The presidents of 11 Latin American countries, including the region’s main economies – Brazil, Mexico, Argentina, Chile and Colombia – announced on Wednesday an “alliance” against inflation to facilitate trade between countries in an area where economic integration remains weak.
The agreement was announced by the Mexican government after a virtual meeting of heads of state, the vast majority of which are on the left. Mexican President Andrés Manuel López Obrador has invited his colleagues to a meeting in Cancun on May 6 and 7.
The purpose of the Alliance is to facilitate trade in food, basic products and intermediate goods by removing “barriers, customs duties, sanitary measures”.
The priority goes to reducing “the cost of these products for the poorest and most vulnerable population”, reads the declaration of this “Alliance of Latin American and Caribbean countries against inflation”.
Inflation in 2022 was 5.79% in Brazil and 7.82% in Mexico, the two largest economies in Latin America. It reached 94.8% in Argentina, a record in 30 years.
This new “alliance” also includes Belize, Bolivia, Cuba, Honduras, Venezuela and Saint Vincent and the Grenadines.
Weak economic integration
The Heads of State mentioned “logistical, financial and other measures” so that the exchange of basic products and intermediate goods “takes place under better conditions”.
The signatories will create a “technical working group” which will determine the cooperation measures, particularly on the issue of “chemical and organic fertilizers”.
This group will be able to establish an action plan to implement “within a reasonable time” the anti-inflation measures.
In terms of logistics, the group will make recommendations to facilitate the transit of products through ports and borders, and the exchange of technologies to promote agricultural productivity.
The first eleven signatories, members of the Community of Latin American and Caribbean States (CELAC) have invited other countries in the region to join them.
However, the signatories declare that they are “aware” of the trade agreements signed by each country or of their commitment to other mechanisms of cooperation and economic integration.
Brazil and Argentina are members of Mercosur along with Uruguay and Paraguay. Mexico is a signatory to a free trade agreement that binds it to the United States and Canada.
“Latin America’s economic integration is very weak,” recalls César Salazar, from the Institute of Economic Investigations of the National Autonomous University of Mexico (Unam).
Within Mercosur itself, “Brazil, which is the great engine of South America, has many more commercial ties with China than with the region,” he adds. “And Mexico, let’s not talk about it: 50% of imports come from the United States, and 85% of exports go to the United States”.