Latin American Agriculture in a World of Trade Agreements

Latin American and Caribbean (LAC) countries have been among the most active participants in the negotiation of regional and bilateral FTAs. The countries of the region are members of 73 of the 259 FTAs notified to the WTO as currently in force, with 29 of these agreements containing tariff concessions made to one or more Latin American partners: the remaining 44 are between an LAC member country and a third country. Among LAC countries already linked by an FTA, a large percentage of agricultural tariffs are already duty free. But the progress in this direction seems to have stalled, with continued tensions in MERCOSUR and political difficulties in the Andean Community. Negotiation of the proposed Free Trade Areas of the Americas (FTAA) has been shelved, and the MERCOSUR-EU negotiations are moving at an imperceptible speed. Meanwhile other countries are moving ahead rapidly by negotiating ambitious mega-agreements, particularly the Trans Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (T-TIP). The only LAC countries actively involved in the TPP talks are Mexico, Chile, and Peru. If either or both of these mega-agreements are concluded the impacts on the region could be significant. These impacts include trade diversion and preference erosion in major import markets, as competitors improve their market access. They could also involve the 3 de facto acceptance of regulatory decisions made by the mega-agreement partners. The Latin American strategies toward these potentially significant agreements and the impacts of the TPP and T-TIP on Latin American agriculture have so far gone largely unstudied. Several possible avenues exist for Latin American countries to counter the impact of a TPP and TTIP on agricultural exports. One possible avenue would be to strengthen existing bilateral trade agreements within the region and to rely on multilateral trade negotiations to improve market access in other regions. Another possible strategy would be to link existing multi-country agreements, such as MERCOSUR and the Pacific Alliance, to NAFTA, in effect reviving the idea for a Free Trade Area of the Americas (FTAA) under a different structure. Another possibility would be to complete and expand the scope of the MERCOSUR-EU FTA talks, to include other LAC countries. A fourth possible action would be for those countries that are not yet part of the negotiations to “sign on” to the TPP in so far as it is an “open access” agreement.