua & Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Monteserret, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, Suriname, Trinidad & Tobago)
· Objective is to form a common market through harmonization of customs procedures
· Most intra-regional trade has been liberalized
· First phase of reducing CET to a range of 0-35 has been implemented starting in 1993
LAIA(Latin American Integration Association, ALADI)
· Set up in 1980, formerly known as LAFTA.
· Members comprise 12 countries (Argentina, Bolivia, Brazil, Cuba, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, Venezuela)
· Objective is to form a common market through extending regional tariff preferences, and ‘partial scope agreements’ among some of the members
· A large number of bilateral trade agreements have been signed among the members to liberalize trade in the LAIA group.
EAI(Enterprise for the Americas Initiative)
· Set up in 1990
· Members comprise CARICOM members, MERCOSUR members, Andean Pact members, and 10 countries including the US
· Objective is very ambitious – to achieve a free trade zone for the entire Western Hemisphere
· To reinforce market-oriented reforms in LA by expanding trade investment, and strengthening environment policies
· The US has signed framework agreements with 31 countries.
· Framework agreements establish the agenda for bilateral negotiations as well as institutional mechanisms.
NAFTA(North American Free Trade Agreement)
· Set up in 1994.
· Members comprise the US, Canada and Mexico.
· Objective is to form a free trade area is goods and services, government procurement, and intellectual property rights, and liberalisation of investment flows and professional services.
· Canadian Agro and Mexican petro-products are partially excluded.
· Effective January 1, 1994, phased elimination of tariffs and non-tariff barriers has started.
· Objective is to remove all trade barriers over a maximum of 15 years.
ROLE OF EPCS /APEX CHAMBERS/MISSIONS