logging in or signing up mercosur Abigail Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINTLite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 3297 Category: Entertainment License: All Rights Reserved Like it (4) Dislike it (0) Added: November 21, 2007 This Presentation is Public Favorites: 1 Presentation Description No description available. Comments Posting comment... By: harry0091 (7 month(s) ago) nice1 Saving..... Post Reply Close Saving..... Edit Comment Close By: cogihot (12 month(s) ago) welldone Saving..... Post Reply Close Saving..... Edit Comment Close By: jrdtata1 (15 month(s) ago) good one Saving..... Post Reply Close Saving..... Edit Comment Close By: krungsirikul (16 month(s) ago) very interesting.. Saving..... Post Reply Close Saving..... Edit Comment Close By: jo38320 (17 month(s) ago) Nice presentation. Very useful. Thanks Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Slide1: MERCOSUR A NEW REGION OF CHALLENGE AND OPPORTUNITY Ministry of Foreign Affairs, International Trade and Worship International Economic Relations Secretariat Argentine RepublicSlide2: WHAT DOES MERCOSUR REPRESENT?Slide3: The definitive end of the hypothetical conflict among the countries of the region From the political perspective... Insurance for the continuation of democratic system currently in operation in the Southern Cone A political and institutional “safety net” over which economic and social relations are developed The strengthening of cultural links among the peoples of the region Progress towards the consolidation of a single regional identity The strengthening of the region’s bargaining power in the global arena The main strategy to ensure the integration of the region into the current international orderSlide4: from the economic perspective ... The better allocation of means of production Wider scales of production A useful tool to strengthen and deepen the economic reforms initiated by individual member states A higher degree of industrial complementarity, through the implementation of joint corporate initiatives Greater incentives to foreign investment as a result of the extended market Greater potential for the integration of small and medium-sized business into international trade Improved levels of consumer welfare, granting access to a wider range of better-value and better-quality goods and servicesSlide5: 14.4% of global forested areas 26% of global cattle stocks 6.5 % of global corn production 6% of global arable land 29% of global soya supplies a considerable reservoir of natural resources...Slide6: NAFTA European Union Japan MERCOSUR China Russian Federation CER 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 Source: World Bank Atlas Million dollars Gross National Product (1995) which is already the fourth-placed geo-economic area in the world... 7,675 7,557 4,231 991 630 392 367Slide7: China India NAFTA European Union MERCOSUR Russian Federation 0 200 400 600 800 1,000 1,200 million inhabitants Source : World Bank Atlas with a market of 200 million inhabitants 178,400 1,175,400 913,600 381,500 370,200 201,300Slide8: MERCOSUR Mexico Hungary Chile Malaysia Russian Fed. Poland Thailand Peru Philippines Indonesia China 0 1,000 2,000 3,000 4,000 5,000 At international level, it is one of the emerging markets with the highest per capita income. dollars at current rate GNP per capita (1995) Source: World Bank Atlas 4,926 4,010 3,840 3,560 3,520 2,650 2,470 2,210 1,890 960 880 530Slide9: It has a substantial communications and telecommunications network under a permanent process of modernization... Concept Unit Quantity Railway network km. 68,643 Road network km. 2,114,923 Navigable rivers km. 65,700 Pipelines km. 12,794 Gas pipelines km. 11,013 Airports units 6,083 Telephones units 12,925,300 Telephones per/1000 inhabit. 63 Source: ECLACSlide10: Verified Energy Reserves Oil 885 Natural Gas 575 Mineral Coal 2,709 Uranium 2,072 Hydroelectricity 18,305 Vegetable Fuel 983 *Equivalent Tons of Petroleum and has a “significant supply” of energy resources. Source: IDB in millon ETP* Slide11: Displays a highly developed and diversified production capacity that represents 50 % of Latin American GDP... Agriculture, hunting, forestry and fishing 11% Electricity, water and natural gas 5% Transport and communications 7% Financial entities, insurance 14% Construction 10% Wholesale and retail business 10% Manufacturing industry 22% Municipal, social and personal services 18% Mining and quarrying 3% Source: ECLAC Slide12: MERCOSUR Spain Canada Mexico Thailand Indonesia Poland Malaysia Philippines Israel Chile 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 and has an industrial sector that is one of the most important among Developing Countries (and is even more important than that of many developed countries). million dollars Industrial