March 31, 2022
The World Trade Organization (WTO) hosted a conversation with a senior World Bank official and WTO ambassadors on March 29th to discuss the regional economic outlook for Latin America and the Caribbean and the role of trade in its recovery. Deputy Director-General Anabel González, the co-chair of the meeting, noted the progress made but said more was needed to improve the region’s trade and investment environment.
Carlos Felipe Jaramillo, World Bank Group Vice President for Latin America and the Caribbean, highlighted for ambassadors the need for countries in the region to leverage trade policy to transition to a new growth path that creates jobs, reduces poverty and protects the region’s wealth of natural resources.
Mr. Jaramillo noted that the pandemic hit the Latin American and Caribbean region hard, causing economies to contract by 7% on average in 2020, the sharpest decline over the last century. He noted that after a sharp rebound in 2021, average economic growth in 2022 was expected to remain well below its potential.
“The region has the opportunity to emerge from the pandemic with a new growth paradigm that responds to its particular challenges and learns from successful cases in other parts of the world,” he told participants. “This requires, among other things, that Latin American economies take a leap forward in terms of productivity and leverage open trade policies.”
“Protectionism can be very tempting, especially in times of uncertainty, but it is a dead-end for the investment, innovation, and dynamism that are needed if we want to leave behind the region’s sluggish growth during the past decade.” He added.
In addition to creating an investment-friendly business environment and fostering competition, Mr. Jaramillo told ambassadors that countries in the region need to focus on tackling other longstanding challenges by improving healthcare systems, enhancing educational outcomes, and addressing climate change through greater investment in renewable energy and supporting the adaptation of agriculture and other sectors to droughts and other extreme weather events.
Several ambassadors commented on the impact of the COVID-19 pandemic on Latin America and the Caribbean, the need to accelerate inclusive and sustainable growth, and the role of the WTO in supporting the region’s post-pandemic economic recovery efforts.
“There cannot be a swift revival of trade and economic growth if members adopt export and other trade restrictions, which trigger a race to the bottom,” said Ambassador Santiago Wills (Colombia), adding that countries in the region should build on digitalization and other trade-facilitating measures adopted during the pandemic.
Ambassador Ángel Villalobos Rodríguez (Mexico) emphasized the key role of private investment in the region’s recovery, noting the need to transform the business environment through reform of regulatory and competition regimes at national and subnational levels. Ambassador Mathias Francke (Chile) said that post-COVID recovery must be sustainable and inclusive, adding that the WTO is playing its part through initiatives on environmental sustainability, gender, and micro, small and medium-sized enterprises, among others.
Ambassador Alfredo Suescum (Panama), who co-chaired the meeting, called on the World Bank and the WTO to deepen their cooperation and develop a common vision that would help Latin America and the Caribbean take full advantage of trade to meet development goals.
Closing the roundtable, DDG González highlighted the progress made by Latin America and the Caribbean in leveraging trade and investment for growth.
Nevertheless, “more work is needed so that businesses in the region can increase their participation in global value chains, diversify production, increase the sophistication of exports and take full advantage of trade,” she said. “Renewed efforts to open and facilitate trade and investment will give a strong impetus to economic growth and job creation in the region while strengthening resilience in the face of growing uncertainty caused by recent shocks.”
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