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When trade liberalization is not enough: Making the case for Aid for Trade in Latin America and Caribbean Osvaldo Rosales Director, Division of International.

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Presentation on theme: "When trade liberalization is not enough: Making the case for Aid for Trade in Latin America and Caribbean Osvaldo Rosales Director, Division of International."— Presentation transcript:

1 When trade liberalization is not enough: Making the case for Aid for Trade in Latin America and Caribbean Osvaldo Rosales Director, Division of International Trade and Integration Economic Commission for Latin America and the Caribbean (UN-ECLAC)

2 OSVALDO ROSALES ECLAC2 Since 1980s the region underwent substantial reforms, including trade liberalization > 100% 29% 10% Latin America: Unilateral liberalization

3 OSVALDO ROSALES ECLAC3 Despite progress in trade liberalization, Latin America and Caribbean remain less trade-oriented than other regions of the world Sources: ECLAC official data, COMTRADE and World Development Indicators Merchandise trade (% GDP), 2006

4 OSVALDO ROSALES ECLAC4 The regional experience shows that market opening alone is not sufficient for sustained exports and economic growth The growth rate in the region has not been sufficient to ensure convergence with the countries of the North. In the last 20 years, only Chile, C. Rica, Panama and D.R show a clear trend of convergence.

5 OSVALDO ROSALES ECLAC5 The export basket continues to be concentrated in few products In most countries of the region, five products account for over half of all exports High concentration of natural-resource based (oil, iron and steel, copper) and agricultural products (soy, sugar, beef, coffee)

6 OSVALDO ROSALES ECLAC6 The problem is not lack of market access… Proliferation of FTAs and integration agreements: Inside the region (CARICOM, CACM, Andean Community and Mercosur) and Outside the region (especially with US, Canada, EU and Japan) ECLAC estimates that appx. 60% of LAC exports in 2005/2006 were covered by PTAs (sharp increase since mid-1990s) Market access is still important, however to take full advantage of it requires actions to facilitate trade and to raise overall competitiveness. The high cost of logistics and the red tape are often more restrictive that the actual trade barriers

7 OSVALDO ROSALES ECLAC7 The key is an explicit strategy of competitiveness…learning from previous experiences of success and failure Public-Private Alliances (PPA) to enhance competitiveness and innovation Active export promotion and diversification policies Enhancing SME´s export orientation Pursuing trade diversification towards products with greater value-added and higher technology/knowledge content Innovation policies linked with export promotion FDI´s attraction policies Education & human resources Infrastructure and logistic Institutional reforms

8 OSVALDO ROSALES ECLAC8 …lowering the trading costs Source: Connecting to Compete, 2007, The World Bank % of respondents deeming the overall logistics costs to be high/very high

9 OSVALDO ROSALES ECLAC9 Latin American countries are lagging behind in logistics performance Source: Logistics Performance Index, The World Bank

10 OSVALDO ROSALES ECLAC10 Source: Doing Business, The World Bank The red tape adds to trading costs

11 OSVALDO ROSALES ECLAC11 Chile, Barbados and Mexico are the champions of competitiveness in the region, but the remaining countries rank low: Source: World Economic Forum Global Competitiveness Index rankings, 2007 (131 countries considered)

12 OSVALDO ROSALES ECLAC12 The role of regional integration is crucial Bigger and unified markets Harmonization/ convergence of norms and rules Productive integration Regional value chains Translatinas Trade facilitation as a key aspect of internationalization strategy mainly for small economies for SME´s to privilege cooperation efforts before negotiation process in the regional integration upgrading

13 OSVALDO ROSALES ECLAC13 ECLACs vision and experience A4T should focus on three aspects of trade- related capacity building: Strengthening national and regional institutions responsible for trade and development Helping firms to get more competitive in global markets, with emphasis in SMEs Reducing domestic barriers to competitiveness (trade facilitation and infrastructure: physical, human and institutional)

14 OSVALDO ROSALES ECLAC14 A4T in LAC economies Provides a unique opportunity to address these challenges in a collective way and developing a broader and better coordinated approach to trade-related TA. Implementation requires policy coordination and priority-setting among the national agencies and establishment of public-private partnerships to mobilize A4T programs. An useful opportunity to build bridges among different visions on integration and trade in South America, enhancing cooperation aspects and delaying negotiations issues for better times.

15 OSVALDO ROSALES ECLAC15 Three pillars of ECLACs trade-related capacity building and technical assistance I.Formulation and implementation of a trade development strategy Trade transformation and diversification, by sectors and markets Incorporation of knowledge and value- added activities in goods and services. Reinforce linkages between goods and service exports Appropriate institutions necessary for technological advance and innovation in the export sector

16 OSVALDO ROSALES ECLAC16 II. Development of local capacity Compatibility and convergence among the various levels of trade negotiations: multi-, pluri-, regional and bilateral. Some of them, N-S agreements with broad commitments on critical issues Administration and implementation of trade agreements (including regional integration efforts) In 2010, 10 LA countries will have FTA with USA; 11-18 and the Caribbean with the EU and 13 agreements will connect LA with Asian countries Diffusion of information and trade related matters, focused on emerging markets such as China, India and ASEAN. Joint-ventures of LAC governments oriented to explore new opportunities on trade and investment with Asian economies

17 OSVALDO ROSALES ECLAC17 III. Trade Facilitation in areas related to: Informatization of Customs procedures (Edocs, CEFACT) targeting SMEs; Sanitary and Phytosanitary measures Technical barriers to trade; Physical infrastructure (maritime transport, ports etc.).

18 OSVALDO ROSALES ECLAC18 ECLACs contribution to the A4T Initiative Collaborate with IDB and WTO on: Identification of specific projects and initiatives for linking trade and development Participation in the design and implementation of regional mechanisms to implement A4T/ Design of performance indicators Support the WTO monitoring and evaluation work from the regional perspective

19 OSVALDO ROSALES ECLAC19 I.Identification of projects and initiatives Work with governments in collaboration with private sector on: Implementation and administration of bilateral and multilateral trade agreements; Definition of Action Plans in the trade facilitation area (C.America, next pilot plan) Formation and functioning of A4T National Committees as mechanisms to articulate the A4T agenda.

20 OSVALDO ROSALES ECLAC20 II.Regional coordination and cooperation mechanisms To develop a regular regional mechanism to share AfT experiences between countries, donors, international agencies and the private sector; Identify and implement technical assistance programs to support AfT.

21 OSVALDO ROSALES ECLAC21 III.Support WTO monitoring and evaluation Support information recompilation and systematization for the joint WTO/OECD database; Providing information on the countries in the region to support WTOs Trade Policy Reviews; Host, organize and catalyze the AfT LAC Support Network.

22 OSVALDO ROSALES ECLAC22 In conclusion… ECLACs understanding of the regions development process and close contacts to the countries and regional organizations enable it to provide significant support to the regions AfT undertaking and assume a leadership role in conceptualizing, operationalizing and implementing the initiative in LAC. THANK YOU.

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