Bulletin80 on the integration of Latin America and the Caribbean May / 2004 Contents Multilateralism, Social Cohesion, and Bi-regional Relations: Key issues at III LAC-EU Summit (1-2) ECLAC Report: LAC Exports Grew by 8.3% in 2003 (3) ALADI Countries Move Ahead Towards Creation of a Regional Free Trade Space (4) Andean Community Marks its 35th Anniversary (4) Education and Culture Should Cease To Be the Cinderella of Free Trade, CAB Ministers Say (5) Calendar of Meetings (5) Briefs (6) - ALADI Releases Study on Impact of the FTAA - ALIDE Holds 34th Regular Meeting of its General Assembly - ACS Project Gets Funding from IDB Guadalajara, Mexico The Mexican city of Guadalajara provided the venue, on 28 and 29 May, for the III Summit of Heads of State and Government of Latin America and the Caribbean and the European Union, who reaffirmed their commitment to consolidate the strategic bi-regional partnership agreed to in their first meeting in Rio de Janeiro, Brazil, in 1999. On this occasion, the Summit was also attended by the leaders of the 10 new Member States of the European Union, which was considered as an important contribution to the strengthening of our partnership, which now includes more than one quarter of the nations of the world. The issues dealt with at the event which basically focused on three key subjects: multilateralism, social cohesion, and strengthening of bi-regional relationship were included in the Declaration of Guadalajara, in which the Heads of States made the following statements, among others: Multilateralism, Social Cohesion, and Bi-regional Relations: Key Issues at III LAC-EU Summit The Latin American and Caribbean Integration Bulletin is a publication of the Permanent Secretariat of SELA which was generated within the framework of the UNESCO-SELA Convention Communications for the Integration of Latin America and the Caribbean of the UNESCO International Programme for the Development of Communications (IPDC). Legal deposit: pp 199703CS183 ISSN: 1317-1844 Latin American Economic (SELA) Permanent Secretariat, Apartado Postal 17035, Caracas 1010-A, Venezuela. Visit SELA's website in Internet: www.sela.org. Send your comments or suggestions to SELA at: ksalerno@sela.org Multilateralism We reiterate that an effective multilateral system, based on international law, supported by strong international institutions and with the United Nations at its centre, is essential for achieving peace and international security, sustainable development and social progress. We recognise the need to make the multilateral system more responsive and effective in meeting global threats and challenges. In this regard, we are committed to the reform and revitalisation of the United Nations, including the General Assembly and the Security Council. We are convinced that a multilateral approach to security provides the best means to maintain international order. We reiterate our firm condemnation of all acts of terrorism and its financing and we undertake, through mutual cooperation, to prevent, combat, sanction and eliminate terrorism in all its forms and manifestations, wherever and by whomever committed. We express our full support for the International Criminal Court as an effective means to combat impunity from the most heinous crimes of concern to the international community. The States Parties call on those countries which have not done so to ratify or accede, as applicable, to the Rome Statute. We firmly condemn all forms of abuse, torture and other cruel, inhumane, and degrading treatment of persons, including prisoners of war, wherever they occur. We express our abhorrence at recent evidence of the mistreatment of prisoners in Iraqi prisons.
