1. Latin America Trade, Tariffs and Competitiveness Submitted to the FTAA Joint Working Group on Electronic Commerce by CCC & CCIB's Telecom / E-Com Working Group Shirley-Ann George Canadian Industry Delegate Vice-Chair Canadian Council for International Business, ECom Working Group Government Programs, IBM Canada Inc. sageorge@ca.ibm.com February 2002 - Part One II. Economic Creativity IV. Impact of Trade Barriers V. ITA - one way to eliminate tariffs I. Growth Competitiveness VI. Benefits of lowering tariffs III. Trade and Tariffs VII. Econometric Studies Public FTAA.ecom/inf/147 June 5, 2002 Original: English

2. Explores link between trade, tariffs and competitiveness ƒfocus on Information Technology and Latin America ƒ Combines data from various international sources – World Economic Form and Harvard University – World Trade Organization (WTO) – IMF World Economic Outlook (WEO) Database Econometric Studies - Country specific ƒBrazil – Federacao das Industries do Rio de Janeiro (Firjan) – LCM Consultores Associados ƒ Argentina – Fundacion de Investigaciones Economicas Latinoamericas (FIEL) Latin America: Trade, Tariffs and Competitiveness

3. I. Growth Competitiveness Ranking for 59 Countries Source: Global Competitiveness Report 2000 World Economic Forum and Harvard University Report for 2000 Measures factors contributing to rapid growth in GDP per capita Macroeconomics and microeconomics determinants Index composed of: ƒEconomic Creativity Index – measures emergence of new businesses – technology innovation or technology transfer - does it matter? ƒFinance Index –efficient financial system, high rates of savings and investment ƒInternational Index –economic integration with the global economy Build on the Competitiveness Index of prior years

4. 1 US 2 Singapore 3 Luxembourg 4 Netherlands 5 Ireland 6 Finland 7 Canada 8 HK 9 UK 10 Switzerland 11 Taiwan 12 Australia 13 Sweden 14 Denmark 15 Germany 16 Norway 17 Belgium 18 Austria 19 Israel 20 NZ 21 Japan 22 France 23 Portugal 24 Iceland 25 Malaysia 26 Hungary 27 Spain 28 Chile 29 Korea 30 Italy 31 Thailand 32 Czech Rep. 33 S. Africa 34 Greece 35 Poland 36 Mauritius 37 Philippines 38 Costa Rica 39 Slovak Rep. 40 Turkey 41 China 42 Egypt 43 Mexico 44 Indonesia 45 Argentina 46 Brazil 47 Jordan 48 Peru 49 India 50 El Salvador 51 Bolivia 52 Colombia 53 Vietnam 54 Venezuela 55 Russian Fed. 56 Zimbabwe 57 Ukraine 58 Bulgaria 59 Ecuador Growth Competitiveness Rankings for 2000 * IMF World Economic Outlook definition of advanced and developing countries Source: Rankings from Global Competitiveness Report 2000 Advanced Economies in blue Latin American Economies in red * Other Developing Economies in green *

5. Growth Competitiveness Rank vs. Average Tariffs for all Goods countries are clustered in groups of 5 source: Global Competitiveness Report 2000 Average for all 59 is 7.9% countries

6. Growth Competitiveness Rank vs. IT Tariffs countries are clustered in groups of 5 source: Global Competitiveness Report 2000; www.ita.doc.gov

7. II. Economic Creativity Index measuring emergence of new businesses Technology Innovation Technology Transfer Ease of Activating New Businesses Venture Capital Availability Obtain Loan with little Collateral Technology Index Start Up Index Economic Creativity Index Source: World Economic Forum Competitiveness Report for 2000

8. Economic Creativity Index 2000 for selective countries Source: World Economic Forum Competitiveness Report for 2000

9. Economic Creativity Index vs. IT Tariffs for Selected Countries Source: World Economic Forum Competitiveness Report for 2000

10. Technology Innovation or Transfer - does it matter? Primary Source of Technology for 20 Largest Economies RankCountry 1US (Nafta) 2JAPAN 3GERMANY 4UK 5FRANCE 6ITALY 7CHINA 8CANADA (Nafta) 9BRAZIL 10SPAIN 11MEXICO (Nafta) 12INDIA 13KOREA 14AUSTRALIA 15NETHERLANDS 16TAIWAN 17ARGENTINA 18SWITZERLAND 19BELGIUM 20SWEDEN IT tariff 0% 18% 0% 34% 0% 40% 8% 0% 10% 0% National Innovation X X X X X X X X X X Technology Transfer X X X X X X X X X X Source: World Economic Forum Competitiveness Report for 2000 and International Trade Administration, US Depart. of Commerce