Economy & Trade, Global Governance, Globalisation, Headlines, Latin America & the Caribbean

LATAM-ASIA: Integration Won’t Be Affected by Crisis

Daniela Estrada

SANTIAGO, Oct 3 2008 (IPS) - The recently created Latin America Pacific Arc will not modify its strategy of integration with Asia “because of unfavourable financial circumstances” like the current crisis, Chilean Foreign Minister Alejandro Foxley said Friday after the group’s fourth meeting in the Chilean capital.

The bloc, made up of Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama and Peru, ended its fourth ministerial meeting with the adoption of the Declaration of Santiago. Also participating in the meeting were delegates from Canada, as an observer, and from China, South Korea, Japan and Australia.

“The U.S. government also expressed an interest in seeking some kind of link in the future with the Latin America Pacific Arc,” Foxley told a press conference, adding that this possibility would be discussed within the group.

“We know that at this time there is enormous uncertainty in the financial markets. However, we want to make it clear that we are not going to modify the path to integration among the countries of Latin America (with Pacific shorelines) and their projection towards Asia because of unfavourable financial circumstances,” he said.

“Our commitment to work together and project ourselves as a bloc towards the Asia-Pacific region is stable, and is a medium to long-term undertaking,” he stressed.

“The 11 countries that are part of this forum share the view that in difficult times like the ones we are experiencing in our economy, we definitely need more trade, not less,” said Mexico’s deputy minister for international trade, Beatriz Leycegui.

Foxley also underlined that the group has the “full backing” of the member countries’ presidents, who will meet on the occasion of the next Ibero-American Summit, to be held Oct. 29-31 in El Salvador, to give the initiative a boost.

The founding document of the Latin America Pacific Arc, which was born in January 2007 in Colombia, stipulates that the bloc’s ministers of foreign relations and trade will hold an annual meeting, and that the deputy ministers will meet once a year as well.

Four working groups were also created: on investment, trade facilitation, convergence of trade agreements, and economic cooperation and competitiveness.

The Arc “is a group of countries in the process of consolidation,” said Foxley.

“The countries of the Arc share a strong conviction that we have done the homework that had to be done to prepare ourselves for an eventuality like this one (the financial crisis), carrying out productive transformation processes, following healthy, balanced fiscal policies, and reducing the public debt,” said the Chilean minister.

Thus, “we can confront external shocks in conditions that are much more favourable than the ones we had in past decades, and I believe that in the next few weeks that will be demonstrated,” said Foxley, although he did not rule out “turbulence” generated by “subjective expectations held by millions of consumers and private economic agents.”

Deputy minister Leycegui praised the group’s “pragmatic focus” that she said is oriented towards “specific projects.”

Foxley said that one of the working groups identified 72 regional investment projects in infrastructure and energy.

Business representatives from throughout the region will thus be invited to the next ministerial meeting, slated for March 2009 in Panama.

The Asia-Pacific region is the fastest-growing region in the world, and in 10 years will account for 50 percent of all global trade, said Leycegui.

The Arc “is open to other countries,” said Foxley, who added that it will not compete with other regional blocs like the Southern Common Market (Mercosur), made up of Argentina, Brazil, Paraguay and Uruguay (Venezuela is in the process of joining as a fifth full member), and the Andean Community, which brings together Bolivia, Colombia, Ecuador and Peru.

“The important thing is to break with the inertia at an international level with respect to progress towards globalisation,” he said.

“We are concerned because the Doha Round (of World Trade Organisation talks) didn’t work, and because the free trade initiative of APEC (Asia-Pacific Economic Cooperation forum), which was first set forth in Hanoi and later reiterated in Sydney, has not yet made progress,” said Foxley.

“We believe that a kind of vacuum has been generated at an international level with respect to initiatives aimed in the direction of Doha and an Asia-Pacific free trade accord, and we want to promote several convergent initiatives,” he added.

These include the Arc and the Trans-Pacific Strategic Economic Partnership Agreement (P4), signed by Chile, Singapore, New Zealand and Brunei, which was recently joined by the United States and has extended an invitation to Peru.

“This is a gradual process of convergence that could eventually lead to an expanded free trade area,” said Foxley.

The bloc has the technical support of the Inter-American Development Bank (IDB), the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), and the Andean Development Corporation.