IDB supports efforts to strengthen Asia-LAC ties through the Trans-Pacific Partnership

Symposium co-sponsored with the Council of the Americas explores potential for increased trade and investment between two dynamic regions

Officials from three Latin American countries, Canada and the United States met at the Inter-American Development Bank in Washington, D.C. to discuss how membership in the recently formed Trans-Pacific Partnership could help boost trade, investment and job creation in the hemisphere by creating linkages with dynamic economies in the Asia-Pacific region. 

“If globalization has taught us anything, it is surely that the benefits can only accrue if integration is embraced, if the world trading system is preserved and strengthened, and if appropriated flexible economic policies are pursued,” said IDB President Luis Alberto Moreno in opening remarks to the symposium, co-organized by the Council of the Americas. 

Three Latin American ambassadors to the U.S.— Arturo Fermandois of Chile, Harold W. Forsyth of Peru and Arturo Sarukhan of Mexico— participated in the event, attended by more than 150 people from the diplomatic, business and academic communities in Washington, D.C. They were joined by Paul Robertson, the Minister of Economic Affairs at the Canadian embassy, Francisco Sanchez, Under Secretary for International Trade at the U.S. Department of Commerce, and Antoni Estevadeordal, Manager of the IDB’s Integration and Trade Sector. 

The Trans-Pacific Partnership (TPP), also known as the Trans-Pacific Strategic Economic Partnership, is a multilateral free trade agreement aimed at reducing tariff and non-tariff barriers to boost trade and investment. It was originally formed by Chile, Brunei, New Zealand and Singapore in 2006. Now, five more countries are negotiating membership in the group: Australia, Malaysia, Peru, the United States and Vietnam, and other countries, including Mexico Canada and Japan are considering doing so.

U.S. Commerce Under Secretary Sánchez said that the framework for the TPP agreement “represents a landmark accomplishment” because it contains all the elements considered desirable for modern trade agreements: It removes all tariff and non-tariff barriers to trade; it takes a regional approach to promote development of production and supply chains across the region; it eases regulatory red tape; it addresses the concerns of new industries, such as clean technology and the digital economy; and it is flexible enough that it can be tweaked in the future to address developments that may arise. 

Moreno noted that in these times of slowing global growth, it’s important for countries to resist the pressures to erect protectionist barriers because that would slow the pace of economic recovery. “Commitments to greater openness to trade and investment, which have been made by the member countries of the Trans-Pacific Partnership…are key to generating the greater levels of confidence that can encourage higher growth,” he told the audience. 

Latin America and Asia are two regions that have weathered the international economic downturn fairly well, he noted. Latin America and the Caribbean (LAC) averaged a 4.3 percent economic growth rate in 2011 and registered record levels of capital inflows of $354 billion dollars. Thanks to high commodity prices, prudent economic policies and targeted social programs, the percentage of people in the region living in poverty continued to fall, dropping to about 30.4 percent. Urban unemployment also dipped, to 6.9 percent. 

The Asia-Pacific region is a key driver of global economic growth, accounting for around half of all international trade flows, which makes it strategically important to LAC countries. 

If countries such as Mexico, Canada, and Japan become members of the Trans-Pacific Partnership, trade flows could sharply increase and Latin American companies would benefit from the ability to become more integrated into global manufacturing value chains, Moreno added. 

The IDB, which has actively supported countries throughout LAC as they have joined a variety of other free trade agreements, “can act as a knowledge bridge between Asia and the Americas” as the two regions seek to deepen their economic ties, he said. 

Increased trade with Asia has reduced LAC’s vulnerability to the European and U.S. economic slowdowns. In 1990, 60 percent of LAC’s trade was with the U.S. and just 10 percent was with Asia; today, just 40 percent of LAC’s trade is with the U.S. and 20 percent is with Asia.