20-Business With Latin American Countries
Transcript of 20-Business With Latin American Countries
-
8/3/2019 20-Business With Latin American Countries
1/20
Doing Business with Latin AmericanCountries
Learning Values:On going through this chapter one can learn:
1. The existing business potential in the whole LatinAmerica.
2. The current business boom in industry and refrom
process.3. Opportuinities and challenges for foreign business
firms.4. Success criteria for Indian companies in Latin America.5. The promotional effort of Indian Government under
FOCUS LATIN AMERICA PROGRAMME.
The fast forward privatization and reform process undertaken ininnumerable Latin American countries lure huge amount of FDI,accompanied by other resources. The hyper inflation and unabatedolitical u heavals are no lon er a deterrent factor.
-
8/3/2019 20-Business With Latin American Countries
2/20
Latin America (French: Amerique Latine, Portuguese: Amrica Latina,Spanish: Latinoamrica or Amrica Latina) is the region of theAmericas where Romance languages those derived from Latin,predominantly Spanish and Portuguese are officially or primarilyspoken. Latin America is distinct from Anglo-America, a region of theAmericas where English predominates. Geopolitically, Latin America isdivided into 20 independent countries and several dependent
Area 21,069,501 sq km
Population 548,500,000
Countries 20 Dependencies 4
GDP $2.26 Trillion (exchange rate) $4.5 Trillion (purchasingpower parity)
Languages Spanish, Portuguese, French, Quechua, Aymara,Nahuatl, Mayan languages, Guaran, Italian, English,German, Welsh, Dutch, Haitian Creole, many others
Time Zones UTC -2:00(Brazil) to UTC -8:00(Mexico)
Largest Cities Mexico City So Paulo
Buenos Aires Bogot
Lima Rio de Janeiro
Santiago Caracas
-
8/3/2019 20-Business With Latin American Countries
3/20
territories. Spanish is predominant and an official language in mostLatin American countries with the exception of Brazil, wherePortuguese prevails, and Haiti, where Haitian Creole is the dominantlanguage.
According to ECLAC , an economic growth rate of 5.3% is estimated for2006, equivalent to a per capita increase of 3.8%. This marks thefourth consecutive year of economic growth, and the third consecutiveyear of rates exceeding 4%, after an average annual growth rate ofonly 2.2% between 1980 and 2002. A breakdown of the annual rates ofGDP growth (in US dollars at constant 2000 prices) is transcribed asfollows:
Country2004
2005
2006(a)
2007(b)
Latin America 6.0 4.5 5.3 4.7
Argentina 9.0 9.2 8.5 7.5
Bolivia 3.9 4.1 4.5 4.0
Brazil 4.9 2.3 2.8 3.5
Chile 6.2 6.3 4.4 5.5
Colombia 4.9 5.2 6.0 5.0
Costa Rica 4.1 5.9 6.8 5.0
Cuba 5.411.8
12.5 n.a.
DominicanRepublic
2.7 9.2 10.0 7.0
Ecuador 7.9 4.7 4.9 4.0
El Salvador 1.8 2.8 3.8 4.0
Guatemala 2.7 3.2 4.6 5.0
Haiti -3.5 1.8 2.5 3.0
Honduras 5.0 4.1 5.6 5.0
Mexico 4.2 3.0 4.8 3.8
Nicaragua 5.1 4.0 3.7 4.0
http://en.wikipedia.org/wiki/Image:Flag_of_Nicaragua.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Mexico.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Honduras.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Haiti.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Guatemala.svghttp://en.wikipedia.org/wiki/Image:Flag_of_El_Salvador.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Ecuador.svghttp://en.wikipedia.org/wiki/Image:Flag_of_the_Dominican_Republic.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Cuba.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Costa_Rica.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Colombia.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Chile_%28bordered%29.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Brazil.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Bolivia.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Argentina.svg -
8/3/2019 20-Business With Latin American Countries
4/20
Panama 7.5 6.9 7.5 7.0
Paraguay 4.1 2.9 4.0 3.5
Peru 5.2 6.4 7.2 6.0
Uruguay11.8
6.6 7.3 6.0
Venezuela17.9
9.3 10.0 7.0
The average region-wide performance masks large differencesbetween and within countries. In particular, the internationalenvironment has affected exporters of high-demand naturalresources, especially in South America (and petroleum-exporting
countries in other subregions), in a very different way to the otherLatin American and Caribbean countries.
