After the LXII Summit of Mercosur was held in the city of Puerto Iguazú, Argentina, in early July 2023, the presidents of Mercosur, Alberto Ángel Fernández, for the Argentine Republic; Luis Inácio Lula da Silva, for the Federative Republic of Brazil and Mario Abdo Benítez, for the Republic of Paraguay, prepared a statement to detail the agreements reached during the multilateral meetings.

“The Presidents of Mercosur renewed the group’s commitment to strengthening democracy, the rule of law, and respect for human rights. They also highlighted the importance of the bloc’s economic, commercial, social, and cultural agenda for the benefit of its citizens and citizens. In turn, they agreed on the need to open a space for political reflection on the modernization of the bloc. This includes strengthening the internal agenda for greater integration of their economies, as well as the strategy of international insertion on a consensual basis. The presidents of Mercosur also expressed solidarity to face the challenges of a world scenario in transformation. These changes are affected by significant alterations in the map of supply chains and production and employment,” the joint statement begins.

The agreements reached by the presidents of Mercosur in 2023

Review of the Mercosur Regime of Origin

The presidents of Mercosur welcomed the approval of the review and update of the Mercosur Regime of Origin (ROM), an essential instrument for the integration of the productive sectors of the States Parties, which is modernized to simplify the rules and adapt them to the reality of international trade.

Customs matters and trade facilitation

The participants highlighted the importance of the “Technical Study on the State and Situation of the Level of Integration of the Mercosur Integrated Control Areas.” They expressed willingness to resolve the difficulties identified to strengthen regional infrastructure and facilitate trade.

The presidents of Mercosur highlighted the preparation of the “Mercosur Customs Information Exchange Procedures Manual” and the updating of the “Mercosur Customs Information Exchange Form,” tools that will contribute to the improvement of actions for the prevention of illicit Customs actions in the States Parties.

Defense of Competition

The heads of state welcomed the resumption of the work of Technical Committee No. 5, “Defense of Competition.” They highlighted the consensus reached in the Work Program that will promote regional cooperation and the culture of competition among the bloc countries.

Consumer Defense

The presidents of Mercosur highlighted the approval of regional regulations that determine the characteristics and procedures for providing information on consumer complaints in each State Party of Mercosur, whose analysis will constitute an input for adopting adequate consumer protection policies in the region.

The participants celebrated the progress in the work for the adoption of the “Cooperation Mechanism between National Consumer Protection Authorities of the States Parties to Mercosur for the Supervision of Compliance with Consumer Protection Regulations,”  an instrument that will facilitate the operation of administrative cooperation for more agile and effective supervision of compliance with the rules.

They highlighted the joint activity of Technical Committee No. 7, “Consumer Defense,” with Working Subgroup No. 6, “Environment,” which made it possible to achieve substantive progress in the process of preparing the “Guide to Good Practices on Sustainable Consumption.”

Foreign Trade Statistics

The heads of state highlighted the conversations aimed at improving the functioning of the Mercosur Foreign Trade Statistics System (SECEM). They reaffirmed the need to continue strengthening its technological infrastructure to improve the availability of Mercosur foreign trade statistical information, both for its character as a tool for analyzing commercial flows and its usefulness for commercial operators and interested third parties.

Services

The participants in the event took note of the progress, during this semester, in the work for the prompt conclusion of the VIII Round of Negotiations of Specific Commitments in Services and highlighted the importance of advancing the liberalization of trade in services to deepen the integration of the economies of the region and more significant insertion in global trade in services.

Sugar sector

They highlighted the continuity of the work in the Sugar Sector Ad Hoc Group to define the objectives and terms of reference of a study on the current context of the sugar sector and related industries in Mercosur. This was done to suggest alternatives to promote its better use and facilitate access to extra-regional markets.

Regulatory issues

The presidents of Mercosur highlighted the presentation of a first proposal to develop guidelines for reviewing the regulatory framework of Working Subgroup No. 3, “Technical Regulations and Conformity Assessment Procedures,” which aims to perfect the process of regulatory harmonization between the State’s Parties.

They went on to highlight the importance of continuing the work of the Ad Hoc Group on Regulatory Issues (GAHTR). They recognized the relevance of transparent and consistent regulatory practices to obtain regulatory results that seek to avoid unnecessary trade barriers and facilitate trade flows between countries in the region and outside the Mercosur economic bloc.

Mercosur Business Forum

The three heads of state highlighted the holding of the 10th Edition of the Mercosur Business Forum. This space promotes the participation of the private sector in the integration process, intending to improve coordination with the public sector.