Output 1994 Source: UNIDO 138,328 112,604 94,853 43,956 35,516 30,162 27,119 18,733 11,311 11,185 6,736Slide13: Which are the distinguishing features of MERCOSUR?Slide14: It is a regional market in which the trade of goods is free from tariff and non-tariff barriers. MAIN CHARACTERISTICS The four Members States have agreed upon a common trade policy. The liberalization of services transactions and the removal of barriers to the free movement of inputs are foreseen for the mid term.Slide15: MERCOSUR covers practically 2/3 of the region´s land area. MERCOSUR in numbers Countries Area Inhabitants millons of Km2 Millions Argentina 2.8 34.1 Brazil 8.5 149.2 Paraguay 0.4 4.8 Ururguay 0.2 3.2 Total 11.9 201.3Slide16: COMMON MARKET COUNCIL COMMON MARKET GROUP MERCOSUR TRADE COMMISSION Working Subgroups Ad-Hoc Groups Specialized Meetings Ministerial Meetings Administrative Secretariat Technical Committees RELATED INSTITUTIONS Joint Parlamentary Commission Economic Social and Consultative Forum Institutional StructureSlide17: Thailand Indonesia Mexico Andean Community Caricom Malaysia MERCOSUR Chile European Union Australia Israel USA New Zealand 5% 7% 9% 11% 13% 15% 17% 19% 21% 23% Average External Tariff 1995 (in percentages) Source: IDB and WTO MERCOSUR constitutes an economic area open to international trade... 23.1% 20% 14.2% 13.4% 12.4% 12% 11.1% 11% 9.6% 8.4% 8.3% 6.6% 6.2%Slide18: European Union 25% INTRAMERCOSUR 22% East Asia 16% Rest of the world 14% USA 14% Rest of LAIA 9% Source: LAIA and is basically a “Global Trader”: none of its customers account for more than a quarter of Mercosur exports... EXPORTS Slide19: European Union 25% INTRAMERCOSUR 21% USA 20% Rest of the World 15% East of Aisa 13% Rest of LAIA 6% Source: LAIA while its imports are also significantly diversified among several countries or regions. IMPORTS Slide20: MERCOSUR economic perfomance in the 90’sSlide21: 1991 1992 1993 1994 1995 1996 1997* Prom 91-96 1% 3% 5% 7% Real GDP growth Source: ECLAC and Gazeta Mercantil MERCOSUR economies have continued to experience strong growth... * projected 3.6% 2.8% 5% 6.7% 1.2% 3.6% 4.2% 3.8%Slide22: NICS MERCOSUR World USA Japan European Union 0% 1% 2% 3% 4% 5% 6% 7% having become one of the most dynamic areas of the global economy in recent years Average growth of GDP 1991-1996 Source: ECLA C and IMF 6.9% 3.8% 2.9% 2.0% 1.7% 1.5%Slide23: Labour Productivity Index (basis 1990=100) 1991 1992 1993 1994 1995 1996 100 125 150 175 Argentina Brazil Source: INDEC, CNI and IPEA At the same time, labour productivity in the industrial sector has improved... 23.1% 110.8 113.1 120 115.4 127.1 130.8 133.6 138.5 138.1 143.2 147.3 161.5Slide24: Variation of Consumer Price Index 1991 1992 1993 1994 1995 1996 ______________________________________________________________ Argentina 84.0 17.5 7.4 3.9 1.6 0.4 Brazil 475.8 1,149.1 2,489.1 929.3 22.0 10.6 Paraguay 11.8 17.8 20.4 18.3 10.5 8.8 Uruguay 81.3 59.0 52.9 44.1 35.4 25.5 Source: ECLAC and Gazeta Mercantil and inflation became just an “unhappy memory”Slide25: 1991 1992 1993 1994 1995 1996 0% 5% 10% 15% 20% (Imp + Exp)/GDP IMPORTS EXPORTS Imports + Exports of goods / GDP Source: World Bank Atlas, ECLAC and WTO Likewise, trade represents an increasing share of GDP...Slide26: million dollars Exports of goods 1990 1991 1992 1993 1994 1995 1996 40,000 50,000 60,000 70,000 80,000 Source: WTO as a result, exports drive economic growth... 46,433 45,911 50,487 54046 62,128 70,405 75,060Slide27: Participation in World Trade 1990 1991 1992 1993 1994 1995 1996 1.00% 1.10% 1.20% 1.30% 1.40% 1.50% Source: WTO and World Bank and the share of MERCOSUR in world trade is growing. 1.1% 1.14% 1.19% 1.38% 1.46% 1.44% 1.46%Slide28: 1990 1991 1992 1993 1994 1995 1996 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Trade flows in the region are growing... million dollars Intra-MERCOSUR Trade of Goods Source: LAIA 4,127 5,103 7,214 10,027 12,049 14,384 16,770Slide29: 1990 1991 1992 1993 1994 1995 1996 35,000 70,000 105,000 140,000 which is reflected in a sustained increase in border traffic number of trucks Truck crossings through Uruguayana-Paso de los Libres Bridge Source: DLF Uruguayana 52,626 73,140 94,478 98,607 104,735 123,431 139,775Slide30: But the growth of regional trade has not occurred “at the expense” of other trading partners... million dollars 1990 1991 1992 1993 1994 1995 1996 35,000 40,000 45,000 50,000 55,000 60,000 Extra-Regional Exports Source: LAIA 42,306 40,808 43,272 44,019 50,079 56,021 58,290Slide31: 0% 10% 20% 30% 40% 50% 60% 70% E.U. NAFTA ASEAN MERCOSUR Andean Community CER intra-MERCOSUR trade is still small compared to others regions of the world. Intra-Regional Trade as a Percentage of Total Trade per Bloc Source: IMF Direction of Trade 9.9% 12.1% 20.4% 22.7% 46% 63.5%Slide32: Mexico Canada Spain