1

AMERICAN CULTURE AND ECONOMY

STEVEN SANDOVAL DUARTE COD 1621022304

LAURA ESTEFANY QUINTERO RESTREPO 1821981603
DAYAN LORENA REINA RIOS 1621021489

JULIANA CORREA JARAMILLO

POLITECNICO GRAN COLOMBIANO

REGIONAL CULTURE AND ECONOMIC OF AMERICA
SANTA FE OF BOGOTA D.C
2020
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Index
Introduction.............................................................................................................................3
ALADI....................................................................................................................................4
Who is involved?.................................................................................................................6
Organizational structure......................................................................................................7
Aims....................................................................................................................................7
Colombia.................................................................................................................................8
Argentina...............................................................................................................................10
Mexico..................................................................................................................................12
Brazil.....................................................................................................................................16
Perspective of negotiation.....................................................................................................17
Conclusions...........................................................................................................................19
Bibliography..........................................................................................................................20
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Introduction

Through this research we want to know and understand the functions of the Latin American

Integration Association ALADI as a fundamental organ to the promotion of international

relations in Latin America and its allies, this association promotes union, alliance and

economic development on a large scale. Through international trade, guaranteeing among

its participants, a consistent, transparent and predictable environment for the satisfactory

execution of transactions, applying instruments such as simplification of formalities and

procedures, standardization and improvements in physical infrastructure and harmonization

of laws and regulations, based on international standards and practices. This association

guarantees an agreement between countries, by means of which tariffs are lowered

according to the norms established between the nations that participate in it, and seeks

economic, social and regional political integration. Although these were created to promote

commercial exchange, they also included fiscal and budgetary policy clauses, as well as the

movement of people and common political organizations.

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ALADI

The ALADI (Association Latino Americana of Integration) was created by the Montevideo

treaty in 1980; It’s a intergoburnamental association of Latin-American countries and his

principal objective is the regional integration looking stablish a common market with four

primordial mechanisms; Financial, tax, customs and health cooperation; Preservation of the

environment and scientific and technological cooperation. Its legal framework allows and

encourages the celebration and existence of subagreements among its members, opens its

field of action through multilateral ties or partial agreements with other countries and areas

of integration in America (Mercosur, Andean Community, among others). It also includes

horizontal cooperation with other integration movements in the world and partial actions

with developing third countries or their respective integration areas. (ALADI, 2014)

However, despite certain rules, the alliance seeks a negotiation between countries similar to

a free trade agreement, thus promoting rapprochement not only in members of the alliance

but international trade with other organizations and agreements, as it was in 2014 in the

Latin American and Caribbean forum. CELAC where it has been encouraged to intensify

dialogue, coordination, interaction, consensus, synergy and convergence of actions between

regional and subregional integration mechanisms. In addition to this, ALADI has promoted

the creation of Forums, approaches and business macro rounds, as occurred on October 19,

2019, where the First ALADI EXPO was held, bringing together 405 exporters and 201

importers from 15 nations, where nearly 4,500 business appointments were held

(PROCOLOMBIA, 2019)
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Source (Banco Monetario Internacional, 2016)

Observing the previous graph, we can see that in millions of dollars the regional trade

between ALADI countries is optimal and in all the countries it belongs between 15 to 40%

of the countries' total exports, thus facilitating and reducing the difficulties and prices of

international traders.

Regarding Colombia's international trade, we can see in graph 2 that nearly 30% of its

exports are to countries that belong to ALADI, which is an encouraging fact since exporters

may have trade facilities and preferential costs when making transactions thus promoting

marketing in the regional total participation

Participation exportations of Colombia Participation in total importations of Colombia

Source, DANE
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Who is involved?

Currently the following countries are part of ALADI:

- Argentina - México

- Bolivia - Panamá

- Brasil - Paraguay

- Chile - Perú

- Colombia - Uruguay

- Cuba - Venezuela

- Ecuador

Nicaragua's entry was approved by the Council of Foreign Ministers on August 11, 2011.

Currently, Nicaragua is conducting trade negotiations with Paraguay in order to become a

full member of ALADI.

Observer Countries:

- El Salvador - Costa Rica - South Korea

- Honduras - Nicaragua - Japan

- Spain - Italy - Ukraine

- Portugal - Switzerland - San Marino

- Guatemala - Russia - Pakistan.

- Dominican - Romania

Republic - China
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Observer Organizations:

- CEPAL - SELA

- OAS - CAF

- IDB - IICA

- UNDP - PAHO / WHO

- The Commission of the European - SEGIB participate.