In this context, the presidents of Mercosur took note of the activities that took place at the event:

• “Women Entrepreneurs in Mercosur – Promoting business with regional expansion,” held on April 27, where Mercosur businesswomen presented specific proposals to promote the participation of women in the business world and the bloc’s international trade activities.
• The Automotive Chapter: “Transition towards sustainable mobility,” held on June 7, made recommendations and proposals related to institutional aspects, supplier development, human resources, international insertion, internal market, and public-private relations.
• The Health Sector Chapter: “Health manufacturing industry: towards regional self-sufficiency in the production of medical equipment,” was held on June 22, in which the conclusions and recommendations were announced to enhance the sector as an axis of trading bloc development.
• The Audiovisual Chapter: “Towards greater regional integration of advertising services,” held on June 27 in virtual format, in which advertising agencies, producers, production companies, and artistic creatives from the region developed recommendations for greater integration of the sector within Mercosur.
• The progress of the segment: “Biotechnological value chains: challenges for Mercosur.” Participants worked to identify the variables necessary to stimulate a regulatory environment favorable to regulatory convergence at the regional level in a strategic and innovative sector in the region.

Fund for the structural convergence of Mercosur (FOCEM)

The presidents of Mercosur reaffirmed that the Fund for the Structural Convergence of Mercosur (FOCEM) is a fundamental tool for overcoming existing asymmetries between the countries and regions of the bloc and strengthening the integration process.

In that sense, the heads of state positively recorded the receipt of Brazil’s contributions committed to the FOCEM in the current semester, which will enable the consideration of additional projects.

They also highlighted the approval of the project “Priority Works for Infrastructure Recovery of the Urquiza Line,” which will improve the transportation of railway cargo in Argentine Mesopotamia and its connection with the remaining States Parties.

Likewise, they took note of the approval of the project “Strengthening the regional institutions of Mercosur to face critical and emergency contexts (pandemic and post-pandemic) with public policies with a human rights perspective,” which will strengthen the bloc’s actions in matters of human rights; and the project “Modernization of the computer infrastructure of the Mercosur Secretariat and the Mercosur Web Portal,” which will improve the computer services available to the public.

Trade and sustainable development

The three heads of Mercosur states recognized the work being carried out by the Ad Hoc Group on Trade and Sustainable Development to fulfill its mandate.

In particular, it relates to valuing the contribution of trade to achieving sustainable development in its three dimensions, giving visibility to the policies carried out by the States Parties to promote sustainable development in their productive systems from a perspective of inclusion and social and environmental conservation. They identified measures and regulations adopted by third parties that could affect regional trade and sustainable development.

Environment

The presidents of Mercosur reaffirmed their decision to continue advancing in the implementation of policies aligned with the United Nations Framework Convention on Climate Change and its Paris Agreement, with the Convention on Biological Diversity and its Kunming-Montreal Global Framework, and with the Convention United Nations to Combat Desertification.

Likewise, they highlighted the need for fair, transparent, and agile financing mechanisms. They underlined the urgent need to capitalize on existing environmental and climate funds, with the expectation that the promises of resource mobilization to achieve the commitments of the Rio Conventions are honored, in line with the principle of Common but Differentiated Responsibilities. They also recognized, in turn, the need to have innovative financial mechanisms, such as the exchange of debt for environmental and climate action, payment for ecosystem services, the use of special drawing rights, and financial instruments such as bonds linked to sustainability.

Finally, they expressed their commitment to active participation and involvement to achieve a successful and inclusive legally binding instrument on plastic pollution.

Agriculture

They reiterated their commitment to move forward with determination in implementing the Sustainable Development Goals (SDGs) of the 2030 Agenda. They agreed that sustainability challenges must be addressed through concerted actions within the framework of multilateralism. This will be based on the principle of common but differentiated responsibilities and respective national capacities. In that sense, the presidents of Mercosur agreed that there is no single approach and that recipes and solutions must be adapted to local needs without leaving anyone behind. They also shared concern about the effects of new unilateral regulations by some countries and trading blocs that, far from solving environmental problems, could aggravate the global situation regarding food safety and cause adverse effects on international trade.

Digital Agenda

The heads of state welcomed the progress in the negotiation of a “Mercosur Cybersecurity Cooperation Agreement,” which will serve to improve the coordination, response, and collaboration of the national authorities of the States Parties to the malicious use of cyberspace to maintain open, secure, stable, accessible, peaceful and interoperable access to the cyber environment.

