2014_05-21_OECD-ECLAC-PSE EU-LAC Forum_vaillant

REGIONAL INTEGRATION: EUROPEAN AND LATIN AMERICAN UNCERTAINTIES

REGIONALISM BETWEEN THE EU AND LATIN AMERICA: INTENSE BUT

HETEROGENEOUS Marcel Vaillant (Paris III/UdelaR)

SECOND EUROPE–LATIN AMERICA ECONOMIC FORUMEurope and Latin America in the wake of global

paradigm shifts and new trends in the world economy

ORGANIZATION

• Growth in deep regionalism• EU and LA• Final remarks

GROWTH IN PTA+• Spaghetti bowls: is a metaphor of chaos and confusion

(more than 3 hundred PTAs)• Some regular pattern in the way trade agreements are

developed: new rules for new trade• Focus: more deep trade agreements with good &

services and disciplines• WTO/RTA data base- in force year of service agreement.• All agreements in services (+disciplines) are also in goods• CU&EIA/FTA&EIA in WTO/RTA lexica- 119 PTA+• Structure and evolution by type: Bilateral; Blocs; Blocs-country.

EVOLUTION 1994-2013 (numbers of PTAs)

1994 1995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

2

4

6

8

10

12

14

16

18

Bilaterals Regional Blocs Bloc-country

PTA+ BY TYPE• Bilateral- – near ¾ are bilateral PTA+ (86/119), with 172

participations (86*2)– Only 40 countries signs PTAs with an average of 4

agreement each. 21 countries with 4 or + bilateral PTA+ explains almost 90% of bilaterals• Half of them are LA countries (10)

• Regional Blocs and Blocs-Blocs- – 15 RB or B-B (7 with the EU) – Starts in middle of 90 with EU-EFTA/EU15 and NAFTA

• Regional Blocs-Country- – Starts with EU-Mexico– EU (7); EFTA (7); ASEAN (2) and CA (2)

Structure by type of PTA+ in force in 2013 (%)

72

13

15

Bilaterals Regional Blocs Bloc-country

Bilaterals by regions Participation Countries Average

NORTH AMERICA 25 3 8

CENTRAL AMERICA 33 6 6

SOUTH AMERICA 30 4 8

OTHER EUROPE 5 5 1

EAST ASIA+ 56 13 4

AUTRALIA-NZ 12 2 6

SOUTH ASIA 6 2 3

NEAR EAST 4 4 1

AFRICA 1 1 1

Total 172 40 4

Bilaterals by countryCountry Total Share (%)Chile 15 8,7Japan 12 7,0Panama 11 6,4Singapore 11 6,4US 11 6,4Mexico 10 5,8Peru 10 5,8China 8 4,7Costa Rica 6 3,5Australia 6 3,5New Zealand 6 3,5Malaysia 5 2,9Korea 5 2,9Taiwan 5 2,9Guatemala 4 2,3Nicaragua 4 2,3El Salvador 4 2,3Honduras 4 2,3Canada 4 2,3Colombia 4 2,3India 4 2,3Sub Total 149 86,6Total 172 100,0

PTA+ BY TYPE• Bilateral- – near ¾ are bilateral PTA+ (86/119), with 172

participations (86*2)– Only 40 countries signs PTAs with an average of 4

agreement each. 21 countries with 4 or + bilateral PTA+ explains almost 90% of bilaterals• Half of them are LA countries (10)

• Regional Blocs and Blocs-Blocs- – 15 RB or B-B (7 with the EU) – Starts in middle of 90 with EU-EFTA/EU15 and NAFTA

• Regional Blocs-Country- – Starts with EU-Mexico– EU (7); EFTA (7); ASEAN (2) and CA (2)

Regional Blocs and Blocs-BlocsBLOC Year

NAFTA 1994EU-EFTA (EEA) 1994EU15 1995EFTA 2002CARICOM 2002EU25 2004MERCOSUR 2005CAFTADR 2006TPP 2006EU27 2007EU-CARIFORUM 2008ASEAN- Australia New Zealand 2010EAC 2010EU28 2013EU-CENTRAL AMERICA 2013