The European Union is exploring WTO-compatible ways to ensure access under the Generalized System of Preferences scheme to the EU market by LAC countries particularly affected by the production and trafficking of illicit drugs. We recognise the specific challenge posed by the trafficking and abuse of illicit drugs and other related criminal activities to Caribbean societies. We therefore welcome the approval by the CARICOM of a Regional Strategy for Drug Demand Reduction, as well as the work and recommendations of the Regional Task Force on Crime and Security. We call on all States to sign and ratify the UN Convention against Corruption in order to ensure its early entry into force. We will reinforce international cooperation in this area. We will take measures to eradicate corruption, and to promote ethics and transparency in government and private sector actions. We reiterate our commitment to the UN Convention on Climate Change and urge those countries which have not yet ratified the Kyoto Protocol to do so without delay. We recognise the specific challenge that global climate change poses to the sustainability of development in those areas most affected, and its negative impact on fragile eco-systems. In this regard, we recognise the particular vulnerability of the Caribbean region arising from the increased intensity and frequency of hurricanes and flooding, and the resulting damage. We note the serious concerns expressed by the Caribbean and some other LAC States regarding the potential risks to environmental, maritime and human security from the transhipment of unprocessed nuclear and radioactive waste through the Caribbean Sea. We will support increased cooperation in this area in relevant international forums, We will continue to promote a comprehensive approach to migration, taking further steps to enhance cooperation and mutual knowledge of migratory realities in both regions. We aim to address important issues such as the full respect for human rights of all migrants, regardless of their status. We highlight that remittances are a significant source of income in many countries. We will therefore cooperate to facilitate the transfer of remittances and reduce the costs, in accordance with relevant national legislation. Social cohesion We reiterate our commitment to attain the Millennium Development Goals by 2015 and underline our determination to build fairer societies by strengthening social cohesion, especially bearing in mind the principle of global common responsibility. We prioritise social cohesion as one of the main elements of our bi-regional strategic partnership and have committed ourselves to cooperate to eradicate poverty, inequality, and social exclusion. Bi-regional relationship We underline the importance of projected agreements between the European Union and the sub-regions of Latin America and the Caribbean, which together with existing agreements and those under negotiation, will allow us to continue to build on our bi-regional strategic partnership. We welcome the Rio Group Initiative towards establishing innovative financial mechanisms intended to reinforce democratic governance and confront poverty, as an additional response of the international community to deal with basic social demands, productive investment and employment generation. We undertake to combat HIV/AIDS through preventive measures combined with adequate healthcare and access to medication for all affected. We are committed to the principles of decent work proclaimed by the International Labour Organisation, in the belief that respect for workers rights and dignity is vital for achieving poverty reduction and sustainable social and economic development for our peoples. We undertake to work together so that the results of UNCTAD XI strengthen the implementation of the conclusions of the Millennium Summit, the Monterrey Consensus and the Johannesburg Summit, and support the negotiations on the Doha Work Programme. This Work Programme provides a major opportunity to further liberalise trade through increased market access and the strengthening of WTO rules and disciplines. We recognise the need to ensure benefits for all countries, and in particular developing countries, and reiterate our strong commitment to achieve significant progress in the negotiations in 2004. We will increase efforts to promote sustainable economic development and to combat poverty, hunger and exclusion. We recall the commitment of the international community to work towards the objective of reaching 0.7% of gross national income of developed countries for official development aid. We recognise the special characteristics of Landlocked Developing Countries and Small Island Developing States, which deserve an approach suited to their specific needs and problems. We underline the progress made in the definition of a bi-regional cooperation strategy. We will promote the allocation of funds for bi-regional cooperation, in order to strengthen the process of bi-regional partnership between Latin America, the Caribbean and the European Union. Considering the importance of science and technology for the economic and social development of our countries, we agree to launch a partnership in science and technology with a view to including Latin America and the Caribbean as a target region for the EU Framework Programmes in these sectors, thereby contributing to deepening and developing biregional links and encouraging mutual participation in research programmes. We reiterate the crucial importance of improving the capability of the international community to prevent and respond comprehensively and collectively to serious humanitarian crises resulting from natural or man-made disasters, through international cooperation, in accordance with international law and the UN Charter, and taking into account General Assembly Resolution 46/182. We gratefully accept the invitation of Austria to hold the fourth EU-LAC Summit in Vienna, on 12 and 13 May 2006. 2/
