THE ROLE OF TRADE: SOUTH-SOUTH AND GLOBAL Ing. MARCELO REGUNAGA New Delhi, November 2003

TRADE IS A KEY ENGINE FOR GROWTH The Argentine experience shows that GDP and per capita income has been linked to open trade (GDP annual growth in selected countries) PeriodArgentinaAustraliaUSA

INCREASE PROYECTED IN GLOBAL DEMAND WOULD LEAD TO GROWING AGRICULTURAL TRADE Scenarios for 2025 and 2050 show that many developing countries (DCs) and LDCs will need to import food and other agricultural products Other DCs, like MERCOSUR, could increase production and contribute to fullfil such requirements Good opportunities for South-South trade in food and other agricultural products Currently some of such opportunities are taken by subsidized agricultural products, which limit potential growth of DCs

SOUTH-SOUTH AGRICULTURAL TRADE IS VERY LITTLE DCs shares in exports of agricultural DCs are very little: – Colombia: 8 %; Egipt: 16 %; India: 19 % – Indonesia: 17 %; Mexico: 6 %; Peru: 18 % – Philipinnes: 13 % There is a need to find ways to promote South-South trade –Reducing domestic and export subsidies in OECD countries –Improving South-South market access

ALTERNATIVES TO IMPROVE GLOBAL AND SOUTH-SOUTH TRADE Multilateral: WTO GSPC : Developing countries reciprocity Regional – Bilateral FTAs and other initiatives

IMPROVING MULTILATERAL TRADE: COMPLYING WITH DOHA MANDATE ON MARKET ACCESS “Substantial improvement” = substantial reductions in tariffs and /or substantial increases in tariff quotas Derbez and other proposals would not result in substantial increases in agricultural trade – Global – South - South

IMPROVING MULTILATERAL TRADE: Industrialized countries Flexibilities –Unespecified % of Uruguay Round approach (10 % of EU tariff lines account for 80 % imports) –Average cuts vs line cuts –Gap between bound and applied tariffs (36 % has no impact) –Flexibilities to maintain high tariffs based on non trade concerns Special Agricultural Safeguard Quotas and tariff quota administration (very poor)

IMPROVING MULTILATERAL TRADE: Developing countries Special products Uruguay Round approach with no increases in quotas Special Agricultural Safeguard which could apply to industrialized and developing countries Alternative: Special and Differential Countervailing Measures (S & D treatment in market access for developing countries)

IMPROVING SOUTH - SOUTH TRADE: Differential and more favourable treatment, reciprocity and full participation of developing countries (GSPC) Promote consultations and agreements between DCs to mutually reduce or eliminate tariffs and non tariff barriers to trade (within UNCTAD) (Decision L 4.903, Nov. 1979)

REGIONAL–BILATERAL FREE TRADE AGREEMENTS AND OTHER TRADE FACILITATION INITIATIVES (sanitary, customs, etc.) MERCOSUR EXPERIENCE Increase in regional and total trade (million dollars, %) Increase in foreign investment - Competitiveness (SSMF) Flows Change(%) ExportsIntra Mercosur5,10015, ExportsRest of world40,80072,70078 ImportsIntra Mercosur5,10015, ImportsRest of world27,30066, TradeIntra Mercosur10,20030, TradeRest of world68,000139, TradeTOTAL78,200169,500117

REGIONAL- BILATERAL FREE TRADE AGREEMENTS AND OTHER TRADE FACILITATION INITIATIVES (sanitary, customs, etc.) OTHER INITIATIVES MERCOSUR - CHILE MERCOSUR - BOLIVIA MERCOSUR - ANDEAN COMMUNITY ARGENTINA (MERCOSUR) - MEXICO F.T.A. AMERICAS MERCOSUR - EU MERCOSUR - INDIA ARGENTINA - CHINA