PTA+ BY TYPE• Bilateral- – near ¾ are bilateral PTA+ (86/119), with 172

participations (86*2)– Only 40 countries signs PTAs with an average of 4

agreement each. 21 countries with 4 or + bilateral PTA+ explains almost 90% of bilaterals• Half of them are LA countries (10)

• Regional Blocs and Blocs-Blocs- – 15 RB or B-B (7 with the EU) – Starts in middle of 90 with EU-EFTA/EU15 and NAFTA

• Regional Blocs-Country- – Starts with EU-Mexico– EU (7); EFTA (7); ASEAN (2) and CA (2)

Regional Blocs and Blocs-BlocsBLOC Year

NAFTA 1994EU-EFTA (EEA) 1994EU15 1995EFTA 2002CARICOM 2002EU25 2004MERCOSUR 2005CAFTADR 2006TPP 2006EU27 2007EU-CARIFORUM 2008ASEAN- Australia New Zealand 2010EAC 2010EU28 2013EU-CENTRAL AMERICA 2013

PTA+ BY TYPE• Bilateral- – near ¾ are bilateral PTA+ (86/119), with 172

participations (86*2)– Only 40 countries signs PTAs with an average of 4

agreement each. 21 countries with 4 or + bilateral PTA+ explains almost 90% of bilaterals• Half of them are LA countries (10)

• Regional Blocs and Blocs-Blocs- – 15 RB or B-B (7 with the EU) – Starts in middle of 90 with EU-EFTA/EU15 and NAFTA

• Regional Blocs-Country- – Starts with EU-Mexico– EU (7); EFTA (7); ASEAN (2) and CA (2)

Regional Blocs and Blocs-BlocsBLOC Year

NAFTA 1994EU-EFTA (EEA) 1994EU15 1995EFTA 2002CARICOM 2002EU25 2004MERCOSUR 2005CAFTADR 2006TPP 2006EU27 2007EU-CARIFORUM 2008ASEAN- Australia New Zealand 2010EAC 2010EU28 2013EU-CENTRAL AMERICA 2013

PTA+ BY TYPE• Bilateral- – near ¾ are bilateral PTA+ (86/119), with 172

participations (86*2)– Only 40 countries signs PTAs with an average of 4

agreement each. 21 countries with 4 or + bilateral PTA+ explains almost 90% of bilaterals• Half of them are LA countries (10)

• Regional Blocs and Blocs-Blocs- – 15 RB or B-B (7 with the EU) – Starts in middle of 90 with EU-EFTA/EU15 and NAFTA

• Regional Blocs-Country- – Starts with EU-Mexico– EU (7); EFTA (7); ASEAN (2) and CA (2)

REGIONAL BLOCS-COUNTRY Before 2000 2001-2005 2006-2010 2011-2013 TotalEU 1 2 2 2 7Albania 1 1Chile 1 1Colombia and Peru 1 1Korea, Republic of 1 1Mexico 1 1Montenegro 1 1Republic of Macedonia 1 1EFTA 3 1 3 7Chile 1 1Colombia 1 1Hong Kong, China 1 1Korea, Republic of 1 1Mexico 1 1Singapore 1 1Ukraine 1 1CENTRAL AMERICA 1 1 2Colombia 1 1Dominic Republic 1 1ASEAN 2 2China 1 1Korea, Republic of 1 1Total general 1 6 6 5 18

EU A MACHINE OF TRADE AGREEMENTS

• Enlargement EU- From 15, 25, 27 and 28• CU- Andorra, San Marino and Turkey• FTA (goods)– Intraregionales North Africa and Near East– Extraregionals African Countries

• FTA&EIA (goods&services&disciplines)– Intraregionals (EFTA and Balkans countries)– Extraregionals LA (Mexico, Chile, CARICOM, Centro

America, Colombia and Peru) +Korea

EU a machine of PTA Before 1990 1991-2000 2001-2010 2011-2013 Total

EU Enlargment 1 2 1 4

CU 2 1 3

FTA (goods) 1 6 7 1 16

Intraregion 1 5 4 11

Extraregion 1 3 1 5

FTA & EIA 3 6 5 14

Intraregion 3 3 1 7

Extraregion 3 4 7

Total 1 11 14 6 37

LATIN AMERICAN COUNTRIES• LA countries higher than average in PTA+ participation but high

heterogeneity

• Pacific side of the sub continent México (10Bi+2); CA countries (Panama 11Bi+1, rest CA 4Bi+2); SA: Chile (15Bi+1), Perú (10Bi+1) and Colombia (Bi4+1).