Physical infrastructure

They highlighted the progress in Working Subgroup No. 14, “Physical Infrastructure,” with a view to the coordination of priority infrastructure projects

for physical integration and the promotion of works that promote productive and logistical integration in Mercosur. In this sense, the three presidents highlighted the proposals for the creation of a Commission on Bioceanic Corridors to have a space for exchange on the different bioceanic corridors existing in Mercosur and the Associated States, as well as a Mercosur Physical Infrastructure Project Bank, to identify priority projects and analyze possible sources for their financing.

Energy

The presidents highlighted the work of Working Subgroup No. 9 “Energy” and the holding of the Meeting of Energy Ministers of Mercosur, in which they agreed on the importance of moving towards greater electrical interconnection and gas integration that allows the full use of the complementary resources of the countries of the region, the need for the energy transition process to be fair, inclusive and adapted to the reality of the Mercosur countries, and the importance of access to international financing. Likewise, they highlighted the advances in energy efficiency, sustainable mobility, incorporation of alternative energies, development of hydrogen, and the completion of new infrastructure works for energy production, transportation, and distribution. This intends to strengthen integration for the benefit of the people of the entire region.

They agreed on the importance of holding the Virtual Energy Integration Seminar: Natural Gas – Transition Fuel, in which the role of natural gas in the energy transition process of Mercosur, Bolivia, and Chile was analyzed. The States Parties of Argentina, Brazil, and Paraguay agreed that natural gas is a strategic fuel in the transition toward a cleaner energy matrix and a factor in integrating South American economies.

E-commerce

The presidents of Mercosur highlighted the importance of the resumption of the meetings of Working Subgroup No. 13, “Electronic Commerce.” In particular, they noted the shared interest in strengthening coordination as a contribution to the future development of guidelines for negotiations on electronic commerce with third countries or blocs and the project, under consideration of the States Parties, to promote digital trade.

They agreed on the importance of the ratification of the “Mercosur Electronic Commerce Agreement,” which establishes a legal framework that enshrines norms and principles related to electronic commerce in the Mercosur trading bloc.

Health

They recognized that the creation and strengthening of national and regional capacities for the development and production of inputs, medicines, and other essential health technologies is a critical element to improve market access and transparency and adequately respond to the needs of regional health, especially in times of pandemics, and that also contributes to health security and economic and social development.

They reaffirmed the relevance and strategic importance of continuing with Mercosur’s participation and active support in all the processes and initiatives coordinated by the World Health Organization (WHO) on prevention, preparation, and response to pandemics.

They celebrated the update of the “Mercosur Strategy on Climate Change and Health,” recognizing that “Climate change affects the health and well-being of people. It directly causes increases in the frequency and intensity of extreme meteorological events such as heat waves, droughts, and heavy rainfall, all with significant health impacts. On the other hand, it contributes to modifying distribution patterns and seasonality of infectious diseases transmitted by water or by vectors and zoonotic diseases. Likewise, climate change will put “the sustainability of health systems at risk if the environmental determinants of health are not seriously addressed, given that the fraction allocated to prevention in the global budget allocated to healthcare is very low (WHO, 2019).”

The presidents of Mercosur were pleased to have strengthened the “Health in Healthy Borders” strategy, initiating activities in surveillance, vaccination, services and HR, and pandemic preparedness and response. This proposal seeks to contribute to ensuring that the populations of border towns linked to Mercosur are safer and more integrated in health. To achieve this, it is considered essential to generate active exchanges of institutional capacities and competencies of the Mercosur countries themselves and take advantage of Mercosur institutions to guarantee the sustainability of the actions.

Seal of good design

The presidents of Mercosur agreed to advance actions that enhance design capabilities in Mercosur through a program that establishes and promotes the MERCOSUR GOOD DESIGN SEAL to strengthen innovation and insertion in international markets of small and medium-sized bloc companies.

The Importance of Mercosur

Mercosur, the Southern Common Market, holds significant importance for the economy of South America. Established in 1991, this regional trade bloc comprises Argentina, Brazil, Paraguay, Uruguay, and, more recently, Venezuela. The primary objective of Mercosur is to foster economic integration among its member countries, promoting the free movement of goods, services, and factors of production. This integration has led to increased trade within the region, creating a larger market for businesses and encouraging economic growth. By eliminating or reducing tariffs and trade barriers, Mercosur enhances the competitiveness of member nations on the global stage.

Furthermore, Mercosur is a platform for coordinated economic policies and joint initiatives, contributing to regional stability and development. The collective bargaining power of Mercosur enables its member countries to negotiate more favorable trade agreements with external partners, strengthening their position in the global economy.