France Germany Italy Argentina Malaysia Thailand Brazil 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% thus, trade flows among MERCOSUR countries are still low Intra-Regional Trade as a percentage of total trade Source IMF Direction of Trade 81.9% 74.9% 68.4% 63.9% 61.7% 58.5% 27.7% 25.2% 18.1% 13.4%Slide33: The top 15 MERCOSUR companies Petrobrás 15,195 Volkswagen Brasil 7,846 General Motors 6,756 Petrobrás Dist. 6,136 Carrefour 5,102 YPF SA 4,954 Fiat 4,626 Shell 4,011 Eletropaulo 3,926 CESP 3,836 Ford Brasil 3,217 Furnas 3,051 Varig 3,007 Petróleo Ipiranga 2,975 Mercedez Benz 2,940 net sales 1995 (US$ million) Source: Gazeta MercantilSlide34: 1994 1995 1996 1997 Argentina BB- BB- BB- BB Brazil B B+ B+ BB- Paraguay NR * BB- BB- BB- Uruguay BB+ BB+ BB+ BB+ International agencies have continued to upgrade the MERCOSUR economies... Debt rating in foreign currency * No rating Source: Standard & Poor's. Slide35: 0 200 400 600 800 1,000 1,200 Argentina Brazil 1994 1995 1996 1997 so that, in the “post Tequila” era, country risk in the region is decreasing. basic points Brady Par Bonds Spread Source: Ministry of Economy , Public Works and Services ( Financing Undersecretariat) 742 1,083 728 487 854 1,074 677 470Slide36: The region offers various investment opportunities... Food and beverages Cars and spare parts Oil and petrochemicals Telecommunications Mining Iron and steel Leather Forestry Cellulose and paper Timber “Hot Industries” Slide37: attracting more and more foreign investors... million dolars Source: UNCTAD, Banco Central do Brasil and Fundación Invertir Foreign Direct Investment in MERCOSUR (1991-1996) 1991 1992 1993 1994 1995 1996 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Argentina Brasil Uruguay-ParaguaySlide38: construction, others) Cars and Spare parts 36% Chemicals and pharmaceuticals 11% Metalurgical industry 9% Food, beverages and tobacco 9% Electrical or electronic products 6% Telecommunications 5% Natural gas and oil 5% Mining 4% Electric energy 3% Others (trade, paper and pulp, 12% with capital flow directed at different sectors of the regional economy Source: Fundación Invertir, UNCTAD and Bco. Central do BrasilSlide39: South Korea MERCOSUR Mexico Malaysia Indonesia Thailand Hungary Chile 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 Thus, MERCOSUR has become one of the main recipients of FDI among Developing Countries... million dollars Cumulative flows 1990-1995 Source: UNCTAD 34,570 31,035 26,668 12,965 11,240 9,935 8,192 5,453Slide40: S. Korea Spain MERCOSUR United Kingdom Italy China ex USSR Mexico India Thailand Sweden Belgium 0 500 1,000 1,500 2,000 2,500 3,000 thousand units the automotive industry being among the largest of all emerging economies... (and larger than that of many Developed Countries) Units Produced in 1995 Source: ANFAVEA 2,562 2,334 1,914 1,776 1,667 1,435 1,082 931 568 526 486 468Slide41: that in recent years has become one of the greatest “stars” of the integration process... Cars and Spare Parts Intra-Regional Trade 1991 1992 1993 1994 1995 1996 0 500 1,000 1,500 2,000 2,500 3,000 million dollars Source: INDEC and LAIA 393 1,191 1,682 2,215 1,945 2,608Slide42: Foreign Direct Investment Projected for Automotive Industry General Motors 3,900 Ford 3,500 FIAT 3,142 VW 3,080 Hyundai 1,700 Renault 1,500 Mercedez Benz 1,171 Toyota 1,000 Asia Motors 900 Sevel-Peugeot 700 Honda 600 Iveco 560 Chrysler 480 Scania 220 Volvo 150 BMW 150 Mitsubishi 150 TOTAL 22,903 1995 - 2000 inducing many transnational companies in this sector to establish and/or expand their production capacity in the region. (in million US$) Source: ANFAVEA, ADEFA and Gazeta MercantilSlide43: Oil and Petrochemicals Iron and steel Industry Communications Electric energy Natural Gas Air transport Railways The successful privatization program -still ongoing- has also been favourable for local and foreign investment. million dollars Total income from privatization in MERCOSUR (1992-1996) 0 2,000 4,000 6,000 8,000 10,000 12,000 Source: BNDES and Ministry of Economy, Public Works and Services (Investment Undersecretariat) Others 1,870 2,037 2,683 6,953 7,271 8,372 11,461 1,250Slide44: Business Initiatives: The driving force in the Integration Process SECTOR ARGENTINE COMPANIES IN BRAZIL BRAZILIAN COMPANIES IN ARGENTINA FOOD AND BEVERAGES SANCOR SADIA ARCOR ARISCO LA SERENÍSIMA LACTA BAGLEY BRAHMA BANKING EXPRINTER ITAU BANCO GALICIA BAMERINDUS EQUIPMENT AND CAPITAL GOODS PROMECOR WETZEL MANUEL SAN MARTIN VALMICRO CONSTRUCTION MATERIALS BENITO ROGGIO DURATEX SADE NORTON CARS ZANELLA COFAP Y CIA DEUTZ FREIOS VARGA IRON AND STEEL USIMISAR CONFAB TUBOS There has been a marked increase in the number of joint ventures in the private sector... Source: Fundación Invertir and Argentine Embassy in BrazilSlide45: while strong investment in basic infrastructure is expected for the next few years... 