Mr. Osvaldo Rosales Director International Trade and Integration Division UN ECLAC Infrastructure services in LAC trade agreements (Session 3) Osvaldo Rosales Director, International Trade and Integration Division UN ECLAC Geneva, April 16, 2014 LAC is among the world’s most open regions in infrastructure services 60.0 30.0 10.5 30.0 14.0 24.9 50.4 51.8 29.9 10.0 40.0 26.7 30.0 15.0 31.1 36.8 38.1 40.0 20.0 East Asia and Pacific Infrastructure services (simple average) 31.7 30.0 19.6 6.8 13.3 18.0 36.3 40.5 44.5 21.3 10.0 Source: ECLAC, based on Borchet, Gootiiz and Mattoo (2012), Service Trade Restrictions Database, 2012 http://iresearch.worldbank.org/servicestrade/aboutData.htm Este de Asia y Pacífico Africa Sub Sahariana 0.0 América Latina South Asia Middle East and North Africa East Asia and Pacific Sub-Saharan Africa Latin America Eastern Europe and Central Asia 0.0 OECD Hing Income 50.0 Asia del Sur 60.0 Oriente Medio y Norte de Africa Financial 50.0 0.0 Sub-Saharan Africa South Asia Sub-Saharan Africa East Asia and Pacific Middle East and North Africa Latin America Eastern Europe and Central Asia OECD Hing Income 60.0 10.0 22.4 43.5 20.0 0.0 20.0 22.2 Europa del Este y Asia Central 10.0 40.0 22.1 OECD Altos Ingresos 20.0 34.4 Eastern Europe and Central Asia 32.8 Transport 50.0 OECD Hing Income 40.0 38.6 45.0 Middle East and North Africa Telecom 50.0 Latin America 60.0 South Asia Services Trade Restrictiveness Index (STRI), around 2010 Source: ECLAC, based on Borchet, Gootiiz and Mattoo (2012), Service Trade Restrictions Database, 2012 http://iresearch.worldbank.org/servicestrade/aboutData.htm 15 15 Panama Chile 21 22 18 20 26 27 50.0 Uruguay Honduras Colombia Paraguay Mexico Costa Rica Telecom Uruguay 40.0 Mexico Peru 50 Costa Rica 12 12 8 11 Venezuela, B.Rep. 70.0 Honduras 30.0 Bolivia, P.S. 0 Venezuela 10.0 0 Nicaragua 40 Colombia 0 0 Chile 20.0 0 Paraguay 60.0 0 Panama 35 30 32 33 0 Guatemala 30 Bolivia, P.S. 41 0 Brazil 62 0 Ecuador 60 Peru 0 Dominican Rep. 70 Nicaragua 10 Guatemala 10 15 7 10 Argentina 29 Brazil 36 Dominican Rep. 45 Argentina Financial Ecuador Transport Uruguay 42 Mexico 50 Peru 50 Uruguay Brazil Costa Rica Colombia Venezuela, B.Rep. 40 Honduras 22 22 Paraguay Chile Bolivia, P.S. 25 22 22 23 Panama 19 27 Venezuela 40 Costa Rica 10 10 Guatemala 18 19 Nicaragua 6 Mexico 30 Dominican Rep. 30 Argentina 5 17 Chile 20 Nicaragua 60 Guatemala 60 Brazil 70 Argentina 4 Honduras 70 Venezuela, B.Rep. 4 Ecuador 20 Ecuador 3 3 Paraguay 10 3 Dominican Rep. Panama 10 Colombia Peru But with a great heterogeneity among countries Services Trade Restrictiveness Index (STRI), around 2010 63 50 50 38 38 38 25 25 25 25 20 Infrastructure services (simple average) 50 31 32 38 3 0.0 How are trade agreements dealing with infrastructure services in Latin America? (1) Trade agreements among LAC countries vary a lot in terms of their coverage of services: Andean Community, CARICOM, Central America-Mexico FTA and Pacific Alliance have liberalized trade in services among their members Pacific Alliance Trade Protocol also includes chapters on financial services, international maritime transport and telecoms Less progress has been made within MERCOSUR Therefore, convergence within the region will not be easy How are trade agreements dealing with infrastructure services in Latin America? (2) FTAs with developed countries include chapters on crossborder services and investment, plus (in many cases) specific chapters on telecoms, e-commerce, financial services and trade facilitation These chapters provide increased transparency and some liberalization (national treatment, access to networks, etc) Air, land and maritime transport are often excluded and are addressed through specific bilateral agreements Effect of FTAs on quality & cost of infrastructure services in LAC countries is not always clear, but there are examples: In Costa Rica, liberalization of mobile telecoms and insurance following CAFTA-DR has enhanced its overall competitiveness How are trade agreements dealing with infrastructure services in Latin America? (3) The most recent “mega regional” FTA negotiations place great emphasis on removing barriers to global value chains This often means liberalizing infrastructure services For example, many TPP chapters relate to IS: Cross-border trade in services Investment Trade facilitation E-commerce Telecoms Intellectual property (ex. management of data flows, location of data servers) Regulatory convergence Competition State-owned enterprises There is little information available on what is being negotiated, but there are several concerns among developing countries Need to balance possible benefits of reduced prices/better quality of infrastructure services with possible losses of policy space Some conclusions LAC is relatively open in IS, compared to other developing regions There’s also great diversity among LAC countries in terms of willingness to open up IS in trade negotiations: But LAC countries show large differences in terms of openness Some progress has been made to liberalize trade in IS in most integration schemes; MERCOSUR is the main relative exception Chile, Colombia, Costa Rica, Mexico, Panama & Peru are active participants in FTAs including services and in the TISA negotiations Bolivia, Cuba, Ecuador and the MERCOSUR countries have taken a more defensive stance, for different reasons (ex. possible impact of trade liberalization on universal access to basic services) But trade negotiations are not the only (or the best) way to improve the region’s infrastructure services: A lot can be done through regional cooperation in transport, energy, telecoms and finance Thank you Geneva, April 16, 2014