Santiago Latin American and Caribbean exports grew by 8.3% in 2003, thanks to better prices and higher volume sales for basic goods such as copper, oil, soya, coffee, cotton, wool and sugar exported by the countries of Central and South America. The prices of manufactured goods rose more slowly. In the first quarter of 2004, exports rose by 17%. The rapid rhythm of trade growth was maintained by the high demand in the U.S., the EU and the developing countries of Asia, particularly China. Exports among Latin American nations also recovered in 2003, after a fall in the two previous years. Imports remained low, compared with 2000 values. For the first time in 13 years, Latin American and Caribbean countries have accumulated a surplus in goods and services of around US$ 25.5 billion, and a current account surplus of about US$ 2.8 billion. The region had not experienced this kind of situation for half a century. The recovery in exports and intra-regional trade is an encouraging sign. Now we must seek ways to develop an export base with higher value added that builds on our revealed comparative advantages, which is capable of incorporating new technologies and has a stronger impact in terms of job creation, said José Luis Machinea, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), at the presentation of the annual report Latin America and the Caribbean in the World Economy, 2002-2003, in Santiago. There were significant price rises for the region s basic products in 2003. Argentina, Brazil and Uruguay expanded their farm exports on the strength of higher prices for soya and its by-products. Coffee exports from Colombia, Brazil and Central America were boosted by a better price, and Paraguay and Uruguay benefited from higher cotton and wool prices. The extraordinary rise in the copper price, which crossed the US$ 1.30 cent/lb barrier in February, favoured Chile and Peru. The biggest boost for Central America and the Caribbean was the recovery in the price of sugar, the main item in its export basket. Belize, Colombia, Ecuador, Mexico and Trinidad and Tobago all saw growth of more than 20% in their mining and oil sectors, thanks to the better prices. In 2003, trade within Latin American reached US$ 60 billion, still 4% below its highest level, in 2000. The procyclical trend in intra-regional trade was once again in evidence; it expanded alongside the increase in the regional product, after contracting in previous years Last year saw a reactivation of 26% in exports among the member states of the Southern Cone Common Market (MERCOSUR), of 6.8% in the Central American Common Market (CACM), and 12% within the Caribbean Community (CARICOM). This is in contrast to the contraction of 5.5% in trade among the members of the Andean Community. In relative terms, however, intra-regional trade is well below its 1997 level. Latin American and Caribbean nations are participating actively in several international trade negotiations. In the multilateral sphere, the most important was the Fifth Conference of Ministers of the World Trade Organisation (WTO), in Cancún, which ended inconclusively due to the lack of progress on farm issues, and the reservations of some developing countries over negotiating matters such as investment, competition policy and trade facilitation. Chile secured a major advance with the ratification of a Free Trade Agreement with the United States. El Salvador, Honduras, Guatemala and Nicaragua successfully concluded negotiations for a Free Trade Agreement with the U.S., joined in 2004 by Costa Rica and the Dominican Republic. The U.S. announced its interest in reaching similar agreements with the Andean countries, and negotiations will begin with Colombia, Peru and Ecuador on 18 May, with Bolivia scheduled to follow later. In the negotiations on the Free Trade Agreement of the Americas, the VIII meeting of ministers in November decided to throw out the scheme of the single undertaking, which would have kept negotiations on all topics together. ECLAC recognizes the advantages of access to North American markets, but warns that fragmentation of the negotiation agenda could work against the interests of countries with less negotiating ability. After a critical review of nearly four decades of government policies aimed at promoting and developing the exports of good and services by Latin American and Caribbean nations, ECLAC notes that there is still no consensus on the effectiveness of the strategies used, and that the region has been characterized by abrupt institutional changes that hinder its success. This issue of Latin America and the Caribbean in the World Economy looks at events in Mexico, Central America and the Caribbean and concludes that the contribution of export promotion and development tools continues to be limited. The study shows that the most recent diversification of exports in these countries owes more to the decisions of foreign companies and the preferential access to the US market than to the traditional tools of export promotion and development. Export promotion in recent years appears to centre on negotiations for market access. ECLAC Report: LAC Exports Grew by 8.3% in 2003 /3