In the light of the risks for the region's future economic development,particularly the risk of a hard or soft landing in the global economy,many countries in the region have taken steps to reduce theirvulnerability. Such measures include adopting more flexible exchange-rate regimes, paying down foreign debt, restructuring debt in favour oflonger profiles and fixed rates, building up international reserves,strengthening fiscal accounts and reducing the dollarization of theirfinancial systems. Economic expansion is expected to slow slightly in
2007, with the regional GDP growth rate projected at around 4.7%. Ifthese projections are borne out, the region's per capita output willshow a cumulative gain of some 15%, or 2.8% per year, in the period2003-2007.
The major trade blocs or agreements in the region Mercosur and theAndean Community of Nations (CAN). Minor blocs or trade agreementsare the G3 and the Central American Free Trade Agreement (CAFTA).
POTENTIAL OF THE LAC REGION
The second fastest growing region in the world.
The region accounts for nearly 5% of world trade.
http://en.wikipedia.org/wiki/Image:Flag_of_Venezuela.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Uruguay_%28bordered%29.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Peru.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Paraguay.svghttp://en.wikipedia.org/wiki/Image:Flag_of_Panama_%28bordered%29.svg -
8/3/2019 20-Business With Latin American Countries
5/20
Rich in natural resources.
The recent liberalisation process has resulted in integration ofthese economies with the global economic system.
Privatization and liberalisation of financial markets.
In many countries inflation has been controlled and the debt
crisis has been overcome. Reduction of tariff/non-tariff barriers.
Activation of regional trade arrangements such as MERCOSUR,ANDEAN PACT, CARICOM.
INDO-LATIN AMERICA TRADE
In spite of various constraints, Indias trade with the region during the last fewyears has been growing rapidly. Our trade with the region has increased from US$1072.45 million in 1996-97 to US$ 5365.44 million in 2005-06, registering an increase ofover 400% in a decade. Indias trade with the region during these years has been asfollows:
(Values in US$ million)
YEAR EXPORTVALUES
IMPORTVALUES
TOTALTRADE
BALANCEOF TRADE
1996-1997 478.74 593.71 1072.45 -114.97
1997-1998 699.83 580.42 1280.25 119.41
1998-1999 611.31 730.69 1342.00 -119.38
-
8/3/2019 20-Business With Latin American Countries
6/20
1999-2000 652.46 936.74 1589.20 -284.28
2000-2001 978.42 707.71 1686.13 270.71
2001-2002 1455.71 989.73 2445.44 465.98
2002-2003 1636.36 1044.92 2681.28 591.44
2003-2004 1777.13 1194.13 2971.26 583.00
INDIAS EXPORT TO LATIN
AMERICA(%SHARE)
0
0.5
1
1.5
2
2.5
3
3.5
1999-
2000
2000-
2001
2001-
2002
2002-
2003
2003-
2004
2004-
2005
2005-
2006
2006-
2007
%share
%share
INDIAS EXPORT TO LATIN AMAERICA(%GROWTH)
-
8/3/2019 20-Business With Latin American Countries
7/20
-20
0
20
40
60
80
100
1999-
2000
2000-
2001
2001-
2002
2002-
2003
2003-
2004
2004-
2005
2005-
2006
2006-
2007
%growth
%growth
INDIAS IMPORT FROM LATIN AMERICA(%SHARE)
0
0.5
1
1.5
2
2.5
3
3.5
1999-
2000
2000-
2001
2001-
2002
2002-
2003
2003-
2004
2004-
2005
2005-
2006
2006-
2007
% SHARE
% SHARE
INDIAS IMPORT LATINAMERICA(%GROWTH)
-
8/3/2019 20-Business With Latin American Countries
8/20
-500
0
500
1000
1500
2000
25003000
3500
4000
4500
5000
1999-
2000
2000-
2001
2001-
2002
2002-
2003
2003-
2004
2004-
2005
2005-
2006
2006-
2007
% GROWTH
% GROWTH
Indias Exports to LAC IndiasImport from LAC
Importance of Latin America(Business 2.0) With its beaches, golf courses, cuba libres, and rock-
solid social-security system, it's no wonder that Costa Rica is luringAmerican executives who want an alternative to Indian outsourcing.After sending thousands of technology and call-center jobs to India andthe Philippines, major U.S. companies including Dell and Procter &
25 %
22%
11%10 %
5%4%
4%4%
Brazil Mexico Chile
Argentina Colombia Venezuela
Panama Uruguay Peru
Panama Central Zone Netherlands Anti l les Turks and Caicos Islan
Guatemala Honduras D ominican Republic
Ecuador
56%
21%
8%
7% 2%1% 1%
Argentina Brazil Chile Mexico
Venezuela Bolivia Colombia Panama
Peru Ecuador
-
8/3/2019 20-Business With Latin American Countries
9/20
Gamble are now looking to Latin America to meet their outsourcing--orrather, "nearsourcing"--needs. Like India before them, Brazil,Nicaragua, Panama, and especially Costa Rica are embracing the trendwith business-friendly policies and aggressive marketing. "Costa Rica ismoving up very fast," says Ram Mohan, IT manager for P&G, which
operates a 1,000-employee center in San Jos, Costa Rica, to handlefinancial and infrastructure systems support.
