Bilateral Economic Relations with Latin American and Caribbean Countries

Relations with the countries of Latin America and the Caribbean are a strategic priority for Argentina. The region receives over 30% of Argentina’s exports, with Argentine imports from the region accounting for a similar percentage.

The region currently faces the challenge of increasing and diversifying its trade, overcoming its dependence on foreign sales of raw materials and hydrocarbons, in order to attain sustainable growth, which in turn will lead to increased well-being for its inhabitants and greater regional insertion into international trade. The region’s potential to achieve this is vast, given its natural, mineral, energy and human resources.

Apart from the sub-regional negotiations conducted within the framework of MERCOSUR, Argentina cultivates bilateral economic, trade and investment relations with every Latin American and Caribbean country, with a view to favouring greater productive chain integration, increasing trade volumes, diversifying the exportable offer of goods and services, incorporating products with higher added value and attracting productive investments.

Those bilateral economic relations are developed through different mechanisms, involving high-level meetings (between presidents and between foreign ministers), joint committees, economic consultations or ad hoc meetings held on the occasion of missions and visits. With South American countries in particular, Argentina has bilateral mechanisms for economic and trade negotiations, as well as Economic Complementation Agreements, negotiated within the framework of ALADI, which include tax exemption schedules that have concluded or are close to conclusion.

The bilateral agenda also includes other important challenges for Argentina and the region, such as the development of new projects with respect to international —terrestrial, maritime, railway, air and fluvial—transport, energy integration, physical connectivity, mining, communications and agro-industry, among other sectors.

We should also note the cardinal importance of the efforts made within the framework of MERCOSUR with a view to achieving constructive relations with other integration processes existing in the region, such as the Pacific Alliance, the Central American Integration System (SICA) and the Caribbean Community (CARICOM), among others, which may lead to greater convergence between sub-regional schemes and result in advancing existing trade and investment potential.

 

Latin American Integration Association (ALADI)

ALADI, created by the 1980 Treaty of Montevideo as the successor to the Latin American Free Trade Association (LAFTA-1960), is currently the largest Latin American inter-governmental organization for economic integration.

Its thirteen member countries are Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Panama, Paraguay, Peru, Uruguay and Venezuela, which together represent over 553 million inhabitants, with an estimated GDP totalling 5.5 trillion dollars and an estimated GDP per capita amounting to 10,100 dollars (Cuba is not included in either sum).

The main purpose of ALADI consists in the creation of an area of economic preferences in the region, with the final goal of achieving a Latin American common market, through regional tariff preferences, agreements with regional scope and agreements with partial scope, thus contributing to economic and social development in the region.

In addition to the scheme for participation in ALADI, Argentina promotes the strengthening of more recent integration processes which serve mainly as mechanisms for political dialogue and coordination with respect to a wide array of topics relating to the interests of the region as a whole. These new regional mechanisms include the Community of Latin American and Caribbean States (CELAC) and the Union of South American Nations (UNASUR).

Community of Latin American and Caribbean States (CELAC)

CELAC (which is made up of Antigua and Barbuda, Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil, Colombia, Costa Rica, Cuba, Chile, Dominica, Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Dominican Republic, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Saint Lucia, Suriname, Trinidad and Tobago, Uruguay and Venezuela) is a regional inter-governmental organization created on 3 December 2011.

CELAC is committed to making headway in the gradual integration process of the region, on the basis of a balance between the unity and the political, economic, social and cultural diversity of the 600 million inhabitants of Latin America and the Caribbean. In addition to being a space for political dialogue and coordination, CELAC seeks to act as a forum for the convergence of common actions and interests and as a platform for promoting the increased presence of the region in the world.

The Pro Tempore Presidency of CELAC was held by Ecuador during 2015, and was subsequently assumed by the Dominican Republic within the framework of the 4th Summit of CELAC (Quito, 24-27 January 2016).

As regards regional communication, CELAC has consolidated dialogue and cooperation between Latin America and the Caribbean and the European Union on matters such as science and technology, migrations, investments, gender issues and the global drug problem, among others. Furthermore, CELAC has opened channels for dialogue with extra-regional powers such as China, Korea, Russia, India, Turkey and Japan, as well as with regional organizations such as the Gulf Cooperation Council.

Union of South American Nations (UNASUR)

UNASUR, which is made up of Argentina, Bolivia, Brazil, Colombia, Chile, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela, is a coordination and integration mechanism created on 23 May 2008 in Brasilia, by the Constitutive Treaty. Its goal is to develop a South American space for dealing with political, social, economic, environmental and infrastructure matters, in order to strengthen the identity of the region.

UNASUR has a General Secretariat based in Quito. The office of the Secretary-General, who acts as the legal representative of the regional organization, is currently held by the former Colombian president Ernesto Samper. In addition to the General Secretariat, UNASUR has a Pro Tempore Presidency which is held by a country (currently Uruguay) on an annual rotation basis. The main functions of the PTP include: presenting, convening and presiding over the meetings of UNASUR’s bodies; submitting to the Council of Ministers of Foreign Affairs for consideration UNASUR’s annual activity schedule, including the dates, places and agendas of the meetings of the bodies in coordination with the General Secretariat.