The significance of Mercosur extends beyond trade to include social and political cooperation. The bloc promotes collaboration on issues such as infrastructure development, environmental protection, and education, fostering a sense of unity among South American nations. In a globalized world, where economic interdependence is crucial, Mercosur plays a pivotal role in shaping the economic landscape of South America and enhancing the region’s overall prosperity.

The prominent sectors are commerce, biotechnology, and information and communications technologies.

Intending to attract foreign investments, Uruguay XXI has launched a new digital portal in Spanish and English for its Project Portfolio. It is the first website that presents public and private opportunities in Uruguay to investors from abroad.

Uruguay XXI’s main objectives are promoting the country’s brand, exports, and investments. In that sense, the platform projects Uruguay’s positive attributes, such as superior quality of life, political stability, and fiscal discipline to attract investors. According to the project’s manager, Álvaro Brunini, it was the intention to link national companies and foreign investors that drove the idea of the project.

The platform’s primary purpose is to facilitate contact between companies and foreign investors through information provided by the  Uruguayan companies within the platform, which will then be provided to foreign businessmen to generate more private communication.

Foreign investments in Uruguay

Uruguay has an open economy where collaborative work between foreign investors and national private companies plays a fundamental role.

Due to an increased linkage between Uruguayan firms and sources of international capital, greenfield ” investments – in which a business is developed from scratch – have gained prominence in recent years. Acquisitions and mergers have also grown.

Regarding the origin of investments, this is led by the United States, Spain, Argentina, and Brazil. Uruguay XXI seeks to ensure that these exceed US$500,000.

On the other hand, Brunini highlighted the importance of the sectoral report on investment funds carried out by the Uruguay XXI in 2023, which positioned Uruguay as among the leaders in Latin America in attracting foreign direct investment.

The companies registered in XXI’s Portal

Brunini explained that 22 domestic Uruguayan companies are looking for foreign investors, and over 60 registered users have uploaded information. “We hope to exceed 70 projects before the end of the year,” he stressed.

Furthermore, Álvaro Brunini maintained that, although the initiative targets all sectors of activity, biotechnology, commerce, and information technology startups predominate.

Project expectations

Brunini said that the project’s objective is to generate the first links and interactions between companies and investors, which is expected to continue to increase in the coming months.

“There is a strengthening of private capital that will contribute to boosting these investments,” said Brunini, adding that this also favors local enterprises.

Following the creation of the portal, Uruguay XXI launched a promotional campaign. To access the registry, companies must enter the agency’s website.

Foreign investment is fundamentally important

Foreign Direct Investment (FDI) plays a pivotal role in sustaining and enhancing the economic health of Uruguay, a small but resourceful South American nation. Uruguay has historically been open to foreign investments, and this approach has yielded multifaceted benefits for the country. Firstly, FDI injects crucial capital into the Uruguayan economy, facilitating the development of various sectors such as infrastructure, technology, and manufacturing. This influx of capital helps bridge funding gaps, allowing the government to undertake ambitious projects that contribute to economic growth and job creation. Moreover, FDI brings with it not only financial resources but also technology and expertise. Foreign investors often introduce advanced technologies and management practices that foster innovation and efficiency in local industries. This technological transfer enhances the competitiveness of Uruguayan businesses on a global scale, positioning them for sustainable growth in the long term.

In addition to economic advancements, FDI contributes significantly to job creation in Uruguay. As foreign companies establish or expand their operations in the country, they generate employment opportunities for the local workforce. This is particularly crucial for a nation like Uruguay, where a thriving job market is essential for social stability and individual prosperity. The creation of employment opportunities, in turn, reduces unemployment rates and enhances the standard of living for the population. Moreover, the diversification of industries spurred by foreign investments ensures a broad spectrum of job opportunities, ranging from skilled technical positions to unskilled labor, catering to a diverse workforce.

Furthermore, FDI serves as a catalyst for international trade by integrating Uruguayan businesses into global value chains. Foreign investors often connect local businesses with their global networks, providing access to new markets and fostering export-oriented growth. Uruguay XXI’s new investment portal seeks to increase this dynamic. This integration expands the market reach for Uruguayan products and exposes local businesses to international best practices, quality standards, and consumer preferences. This exposure enhances the adaptability and resilience of Uruguayan industries, making them better equipped to navigate the complexities of the global economy.

In conclusion, foreign direct investment is critically important to the health of the Uruguayan economy due to its multifaceted contributions. Beyond the immediate financial injections, FDI brings technological advancements, managerial expertise, job opportunities, and international market access. Embracing foreign investments accelerates economic growth and positions Uruguay as a competitive player in the global marketplace, ensuring a sustainable and prosperous future for the nation. Uruguay XXI’s efforts to promote the country’s brand, exports, and investments through its new portal will play a positive role in helping the South American nation capture a more significant share of foreign direct investment.