Tata Consultancy Services (TCS) Invests in Training Center to Boost TechnologyCompetitiveness in Latin America
TCS has set up a regional training center for Latin America
established in the Knowledge Development Center (KDC),
which is hosted by the Uruguayan technology lab (LATU). It will alsoserve, as a hub for training needs of local software companies inUruguay.
The TCS training center will be based in Montevideo, Uruguay andwill serve as a training platform to upgrade the technology skills of thefirm's employees across Argentina, Brazil, Chile, Colombia, Mexico,Uruguay and other countries in the region.
With increasing demand for IT and BPO services in Latin America, theopportunities for job creation in this sector are immense but the supplyof trained manpower could serve as a barrier to growth. "LatinAmerica today is becoming an increasingly important IT
services marketplace, with some of the highest projected
growth rates over the next five years. It is also rapidly becomingan important hub for global sourcing of IT skills.
TCS invests more than 6 percent of its annual revenues in trainingand development and will bring in experts from across the world to
serve as faculty in its Latin America Training Center.
TCS currently runs an extensive Global Delivery Network in
Latin America with centers in Uruguay, Brazil, Argentina and
Chile serving over 150 clients.
-
8/3/2019 20-Business With Latin American Countries
10/20
India's growing role in LatinAmericaThere is hardly a country geographically farther away from Latin America than this one.
In Latin America over the past five years, India is discovering theregion as a major business partner, raw materials supplier and politicalsoul mate.
India's trade with Latin America has skyrocketed from $1 billion adecade ago to $5.3 billion last year. And judging from what IndianTrade and Industry Minister Kamal Nath told me, trade will double to$12 billion over the next two years.
Late last year, India's Jindal Group announced a $2.3 billion
investment in Bolivia's El Mutun iron ore mine. And, with little fanfare,India is beginning to increase its political and public relations activitiesin the region.
India is in a growth trajectory, India is likely to grow at 10 percentannually in coming years. And Latin America is very importantto us.
India is also seen as a softer power than China, he noted. It is best known in LatinAmerica for its Buddhist history and spiritual movements that are increasingly popular inthe region, and for its booming information technology and pharmaceutical companies.
Compositions of items with LAC
Chemicals
This is one of the leading segments of our exports. The local chemicalindustries are not well developed. Chemicals from India have beencoming into this market through European traders. Chemicals fromIndia go into the industries of food, beverages, cosmetics,pharmaceuticals, mining, paints, oil sector etc.
Pharmaceuticals
This is a pleasant surprise for the LAC who did not imagine earlier thatIndia could export pharmaceuticals. Some of the LAC companies were
-
8/3/2019 20-Business With Latin American Countries
11/20
importing bulk drugs from India. They have now started dealingdirectly with the Indian exporters.
Reddy Laboratories, Core Healthcare, Aurobindo Pharma etchave been successful in promotion of their branded products by direct
marketing through local medical representatives.Already Dabur and Himalaya Drugs have entered into the Ayurvedasector. There is scope to build a long-term market in this field also.
Engineering Products
Two wheelers from India such as Bajaj and LML scooters and HeroHonda motorcycles have become popular in the region. There is verygood scope for increasing the sale of Indian scooters and motorcyclesas more and more lower middle class people, particularly in the interior
areas gain purchasing power. Here again, the Indian companies andtheir agents are content with the small volumes of their sales. Theirmarketing is poor and ambitions are limited.There is very good scopefor export of three wheelers to this region.
Manufacturing sector
The manufacturing industries of LAC (mainly Colombia and Venezuela,the others have only limited facilities) are in the process ofmodernisation to withstand the globalization process. This offers
opportunities for our exports of equipments and machinery andconsultancies. Area of opportunities are sugar industry , small scaleindustries, chemicals, plastics etc.
