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Special Edition 1996

Lights and Shadows of the International and Regional Economic Agenda

Carlos J. Moneta
 Permanent Secretary of the Latin American Economic System (SELA)

    Excerpts from Ambassador Moneta's address to the Ministerial Stage of the XXII Latin American Council of SELA held on 24 October 1996 in Montevideo, Uruguay.

    Recently, the Director General of WTO, Dr. Ruggiero, referring to the agenda on multilateral trade, pointed out that the scenario was one of «lights and shadows». Beyond the trade dimension, the international and regional economic agenda also has «lights and shadows»; the present world situation and the prospects for future evolution of this process show both considerable assets and liabilities for all the Latin American and Caribbean countries.

    I would now like to discuss these contrasting areas at greater length, Mr. Chairman, since SELA is affected by many variables which depend on the international framework. Therefore, any consideration or proposal on SELA's work plan, ts modernization and its modality of action should be deeply rooted in an analysis of the present and future agenda of the Member States and of the international and regional systems where they operate. Thus, when preparing the guidelines for the working programme which we are submitting for consideration by this Council, the Secretariat has been very much aware of this scenario of lights and shadows.

    First of all at the «shadows» level, the social deficit -no doubt the most serious of all- is reflected in the rates of poverty, disease, education and a whole range of basic needs which have not been met. These rates remind us that growth and development are not synonyms: a recent World Bank study indicated that in order to curb (and only to curb) the increase of poverty in Latin America and the Caribbean, the average growth of the region should be at least 5 percent per year over the next 10 years.

    In the second place, the technological deficit is a very important factor, since it has direct impact on the competitiveness of our economies and therefore on prospects for production mechanisms and their relation with trade flows and international investment. In Latin American and Caribbean industry, the amount of high and medium technology products is equal to half that of such products in the «Asian Tiger» industry. This means that the profile of technological progress incorporated into trade from our region is still low, due to its scant degree of technological specialization.

    Thirdly, there is a trade and financial deficit in terms of trade, foreign debt and investment. Although the region's participation in world trade has increased, it continues to be low (around 6 percent). Such percentage does not seem to compensate for unilateral efforts towards liberalization, started at the end of the 1980s. Similarly, foreign capital flows are not adequate and the level of savings and domestic investment remains low.

    In the fourth place would come the «institutional» deficit. We are referring to the many problems burdening public institutions and private organizations related to the economic activity and social policies of the countries of the region that make it difficult to reach the required rate of efficiency and capacity for response vis-a-vis globalization demands.

    The group of «shadows» mentioned earlier repeatedly aim at the structural problems of Latin American and Caribbean economies. They are expressed in asymmetries: in the distribution of income at the domestic level but also in education and technological advances, job opportunities, capacity to compete with foreign companies. At the external level, asymmetries are to be found in the economic relationships between countries, showing varying degrees and capacities for insertion in the global economy and in the decision-making process related to the management of the global economic system.

    Nevertheless, together with these dark clouds, we can also see some «light» stemming from the recent evolution of world economy which translates into potentialities and important assets for our economic and social development.

    Furthermore, intraregional trade and investment dynamism shows that the entrepreneurial sector is capable of progressing beyond the opportunities offered by inter-governmental negotiations. For the first time in history, integration in the region advances both on a formal level -through a positive abundance of all kinds of agreements- and at the level of real trends for trade and financial exchanges. Moreover, at present we are witnessing an enhancement of integration processes in all fields, above all, of those which are unlikely to be included in statistics since they are of a qualitative nature: for instance those of social and cultural integration, the starting point not only to consolidate what has been achieved so far, but also to follow more ambitious channels towards integration and to consolidate the international projection of all subregional plans and agreements.

    Additionally, the region has become an important pole attracting foreign investment: we have left behind th image of a region only associated with foreign debt. At a time of implacable competition among countries to attract capital, the trust shown by large and small investors from many different places is quite significant.

    The final element I would like to point out is highly positive and important at the medium and long term. It refers to the strengthening of extraregional relations, particularly with the European Union and APEC, China, Japan and other poles of economic activity. These relations are giving rise to a multilateral vocation in trade policy in the region which, together with the broad process of trade negotiations under way, has not neglected to strengthen its links with extraregional partners.

    We think that these lights and shadows should be taken into account when determining the priority areas and action modalities for SELA: the subject areas of the Organization directly result from the obviously changing and adjustable economic and social agendas of the governments, depending on internal and external transformations at the regional, hemispheric and multilateral level.

    As regards the subject areas, the first comparative advantage of SELA lies in the permanent parallelism which has always existed between its work agenda and the agendas of the economic Cabinets of its Member States: the work programme of SELA is a sort of «mirror» reflecting daily situations and the changes that determine the Organization's political relevance. Within such a dynamic and kaleidoscopic framework, we believe that the Latin American Council is the appropriate forum to make a global balance of the instruments and progress of the region in the field of cooperation, integration and external insertion. Likewise, we consider that the action modalities of the organization are flexible and versatile: they encompass follow-up work, analysis and prospective reflection, training programmes and technical support to negotiations, horizontal cooperation initiatives and, as an increasingly important axis, the exchange of national experience as well as support to consultations and coordination among the Member States, in accordance with their instructions and following the circumstances and the specific needs of the subregions.

    Finally, Mr. Chairman, we consider SELA to be a useful instrument for all its Member States in the formulation and implementation of their development strategies and participation on international fora. We also understand it to be an important part of the machinery for regional integration and an element which will help to climb its most promising and difficult slope: that of convergence.

    Toward that end, SELA has already made progress in the essential process of strengthening and rationalizing all the organizations which form part of the institutional machinery of Latin America and the Caribbean. The efforts made by the Permanent Secretariat to support the Organization's modernization process take due account of the instructions of the Member States; we believe that important progress will be made in this area during this meeting.

    Popol-Vuh, perhaps the first book on regional integration, states that at the beginning, the Gods of Construction «talked; then met in a council, thought, understood one another, and then united their language and their knowledge.»

    Far from being Constructor Gods, we are however attempting to contribute to SELA becoming a forum where the Latin American and Caribbean countries can hold a dialogue, understand one another and build the future with a language common to all of them.

    In our region, this common language refers to integral and sustainable development and not only to growth and the environment; it refers to technology transfer and not only to intellectual property; to strengthening and convergence of all that has been achieved in the field of integration among our countries; to transparent access to markets and not only to competitiveness; to regional economic security as opposed to aggressive unilateral and extraterritorial measures; to the new role of the States as regards their economic and social responsibilities and not oly to deregulation and liberalization.

    Our language, Mr. Chairman, -the language of SELA- is also the language of diversity and union, of exchange and cooperation within the mosaic of countries forming part of our organization and in support of a region which aims at holding a leading position on the world scenario.

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