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To be fair, a lot of work has been done. The region has 33 preferential trade agreements PTAs , more than any other in the world.
Latin America and the emerging ideological struggle of the 21st Century
If signing the most trade pacts were a sport, Latin America and the Caribbean would be the hands-down winner. On the positive side, these pacts have increased trade in dollar terms within the region by an estimated 64 percent on average since the early s. But this complicated trade architecture has two problems. Those three economies together account for almost two-thirds of the gross domestic product of Latin America and the Caribbean, but the three nations contribute just 7 percent to intraregional trade.
In addition, the three main subregions Central America, South America and the Caribbean are barely linked to one another. The second problem is that this mosaic of 33 relatively small pacts has spawned accompanying rules of origin agreements. The result is a complex web of 47 rules of origin agreements.
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Firms are hard-pressed to acquire goods from the most efficient producers and struggle, in turn, to join competitive regional supply chains. We have calculated the cost of these rules of origin pacts to be the equivalent of an import tariff of 15 percent. So, Latin America and the Caribbean cannot afford to rest on its laurels. We need to fill the integration gaps, particularly among the largest economies, and promote convergence among the pacts.
This is the logical thing to do anyway, but even more so in the face of a protectionist backlash in some developed countries and the rise of mega-trade pacts elsewhere that are starting to dominate the international scene. Leaders can pick the strategy best suited to their political circumstances and ambition. They can take a more cautious, step-by-step approach.
They would first harmonize rules of origin among existing pacts and then fill the relationship gaps. Emerging Multinationals. Emerging Technologies. Environment and Natural Resource Security.
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