Promoting Competitiveness in Latin America and the Caribbean Panel: International Trade and Global Integration Ministry of Trade, Industry and Tourism Gabriel Duque Deputy Foreign Trade Minister Mexico City, 27 July 2010
Integration Despite debate on the theory, trade negotiations continue to increase Trade Agreements in Force Notified to WTO 250 200 150 100 50 0 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 Source: WTO
Integration as does trade and foreign direct investment World Trade (% GDP) 5.0% 50 45 40 37,4 44,9 4.0% FDI (%GDP) 35 30 26,9 3.0% 25 20 15 10 9,8 17,0 20,7 15,7 10,0 13,9 22,4 2.0% 1.0% 5 2,0 0 1800 1870 1900 1913 1929 1938 1950 1973 1992 2000 2008 Source: Taylor (2003), WTO 0.0% 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 Source: WTO
IN 2010 WE WILL BE COMPLETING 11 INTERNATIONAL AGREEMENTS WITH 47 COUNTRIES
IN 2010 WE WILL COMPLETE 20 INTERNATIONAL INVESTMENT AGREEMENTS WITH OVER 40 COUNTRIES, AND 16 AGREEMENTS FOR THE AVOIDANCE OF DOUBLE TAXATION WITH 18 COUNTRIES BIT (50 countries, including both BITs and FTA chapters on investment ) In force: BIT Peru (2003), BIT Spain (2007), BIT Switzerland (2009), BIT Chile (2009), BIT Northern Triangle (2010) Signed: BIT Peru extension (2007), BIT China (2008), BIT Belgium Luxembourg (2009), BIT India (2009), BIT UK (2009), BIT South Korea (2010), FTA Canada (2008), FTA EFTA(2008), FTA EU (2010) In negotiation: FTA South Korea, FTA Panama, BIT Kuwait (negotiation completed), BIT Japan, BIT Germany and BIT France; negotiations with the latter two have been suspended following the taking effect of the Lisbon Treaty. DTT (18 countries) In force: CAN Peru, Ecuador and Bolivia (2004), Spain (2008), Chile (December 2009). Signed: Switzerland (2007), Canada (2008), Mexico (2009). Negotiations concluded: South Korea, Belgium, Czech Republic In negotiation: Germany, Netherlands, India, Japan, France, United States (suspended) and Venezuela (suspended).
Colombia has increased imports threefold in recent years 50,000 Exports US$ Millions 40,000 37,626 40,000 30,000 20,000 16,788 24,391 21,190 29,991 32,853 11,617 13,158 12,330 11,975 13,129 10,000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: DANE & SIGOB
15.000 and has achieved a fourfold increase in foreign direct investment FDI (US$ Millions) 10.583 12.500 12.000 10.252 9.000 6.656 9.049 7.201 6.000 3.000 1.508 2.436 2.542 2.134 1.720 3.016 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Banco de la República
The Herfindahl- Hirschman index (HHI) for Colombian exports according to market shows that they have become more diversified, but are still highly concentrated 3.000 2.500 4 countries 2.624 This indicator is equivalent to exporting the same quantities to : 6 countries 2.000 1586 1.586 1.732 HHI 1.500 1.000 500-200 00 200 01 200 02 200 03 200 04 200 05 200 06 200 07 200 08 Source: DANE-DIAN, calculations by MCIT-OEE
Colombia is at a midway point in terms of market concentration in Latin America, but has been among those that have diversified most in recent years 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0-1,000-2,000 Concentration index for exports and change in countries of Latin America Mexico Ecuador Ve enezuela Bolivia Colombia Peru Chile A rgentina Brazil * HHI Colombia and Peru 2007 Source: LAIA, MCIT-OEE calculations HHI 2006 HHI change from 2000 to 2006
76% of non-traditional goods exporters sell to just two markets Market Concentration of 11,061 Exporting Companies 1 market 6.820 2 markets 1.555 3 markets 4 markets 5 markets 6 10 markets 11 20 markets More than 20 markets 729 412 304 739 410 92 Companies % of total United States 1,653 24% Venezuela 1,457 21% Ecuador 628 9% Rest 3,082 45% Total 6,820 100% Source: DANE. Calculations by Proexport (2008)
Companies 2008 Exports 2008 671 (6%) 1,007 (9%) > US$ 5,000,000 US$ 1,000,000 - US$ 5,000,000 US$34,240 (91%) US$2,258258 (6%) 671 US$ 500,000 000 - US$ 1,000,000 (6%) US$375 (1%) 8,842 (79%) 0 US$ 500,000 000 US$753 (2%) 2004 = 11,190 exporting companies 2008 = 11,191 exporting companies 2004 = US$ 16,730 Million 2008 = US$ 37,626 Million There has been an increase in exports per company Source: DANE. Calculations by Proexport
Integration Colombia Exports by product also show significant concentration 9prod products This indicator is equivalent to exporting equal quantities of: 1.200 1.132 1.000 11 products 879 HHI 800 600 682 607 400 200-2000 2001 2002 2003 2004 2005 2006 2007 2008 * Nomenclature item (4 digits) Source: DANE, DIAN, MCIT-OEE calculations