ALADI Countries Move Ahead Towards Creation of a Regional Free Trade Space Andean Community marks its 35th anniversary 4/ Montevideo The Secretary-General of the Latin American Integration Association (ALADI), Venezuelan Ambassador Juan Francisco Rojas Penso, submitted the Report on the Evolution of the Integration Process of Latin America during the year 2003, on 17 May, at the headquarters of the organisation. Rojas Penso highlighted that after six years, it was possible to move ahead with the regional integration process within an environment of economic recovery in the countries belonging to the Association, which grew at an average rate of 1.6% last year, and have a promising outlook for 2004, since their gross domestic product is projected to grow by approximately 3.5%. Such an economic recovery had a positive impact on trade among ALADI Member States, which accounted for US$ 42.88 billion in 2003 an increase of 11% over the previous year, which was significantly higher than the 4.5% registered for global trade. Such an increase was due to a growth in intra-mercosur trade, particularly as a result of the recovery in trade exchanges between Argentina and Brazil, Rojas Penso explained. He said that trade within the region accounts for a little over 17% of the total trade with the whole world, and its growth has helped ALADI countries to post record balances for the first time over the last 50 years. He added: Once again, the Latin American market turned out to be the main destination for exports of manufactured goods, as they accounted for 75% of total exports to the region. Lima.- In a solemn session, with the attendance of the President of Peru, Alejandro Toledo, the 35th anniversary of the signing of the Cartagena Agreement was celebrated on 24 May in the headquarters of the Andean Community General Secretariat in Lima. President Toledo declared that in this anniversary, the Andean Community is experiencing a great moment, with the development of dynamic initiatives such as the new strategic design, which he added will be approved at the next Presidential Summit to be held in Cuenca, on 12 July. "This challenge will represent the climax of a process influenced by internal and external factors and I particularly believe that the steps taken by each member country of the Andean Community, in order to assume an updated agenda to face the 21st century, are of crucial importance and will force us to work under integration schemes that go beyond purely commercial matters, he underscored. For his part, the Andean Community Secretary General, Allan Wagner, highlighted three top priority and immediate tasks that will contribute to the Andean Community development, with more equality and influence at worldwide level. The first task is to strengthen our commercial integration with a view to a common market adapted for globalisation purposes; the second task deals with recovering the idea of development in the integration process agenda, this being understood now as competitiveness and social inclusion; and the third task is the search for social cohesion, in such a way that integration may contribute to overcome poverty, exclusion and inequality, which is essential to ensure democratic governance, Wagner said. With respect to the integration process, the report of ALADI s General-Secretary highlights that regardless of the slowdown in trade negotiations at the WTO and the FTAA the governments of ALADI Member States reaffirmed their support to the Latin American integration process. In this regard, the report made special emphasis on the fact that the negotiations between the Andean Community and MERCOSUR came to a successful conclusion in December 2003. As a result of that agreement, of the 66 possible bilateral relations within the region, 49 of them are aimed at creating free trade areas in the hope of reaching total liberalisation of slightly more than 87% of the trade exchange by the year 2007. The report says that concluding the above-mentioned negotiations is an incontrovertible proof of the political will of the Latin American governments to jointly face the challenges posed to the region by the globalisation process of the international economy. Two approaches have emerged to deal with these challenges. The first approach favours individual responses through bilateral agreements with industrialised nations. The second approach suggests that those challenges can only be dealt with in an appropriate way by deepening the regional integration process. The conclusion of the agreement between the Andean Community and MERCOSUR is a step forward towards the creation of an enlarged Free Trade Space among the countries of the Association a subject that will be thoroughly debated by the Council of Ministers of ALADI, which will take place in Montevideo on 18 October, Ambassador Rojas added MetLife for $962 million. Furthermore, Wagner stated that a priority objective should be the creation of a largely integrated South American space, with infrastructure integration as the cornerstone, represented by the IIRSA initiative. Finally, he mentioned the trade association efforts displayed with the United States and the European Union, and the Andean projection towards the Pacific Basin. On behalf of the Chairman of the Andean Council of Foreign Affairs Ministers, the Foreign Affairs Vice- Minister of Ecuador, Edwin Johnson, affirmed that it is now time to look for a new objective that will finally lead the Andean Community to a true political and economic integration. The President of the Andean Community Commission and Minister of Foreign Trade, Industrialization, Fisheries and Competitiveness of Ecuador, Ivonne Juez de Baki, stated that the present problems may be solved by combining our efforts, joining our wills and getting together as partners in this dream of Andean and Latin American union. On this occasion, I wish to transmit you my optimism with regard to what can be achieved by us if we work together, with courage and willingness, for a long-term relationship, she highlighted. For his part, the President of the Andean Community Court of Justice, Walkter Kaune Arteaga, emphasized the strength of this organisation. "In addition to fulfilling its duties in the solution of controversies in the past four years it has taken care of more than 500 cases it has contributed to consolidate the institutional framework of the integration process ", he said.