Information Technology
The LAC is impressed with the advances of Indian IT sector. Thebusiness delegations have been including Bangalore, Hyderabadand Chennai in their trips to see our IT sectors. APTECH hasestablished a center in Colombia and is venturing into Venezuela.
There is potential specifically for supply of software to the richpetroleum sector and banks besides Internet and e-commerce sectors.
Oil SectorPetroleum exploration, production and downstream industries are themost important economic sectors in Venezuela, Colombia and Ecuador.After the increase in oil prices in 2000, the oil sector in these countries
-
8/3/2019 20-Business With Latin American Countries
12/20
has resumed investment in exploration and production anddownstream sectors. They have shown willingness to considerpurchase of equipments and components from India.
AgricultureVenezuela has large fertile areas suitable for agriculture. There areabundant water resources and energy available at very low costs. Thisprovides opportunities for consultancy services and supply of agroequipments and machinery. Venezuelan farmers want to developcashew nut farms and industry and seek Indias expertise.
Textiles
Indian ready-made garments have become popular in the LAC region. The textile industries in the region in general (and particularly inVenezuela) have gone into decline after the opening of imports. Thereare no new investments or significant efforts to revive the textileindustry. This means that this area will become a regular market forour textiles in the long run. There is also an emerging market for highfashion garments from India.
Investment and Joint VenturesVenezuela has offered oil fields to ONGC for exploration andproduction. A MOU was signed with CVG, a Public Sector Undertakingof Venezuela in March 2001 under which gold and diamond mines havebeen offered to Indian companies for exploration and production. CVG
has sought Indias assistance in setting up a Diamond Exchange and aCutting and Polishing Centre in Venezuela. There are possibilities forIndian companies to invest and establish joint ventures in the region inthe area of pharmaceuticals, chemicals and engineering products andInformation Technology.
!
Trade Blocs in Latin America
MERCOSURLAFTAANDEAN COMMUNITYCARICOM
-
8/3/2019 20-Business With Latin American Countries
13/20
CACM
MERCOSUR
Member countries
Comprising Argentina, Paraguay, Uruguay and Brazil, the Southern Common
Market - MERCOSURrepresents a total population of 190 million individuals, living inan area larger than the total surface of the European continent, covering more than 12million square kilometers.
Objectives of MERCOSUR
Free transit of production goods, services and factors betweenthe member states with inter alia, the elimination of customsrights and lifting of no tariff restrictions on the transit of goods orany other measures with similar effects;
Fixing of a common external tariff (TEC) and adopting of a common trade policywith regard to nonmember states or groups of states, and the coordination ofpositions in regional and international commercial and economic meetings;
Exports from India to Mercosur:
The problem of geographical proximity had always been akey issue for trade between India and South America.Transport has turned out to be expensive and time-consuming. This was a major determinant of trade in this case.The fact that very few direct shipping lines existed between Indiaand the Mercosur countries compounded the problem.
Opportunities for export by Indian traders of a wide range ofproducts some of which are already exported to the region.Drugs, pharmaceuticals and chemicals dominate India's exportsto Mercosur at present and accounts for 27.8 per cent of the totalexports .Organic chemicals, followed by pharmaceuticalsdominate trade within this sector. Transport equipment,inorganic/organic/agro chemicals, plastic and linoleum products,
-
8/3/2019 20-Business With Latin American Countries
14/20
dye intermediates, cotton yarn fabrics, readymade garments,cotton manmade yarn fabrics, electronic goods and coal tarfollow this category. Diesel oil has been a recent addition toIndia's export basket to Brazil.
Pharmaceuticals present a major area for Indian exports. Brazilprovides the single largest opportunity in this sector. Despite arecent contraction, the Brazilian pharmaceuticals marketcontinues to be the 10th largest pharmaceutical market amongcountries that protect intellectual property.
Some Pharmacy companies like Wockhardt, Unichem, Lupin
Laboratories, NATCO and others are planning to set upoperations in Brazil. M/s Hetero, CIPLA, IPCA Brazil, Medicorp,Alembic and others supply bulk drugs.
Pharmaceuticals represent 2.57 % of Mercosur imports, whileIndia supplied only 16 million US$ worth of goods that amountedto 0.71% of total pharmaceuticals import. However, this saw adramatic increase in the last two years, and India's exports inamounted to 2.1 billion US$. Government sources expressedoptimism regarding further boost to exports in this sector.