The economies of the Dominican Republic, Panama, and Honduras lead the growth rankings this year and in 2024, according to a recent report by Moody’s Analytics that examines the economic outlook for Latin America.

For 2023 and 2024, the outlook for real GDP growth rates for the Dominican Republic will be 4.3 and 4.9; Panama, 4.4 and 3.7; and Honduras, 3.4 and 3.6, respectively.

These projections coincide with those recently issued by the Central Bank of Honduras (BCH) within the framework of the review or adjustment of figures of the Monetary Program for the years in question.

Honduran economic growth exceeds the Latin American average

The projected behavior for the Honduran economy is slightly above the Latin American average. According to Moody’s Analytics, the outlook for Central America will be marked by lower growth this year due to a less favorable global environment.

Income from tourism and remittances continues to drive the growth of the Honduran economy as inflation continues to decline. Some countries are already in the target inflation range. Although some central banks have begun to reduce their monetary policy rates, they are expected to remain high, affecting domestic demand.

Regarding remittance flows, it is expected that they will continue to benefit from the strength of the US labor market, but its cooling will prevent anticipated growth. Moody’s regional report states, “The region’s economy will see greater growth in 2024.”

The Honduran economy has the potential to grow more, believes the National Association of Industrialists (ANDI) executive director, Fernando García. However, “the review carried out by the Central Bank is positive. It seems that what we projected at the beginning of the year was very ambitious.”

The projection of 3.0 and 3.5 is more realistic. “We hope this goal is met, but as a country, we should grow at 8 and 10 percent to overcome underdevelopment.” But “legal security is needed, in contracts and stability in legislation,” and of course, we must avoid permanent conflicts between politicians because they weaken the investment climate, he mentioned.

Based on a summary of the Monetary Program, the business leadership considers that the moderation of economic growth of the Honduran economy is consistent with a less favorable international context, characterized by a global slowdown and inflation that remains high.

Behavior of the Honduran Economy

According to the Economic Policy Department of the Honduran Council of Private Enterprise (Cohep), the downward revision of the economic growth in the country would be influenced by a drop in exports, explained by the lower external demand for Goods for Processing (textile garments), particularly from the USA – the leading destination of Honduran textile exports.

Likewise, lower growth in private consumption is expected. This situation will be primarily impacted by a lower flow of family remittances than initially expected in response to the slowdown in US economic activity. In addition, lower income for companies is anticipated due to a decreased dynamism of the main economic activities of the Honduran economy.

Moreover, a lower contribution from public investment is estimated in 2024. However, it would continue to be higher than the previous year’s investment in public works and improvements in road infrastructure and the energy sector.

Steps to take to promote economic growth

A comprehensive and multi-faceted approach is necessary to maximize economic growth in Honduras from a policy perspective. Firstly, addressing political instability is crucial. Implementing policies that promote political stability, continuity, and transparency can instill confidence in investors and create an environment conducive to long-term economic planning. Strengthening institutions to ensure effective governance and combating corruption are paramount, as they contribute to a stable and predictable business climate.

Social development policies should focus on reducing poverty and inequality, enhancing education and healthcare, and empowering the workforce. Investing in human capital will not only improve the standard of living for Honduran citizens. Still, it will also create a skilled and productive labor force, vital for attracting and retaining investments in a globalized economy. Additionally, targeted infrastructure development, including transportation and communication networks, is imperative to facilitate the movement of goods and services, reducing transaction costs and promoting overall economic efficiency.

Diversifying the economy by promoting sectors beyond traditional agriculture is essential for resilience against external shocks affecting the Honduran economy. Encouraging innovation and technology-driven industries can contribute to higher productivity and competitiveness on the global stage. Moreover, given Honduras’ vulnerability to natural disasters, formulating climate-resilient agricultural policies and disaster management strategies is crucial.

Trade policies that foster international partnerships and market access are vital for Honduran economic growth. Negotiating favorable trade agreements and participating in regional economic integration can open up new opportunities for Honduran businesses and enhance export potential. Simultaneously, policies supporting small and medium-sized enterprises (SMEs) can stimulate entrepreneurship and generate employment.

Incentivizing foreign direct investment through clear and consistent regulations, tax incentives, and creating special economic zones in Honduras can attract capital and technology transfer. However, such initiatives should be accompanied by measures to ensure responsible and sustainable business practices.