Cartagena de Indias, Colombia The ministers of Education of the Member States of the Andrés Bello Convention (known by its Spanish acronym as CAB) signed the Declaration of Cartagena de Indias during the forum Cultural Identity, Education and Free Trade Agreements, which was held from 19 to 21 May in the Colombian coastal city of Cartagena. The forum was aimed at analysing the impact of those treaties on key social sectors, such as education, culture, science and technology. In the Declaration, the ministers of Cuba, Panama, Venezuela and Colombia, as well as the delegates from the Ministries of Education of Paraguay, Peru, Spain, Ecuador, Bolivia and Chile, considered, among other issues, that education, culture, science and technology in our countries are not being taken into account in the fundamental decisions that our governments are making or discussing at the various international negotiation forums. The ministers stated that the decisions at stake have an influence on the educational, cultural and scientific processes, which in turn have a direct impact on the lives of millions of men and women in our continent. These decisions are made within an economic and social context marked by poverty, inequalities and deep equity problems. In opening the event which was also attended by international experts CAB s Executive Secretary, Ana Milena Escobar Araujo, made a strong call for greater attention to the implications of free trade agreements for education, culture, science and technology. The Executive Secretary made special emphasis on the way our governments deal with strategic sectors of our nations, such as education and culture. By the way our governments, private sectors and civil society act, it seems as though education and culture have always been the Cinderella of free trade agreements. This turns out to be an utter paradox if we take into consideration that the greatest catalysts for integration even for trade integration have been the cultural exchanges that have occurred thanks to the mass media and communication technologies, she said. Trade negotiations also provide an opportunity to regulate those cultural exchanges, which so far have only worked against cultural identity and diversity, she added. CAB data A study conducted by CAB indicates that the ongoing negotiations do no include sectors such as cinemas (box office prices, distribution, support policies and financing), television (percentage of national TV contents, free movement of people, foreign investment), new technologies (free software, proprietary software, free trade), copyrights, minorities and disadvantaged populations, intellectual property rights and production, and knowledge appropriation and circulation, among others. Other CAB data show that in the year 2001 the contribution made by cultural industries to the GDP amounted to 7.8% in the United States, 4.5% in MERCOSUR, and 2.04% in the countries of the Andean Community and Chile. Figures also indicate that in the case of exports of cultural goods within the continent, 61% comes from the United States, 8.4% from Canada, 26% from Mexico, and 3.8% from the rest of the continent. In view of these inequities, CAB suggests that the FTAA negotiations should include cultural aspects such as property, national identity, development of cultural and creative activities at the national, regional and local levels, nationality and intellectual property conditions, and copyrights. Education and Culture Should Cease To Be the Cinderella of Free Trade, CAB Ministers Say Calendar of Meetings Pucon, Chile, 4 and 5 Meeting of APEC Trade Ministers Sao Paulo, Brazil, 13 to 18 XI UNCTAD Quito, Ecuador, 6 to 8 XXXIV General Assembly of the OAS Santa Cruz, Bolivia, 8 to 11 Seminar-Workshop Innovation and Financial Technologies For Financing of SMEs in Latin America Sao Paulo, Brazil, 11 and 12 Special Ministerial Meeting in commemoration of the 40th Anniversary of the G-77 Mexico City, Mexico, 10 to 12 IX Regional Conference on Women in Latin America and the Caribbean Port of Spain, Trinidad and Tobago, 15 and 16 V Meeting of the Group of Experts in Sustainable Tourism Indicators Trinidad and Tobago, 18 Fourteenth Meeting of the Council of Ministers of CARICOM Fajardo, Puerto Rico, 27 to 29 XX Latin American Congress on Foreign Trade (CLACE) San Juan, Puerto Rico, 28 June to 2 July Thirtieth Session of ECLAC June /5
