SELA, EAEU analyse bilateral trade

Last Wednesday, 8 December 2021, the Latin American and Caribbean Economic System (SELA) and the Eurasian Economic Union (EAEU) held the second online seminar entitled Eliminating barriers and bridge-building for business cooperation. The timing was perfect to identify mechanisms useful to counter the challenges in the bi-regional trade.

“There is plenty of opportunities to bridge the divide. New maritime routes could help reduce the cost of export and import of goods. Trade agreements between the Eurasian Economic Union and countries or integration groups of countries in Latin America and the Caribbean (LAC), as well as reduced tariffs, relaxed regulatory measures for mutual trade and technology could also allow for the trade of electronic services,” Ambassador Clarems Endara, the Permanent Secretary of SELA, declared.

According to the senior officer, LAC regional integration mechanisms should become known in the EAEU and vice versa for further cooperation of both regions. “There are digital platforms, such as the website Pymes Latinas (Latin SMEs) of ALADI or ConnectAmericas of the IDB,” he added.

He advised that, in view of the structural crisis, SELA needs to seize opportunities for economic recovery after the COVID-19 pandemic.

For his part, Guillermo Daniel Ortega, the President of the Central American Parliament (PARLACEN), voiced the willingness, preparedness, experience and collaboration of PARLACEN to lobby for LAC-Eurasia trade.

He referred to some mechanisms helpful to escalate actions with third blocs of nations and establish and thrust a relationship with one of the largest free trade zones, as the Member States of the Community of Independent States.

Eduardo Espinoza, the Director General for Economic Integration and Trade Facilitation and Transport, Central American Economic Integration Secretariat (SIECA), ratified the role of the institution as an expert body that gives Central American countries assistance in the agenda of economic integration.

“We have nowadays a blanket policy of mobility and logistics. Therefore, we are developing currently a master plan for logistic promotion 2035 involving a mapping of regional infrastructure to place Central America in a logistic hub able to augment and cash in on the comparative advantages as a region,” he said.

“We count on a memo of understanding effective as of last February, with the aim of exhaustive collaboration between SIECA and the Eurasian Economic Commission, oriented to a stronger mutual economic cooperation, sustainable development and exchange of experiences,” Espinoza reported.

“We have lot of work to do as we analyse the trade and investment flows between these regions. Central America exports to the EAEU agricultural goods, such as coffee, bananas, tobacco and pineapple,” he broke down.

There is much leeway to improve in terms of increasing the profile and tightening ties between Central America and Eurasia,” he said.

Mónica Ayala, the head of the Cooperation and Training Department, Latin American Integration Association (ALADI) explained that ALADI has designed an innovative platform where the SMEs of all the 13 Member States can expand their ventures, namely Pymes Latinas Grandes Negocios (Latin SMEs, Big Businesses).

“Entrepreneurs can access important tools and fortify their involvement in the intra-regional trade by using innovation tools. In turn, the platform supplies all the necessary information for import and export in every country party to ALADI, and that is very useful for the businesses who pursue to cross borders to reach more consumers and widen their business plans,” she noted.

Growing possibilities for rapprochement

In the words of Jorge García Tuñón, the President of the Argentine-Russian Chamber of Commerce and Industry (CACIAR), “Russia presently is a financial super power based on its international reserves in gold and foreign currency, but together with the EAEU should decide how to cooperate with Latin America and the Caribbean.”

“Some adjustments ought to be made in bilateral relations and we need to accomplish what has been written in more than 50 years. LAC is an extremely rich region, but with an uncertain future. I cannot understand why trade relations are so negligible. Today, Russia has put its sight on the future with the new technologies. Instead, Latin America has remained in the past. Empathy and curiosity prevail, but not the commitment. A free trade agreement should exist,” the expert reasoned.

Nevertheless, Ambassador Oscar Hernández, the Director for Integration and Cooperation of SELA, opined that, no matter the difficulties faced by LAC and Eurasia due to the distance, global economy has proved that they can be overcome. “We have troubles with the international financial system. There are new methodologies and ways to speed up such processes of free trade agreements,” he advised.

“They are important indeed and we need to follow such stimulus. Remember that all of us are parties to the World Trade Organisation (WTO). We have agreements in place, rules, foreseeability and, sure enough, the necessary conditions to spur economic and trade relationships between these regions,” he said.

The second seminar of SELA and the EAEU, Ambassador Hernández said, displayed such great potential. “Today, we have looked at all the obstacles and bottlenecks, and that just proves that we are on track in quest of opportunities.”

“We, in LAC, are 638 million people, compared to Eurasia, with 180 million people, which means a puissant population to enter into a trade and competitive relationship based on the production abilities, the impetus of a the Latin American and Caribbean business and entrepreneurial sector that also seeks rapprochement,” he said.

In the opinion of the Director for Integration and Cooperation of SELA, such forums have helped changed the wording about both regions as very distant one another. “One and a half year ago this

pandemic started; now, however, million Latin Americans have been immunized with a vaccine produced in the region of Eurasia. This demonstrates that, when there are efforts, abilities and interest in strengthening economic relations and finding opportunities, both market niches can make it.”

Bi-regional business opportunity

To the mind of Dmitri Razumovsky, the Director of the Institute of Latin American Studies, Russian Academy of Sciences, “Russian is willing, not only to promote solutions, but also to join the Latin American people, wanting to do something serious and smash trade barriers. Both sides, LAC and the EAEU, have undergone a systemic crisis, not only because of the pandemic. Note the exhausted raw materials and higher prices. Thus, looking for enlarged productivity is of the essence.”

Viktor Sheremetker, the Trade Representative of the Russian Federation at Brazil, listed among the items of Russian-Brazilian cooperation “the trade of meat, soy, coffee, peanuts, crude oil and by-products, as well as fertilizers.”

In his view, a new way of thinking and approach are fundamental to foster bi-regional trade. “Should this be accomplished, then investment will be very serious indeed,” he anticipated.

“The trade structure needs to be standardized. Establishing relations with centres and scientific institutions is important to improve the links with Latin America,” he added.

Sergey Glazyev, Minister in charge of Integration and Macroeconomics of the Eurasian Economic Commission (EEC); Dmitriy Belov, Deputy Director of the Latin American Department, Ministry of Foreign Affairs of the Russian Federation, and a representative group of speakers from the EAEU took an active part in the event.

The Latin American and Caribbean Economic System, with the accolade of its Member States, recently passed the Work Programme 2022-2025 and the plans for organisational restructuring, which will govern its endeavours to meet the country requirements in the thematic areas of economic recovery, digitalization and social development.

Such thematic areas contain projects in line with the United Nations Sustainable Development Goals (SDGs) and the activities agreed upon with Member States, namely: productive articulation, trade facilitation, support of SMEs, disaster risk reduction, and migration, among many others.

These tasks will also require strategic partners from a clear perspective in order to avoid duplication of efforts. Instead, the purpose is to capitalize on international agencies and organizations which have become a benchmark in the region and count on agendas with a higher impact on these mandates.