As a result of trade capacity building programs in LAC, the region has a large number of sophisticated trade and investment agreements and some of the lowest tariffs.
Policy research and impact studies
The IDB prepares analytical products with the overall goal of assisting member countries in designing and implementing trade and integration policies that facilitate economic growth, development and poverty reduction. It aims to provide policy recommendations and analysis to IDB operations and stakeholders that are technically sound, relevant to countries’ current development goals and consistent with current theoretical knowledge and policy debate. The policy research has been built around various areas including:
(a) The design of optimal strategies for implementing existing agreements to promoting convergence and accumulation among the existing agreements.
(b) The trade and investment implications for the region of the emergence of Asia. A comprehensive China and Latin America and the Caribbean (LAC) report was published in 2004, “The Emergence of China: Opportunities and Challenges for Latin America and the Caribbean”. This was followed by a report on India and Latin America, “Is India the Next Big thing for Latin America? Opportunities and Challenges for Trade and Investment (2010)”. “Ten Years After the Take-off, Taking Stock of China-Latina America and the Caribbean Economic Relations (2010)”; “Korea, Breaking the Mold of the Asia-Latin America Relationship (2011)”; “Shaping the Future, Of the Asia and the Pacific-Latin America and the Caribbean Relationship (2012)”.
(c) Non-policy trade costs, including logistics, trade facilitation and information costs, that is, trade costs other than tariffs and non-tariff barriers, such as transport costs and other trade facilitation costs, including the information costs of carrying out trade. Research in this area involved the publication in 2008 of the report “Unclogging the Arteries: The Impact of Transport Costs on Latin American and Caribbean Trade”, that shows that these types of barriers are today the most important obstacles to trade in the region. In 2010, the Bank published Evaluation of the Impact of Export Promotion Institutions in LAC , which examines the effectiveness of LAC export promotion agencies, a topic of particular relevance given the region’s pressing need to diversify its exports in an environment where government resources are increasingly scarce.
Finally, a forthcoming policy research report will look at the impact of domestic transport costs on LAC’s exports and the regions’ insertion in global value chains.
A broad aim of IDB policy research on trade policy development is to spark analysis, studies and debate on integration and trade issues across Latin America and the Caribbean. Important tools for this purpose are:
(a)The Euro-Latin Study Network on Integration and Trade (ELSNIT) that focus on promoting the collaboration between European and LAC researchers on regional integration issues. It is a co-organized by INT/INTAL and four leading European centers specializing in regional and global integration issues: Center for International Economics (UPF-Barcelona); Centre d’études prospectives et d’informations internationales (CEPII - Paris); European University Institute (Research Institute of the European Commission based in Florence) and the Kiel World Economics Institute.
(b) LACEA – Trade, Integration and Growth Network (LACEA-TIGN) is one of several networks co-organized with LACEA and has a focus on trade, integration and growth issues.
(c) REDINT (Red de Integración INT-INTAL) seeks to promote collaborative research on trade and integration among the main research institutions in LAC. It is often used to produce background papers for the INT’s policy research reports.
(d) LAEBA (Latin America/Caribbean and Asia/Pacific Economics and Business Association) is a forum dedicated to advancing economic linkages between Asia and LAC through cross-regional and comparative research and exchange. LAEBA is co-organized by INT/INTAL and the Asian Development Bank Institute.
Trade policy notes
Upon request by client countries, the IDB Integration and Trade Sector prepares trade policy notes to assist individual countries in trade policy-making by providing a diagnosis of the country’s trade sector, highlighting the main challenges and opportunities that the country faces in the trade area, and presenting a set of recommendations for implementing such policies. The notes normally deal with specific country issues on trade, such as how to implement the provisions of a trade agreement, promote exports and attract foreign investment, and achieve such objectives as minimizing the impact on vulnerable groups.
Support for the negotiation and implementation of trade and investment agreements
Over the last decade, the Latin American and Caribbean countries have signed a substantial number of trade and investment agreements. Given the increasingly complex web of agreements, it is critical that the public and private sectors involved in international trade and investment understand the implications of these deals. The Bank provides support to public and private sectors through grants, financial operations, policy advice and capacity building in coordination with the WTO on the following areas:
- Technical assistance in the negotiation of trade and investment agreements;
- National legislation reform to comply with the requirements of the agreements in areas such as intellectual property, rules of origin, investment, government procurement, services, technical standards, antidumping, conflict resolution, environment and climate change, and sanitary and phytosanitary measures;
- Evaluation of the economic and social impact of trade liberalization, and policy advice to minimize the impact of trade and investment agreements on the most vulnerable industries and social groups;
- Comprehensive transition plans towards trade liberalization and economic integration.
One example is a recently launched project, Implementation and Administration of Free Trade Agreements, which is intended to provide support to Latin American and Caribbean countries in solving key challenges and problems associated with the implementation and administration of recently adopted free trade agreements (FTAs), in order to enable countries to be better placed to comply with these agreements and to use their implementation as a building block for strengthening institutional capacity, the rule of law and the business climate, and for enhancing competitiveness.
Trade and Integration Capacity Building Programme
The IDB, jointly with the WTO, has developed a training programme for trade negotiators in the framework of the Memorandum of Understanding signed by these institutions in February 2002.
The objective of the IDB/INTAL-WTO Training Programme is to strengthen the capacities of the governments in the region for negotiating and implementing the multilateral trade agreements. The Programme is directed to national government officials from Latin America and the Caribbean whose working responsibilities are closely related to the process of trade negotiation at a multilateral level. Training themes include: WTO rules, trade in services, sanitary and phyto-sanitary standards, Aid for Trade, trade and development, environment and climate change.