1. REGIONAL INTEGRATION IN LATIN AMERICA Luis Ángel Madrid April 2010

2. The LA region

3. Background Six years of economic bonanza 2002-2008 (induced by China’s appetite for natural resources $ commodities) Grappling with the global recession of 2008-2009 (how to be counter-cyclical) Structural problems: the world’s highest rates of inequality and public insecurity (poverty & unemployment) In which direction in the near future? Populism or market economics?

4. World Economic Forum in LA A stronger cooperation and integration in Latin America is needed The entire process has been jeopardized by ideological and political differences Trade should is being used as political weapon Cartagena, April 7-8 th 2010

5. TOPICS 1.Latin America at the WTO: ignorance or pessimism? 2.The regional environment: many steps backwards? 3.The preferred venue: bilateralism within and without.

6. MULTILATERALISM: THE WTO

7. Everybody member of WTO, but major players? CountryNumber of cases at the DSB (as complainants) Argentina15 Brazil24 Chile10 Colombia & Panama5 Costa Rica4 Guatemala7 Mexico21

8. Tariff profiles of LA CountryBound tariff (%)MFN tariff (%) Argentina31.912 Brazil31.412.2 Chile25.16 Colombia42.912.5 Costa Rica42.85.5 Mexico36.112.6 Peru30.110.2

9. REGIONALISM

10. In the 90s: rising integration FTAA (ALCA): launched by presidents G.H.W. Bush (Enterprise of the Americas Initiative, 1990) & Clinton (First Summit of the Americas, 1994) APEC (1993) WTO (1994)

11. THREE MODELS OF INTEGRATION [ALADI, LAIA (1961,Treaty of Montevideo, 1980)] 1.Andean Community (1969 & 1996) & CACM (Protocol of Tegucigalpa, 1991) 2.MERCOSUR (Treaty of Asuncion, 1991 & Treaty of Ouro Preto, 1994) 3.NAFTA (1992)

12. ANDEAN COMMUNITY

13. Intra-regional trade (exports) CAN countries1990-19992000-2006 Bolivia41,851,3 Colombia24,631,9 Ecuador2230,4 Peru17,519,1 Venezuela50,735,7

14. Problems Lack of progress in further economic integration: the common tariff an elusive goal Deep political differences: Bolivia & Ecuador vs. Colombia & Peru Countries unable to obey common rules Venezuela left in 2006 Everyman for himself: free trade agreements with multiple external partners New integration schemes in LA: UNASUR, ALBA

15. MERCOSUR

16. Intra-regional exports 1980-19891990-19992000-2006 Argentina20,541,542,4 Brazil13,722,325,9 Paraguay45,955,564,3 Uruguay39,750,742,3

17. Challenges Weak institutional structures and nature of the process: state driven Venezuelan membership: stalled in Paraguay because the democratic clause Huge imbalances: in 2008 Brazil exports US $193 b., Argentina US $68.3 b.; Uruguay US $5.9 b. & Paraguay US $4.3 billion The echoes of 2 crisis: 1998 & 2001

18. BILATERALISM

19. EE.UU: the most controversial partner Mexico: entered into force January 1 st 1994 Chile: entered into force January 1 st 2004 CAFTA-DR: signed in August 2004 Peru: entered into force January 1 st 2009 Colombia: signed November 2006 Panama: signed June 2007

20. European Union Mexico: March 2000 Chile: November 2002 Colombia & Peru: concluded April 2010 CAFTA: in negotiations MERCOSUR : in negotiations

21. ASIA & AFRICA Australia: Chile (2008) China: Chile (2005) Japan: Mexico (2004); Chile (2005) Korea: Chile (2003) India: MERCOSUR (2004); Chile (2006) Israel: Mexico (2000); MERCOSUR (2007) P4: Chile (2005) SACU: MERCOSUR (2000) Turkey: Chile (2009)

22. Among Latin American ALADI: regional & bilateral (AAP) 86 AAP among ALADI members (Mexico, Chile, CAN & MERCOSUR) and other LA countries (incl. Cuba, Guyana, Surinam) But some few directed to free trade (art. XXIV GATT 1994)

23. Conclusions NAFTA led the way with the US, but fraught with problems (Colombia, Panama, Ecuador, Venezuela, MERCOSUR) European Union in similar situation (plus CAFTA) China the major question: Brazil signed several mineral agreements on April 15 th 2010; clashing interest remain (undervalued yuan undermines Brazilian industry, Brazil closed economy & bid for the SC).

24. MANY THANKS