Overall, a holistic and coordinated policy framework addressing political, social, economic, and environmental dimensions is necessary to maximize the growth of the Honduran economy. The success of these policies requires sustained commitment from both the government and the international community, fostering a collaborative effort to unlock the nation’s economic potential.

Gabriel Boric, president of Chile,  recently announced that the Chile – Mexico Free Trade Agreement (CMFTA) will be reviewed in March of 2024, 25 years after it was signed.

Chile and Mexico seek to deepen economic collaboration

In a message to the media on the occasion of the official visit of President Andrés Manuel López Obrador to Chile within the framework of the 50 years of the coup d’état in that country, and after a private meeting at the La Moneda Palace, the Chilean president expressed that the coming update of the trade agreement will strengthen economic collaboration between the two nations.

“Next year, in March, when we celebrate 25 years of the Chile – Mexico free trade agreement, we will once again reinforce and update, precisely, the instances of collaboration that we have put in place for two countries, ” expressed the Chilean head of state.

Gabriel Boric pointed out that Chile and Mexico are united by their history and that although they are geographically distant countries, they have a special closeness, “a rich past together and a challenging present and future that is built in democracy, with justice and freedom.”

The particulars of the Chile – Mexico Free Trade Agreement

The Chile – Mexico Free Trade Agreement (CMFTA) represents a strategic alliance between two dynamic economies in the Latin American region. Signed in 1998, this landmark agreement has significantly transformed the trade landscape between Chile and Mexico, fostering economic growth, enhancing market access, and strengthening diplomatic ties. This essay delves into the critical provisions of the CMFTA, examining how it has propelled bilateral trade, encouraged investment, and laid the foundation for a resilient economic partnership.

Tariff Elimination and Market Access:

At the heart of the CMFTA lies the commitment to eliminate tariffs on a broad spectrum of goods and services. This provision has been instrumental in expanding market access for businesses in both nations. The gradual reduction and elimination of tariffs have facilitated the flow of goods across borders, creating a more competitive and conducive environment for trade. From agricultural products to manufactured goods, the CMFTA has effectively dismantled financial barriers, encouraging diverse industries to thrive.

Beyond tariff elimination, the agreement addresses non-tariff barriers, streamlining customs procedures and simplifying regulatory processes. This reduces transaction costs for businesses and ensures a smoother and more efficient trade flow. The result is a more seamless exchange of goods and services, benefiting businesses and consumers.

Investment Protection and Facilitation:

The CMFTA extends its impact beyond trade in goods, emphasizing investment protection and facilitation. Investors from both Chile and Mexico enjoy a secure and predictable environment, shielded from discriminatory practices and expropriation. This provision has been pivotal in encouraging cross-border investment, fostering economic growth, and diversifying both nations’ economies.

Moreover, the agreement establishes mechanisms for dispute resolution, ensuring a transparent framework for addressing any investment-related issues that may arise. This builds trust between investors and host countries and guarantees the stability necessary for long-term investment planning.

Services and Intellectual Property:

Recognizing the evolving nature of the global economy, the Chile – Mexico Free Trade Agreement goes beyond traditional trade agreements by incorporating services and intellectual property provisions by facilitating the cross-border provision of services, Chile and Mexico benefit from the exchange of expertise and innovation in sectors such as technology, finance, and education.

Additionally, the agreement provides robust protection for intellectual property rights, acknowledging the critical role of innovation in economic development. This ensures that the creative and intellectual works of individuals and businesses are safeguarded, encouraging investment in research and development and fostering a culture of innovation in both nations.

Sustainable Development and Social Responsibility:

The CMFTA takes a progressive stance by incorporating sustainable development and social responsibility provisions. Both nations commit to promoting environmentally friendly practices and fostering social inclusivity in their economic activities. This forward-thinking approach enhances the image of Chilean and Mexican products in the global market and positions both nations as responsible participants in the international trade community.

The CMFTA sets a precedent for trade agreements that prioritize sustainable development by aligning economic growth with environmental and social considerations. This benefits the present generation and lays the groundwork for a more resilient and responsible economic future.

The Chile – Mexico Free Trade Agreement created an economic partnership

The Chile-Mexico Free Trade Agreement is a testament to the transformative power of bilateral collaboration. This agreement has elevated the economic partnership between Chile and Mexico to new heights by eliminating trade barriers, protecting investments, and fostering innovation. As businesses and consumers continue to reap the rewards of this alliance, the CMFTA serves as an example of how nations can forge mutual prosperity through open dialogue, cooperation, and a commitment to shared economic growth. The Chile-Mexico Free Trade Agreement exemplifies successful economic diplomacy as both nations navigate an ever-changing global landscape. It offers valuable lessons for nations aspiring to deepen their economic ties to pursue shared prosperity.

