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Trade disintegration makes Latin America more vulnerable, highlighted ECLAC

El Economista – Mexico City

The disintegration in international trade in Latin America hinders resilience to the Covid-19 pandemic, concluded the Economic Commission for Latin America and the Caribbean (Cepal).

“Reversing the process of commercial disintegration in the region is presented as an urgent challenge for Latin America and the Caribbean,” said ECLAC in its International Trade Outlook for Latin America and the Caribbean.

From his point of view, in this effort it is crucial to deepen the ties between Mexico and Mercosur, and particularly Brazil. Despite various attempts, the two largest and most productive economies in the region do not have a trade agreement between them, and the bulk of their trade is conducted on a non-preferential basis.

According to information from August 2020, Brazil offered Mexico tariff preferences in only 18.2% of all tariff lines, while in the opposite direction the proportion reached 18.5%. “In this context, trade interdependence between the two countries remains at very low levels,” he added.

The Commission projects that Mexico’s exports fell 13% and its imports fell 18% in 2020, while those of Brazil fell 7 and 16%, respectively.

“Mexico’s exports could reach (in 2021) a growth rate between 15 and 25%, obviously considering a better macroeconomic environment, with the caution that these figures should have assuming the recovery of the United States and that there is a boost to value chains American and of course the vaccine “, said the executive secretary of ECLAC, Alicia Bárcena.

The organization highlighted that to form an integrated regional space, the participation of both Brazil and Mexico is required, since together they represent 55% of the region’s GDP and 53% of its population.

Although both countries compete in various sectors, this also opens spaces for productive integration and intra-industry trade.

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