With respect to UNASUR, it should be noted that the member countries have created an institutional structure comprising the sectoral councils in charge of subjects such as energy, social development, infrastructure, economy and finance, science, technology and innovation, among others.

Furthermore, UNASUR offers a preferential space for the design and implementation of a South American strategy for the exploitation of natural resources, which are one of the main comparative advantages of the region, considering that it has the largest oil reserve in the world, nearly one third of our planet’s water resources, 40% of the world’s biogenetic reserves, and one of the biggest food production markets in the world.

In sum, in an increasingly complex and interdependent global context, Argentina favours lines of action with a results-oriented, pragmatic approach for the common good of the societies that are part of the Latin American countries, and also endeavours to actively participate in the resolution of issues on the regional and international integration agenda that require permanent and continuous dialogue with the main global actors capable of facilitating the achievement of the objectives and goals aimed at strengthening inclusion and improving human development indexes.

THE SOUTHERN COMMON MARKET - MERCOSUR

MERCOSUR is a strategic political platform for regional integration, as well as a key element of Argentina’s foreign policy. Its origins date back to the restoration of democracy in the 1980s, when Argentina and Brazil began a process of growing regional integration, joined by Paraguay and Uruguay in 1991 through the execution of the TREATY OF ASUNCION creating the SOUTHERN COMMON MARKET.

MERCOSUR is currently made up of Argentina, Brazil, Paraguay, Uruguay and Venezuela, while Bolivia is in the process of becoming a full member. Chile, Peru, Colombia, Ecuador, Guyana and Suriname are Associate Countries of MERCOSUR.

The main purpose of MERCOSUR is to achieve integration through the free movement of goods, services and production factors, the establishment of a common external tariff and the adoption of a common trade policy, the coordination of macroeconomic and sectoral policies and the harmonization of legislation in the relevant areas, with a view to strengthening the bloc.

In the twenty-five years that have passed since the Treaty of Asunción (1991), MERCOSUR has contributed to the consolidation of peace and democracy in the region, being an element of stability that deepens political and economic ties. Furthermore, it neutralizes inclinations towards fragmentation and favours the development of productive structures, trade growth and greater international insertion of its members.

In recent years, MERCOSUR’s agenda has added a series of new topics through the incorporation of the social, political and citizen dimensions, as well as initiatives on productive integration and reduction of asymmetries.

MERCOSUR covers an area of 13.7 million km2, with a population of nearly 300 million inhabitants and a joint GDP amounting to 3.2 trillion dollars, which would represent the fifth largest world economy. If Purchasing Power Parity (PPP) is considered, joint GDP totals nearly 5 trillion dollars.

Intra-zone trade has multiplied over 10 times during the 25 years of existence of the bloc, with a significant participation by the automotive sector.

Argentine exports in 2014 reached nearly 19 billion dollars, with Industrial Products representing almost 70% of that figure. Furthermore, Argentine imports from MERCOSUR amounted to 15 billion dollars, as a result of which total trade between Argentina and the bloc reached 34 billion dollars.

MERCOSUR BODIES

The Ouro Preto Summit (1994) granted international legal personality to MERCOSUR and created the following bodies:

Common Market Council,

Common Market Group, and

Trade Commission,

Other important bodies include the MERCOSUR Secretariat and Parliament, the Dispute Resolution System, and organs such as the High Representative-General, the Social Institute and the Institute for Public Policies on Human Rights of MERCOSUR.

The institutional structure of MERCOSUR clearly shows that the goal of the bloc is not limited to trade matters, but also includes a comprehensive holistic integration strategy.

With a view to reducing asymmetries between members, the “MERCOSUR Structural Convergence Fund” (FOCEM) was created in 2005, with the aim of financing programmes to support smaller economies and less developed regions with non-reimbursable funds.

MERCOSUR PROSPECTS

Argentina is optimistic about the future of MERCOSUR in a changing global context that presents significant challenges.

The bloc provides a space for strengthening political, economic and social ties between the countries in the region and their relations to the world, thus contributing to growth and the reduction of inequality in the region, as well as to the adoption of common positions in the face of a changing international reality.

In line with its goals, MERCOSUR has decided to give fresh impetus to its negotiations with third countries and groups of countries, highlighting the convenience of increasing its insertion into global trade and investment flows through ambitious, broad and balanced agreements that will contribute to economic growth, job creation and bloc competitiveness, while preserving the rights of workers and favouring human development.

MERCOSUR’s Declaration on External Relations (December 2015) states that the bloc is ready to move towards a conclusive phase in the negotiations to sign a Bi-Regional Association Agreement with the European Union, that would begin with the exchange of market access offers.

Likewise, the objectives include seeking new trade partners, consolidating the agreements already signed with third countries and groups of countries, and strengthening existing dialogue mechanisms.

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