Briefs ALADI Releases Study on Impact of the FTAA Montevideo.- The General Secretariat of the Latin American Integration Association (ALADI) released on 18 May the main conclusions of the document titled Impact of the FTAA on the economies of the Member States of ALADI: A general equilibrium analysis. The study was conducted with the purpose of supporting Member States in the ongoing negotiations to create a continent-wide free trade area. The document includes the results from a simulation exercise based on the development of a computerised model that allowed for an analysis of the quantitative effects of changes in the policies governing allocation of resources, efficiency and economic well-being. In this regard, the underlying methodology of the model consists in explaining what would have happened with the economy, in a given base year, if a specific change in trade policy had been applied in the case of this exercise it was a modification in tariff levels while keeping unchanged the other aspects of domestic policies as well as external conditions. The aggregated results show that the FTAA agreement would have a positive effect on ALADI countries as a whole as measured by the changes in real GDP. All ALADI countries would increase their exports according to this simulation of the FTAA agreement. However, the study also underscores that the downsides of the increases in trade volumes and in internationalisation that the FTAA countries would experience are a greater concentration in some sectors and an increase in the importance of intracontinental destinations. The combination of these factors could make the region s countries more vulnerable to the internal shocks that may occur in each one of them (depending on the size of the country as an exporter or importer). In other words, a greater concentration implies greater commercial risk, which is a factor that the countries should bear in mind in designing their public policies aimed at facilitating the process of economic transformation that the creation of the FTAA could involve.. ALIDE Holds 34th Regular Meeting of its General Assembly Buenos Aires.- The 34th Regular Meeting of ALIDE, held on 27 and 28 May in Buenos Aires, Argentina, addressed the key challenges the region faces in moving toward greater integration with economic growth. The meeting was organised by the Bank of Foreign Trade and Investment (BICE) and the Latin American Association of Development Financing Institutions (ALIDE), under the sponsorship and with the collaboration of financing institutions in Argentina that are members of ALIDE. The agenda of the meeting focused on three major areas: the identification of innovative financial mechanisms for raising long-term resources for productive investment and development; integration financing, covering not only the promotion of trade, but also of infrastructure and investments; and the role of the development banking system in strengthening, coordinating and financing SMEs, which constitute a major factor in the process of economic recovery.aside from the opening session, the meeting included three plenary sessions to analyse the agenda, followed by general discussions among the participants, the 30th Meeting of ALIDE National Coordinators, a special session on institutional matters, and several seminars on sectoral financing. In addition, several business interviews were conducted. The interviews offered an opportunity for development financing institutions, international banks and financing institutions, and investment and project promotion institutions to exchange ideas about possible businesses, investments and financing of projects and activities of common interest. ACS Project Gets Funding from IDB Port of Spain.- The Italian government has confirmed funding to the tune of US$ 150,000 for a maritime transport project of the Association of Caribbean States (ACS) through its Trust Fund managed by the Inter- American Development Bank (IDB). As trade liberalization gathers pace and tariff barriers are removed throughout the world, transport costs are increasingly important in determining the final price of goods. For many ACS members, and particularly for the small Caribbean islands, this presents a huge challenge, ACS Secretary General Dr Rubén Silié said at the brief signing ceremony held on 5 May at the ACS Secretariat. IDB Country Representative, Mr William Robinson, highlighted that this project and the Memorandum of Understanding signed between the ACS and IDB in 2002 show the growing recognition by the IDB of the ACS as an important executing agency of cooperation projects in the Greater Caribbean. I am confident that this project will bring successful results with concrete benefits to Caribbean countries as the ACS Building Codes project did, he said. Other collaborating institutions on the project include the Caribbean Community (CARICOM), Caribbean Shipping Association (CSA), Central American Commission on Maritime Transport (COCATRAM), Economic Commission for Latin America & the Caribbean (ECLAC), Organisation of Eastern Caribbean States (OECS), TRAINMAR Caribbean Network, and University of New Orleans (UNO). This US$ 200,000 project is part of the ACS program entitled Uniting the Caribbean by Air and Sea, which is aimed, inter alia, at supporting the modernisation and rationalisation of transport policies, infrastructure and services throughout the Greater Caribbean. 6/