• MERCOSUR countries plus Bolivia and Ecuador non trade agreement relationship with third markets. Brazilian leadership.

• Intraregional trade- Centro America more 30% and in South America 15%.

– Positive effects CAFTA And EU-Central America in Central America economic integration process

MERCOSUR TRADE AGREEMENTS

RTA Name Coverage Type Notification Date of entry into force Status

Southern Common Market

(MERCOSUR)Goods & Services

CU & EIAEnabling Clause &

GATS Art. V

29-Nov-1991(G)

In Force07-Dec-2005(S)

MERCOSUR - India Goods PSA

Enabling Clause

01-jun-09 In Force

Mexico - Uruguay Goods & Services

FTA & EIAGATT Art.

XXIV & GATS Art. V

15-jul-04 In Force

INTEGRATION IN SOUTH AMERICA• Two stages:– Until 2000- • gradual economic integration with increasing deeper

agreements at subregional level (AC and MERCOSUR).• developing of common infrastructure at South America

level; effort to institutionalize the process (IIRSA)

– From 2003 until now reversion in the orientation.• Leadership disputes (Brazil vis a vis Venezuela-Argentina)

change in the objective and the method of the integration process– From trade integration to administrative trade policies– From developing transport infrastructure to complementarities in

energy sources and energy security– From an infrastructure agenda to a huge agenda with

asymmetries and developing issues (education, health, income distribution), defense and security, etc, IIRSA to UNASUR.

LOW PERFORMANCE OF SA

• Intraregional trade (less 15%)• Difference in trade agreements outside region– Chile, Peru and Colombia– Brazil, Venezuela, Argentina, Paraguay, Uruguay, Bolivia

and Ecuador• Fulfillment of the agreement, trade disputes and

controversies, credibility and uncertainties– Protection and trade administration

• Increasing portfolio of megaproject with state control– without any result (GASUR, Banco del Sur, …)

EU-MERCOSUR• Guinness record- Period of negotiation length. 1995- Framework

agreement with three pillars: cooperation, political and trade.• Two stages of trade negotiations– 2000-2004 13 Trade Rounds of BTC– 2010-2014 10 Trade Rounds

• Until now there are no liberalizations offers. Many problems. – EU a deep agreements in services and disciplines,

manufacturers goods– MERCOSUR liberalization demand in agricultural products– MERCOSUR is not a Custom Union/ Trade policy EU.– Bilateral agreements and/or less ambitious in its objectives

FINAL REMARKS• Spaghettis bowl is not full when more mature type of

PTAs are considered (services and complementary matters)– Another filter could be applied by scope of disciplines PTA+,

enforcement and performance. – Few deep PTA+ are relevant

• Main Hubs EU, USA and ASEAN (+5) countries:Three standards PTA+. So the problem of convergence could be more easy to administrate – new tendency• Megablocs (EU-CA/EU-CARICOM; ASEAN-AUS-NZ; US-TPP)• Blocs-country (EU, ASEAN, EFTA, EU-USA?)• Plurilaterals (TISA)

• PTA+– EU machine of trade agreements– LA – intense participation

• integration space for USA and EU. Domino effect.• heterogeneity. Atlantic Side outside.

• Evaluate the effect trade agreements EU-LA– Trade and IED determinants: markets size; geography;

agreements;…. By sectors and type of trade– Structural gravity substantial improvements in models

and methods.– New empirical evidence

• Cost for MERCOSUR countries to be outside this EU-LA space.

Thank [email protected]

Intra and Extraregionals in three main Hubs

    Before 1990 1991-2000 2001-2010 2011-2013

EU 18   4 8 6

Enlargment 4   1 2 1

Intra 7   3 3 1

Extra 7     3 4

USA 13   2 8 3

Intra 2   1 1  

Extra 11   1 7 3

East Asia 45     37 8

Intra       21 8

Extra       16  

Total 119 1 9 84 25