Engineering goods is another key export segment for India.Some engineering firms like Thermax, Electronic HitechComponents are also trying for investment/partnership. The EximBank study also pointed out that infrastructure projects such aselectricity transmission; telecom, oil and gas also presentsignificant opportunities for major Indian companies such as KEC,Kalpataru Projects, Reliance and Tatas.
Apart from the trade in goods, trade in services has turned out tobe a new potent area for exports. E-commerce is an arena inwhich Indian companies can establish its presence in theMercosur region. Information technology, it has been indicatedby Indian government sources, is to be a key export segment infuture. This sector has already witnessed substantial gains in therecent period. Indian IT sector exports to Latin America in 2002-03 were around 583 million US dollars. Though it is still a low
-
8/3/2019 20-Business With Latin American Countries
15/20
figure compared to India's exports to the US and WesternEurope, the share being only 5.9 % of India's total IT servicesexport and 3.33 % of Latin America's equivalent imports, it isgrowing steadily and can reach a huge market in Mercosur.
IMPORTS OF INDIA FROMMERCOSUR:
The Mercosur countries, on the other hand, can also exportseveral commodities to India, edible vegetable oil being theforemost at present. However, geographical proximity remainsthe major problem with Mercosur exports.
Edible vegetable oil is the dominant single export to India, withthe largest share of 67.09 per cent in total Mercosur exports in2001-02. This share, which was only 3.25 per cent of totalMercosur exports in 1994, rose steeply to 28.39 per cent thenext year. It continued to rise steadily till it reached around 70per cent in 1998 and remained there till 2000, and this trendshows no sign of a reversal in the near future.
Due to gross inadequacies in its processing industry, India is theworld's biggest importer of edible vegetable oil. Vegetable oilconstitutes as much as 70% of India's total agricultural importsand about 2.9 % of all Indian imports. Of total imports ofvegetable oil, soybeans oil, which is imported from Brazil andArgentina, has the second highest share.
Other exports include petroleum and products, machinery, non-ferrous metals, metaliferrous ores and metal scrap, crude
minerals, non-electrical machinery, leather, professionalinstruments, cotton and raw wool. Among the exports of Brazil,machinery and mechanical as well as electrical appliances andparts occupied an important 11% of total export to India.Vehicles and parts contributed 8.82 % of total. Organicchemicals, metal products and cotton occupy shares of 7.96,7.32 and 6.63 % respectively. Since Edible oil occupies a hugeshare (88.86%) in Argentina's exports, other items individually
-
8/3/2019 20-Business With Latin American Countries
16/20
contribute negligible shares. Leather and products (2.81%),Cotton (2.22%) and metal and products (2.01%) are the otherexported commodities.
As far as India's present import pattern is concerned, mineralfuels and oils (including petroleum products) occupied a huge30.67% in Machinery and mechanical products etc contributedan 8.26%, electrical machinery and equipments a further 6.19%. Metal and products together occupies about 5% of totalimports. Pearls, semi-precious stones and imitationjewelry is another potential export for Brazil. At present itoccupies only about 2% of Brazilian exports to India.
LAFTA
The Latin American Free Trade Association was created in 1960in theTreaty of Montevideo by Argentina, Brazil, Chile, Mexico, Paraguay,Peru, and Uruguay. The signatories hoped to create a common marketin Latin America.By 1970, LAFTA expanded to include Bolivia, Colombia, Ecuador, andVenezuela. In 1980, LAFTA reorganized into the Latin American
Integration Association. Membership remained unchanged until Cubajoined in 1999.
The goal of the LAFTA is the creation of a free trade zone in LatinAmerica. It should foster mutual regional trade among the memberstates, as well as with the U.S. and the European Union. The LAFTAagreement has important limitations: it only refers to goods, not toservices, and it does not include a coordination of policies. Comparede.g. to the European Union the political and economic integration is
very limited.
The AndeanGroup
The Andean Group (AG), whichwas created by the Cartagena
-
8/3/2019 20-Business With Latin American Countries
17/20
Agreement of 1969, now comprises Bolivia, Colombia, Ecuador, Peruand Venezuela. The AG was formed because of dissatisfaction with theLAFTA arrangement, which the Andean countries believed haddelivered most of the benefits to the largest member countries (Brazil,Mexico, Argentina). The primary objectives of the AG were:
To liberalize intraregional trade gradually; To phase-in a common external tariff against outside country
imports; To establish regional industrial development programs to
distribute the benefits of integration among members; To develop a common investment policy in order to discourage
intraregional competition for foreign investment; To establish common protection for intellectual property.