Integration Colombia is at a middle point in terms of product concentration in Latin America, and it has not varied in recent years 10000 8000 6000 4000 2000 0-2000 Concentration index for exports according to product and change in countries of Latin America -4000 Mexico Ecuador Venezuela Bolivia Colombia Peru Chile Argentina Brazil Source: UNCTAD, MCIT-OEE calculations IHH 2005 HHI change from 1995 to 2005
Concentration by product of Colombian exports to various destinations in 2000 and 2008 (HHI) 5,013 3,935 3,896 3,504 3,269 6000 5000 4000 2,1333 2,187 2,187 1,924 1,793 1,208 1,246 344 974 317 309 191 297 849 249 3000 2000 1000 0 Japan Canada EFTA USA European Union Mercosur Chile Northern Triaingle Venezuela CAN HHI products 2000 HHI products 2008 Source: DANE, DIAN, MCIT-OEE calculations
Free Trade Agreements Agenda: The current agenda for negotiations has been based on 20 countries and 20 variables in five categories: Consolidation of current markets Markets with potential ti for exports Attraction of foreign investment Political feasibility Openness to free trade 1 Panama 2 Japan 3 South Korea 4 Gulf States 5 Russia 6 Dominican Republic 7 Costa Rica 8 Caricom 9 Australia 10 Singapore
Integration But free trade and investment are only part of the equation European Union: Per capita GDP (Dollars at PPP*) 50.000 45.000 40.000 35.000 * PPP: Purchasing Power Parity 30.000 25.000 20.000 15.000 10.000 5.000-1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Ireland Greece Spain Portugal Germany Italy United Kingdom Source: IMF
Improvement in Business Climate 1 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 183 Doing Business 2008 83 to 66 among 175 countries * * * 6th most active reformer Doing Business 2009 Doing Business 2010 66 to 53 among 181 countries * * * * * 8th most active reformer 53 to 37 among 183 countries * * * * * * * * 7th most active reformer For the third year in succession, Colombia has been one of the 10 countries carrying out the most reforms to improve business climate Leading reformer in Latin America The Latin American country making the most reforms in the last 5 years (Vienna, April 22, 2009)
A strategy to be consolidated Doing Business 2010 - Latin America Global Position in DB 2010-183 countries Position of Colombia for each indicator Colombia Chile Mexic o 37 49 51 Protecting investors Closing a business 5 32 Peru 56 Construction permits 32 Panama El Salvador Guatemala 77 84 110 Registering property Getting credit 51 61 Uruguay 114 Nic aragua 117 Argentina 118 Costa Rica 121 Paraguay 124 Brazil 129 Employing workers Starting a business Trading across borders Paying taxes Enforcing contracts t 63 74 97 115 Ecuador 138 152 Honduras 141 0 20 40 60 80 100 120 140 160 180 Bolivia Venezuela, RB 161 177 18
Integration National & Sectoral Sector business plans Covers 4 core aspects Productive Transformation Program Public private cooperation Coordinates institutions and programs for development of world class sectors Regional Regional Competitiveness Committees Regional Competitiveness Plans aimed at productive development Cover 10 core aspects Public private coordination Coordinate business development at local level Conpes Documents
Integration Concluding remarks: International trade and global integration are moving forward despite the crisis and ideological debate. Colombia has been developing an aggressive policy of integration with global markets with the clear purpose of diversification: it includes treaties, business promotion and trade and investment facilitation. Nevertheless, the international ti ldevelopment of the economy should ldbe complemented by domestic policies that improve the business climate and the competitiveness of the productive sector. The country is working on this at both sector andregional level. Specifically: Highway infrastructure is being developed, particularly in the case of the highways that link the center of the country to the main ports. Coverage, quality andpertinence ofeducation is being improved. Animal and plant health standards have been targeted so that agricultural goods can be exported. Development of world class sectors (PTP).
Promoting Competitiveness in Latin America and the Caribbean Panel: International Trade and Global Integration Ministry of Trade, Industry and Tourism Gabriel Duque Deputy Foreign Trade Minister Mexico City, 27 July 2010