1996 16,524 1997 17,350 1998 18,218 1999 19,128 2000 20,085 2001 21,089 2002 22,143 2003 23,251 2004 24,413 av. 1996-2000 20,245 * based on a project 5% growth including transport, energy and communications Source: I DB (996) million dollars Estimated Gross Investment Requirements in Infrastructure in the Southern Cone (1996-2000)*Slide46: Major Infrastructure Projects in the Southern Cone much of this investment is currently under analysis and/or implementation... in million dollars Source: IDB POWER SECTOR Project Participating countries Estimated Amount Yaciretá-Apipé Complex Agentina and Paraguay 9,100 Corpus Christi Mainplant Agentina and Paraguay 3,680 Itatí-Itacorá Agentina and Paraguay 2,414 Garabí Agentina and Brazil 1,789 Roncador Agentina and Brazil 3,189 San Pedro Agentina and Brazil 1,953 Others 1,482 Total 23,607 Project Participating countries Estimated Amount Itaipú-Corpus-Yaciretá Argentina, Paraguay and Brazil 150 Garabí Argentina and Brazil 224 Power link between Argentina and Chile Argentina and Chile 224 Power link between Brazil and Uruguay Brazil and Uruguay 180 Total 778 POWER LINKSSlide47: Major Infrastructure Projects in the Southern Cone in million dollars GAS SECTOR Proyect Participating countries Estimated Amount Gas pipelines, Argentina and Brazil Argentina and Brazil 2,795 Gas pipelines, Bolivia and Brazil Bolivia and Brazil 2,083 Gas pipelines, Argentina and Chile Argentina and Chile 1,339 Gas pipelines, Argentina and Uruguay Argentina and Uruguay 180 Other projects 995 Total 7,392 TRANSPORT SECTOR Project Participating countries Estimated Amount Highway Río de Janeiro - Bs.As. Argentina, Brazil and Uruguay 2,000 Bridge Rosario-Victoria Argentina 300 Hidroway Paraná - Paraguay Arg, Bra, Bol, Parag and Urug 2,500 Bridge Bs.As. - Colonia Argentina and Uruguay 1,000 Other projects 3,170 Total 8,970 Source: IDBSlide48: * Equivalent Tons of Petroleum Oil Natural Gas Others Hydroelectricity Vegetal- Nuclear 1994 2000 2010 0 50,000 100,000 150,000 200,000 250,000 thoudsand E.T.P.* Projected Primary Energy Production Source: IDB The wide range of possibilities for energy generation constitutes a comparative advantage which, at the same time, presents ample scope for investment Slide49: MERCOSUR “STRATEGY” WITH A VIEW TO THE FUTURESlide50: MERCOSUR priorities are threefold: 1. The consolidation of agreements already signed 2. The deepening of these bonds by means of new agreements 3. To make progress in the area of extraregional negotiations The appropriate interlinking of these three objectives guarantees the balanced and smooth development of the integration process.Slide51: The daily task of consolidating the commitments already achieved is closely linked to the internalization of Mercosur law, the effective fullfilment of the agreements and the creation and organization of regimes such as: Customs valuation Rules of origin Technical standards Non-tariffs barriers Special Import Regimes Sectorial regimesSlide52: To deepen the integration process means taking steps towards new trade and investment disciplines that will contribute to the definitive consolidation of the “MERCOSUR identity” Liberalization of trade in services A common regime for government procurement “Discipline” (coordination) of public policies affecting competitiveness Harmonization of public policies that affect the location of investment “NEW ISSUES”Slide53: During 1997, MERCOSUR hopes to conclude the trade agreements with Mexico and Andean Group MERCOSUR-LAIA The Comercial Subcommitee is currently preparing the way for a future trade liberalization The negotiation process is expected to start in 1988 and it should lead to the formation of FTAA in the year 2005 MERCOSUR-EUROPEAN UNION FREE TRADE AREA OF THE AMERCIA (FTAA) After signing the free trade agreements with Chile and Bolivia in 1996, progress in the external agenda means the continuation of negotiations... and the talks with other countries and regions such as Japan, India, Switzerland, South Korea, CER, CIS, ASEANSlide54: To deepen the process of integration and MERCOSUR integration into world economy To strengthen the institutional arrangement of the Customs Union To maintain the regional process of economic growth To consolidate the economic and political stability of Member States To continue the process of structural reform within Member States To continue fighting and unemployment in the region In conclusion, the challenges MERCOSUR faces are :Slide55: MERCOSUR A NEW REGION OF CHALLENGE AND OPPORTUNITY Ministry of Foreign Affairs, International Trade and Worship International Economic Relations Secretariat Argentine Republic You can see this presentation in Internet: http://www.ar/SECEC/index.htm You do not have the permission to view this presentation. 