GENERAL LC/CAR/G.756 30 October 2003 ORIGINAL: SPANISH MAIN TRADE TRENDS, TRADE POLICY AND INTEGRATION IN THE GREATER CARIBBEAN i INDEX PRESENTATION....................................................................................................................................................................1 SUMMARY AND CONCLUSIONS.................................................................................................................................... 3 I. INTRODUCTION........................................................................................................................................................ 14 A. Origin and objectives of the A C....................................................................................................................... S 14 B. Main characteristics of member states and their international insertion.........................................................15 1. Great diversity....................................................................................................................................................... 15 2. The problems faced by small economies...........................................................................................................20 3. International insertion and reciprocal ties..........................................................................................................22 II. THE EVOLUTION OF FOREIGN TRADE AND INVESTMENT....................................................................25 A. International trade during the ’90s..................................................................................................................... 25 B. Intra-ACS Trade................................................................................................................................................... 33 C. The composition of external trade, the importance of trade agreements and export promotion and development policies...........................................................................................42 1. Introduction...........................................................................................................................................................42 2. The composition of exports................................................................................................................................. 45 3. An approximation to the potential for trade creation....................................................................................... 51 4. Several export promotion and development policies........................................................................................56 5. Conclusion............................................................................................................................................................ 60 D. Foreign Direct Investment (FDI) in ACS countries......................................................................................... 61 1. General FDI trends in Latin America and the Caribbean.................................................................................61 2. FDI in the Caribbean Basin.................................................................................................................................63 3. Intra-regional investment among ACS countries..............................................................................................77 III. TRADE POLICY AND INTEGRATION AGREEMENTS................................................................................ 84 A. General aspects.....................................................................................................................................................84 B. The recent evolution of trade policies................................................................................................................87 1. The countries of the Caribbean Community (CARICOM)..............................................................................87 2. The countries of the Central American Common Market (CACM)................................................................96 3. Cuba, the Dominican Republic, Panama and Associate States......................................................................107 4. The countries of the Andean Community........................................................................................................112 5. Chile and Mexico................................................................................................................................................116 IV. EXISTING AGREEMENTS AND NEGOTIATIONS IN PROGRESS........................................................... 121 A. The W orld T rade Organisation (WTO)............................................................................................................ 121 1. The major implications of the agreements of the Uruguay Round for the region........................................121 2. Negotiating proposals from countries in the region....................................................................................... 123 B. Trade Agreements and negotiations with developed countries......................................................................124 1. Agreements with the European Union............................................................................................................. 124 2. Agreements with the United States.................................................................................................................. 128 C. Main areas of action of the ACS.......................................................................................................................130 1. Attempts to establish a preferential trade zone among ACS countries..........................................................130 2. The facilitation of mutual trade.........................................................................................................................134 3. Cooperation in transport, tourism and natural disasters................................................................................. 137 EPILOGUE........................................................................................................................................................................... 144 BIBLIOGRAPHY.............................................................................................................................................................. 146 ii INDEX OF TABLES Table 1 Member countries of the ACS: Main indicators of the size of economies and their economic and social development.......................................................................................................................19 Table 2 ACS: Exports by main destinations, 1990-2001...................................................................................................27 Table 3 ACS: Participation of the sub-groupings in total exports, by main destinations, 1990-2001.......................... 28 Table 4 ACS: Exports by main destination, 1990-2001.................................................................................................... 29 Table 5 ACS: Imports by main origin, 1990-2001 .............................................................................................................30 Table 6 ACS: Imports by main origin, 1990-2001 .............................................................................................................31 Table 7 ACS: Participation of the sub-groupings in total imports by main origin, 1990-2001 .....................................32 Table 8 Exports among ACS countries, 2001..................................................................................................................... 36 Table 9 Exports among ACS countries, 2001,.................................................................................................................... 39 Table 10 List of main trade agreements signed by ACS countries...................................................................................44 Table 11 ACS: Composition of exports of goods by destinations and categories respectively, 2001.......................... 49 Table 12 Netherlands Antilles. Main products (2001)....................................................................................................... 50 Table 13 Group of Three: Main export products within the G-3 and their participation in exports to the world, 2001............................................................................................................................................... 52 Table 14 CACM: Main export products within the CACM and their participation in exports to the world, 2001.................................................................................................................................................................. 53 Table 15 CARICOM: Main export products within CARICOM and their participation in exports to the world, 2001*.............................................................................................................................................. 54 Table 16 ACS: Main export goods within ACS and their Participation in exports to the world, 2001........................ 55 Table 17 Latin America: Scope of the income tax exemption for companies in the Duty Free Zone (2000).............................................................................................................................................