The Frederick S. Pardee Center for the Study of the Longer-Range Future hosted a Pardee House Seminar titled “Shaping the Future of the Asia-Latin America Relationship” on Nov. 6 featuring Economics Professor Enrique Dussel Peters of the Universidad Nacional Autónoma de México and Mauricio Mesquita Moreira, Principal Economist of the Inter-American Development Bank. Pardee Faculty Fellow Kevin P. Gallagher organized the seminar and served as the moderator.
Moreira discussed the findings of a report titled Shaping the Future of the Asia and the Pacific-Latin America and the Caribbean Relationship published earlier this year. The report is a joint project of the Asian Development Bank, the Inter-American Development Bank, and the Asian Development Bank Institute.
Specifically, Moreira described the significant trade imbalance between the regions for the past dozen years as China’s dramatic growth created a spike in its exports of manufactured goods to some Latin American markets (especially Mexico and Central America), while relying on imports from other areas of Latin America (especially South America) for the natural resources and raw materials it needs to fuel its growth. Although such imbalances often run in “boom and bust” cycles that last perhaps a decade, he said analysts foresee China sustaining its reliance on Latin American resources for approximately 35 years and in the case of India, perhaps as long as 50 years. “We know (a bust) will happen, but it’s a question of when”, he said.
Countries from both regions have tried imposing tariffs on imports as a short-term way of addressing the issues, but have found that not to be effective, as high transportation costs of moving goods and commodities between Asia and Latin America countries already add significantly to the costs.
While Latin American countries had been willing to negotiate free trade agreements (FTAs) and bilateral investment treaties (BITs) with specific countries in the past– 18 such agreements are in place now, with the potential for 12 more before 2020 – that willingness has dropped off in recent years, Moreira noted. Instead, he said, there has been an increase in cooperative agreements between countries in the two regions, but most take the form of a “memorandum of understanding” that doesn’t require specific commitments or provide metrics for measuring whether the agreements are having a positive impact of any sort. He characterized them as “too much hype and not much substance,” and said that cooperative agreements are important to future relationships between the regions, but they have to be “more meaningful and measurable.”
Asked to offer comments on the report, Prof. Peters praised the report and the Inter-American Development Bank in particular for raising the issue of transportation costs, often caused by underdeveloped or poorly maintained infrastructure, as a relevant issue that is often ignored in discussions of barriers to trade. But he noted that report was attempting to tackle a complex topic involving more than 70 countries in the Asia-Pacific region and 37 countries in Latin America, making it “very difficult to make proposals” for specific actions. He challenged the institutions that developed the report to identify “concrete options” for increasing cooperation between the regions, including identifying which institutions would be involved and what type of instruments would be used.
The seminar was co-sponsored by the BU Center for the Study of Asia, the Latin American Studies program, and the Global Development program.
A video of the seminar will be available soon on the multimedia section of this web site.