Address at Forum for East Asia Latin America Cooperation
Delivered at Ministerial Intervention, Forum for East Asia Latin America Cooperation
Strengthening the partnership between FEALAC and the United Nations’ Regional Commissions - ESCAP and ECLAC – is a timely initiative. It falls squarely within our brief as regional think tanks to provide solid analysis to inform effective multilateral action.
There are compelling reasons for consolidating this partnership. Both regions are operating below their potential. Following the global crisis the intraregional trade between the two blocs was 20% lower in 2016 than at its peak in 2012-2013, financial flows are weaker and asymmetric. There is ample scope to improve the exchange of technology and the flow of ideas and knowledge.
East Asian dynamism has been driving global output and trade. Economic integration within ASEAN is expected to be further deepened as mega projects such as the Belt and Road Initiative and the Eurasia initiative improve integration in the wider region. Leveraging East Asia’s economic development models and policies, which have helped enhance its countries’ diversification, export orientation and technological expertise could be beneficial to Latin America. East Asia would gain by tapping into advances made by Latin American nations.
How should this partnership be shaped to be game changing?
First, it must be anchored in the implementation of 2030 Agenda for Sustainable Development, the Addis Ababa Action Plan and the Paris Climate Agreement across both blocs.
Second, it must reinforce multilateralism as global governance mechanism at a time when it is being undermined by protectionist stances reflecting anti-globalization sentiments in different corners of the globe. Decisive action to reduce uncertainties and barriers are a prerequisite to reviving trade growth.
Third, reversing the decline in trade flows - which after reaching $400 billion in 2012 have declined to $324 billion - and in Foreign Direct Investment flows, would require lifting more comprehensively trade barriers and strengthening investor confidence. The partnership must be underpinned by measures to improve the business climate and support the structural transformation needed for Latin America to shift from being resource and commodity dependent to becoming a manufacturing and service hub, integrated into global value chains. Among other things, this calls for promoting competition and investment liberalization backed by harmonized legal and regulatory frameworks.
Fourth, to exploit the full potential of the 16 bilateral Free Trade Agreements among the members of FEALAC, we need a long-term approach to consolidate these agreements into wider and deeper plurilateral regional and ultimately inter-regional blocs. For example, we need to consider merging the Pacific Alliance (Chile, Colombia, Mexico and Peru) with TPP 11; or expanding the China-Japan-Republic of Korea Investment Agreement. We need to proceed carefully with FTA coverage to include smaller and least developed countries as well.
Through the analytical work the FEALAC fund will sponsor, we need to explore how effective and sustainable inter-regional cooperation can be promoted with a focus on more substantive trade and investment promotion backed by stronger and harmonized legal, regulatory and competition and innovation policy frameworks along with sustainable infrastructure development that deepens interconnections. Public policies to reduce inequality and enhance social cohesion will be critical to inducing stability and key to sustainable economic growth.