During this decade, and with particular intensity in recent months, several far-reaching trade negotiations have been in the works worldwide. Chief among them are the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union; a Free Trade Agreement (FTA) between the European Union and Japan; a Regional Comprehensive Economic Partnership (RCEP) among the ten members of the Association of Southeast Asian Nations (ASEAN) plus Australia, India, New Zealand, China, Japan, and the Republic of Korea; and an FTA among the latter three countries. All four processes were formally launched in 2013. They come on top of the Trans-Pacific Partnership (TPP) negotiations, underway since 2010, encompassing twelve countries of Latin America, North America, Asia, and Oceania. All these initiatives— referred to in the literature as mega-regional or mega-bilateral negotiations—should have a deep impact on the global trade and investment architecture of the coming decades, especially given the continued impasse at the Doha Round of the World Trade Organization (WTO).
A rapidly growing number of FTAs has been a global trend since the 1990s, but the recent mega-regional negotiations have features that set them apart from most existing pacts. The first two distinctions are the number and size of the economies concerned. All of them account for significant shares of world output, population, trade, and foreign direct investment (FDI). Second, these mega-regional negotiations go beyond the bilateral approach of most of the existing FTAs by aiming to create vast integrated economic spaces, whether Asian, transatlantic, or trans-Pacific. Third, the thematic agenda is far more extensive and complex than has traditionally been the case, and it includes a number of areas not covered by WTO agreements.
This brief by Osvaldo Rosales and Sebastián Herreros of the Economic Commission on Latin America discusses how Latin America may be affected by the ongoing mega-regional negotiations, specifically the TPP and the TTIP. Only Chile, Mexico, and Peru currently participate in the TPP negotiations and no Latin American countries are involved in TTIP talks, but all countries in the region stand to be influenced by both processes. Since the TPP and TTIP negotiations are underway at the time of writing (with the latter in a very early stage), any pronouncements on their outcome are highly speculative. Moreover, time and space restrictions preclude a detailed country-by-country analysis. Instead, we attempt to identify key issues that would arise from a successful conclusion of both negotiations. Further, in-depth examination by Latin American academics and policymakers is called for in the coming years.
This brief focuses on the possible impact of the TPP and TTIP on Latin American countries’ future trade flows, how both processes might influence these countries’ ability to design and implement a number of public policies, and deals with possible implications for Latin American regional integration. The paper ends with some concluding considerations.
The full paper can be downloaded below. The Dialogue is deeply grateful to Liberty Mutual for its generous support of this project.