Soon, Argentina will face a crucial election for its future. The US -Argentina Business Council ( USABC ) of the United States Chamber of Commerce, based in Washington DC, believes that a solid and close economic-trade relationship between both countries is fundamental so that Argentina can get out of its current crisis. The organization believes that the US can be a strategic ally for sustained economic growth in Argentina.

The US and Argentina have a long history of commercial relations

This year, the United States and Argentina celebrate two hundred years of diplomatic relations, and the private sector has made a vital contribution to developing a prosperous and mutually beneficial relationship. More than three hundred American companies are based in Argentina, some of which have been in the South American nation for over one hundred years. The United States has historically been the primary source of foreign direct investment in Argentina, with an investment stock estimated at 16 billion dollars. The United States is also Argentina’s third trading partner – after Brazil and China – which in 2022 represented almost $30 billion in trade in goods and services.

However, the bilateral economic relationship has yet to reach its full potential. With an increasingly complex business environment marked by record annual inflation, increasingly strict controls, and trade barriers, trade is declining. Restrictions have increased through mandatory import permits and increasingly limited access to the foreign exchange market. These circumstances can be detrimental to continuing economic growth in Argentina.

The USABC has identified a series of initiatives and reforms in areas linked to trade, energy, and innovation that it believes, regardless of who is elected president in the upcoming contest, the future government of Argentina should promote to achieve its enormous potential, and with which the Council is fully committed to collaborating.

On the part of the United States, the USABC believes that a Critical Minerals Agreement (CMA) should be promoted with Argentina. This country’s lithium carbonate production is estimated to triple to 120,000 tons by 2024. However, without a free trade agreement or CMA with the United States, American companies will not be able to benefit from the inflation reduction law and will not see Argentina as a competitive supplier of lithium.

A Critical Minerals Agreement will fortify economic growth in Argentina

That is why the USABC proposes to develop an ambitious work agenda that mobilizes the Argentine and US diplomacies to take concrete steps toward signing a CMA. Furthermore, the organization firmly supports the IMF agreement with Argentina. With inflation above 150%, a growing fiscal deficit, and a significant contraction in economic activity, the USABC urges the United States government to continue supporting the IMF program to promote economic growth in Argentina.

Likewise, the United States – Argentina Business Council believes including Argentina in the Alliance for Economic Prosperity in the Americas (APEP) is essential. At the 2022 Summit of the Americas, APEP was launched to address inequality, foster integration, generate high-quality employment, and foster democratic values. The USABC proposes that the US authorities invite Argentina to join APEP at this initial stage.

The Council believes that the Argentine government should implement an open and transparent consultation process to address trade obstacles. It is evident that the economy is in a critical situation, but current trade restrictions discourage investment and growth. Mandatory import licenses generate unnecessary costs, bureaucracy, and uncertainty, which harms economic activity and job creation, affects competitiveness, and discourages investment in promoting Argentina’s economic growth.

Access to foreign exchange markets is critical to sustained growth

Furthermore, the country must lift exchange restrictions. Companies that cannot access the foreign exchange market practically cannot operate, and by limiting their ability to repatriate dividends, the incentives to invest in Argentina are blurred and constitute a further impediment to the country’s sustained growth.

Finally, Argentina must unleash its full export potential by eliminating duties and restrictions on exports. To consolidate its profile as a reliable global supplier of food, minerals, and energy, the country must thoroughly review measures that discourage exports, starting with eliminating or reducing export duties and prohibiting the export of certain products.

The United States – Argentina Business Council invites the next government to deepen its relationship with the US private sector and actively work on a joint agenda in strategic sectors for both countries, such as agribusiness, biotechnology, energy, and aerospace.

US trade and investment can grow significantly in the right business climate and contribute considerably to Argentina’s economic growth. In that sense, the USABC believes and shares the perspective of Argentine political leaders that a structural change is necessary that allows Argentina to achieve its promising future. The USABC appreciates that each of the leading candidates for the country’s presidency recognizes, in their own way, this reality, and the organization has a firm commitment to helping Argentina emerge from the current crisis and resume sustained economic growth, the elimination of poverty, and the prosperity of its people.

The United States Chamber of Commerce and its member companies want to be key partners that support positive steps on this new path for economic growth in Argentina.

According to the Central Reserve Bank of Peru, Peru maintains solid macroeconomic fundamentals that give it the capacity to respond to economic shocks.