In contrast to the LAFTA's gradual method of tariff elimination throughcontinuous negotiations, the AG tariffs were to be phased out in anautomatic fashion. The more developed countries (Colombia, Chile,Peru and Venezuela) were expected to reduce their tariffs onintraregional trade by 7% per year until these were completelyremoved by 1980. The less developed members (Bolivia and Ecuador)
were given until 1990 for full liberalization of their trade.
The Andean Group's trade liberalization had a limited impact asintraregional trade increased from 2.3% of total exports in 1970 to5.5% in 1987 before declining to 4.9% in 1989. Part of the explanationlays in the relatively small size of the combined internal market(US$121.9 billion) as well as the inadequate intraregionaltransportation links. Regional integration also fell short of originalintentions due to: the number of exemptions granted from tradeliberalization; delays in implementing the common external tariff; andfailure to implement the regional industrial strategy calling for
reallocation of plants among countries.
Central American CommonMarket
-
8/3/2019 20-Business With Latin American Countries
18/20
CACM
The five countries of Central America began the process of economicintegration in the 1950s with a number of bilateral commercial
accords. In 1960, the countries of Guatemala, El Salvador, Hondurasand Nicaragua created the Central American Common Market (CACM)through the General Treaty of Economic Integration. Costa Rica joinedthe CACM in 1964. The UN Economic Commission for Latin America,which conceived the idea of a Central American common market,believed that, although import substitution might be inefficient whenpursued individually by small developing countries, the market scaleproblem could be overcome if countries joined regional groupings. By1969 the CACM had removed tariffs on 95% of traded items with the remaining 5%covered by international agreements and other special arrangements. As a result,intraregional trade expanded from 7.5% of total exports in 1960 to 26.8% in 1970.
Recently, the CACM has been revitalized. In July 1990, Honduras wasre-admitted to the CACM and one year later the members agreed toestablish a new common market. Panama, which had never been amember of the CACM, has also agreed to join the Pact. Besidesremoving most quantitative restrictions and liberalizing agriculturaltrade, the CACM intends to adopt common external tariffs ranging from5% to 20%. These new tariff rates, which are considerably lower thanthe earlier rates of most CACM countries, are being heralded as "aclear move towards trade liberalization."
All CACM members have also signed framework agreements with theU.S. which establish negotiating principles for trade and investmentissues. The receptiveness of CACM countries to the idea of free tradewith the United States reflects the fact that the U.S. is their largesttrading partner and Mexico is their greatest competitor in that market.NAFTA would erode the trade preference that Central American enjoyswith the U.S. as a result of the Caribbean
CARICOM
-
8/3/2019 20-Business With Latin American Countries
19/20
CaribbeanCommunity
and CommonMarket T heCaribbean Communityoriginated in 1965 with theCaribbean Free TradeAssociation (CARIFTA), whichwas formed by Antigua,Barbados and Guyana. Thesethree members were joinedin 1968 by eight other
Caribbean countries(Jamaica, Trinidad andTobago, Grenada, Dominica, St. Lucia, St. Vincent, Montserrat and St.Kitts-Nevis-Anguilla). The CARIFTA immediately removed most barriersto intra-regional trade and provided a five-year phase-out of duties oncertain exempted products. There was no provision under CARIFTA fora common external tariff.
The common external tariff schedule established rates of duty rangingfrom 5% to 45% on goods imported from outside countries. In order toencourage economic development, lower rates of duty were applied
against imported capital equipment and intermediate products, whilethe higher duties were reserved for finished goods. The adoption of theCET met with some delays as Antigua and Barbuda, Montserrat,St. Christopher and Nevis, and St. Lucia had tariff rates of up to 70% onimports from outside countries. Non-tariff barriers also add significantlyto the level of protection afforded by these stated tariff rates.
BARRIERS FOR INDIA IN TRADEWITH LATIN AMERICA
-
8/3/2019 20-Business With Latin American Countries
20/20
Language barrier
Inadequacy in the exchange of information
Absence of direct economic shipping and links
Distance
Strategies to be implied for thetrade between LAC & INDIA
Investment and Joint Venture
Managing the product life cycle
Trade Through Brokers and Agents