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mercosur Abigail Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINTLite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 3297 Category: Entertainment License: All Rights Reserved Like it (4) Dislike it (0) Added: November 21, 2007 This Presentation is Public Favorites: 1 Presentation Description No description available. Comments Posting comment... By: harry0091 (7 month(s) ago) nice1 Saving..... Post Reply Close Saving..... Edit Comment Close By: cogihot (12 month(s) ago) welldone Saving..... Post Reply Close Saving..... Edit Comment Close By: jrdtata1 (15 month(s) ago) good one Saving..... Post Reply Close Saving..... Edit Comment Close By: krungsirikul (16 month(s) ago) very interesting.. Saving..... Post Reply Close Saving..... Edit Comment Close By: jo38320 (17 month(s) ago) Nice presentation. Very useful. Thanks Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Slide1: MERCOSUR A NEW REGION OF CHALLENGE AND OPPORTUNITY Ministry of Foreign Affairs, International Trade and Worship International Economic Relations Secretariat Argentine RepublicSlide2: WHAT DOES MERCOSUR REPRESENT?Slide3: The definitive end of the hypothetical conflict among the countries of the region From the political perspective... Insurance for the continuation of democratic system currently in operation in the Southern Cone A political and institutional “safety net” over which economic and social relations are developed The strengthening of cultural links among the peoples of the region Progress towards the consolidation of a single regional identity The strengthening of the region’s bargaining power in the global arena The main strategy to ensure the integration of the region into the current international orderSlide4: from the economic perspective ... The better allocation of means of production Wider scales of production A useful tool to strengthen and deepen the economic reforms initiated by individual member states A higher degree of industrial complementarity, through the implementation of joint corporate initiatives Greater incentives to foreign investment as a result of the extended market Greater potential for the integration of small and medium-sized business into international trade Improved levels of consumer welfare, granting access to a wider range of better-value and better-quality goods and servicesSlide5: 14.4% of global forested areas 26% of global cattle stocks 6.5 % of global corn production 6% of global arable land 29% of global soya supplies a considerable reservoir of natural resources...Slide6: NAFTA European Union Japan MERCOSUR China Russian Federation CER 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 Source: World Bank Atlas Million dollars Gross National Product (1995) which is already the fourth-placed geo-economic area in the world... 7,675 7,557 4,231 991 630 392 367Slide7: China India NAFTA European Union MERCOSUR Russian Federation 0 200 400 600 800 1,000 1,200 million inhabitants Source : World Bank Atlas with a market of 200 million inhabitants 178,400 1,175,400 913,600 381,500 370,200 201,300Slide8: MERCOSUR Mexico Hungary Chile Malaysia Russian Fed. Poland Thailand Peru Philippines Indonesia China 0 1,000 2,000 3,000 4,000 5,000 At international level, it is one of the emerging markets with the highest per capita income. dollars at current rate GNP per capita (1995) Source: World Bank Atlas 4,926 4,010 3,840 3,560 3,520 2,650 2,470 2,210 1,890 960 880 530Slide9: It has a substantial communications and telecommunications network under a permanent process of modernization... Concept Unit Quantity Railway network km. 68,643 Road network km. 2,114,923 Navigable rivers km. 65,700 Pipelines km. 12,794 Gas pipelines km. 11,013 Airports units 6,083 Telephones units 12,925,300 Telephones per/1000 inhabit. 63 Source: ECLACSlide10: Verified Energy Reserves Oil 885 Natural Gas 575 Mineral Coal 2,709 Uranium 2,072 Hydroelectricity 18,305 Vegetable Fuel 983 *Equivalent Tons of Petroleum and has a “significant supply” of energy resources. Source: IDB in millon ETP* Slide11: Displays a highly developed and diversified production capacity that represents 50 % of Latin American GDP... Agriculture, hunting, forestry and fishing 11% Electricity, water and natural gas 5% Transport and communications 7% Financial entities, insurance 14% Construction 10% Wholesale and retail business 10% Manufacturing industry 22% Municipal, social and personal services 18% Mining and quarrying 3% Source: ECLAC Slide12: MERCOSUR Spain Canada Mexico Thailand Indonesia Poland Malaysia Philippines Israel Chile 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 and has an industrial sector that is one of the most important among Developing Countries (and is even more important than that of many