In 1980, LAFTA was reorganized into the Latin American Integration Association (ALADI) and free trade agreements led to an increase in foreign direct investment, attracted by free access to ESTV member countries. For example, Japanese automakers can set up plants in Mexico because NAFTA allows them to export goods to the United States duty-free. For Latin American countries, historically isolated from global trade routes and with a productivity deficit, free trade agreements can act as catalysts for investment and productivity growth. “The negotiations have been long – difficult, difficult, and at least I have often said, “We are almost there. Now it`s us. This is a pioneering agreement,” Malmstrom said. More than 300 free trade agreements are currently in force around the world. They come in different shapes and sizes, but the common thread is discounted rates. About 35 free trade agreements – one-tenth in total – have been signed by countries in Latin America and the Caribbean.

Free trade advocates argue that by removing tariff and non-tariff barriers, the agreements allow countries to export more goods and services they produce most efficiently and to import those for which other countries have a comparative advantage, thus taking advantage of competitive prices. The end result, at least in theory, is a win-win situation, with increased efficiency and mutual benefits all around. … The aim of laFTA is to create a free trade area in Latin America. It should promote reciprocal regional exchanges between Member States as well as with the United States and the European Union. To achieve these goals, several institutions are planned: for example, Mercosur. Brazil`s exports to Argentina increased following the signing of the agreement in 1991, but fell shortly after Argentina`s economic collapse in 2001. Instead, the main driver of trade for Brazil has been China`s rapid rise as a production power.

In 2009, it became Brazil`s largest trading partner and the largest commodity market, as shown in the graph below. According to the United Nations, according to the United Nations, it continues to buy more raw materials in Brazil than any other country. All this without a trade agreement between the two, and even with some commercial sputum thrown. The EU and the South American economic bloc, Mercosur, have reached a huge trade agreement after 20 years of negotiations. The Pacific Alliance differs from most Latin American regional blocs because it was created to seek closer relations with Pacific economies, rather than deepening internal ties based on political ideology (unlike ALBA and UNASUR, both of which fail when Venezuela collapses). The group, founded in 2011, managed to increase global trade for its member countries to $1.03 trillion in 2016, up from $876 million in 2010. What really matters is trade compatibility, not trade agreements – it takes much more than tariff reductions to encourage countries to trade. For Latin America, China`s thirst for raw materials has been the main driver of trade trends and not a single one of the trade agreements signed since the 1990s. The LAFTA agreement has important limitations: it only concerns goods, not services, and it does not involve policy coordination.

Compared to the European Union. B, political and economic integration is very limited. The EU is already Mercosur`s largest trading and investment partner and the second largest in merchandise trade, Reuters reports. Trade agreements promote specialization in areas with a comparative advantage. This growth model can lead to high costs if agreements are signed with industrialized countries. For most Latin American countries, their advantage lies in raw materials, so signing trade agreements with trade economies specialising in industrial goods and services such as the EU or China involves more investment in the primary sector.

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