challenges for regional integration in latin america and the caribbean mauricio mesquita moreira....
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Challenges for Regional Integration in Latin America and the Caribbean
Mauricio Mesquita Moreira.Principal EconomistIntegration and Trade Sector
XXXVII Meeting of the Network of Central Banks and Finance Ministries.Washington D.C. June 18, 2013
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Outline
• The motivation• The road so far• The results• The challenges
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Motivation
• Geopolitics security and political stability.
• Economic Transformationeconomies scale and learning,
competition, public goods, FDI, lock in structural reforms, move faster with economic liberalization.
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The Road So Far
Where are we after decades of “new” regionalism?
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Pre1994: The first steps
UruguayParaguay
Argentina
Brazil
Panama
NicaraguaCosta Rica
El SalvadorGuatemalaHonduras
Dominican Republic
Antigua & Barbuda, Barbados,Belize, Dominica, Grenada,
Guyana, Jamaica, St. Lucia, St. Kitts & Nevis,
St. Vincent & the Grenadines,Suriname,Trinidad &
Tobago
CARICOM
CACM
Source: IDB.
Singapore
Australia
China
Korea
Japan
EU
EFTA
Brunei
Bahamas
Haiti
Thailand
N.Z.
Canada
Mexico
USA
Bolivia
EcuadorPeru
VenezuelaColombia
ACN
MERCOSUR
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Canada
UruguayParaguay
Argentina
Brazil
Mexico
Chile
Bolivia
Ecuador
Peru
VenezuelaColombia
Panama
NicaraguaCosta Rica
El SalvadorGuatemalaHonduras
Dominican Republic
Antigua & Barbuda, Barbados,Belize, Dominica, Grenada,
Guyana, Jamaica, St. Lucia, St. Kitts & Nevis,
St. Vincent & the Grenadines,Suriname,Trinidad &
Tobago
MERCOSUR
ACNCARICOM
CSME
CACM
Canada-CRI
CAFTA-DR(CARICOM members but not in CSME)
Chile-Cent. Amer.
NAFTA
ACE 35
ACE 36
Source: IDB.
ACE 59
ACE 59
ACE 59
ACE 58
G-3
USA
EU, EFTA
Singapore
Australia
China
Korea
Japan
EU
Brunei
TPP
Bahamas
HaitiEU-
CARIFOUM
EPA
Thailand
N.Z.
2000s: The Spaghetti bowl
ASEAN
ASEAN+6
ASEAN+3
ARCO
PA
PA
UNASUR
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Do results meet expectations?
Partly…• Geopolitics
– Achievements in MERCOSUR (democratic safeguards, Brazil-Argentina military rivalry) and CARICOM;
– But difficulties in the Andean Community (rivalry Colombia/Venezuela, individual negotiations) and in MERCOSUR (Doha, Europe and China)
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Economics – The agreements were effective in bringing down barriers and boost
intraregional trade but have lost momentum in the last decade and…
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• …the impact on extra regional competitiveness was marginal at best
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The challenges
How to interpret the results?
Is the “new” regionalism doomed to be irrelevant?
Not necessarily, but governments have to double their “bets”
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The challenges
Three key issues
1) Convergence 2) Investment in infrastructure3) Deepening
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1) Convergence
• Need for a regional market without the “spaghetti” (rules of origins), key to maximize economies of scale and develop regional value chains.
.
Canadá USA
México Chile
UruguayParaguay Brazil Argentina
Mercosur
Bolivia Colombia
Venezuela Perú Ecuador
Costa Rica Nicaragua
El Salvador HondurasGuatemala
MCCA
Jamaica
Trinidad yTobago
Antigua y BarbudaBarbadosBelizeDominica
GrenadaGuyanaSurinameSta. Lucia
St. Vincent & GrenadinesSan Kitts y NevisCARICOM
Panamá Republica Dominicana
ALADI
CA
ALCA
USA-MCCA Canadá-CA-4-
USA-Chile
Bahamas Haití
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2) InfrastructureWithout investment in infrastructure, there is neither “enlarged
market effect” nor greater share of the world markets
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3) Deepening
LAC South-South agreements can only make a difference in the context of deep integration. But that requires:
Bring external tariffs down to avoid trade diversion; Get rid of the remaining intra-regional tariff and non-tariff barriers level the regulatory “playing-field” Convergence of the macro policies frameworks.
• The key question: Is there political will for this agenda?