developed countries). million dollars Industrial Output 1994 Source: UNIDO 138,328 112,604 94,853 43,956 35,516 30,162 27,119 18,733 11,311 11,185 6,736Slide13: Which are the distinguishing features of MERCOSUR?Slide14: It is a regional market in which the trade of goods is free from tariff and non-tariff barriers. MAIN CHARACTERISTICS The four Members States have agreed upon a common trade policy. The liberalization of services transactions and the removal of barriers to the free movement of inputs are foreseen for the mid term.Slide15: MERCOSUR covers practically 2/3 of the region´s land area. MERCOSUR in numbers Countries Area Inhabitants millons of Km2 Millions Argentina 2.8 34.1 Brazil 8.5 149.2 Paraguay 0.4 4.8 Ururguay 0.2 3.2 Total 11.9 201.3Slide16: COMMON MARKET COUNCIL COMMON MARKET GROUP MERCOSUR TRADE COMMISSION Working Subgroups Ad-Hoc Groups Specialized Meetings Ministerial Meetings Administrative Secretariat Technical Committees RELATED INSTITUTIONS Joint Parlamentary Commission Economic Social and Consultative Forum Institutional StructureSlide17: Thailand Indonesia Mexico Andean Community Caricom Malaysia MERCOSUR Chile European Union Australia Israel USA New Zealand 5% 7% 9% 11% 13% 15% 17% 19% 21% 23% Average External Tariff 1995 (in percentages) Source: IDB and WTO MERCOSUR constitutes an economic area open to international trade... 23.1% 20% 14.2% 13.4% 12.4% 12% 11.1% 11% 9.6% 8.4% 8.3% 6.6% 6.2%Slide18: European Union 25% INTRAMERCOSUR 22% East Asia 16% Rest of the world 14% USA 14% Rest of LAIA 9% Source: LAIA and is basically a “Global Trader”: none of its customers account for more than a quarter of Mercosur exports... EXPORTS Slide19: European Union 25% INTRAMERCOSUR 21% USA 20% Rest of the World 15% East of Aisa 13% Rest of LAIA 6% Source: LAIA while its imports are also significantly diversified among several countries or regions. IMPORTS Slide20: MERCOSUR economic perfomance in the 90’sSlide21: 1991 1992 1993 1994 1995 1996 1997* Prom 91-96 1% 3% 5% 7% Real GDP growth Source: ECLAC and Gazeta Mercantil MERCOSUR economies have continued to experience strong growth... * projected 3.6% 2.8% 5% 6.7% 1.2% 3.6% 4.2% 3.8%Slide22: NICS MERCOSUR World USA Japan European Union 0% 1% 2% 3% 4% 5% 6% 7% having become one of the most dynamic areas of the global economy in recent years Average growth of GDP 1991-1996 Source: ECLA C and IMF 6.9% 3.8% 2.9% 2.0% 1.7% 1.5%Slide23: Labour Productivity Index (basis 1990=100) 1991 1992 1993 1994 1995 1996 100 125 150 175 Argentina Brazil Source: INDEC, CNI and IPEA At the same time, labour productivity in the industrial sector has improved... 23.1% 110.8 113.1 120 115.4 127.1 130.8 133.6 138.5 138.1 143.2 147.3 161.5Slide24: Variation of Consumer Price Index 1991 1992 1993 1994 1995 1996 ______________________________________________________________ Argentina 84.0 17.5 7.4 3.9 1.6 0.4 Brazil 475.8 1,149.1 2,489.1 929.3 22.0 10.6 Paraguay 11.8 17.8 20.4 18.3 10.5 8.8 Uruguay 81.3 59.0 52.9 44.1 35.4 25.5 Source: ECLAC and Gazeta Mercantil and inflation became just an “unhappy memory”Slide25: 1991 1992 1993 1994 1995 1996 0% 5% 10% 15% 20% (Imp + Exp)/GDP IMPORTS EXPORTS Imports + Exports of goods / GDP Source: World Bank Atlas, ECLAC and WTO Likewise, trade represents an increasing share of GDP...Slide26: million dollars Exports of goods 1990 1991 1992 1993 1994 1995 1996 40,000 50,000 60,000 70,000 80,000 Source: WTO as a result, exports drive economic growth... 46,433 45,911 50,487 54046 62,128 70,405 75,060Slide27: Participation in World Trade 1990 1991 1992 1993 1994 1995 1996 1.00% 1.10% 1.20% 1.30% 1.40% 1.50% Source: WTO and World Bank and the share of MERCOSUR in world trade is growing. 1.1% 1.14% 1.19% 1.38% 1.46% 1.44% 1.46%Slide28: 1990 1991 1992 1993 1994 1995 1996 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Trade flows in the region are growing... million dollars Intra-MERCOSUR Trade of Goods Source: LAIA 4,127 5,103 7,214 10,027 12,049 14,384 16,770Slide29: 1990 1991 1992 1993 1994 1995 1996 35,000 70,000 105,000 140,000 which is reflected in a sustained increase in border traffic number of trucks Truck crossings through Uruguayana-Paso de los Libres Bridge Source: DLF Uruguayana 52,626 73,140 94,478 98,607 104,735 123,431 139,775Slide30: But the growth of regional trade has not occurred “at the expense” of other trading partners... million dollars 1990 1991 1992 1993 1994 1995 1996 35,000 40,000 45,000 50,000 55,000 60,000 Extra-Regional Exports Source: LAIA 42,306 40,808 43,272 44,019 50,079 56,021 58,290Slide31: 0% 10% 20% 30% 40% 50% 60% 70% E.U. NAFTA ASEAN MERCOSUR Andean Community CER intra-MERCOSUR trade is still small compared to others regions of the world. Intra-Regional Trade as a Percentage of Total Trade per Bloc Source: IMF Direction of Trade 9.9% 12.1% 20.4% 