Inter-American Development Bank’s Principal Economic Advisor, Mauricio Moreira, says the region must move towards convergence to be able to trade with China and the US.
Trade is being hampered by the large number of preferential trade agreements (PTAs) in Latin America and the Caribbean.
Pointing out that there are 33 PTAs in the region alone, the Inter-American Development Bank’s Principal Economic Advisor, Mauricio Moreira, described these as “far too many”, adding that while such agreements were fine in the trade market of the 1990s, they are not good enough for 2020 and beyond.
“On the one hand, they help us to liberalise trade within the region, but it is not good enough in the current environment because… if you want to export within the agreements, you have to comply with the rules of origin which are very cumbersome, very expensive and prevent the formation of regional value chains. So we need to do better and try to take advantage of the full market.
Therefore, he suggested that now may be the time to consider the convergence of the agreements to have a bigger market.
“Of course, there are political constraints to doing this, but we try to think of an agenda where we can be conservative in terms of ambitions and keep all the territory, but let’s make sure that all the territories have the same rules. Or we can be more ambitious and try to go to a region-wide free trade area, which given that we have China, the European Union et cetera, if we want to make a difference we need to be ambitious about,” he asserted.
He told The Barbados Advocate at the Hilton Barbados yesterday that with 90 per cent of the trade liberalised, it will not be an easy task to achieve the same with the remaining ten per cent, as the harmonisation of the agreements would require bringing in Brazil, Mexico and Argentina and getting “Caricom closer to South America, which has not happened yet”.
Nevertheless, Moreira said such a venture would be “a worthwhile agenda”.
“If we want to remain relevant, we need to move towards convergence and we need to become a bigger animal if we want to reap the benefits of trade, and if we want to have any type of bargaining power against China and the United States and the bigger trading partners,” he added.