At the recent Investor Day 2023, organized by the Lima Stock Exchange Group (BVL), Adrián Armas, Central Manager of Economic Studies of the Central Reserve Bank of Peru (BCRP), presented the economic perspectives of the Peruvian market and the current situation of the global economy.

Below is a summary of his presentation:

Global economic growth and risks

The International Monetary Fund (IMF) has revised its global growth forecasts for this year, going from a modest 2.8% to a more optimistic 3%. This improvement is primarily due to the moderation of some risks, such as the banking crisis.

The economic indicators of the United States have exceeded some expectations, which influences the outlook for inflation rates and control. However, there is a lagging effect of the measures taken, and it is essential to highlight that the risk of banking crises in the United States has been reduced if The IMF has identified several risks that could affect global economic activity:

– High Inflation: Inflation could remain high or even increase due to events such as an escalation of the war in Ukraine and extreme weather events.

– Turbulence in the Financial System: The tightening policies of central banks could generate turmoil in the financial system.

– China’s Slow Recovery: Despite the IMF’s projection of 5.2% growth in China, more recent data suggests a slower economic recovery.

– Fiscal Debt Overhang: Tensions related to fiscal debt could spread to other economies.

The terms of trade remain favorable at levels above the average of the last two decades. This leads to having a strong trade balance.

Outlook for Peru

In the global context of favorable terms of trade, leading to a surplus trade balance, Peru has faced political challenges in recent years, which has led to the rotation of presidents and authorities. 2021, in particular, experienced the largest short-term capital outflow in decades due to political uncertainties.

However,  according to the Central Reserve Bank of Peru, the country maintains solid macroeconomic fundamentals that give it the ability to respond to economic shocks. Stability is one of the best assets of the Peruvian economy, and its currency, the Sol, has proven to be one of the most stable in the region, with limited depreciation.

Peru has international reserves equivalent to 29% of GDP, the highest in the region and comparable with Far Eastern economies.

National Economic Activity

While Peru has maintained solid average economic growth of 4.3% annually over the past two decades, it has recently faced obstacles, such as the anchovy fishing ban, social conflicts, and adverse weather conditions. In the first half of the year, GDP experienced a drop of -0.5%.

Business expectations were affected, and although there was a slight recovery in July, challenges remain in private investment and consumption, according to the Central Reserve Bank of Peru.

Monetary Policy and Inflation Projection

The BCRP has maintained the reference interest rate at 7.75%, with an inflation rate decreasing significantly. Unlike other countries in the region, Peru registers one of the lowest and most stable inflation rates in the current century, around 3%. Inflation decreased to 5.88% in July after reaching a maximum of 8.81% in June 2022, partly due to climatic factors and rising food prices.

The same has yet to happen in neighboring countries where their rates have risen to double digits, such as Brazil and Colombia, which are at 13.25%, Mexico at 11.25%, and Chile at 10.25%. (Data as of August 17, 2023).

The Central Reserve Bank of Peru is working with a scenario of relative political stability. The markets are attributing growth for this year of 1.3%, and for next year, it is projected to be 2.7%, with Peru becoming the country in the region with the highest growth in 2024.

Solid fundamentals, according to the Central Reserve Bank of Peru

Peru stands out for its solid macroeconomic fundamentals: low inflation rates, high international reserves, low financing costs, and orderly public finances. Economic recovery is linked to socio-political stability and a favorable environment for doing business.

The country is projected to be one of the fastest-growing countries in 2024, and inflation is expected to enter the target range as the effects of adverse weather events on food prices dissipate.

Peru is a good choice for foreign direct investment

Peru is an attractive destination for foreign direct investment (FDI) due to its robust economic fundamentals, strategic geographic location, and commitment to fostering a business-friendly environment. With a consistently growing economy, Peru has demonstrated resilience and stability, offering investors a predictable landscape. The country’s strategic positioning as a gateway to the Pacific provides access to key Asian and American markets, enhancing trade opportunities. Additionally, Peru has actively engaged in trade liberalization, signing numerous free trade agreements that facilitate market access and reduce trade barriers. The government’s dedication to economic reforms, such as streamlining bureaucratic processes and improving infrastructure, further enhances the ease of doing business.

Natural resource abundance, including significant mineral and agricultural wealth, presents lucrative investment prospects, particularly in the mining, agriculture, and renewable energy sectors. Peru’s diverse and dynamic economy and skilled workforce make it an ideal investment destination. Moreover, ongoing efforts to promote sustainability and responsible business practices align with global trends, fostering a positive image for environmentally conscious investors. In conclusion, Peru’s stable economic growth, strategic location, commitment to reforms, and abundant natural resources collectively make it an enticing option for foreign direct investment.