22.7% 46% 63.5%Slide32: Mexico Canada Spain France Germany Italy Argentina Malaysia Thailand Brazil 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% thus, trade flows among MERCOSUR countries are still low Intra-Regional Trade as a percentage of total trade Source IMF Direction of Trade 81.9% 74.9% 68.4% 63.9% 61.7% 58.5% 27.7% 25.2% 18.1% 13.4%Slide33: The top 15 MERCOSUR companies Petrobrás 15,195 Volkswagen Brasil 7,846 General Motors 6,756 Petrobrás Dist. 6,136 Carrefour 5,102 YPF SA 4,954 Fiat 4,626 Shell 4,011 Eletropaulo 3,926 CESP 3,836 Ford Brasil 3,217 Furnas 3,051 Varig 3,007 Petróleo Ipiranga 2,975 Mercedez Benz 2,940 net sales 1995 (US$ million) Source: Gazeta MercantilSlide34: 1994 1995 1996 1997 Argentina BB- BB- BB- BB Brazil B B+ B+ BB- Paraguay NR * BB- BB- BB- Uruguay BB+ BB+ BB+ BB+ International agencies have continued to upgrade the MERCOSUR economies... Debt rating in foreign currency * No rating Source: Standard & Poor's. Slide35: 0 200 400 600 800 1,000 1,200 Argentina Brazil 1994 1995 1996 1997 so that, in the “post Tequila” era, country risk in the region is decreasing. basic points Brady Par Bonds Spread Source: Ministry of Economy , Public Works and Services ( Financing Undersecretariat) 742 1,083 728 487 854 1,074 677 470Slide36: The region offers various investment opportunities... Food and beverages Cars and spare parts Oil and petrochemicals Telecommunications Mining Iron and steel Leather Forestry Cellulose and paper Timber “Hot Industries” Slide37: attracting more and more foreign investors... million dolars Source: UNCTAD, Banco Central do Brasil and Fundación Invertir Foreign Direct Investment in MERCOSUR (1991-1996) 1991 1992 1993 1994 1995 1996 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Argentina Brasil Uruguay-ParaguaySlide38: construction, others) Cars and Spare parts 36% Chemicals and pharmaceuticals 11% Metalurgical industry 9% Food, beverages and tobacco 9% Electrical or electronic products 6% Telecommunications 5% Natural gas and oil 5% Mining 4% Electric energy 3% Others (trade, paper and pulp, 12% with capital flow directed at different sectors of the regional economy Source: Fundación Invertir, UNCTAD and Bco. Central do BrasilSlide39: South Korea MERCOSUR Mexico Malaysia Indonesia Thailand Hungary Chile 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 Thus, MERCOSUR has become one of the main recipients of FDI among Developing Countries... million dollars Cumulative flows 1990-1995 Source: UNCTAD 34,570 31,035 26,668 12,965 11,240 9,935 8,192 5,453Slide40: S. Korea Spain MERCOSUR United Kingdom Italy China ex USSR Mexico India Thailand Sweden Belgium 0 500 1,000 1,500 2,000 2,500 3,000 thousand units the automotive industry being among the largest of all emerging economies... (and larger than that of many Developed Countries) Units Produced in 1995 Source: ANFAVEA 2,562 2,334 1,914 1,776 1,667 1,435 1,082 931 568 526 486 468Slide41: that in recent years has become one of the greatest “stars” of the integration process... Cars and Spare Parts Intra-Regional Trade 1991 1992 1993 1994 1995 1996 0 500 1,000 1,500 2,000 2,500 3,000 million dollars Source: INDEC and LAIA 393 1,191 1,682 2,215 1,945 2,608Slide42: Foreign Direct Investment Projected for Automotive Industry General Motors 3,900 Ford 3,500 FIAT 3,142 VW 3,080 Hyundai 1,700 Renault 1,500 Mercedez Benz 1,171 Toyota 1,000 Asia Motors 900 Sevel-Peugeot 700 Honda 600 Iveco 560 Chrysler 480 Scania 220 Volvo 150 BMW 150 Mitsubishi 150 TOTAL 22,903 1995 - 2000 inducing many transnational companies in this sector to establish and/or expand their production capacity in the region. (in million US$) Source: ANFAVEA, ADEFA and Gazeta MercantilSlide43: Oil and Petrochemicals Iron and steel Industry Communications Electric energy Natural Gas Air transport Railways The successful privatization program -still ongoing- has also been favourable for local and foreign investment. million dollars Total income from privatization in MERCOSUR (1992-1996) 0 2,000 4,000 6,000 8,000 10,000 12,000 Source: BNDES and Ministry of Economy, Public Works and Services (Investment Undersecretariat) Others 1,870 2,037 2,683 6,953 7,271 8,372 11,461 1,250Slide44: Business Initiatives: The driving force in the Integration Process SECTOR ARGENTINE COMPANIES IN BRAZIL BRAZILIAN COMPANIES IN ARGENTINA FOOD AND BEVERAGES SANCOR SADIA ARCOR ARISCO LA SERENÍSIMA LACTA BAGLEY BRAHMA BANKING EXPRINTER ITAU BANCO GALICIA BAMERINDUS EQUIPMENT AND CAPITAL GOODS PROMECOR WETZEL MANUEL SAN MARTIN VALMICRO CONSTRUCTION MATERIALS BENITO ROGGIO DURATEX SADE NORTON CARS ZANELLA COFAP Y CIA DEUTZ FREIOS VARGA IRON AND STEEL USIMISAR CONFAB TUBOS There has been a marked increase in the number of joint ventures in the private sector... Source: Fundación Invertir and Argentine Embassy in BrazilSlide45: while strong investment in basic infrastructure is expected for the next few years... 1996 16,524 1997 17,350 1998 18,218 1999 19,128 2000 20,085 2001 21,089 2002 22,143 2003 23,251 2004 24,413 av. 1996-2000 20,245 * based on a project 5% growth including transport, energy and communications Source: I DB (996) million dollars Estimated Gross Investment Requirements in Infrastructure in the Southern Cone (1996-2000)*Slide46: Major Infrastructure Projects in the Southern Cone much of this investment is currently under analysis and/or implementation... in million dollars Source: IDB POWER SECTOR Project Participating countries Estimated Amount Yaciretá-Apipé Complex Agentina and Paraguay 9,100 Corpus Christi Mainplant Agentina and Paraguay 3,680 Itatí-Itacorá Agentina and Paraguay 2,414 Garabí Agentina and Brazil 1,789 Roncador Agentina and Brazil 3,189 San Pedro Agentina and Brazil 1,953 Others 1,482 Total 23,607 Project Participating countries Estimated Amount Itaipú-Corpus-Yaciretá Argentina, Paraguay and Brazil 150 Garabí Argentina and Brazil 224 Power link between Argentina and Chile Argentina and Chile 224 Power link between Brazil and Uruguay Brazil and Uruguay 180 Total 778 POWER LINKSSlide47: Major Infrastructure Projects in the Southern Cone in million dollars GAS SECTOR Proyect Participating countries Estimated Amount Gas pipelines, Argentina and Brazil Argentina and Brazil 2,795 Gas pipelines, Bolivia and Brazil Bolivia and Brazil 2,083 Gas pipelines, Argentina and Chile Argentina and Chile 1,339 Gas pipelines, Argentina and Uruguay Argentina and Uruguay 180 Other projects 995 Total 7,392 TRANSPORT SECTOR Project Participating countries Estimated Amount Highway Río de Janeiro - Bs.As. Argentina, Brazil and Uruguay 2,000 Bridge Rosario-Victoria Argentina 300 Hidroway Paraná - Paraguay Arg, Bra, Bol, Parag and Urug 2,500 Bridge Bs.As. - Colonia Argentina and Uruguay 1,000 Other projects 3,170 Total 8,970 Source: IDBSlide48: * Equivalent Tons of Petroleum Oil Natural Gas Others Hydroelectricity Vegetal- Nuclear 1994 2000 2010 0 50,000 100,000 150,000 200,000 250,000 thoudsand E.T.P.* Projected Primary Energy Production Source: IDB The wide range of possibilities for energy generation constitutes a comparative advantage which, at the same time, presents ample scope for investment Slide49: MERCOSUR “STRATEGY” WITH A VIEW TO THE FUTURESlide50: MERCOSUR priorities are threefold: 1. The consolidation of agreements already signed 2. The deepening of these bonds by means of new agreements 3. To make progress in the area of extraregional negotiations The appropriate interlinking of these three objectives guarantees the balanced and smooth development of the integration process.Slide51: The daily task of consolidating the commitments already achieved is closely linked to the internalization of Mercosur law, the effective fullfilment of the agreements and the creation and organization of regimes such as: Customs valuation Rules of origin Technical standards Non-tariffs barriers Special Import Regimes Sectorial regimesSlide52: To deepen the integration process means taking steps towards new trade and investment disciplines that will contribute to the definitive consolidation of the “MERCOSUR identity” Liberalization of trade in services A common regime for government procurement “Discipline” (coordination) of public policies affecting competitiveness Harmonization of public policies that affect the location of investment “NEW ISSUES”Slide53: During 1997, MERCOSUR hopes to conclude the trade agreements with Mexico and Andean Group MERCOSUR-LAIA The Comercial Subcommitee is currently preparing the way for a future trade liberalization The negotiation process is expected to start in 1988 and it should lead to the formation of FTAA in the year 2005 MERCOSUR-EUROPEAN UNION FREE TRADE AREA OF THE AMERCIA (FTAA) After signing the free trade agreements with Chile and Bolivia in 1996, progress in the external agenda means the continuation of negotiations... and the talks with other countries and regions such as Japan, India, Switzerland, South Korea, CER, CIS, ASEANSlide54: To deepen the process of integration and MERCOSUR integration into world economy To strengthen the institutional arrangement of the Customs Union To maintain the regional process of economic growth To consolidate the economic and political stability of Member States To continue the process of structural reform within Member States To continue fighting and unemployment in the region In conclusion, the challenges MERCOSUR faces are :Slide55: MERCOSUR A NEW REGION OF CHALLENGE AND OPPORTUNITY Ministry of Foreign Affairs, International Trade and Worship International Economic Relations Secretariat Argentine Republic You can see this presentation in Internet: http://www.ar/SECEC/index.htm