Organizational structure

The Council of Ministers is the highest decision-making body within ALADI. There is also

a Committee of Representatives (permanent political body), a General Secretariat (based in

Montevideo, Uruguay), and an Evaluation and Convergence Conference, which is in charge

of examining the operation of the integration process. There are also Working Groups to

fulfill the Agency's mission, among which are the Committee on Budget and Institutional

Affairs, and the Technical Groups on Standards and Disciplines, Trade Facilitation, Access

to Goods Markets, Services and New Topics, System of Support to the Countries of Less

Relative Development (PMDER), and Social and Productive Integration. (Cancilleria,

2018)

Aims

- Gradually reduce and eliminate obstacles to reciprocal trade in its member countries

- Promote the development of ties of solidarity and cooperation between Latin

American peoples

- Promote the economic and social development of the region in a harmonious and

balanced way in order to ensure a better standard of living for its peoples
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- Renew the Latin American integration process, and establish mechanisms

applicable to the regional reality

- -Create an area of economic preferences with the final objective of establishing a

Latin American common market

Colombia

Source, own elaboration

Unlike Latin America, Colombia is currently undergoing a recovery process, after 10

consecutive quarters with growth below 2.5%, and even in some quarters below 2%.

Starting in the second quarter of 2018, the Colombian economy begins a recovery process

which continues in the following months and currently grows at rates slightly above 3.2%,

explained by the good performance of consumption and investment since 2018. However,

rates of 3.2% are not enough; They are far from the long-term growth of Colombia, which

is between 4% - 4.5% and will allow us to respond to the great challenge that the country
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has today to generate quality jobs and meet the great needs in social and competitive

matters.

The growth engines of the Colombian economy during 2019 were consumption and

investment. Household consumption, which in 2018 grew 3.6%, at the end of the third

quarter 2019 grows 4.7%. For its part, the investment measured by gross fixed capital

formation, went from 0.8% in 2018 to 4.6% in the same period of 2019. [ CITATION

Ban20 \l 3082 ]

On the external front, 2019 was not a good year for exports, due to the low dynamics of

international trade. At the end of the year, external sales, both commodities and industrials,

contracted.

Source, DANE

This encouraging scenario does not mean at any time that the country is not in

trouble. Colombia maintains relatively high unemployment rates and in recent years there
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has been an increasing trend in this indicator. Socially, the reduction of poverty and

inequality must be a fundamental part of the country's agenda.

Argentina

Argentina has a long history of political and economic instability - with large growth

fluctuations each year. In 2019, the country had a negative GDP growth of 3.1%.

Argentina's economy, the second largest in South America, is expected to contract for the

third consecutive year in 2020, with negative growth of 1.3%. Argentina has had to face a

new economic crisis, triggered by a growing deficit and debt, and political instability with

alternations between the right and left governments. However, the root cause was a budget

deficit that investors hesitated to finance, while former President Mauricio Macri lost

credibility. However, the new president-elect Alberto Fernández promised to revive the

economy, although he must face demands from far-left parties in his coalition, which

request greater social spending, while investors want to give priority to negotiations. of

debts. There is general concern in the Argentine market that Fernández is going against

Macri's pro-market stance. Even so, the GDP growth projected by the IMF for the year

2021 is 1.4%.[ CITATION Ban19 \l 3082 ]

According to reports and the economic history of Argentina, the country has been in an

economic recession for several years as its rulers have tried to make unsuccessful

modifications in social and economic structures. Its currency is one of the most devalued in

Latin America, its inflation rates exceed 50% and its GDP is indebted at 93%, calling into

question the country's ability to pay it, however, Argentina shows a great focus to lower
 11

this percentage, considering that their goals and projections are uncertain as they were

many years ago.

The depreciation of its currency has been seriously affecting international negotiations,

imports and exports, as well as low domestic demand. However, if the economy focuses on

the recovery of agricultural exports, it could contribute to reducing the economic

imbalance. The poverty and unemployment rates in Argentina are very high and the country

is in a constant social war between the government and the unions, in addition, the country

is divided between central and decentralized authorities, which are confronted around the

distribution of federal income. Almost a third of the population in Argentina lives below

the poverty line. The infrastructure network requires more investment, since there is not

always access to electricity and water in rural areas.

2019 2020
Indicadores de crecimiento 2017 2018 2021 (e)
(e) (e)

GDP (billions of USD) 642,93e 519,49e 445,47 443,25 481,84

GDP (annual growth in%, constant price) 2,7e -2,5e -3,1 -1,3 1,4

GDP per capita (USD) 14.588e 11.658e 9.888 9.731 10.462

Balance of public finances (in% of GDP) -7,0 -4,4e -2,3 -0,7 -1,2

State indebtedness (in% of GDP) 57,1 86,1e 93,3 80,8 76,4

Rate of inflation (%) 25,7 34,3e 54,4 51,0 32,3

Unemployment rate (% of active population) 8,4e 9,2e 10,6 10,1 10,1

Source, Banco Santander

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Mexico

It is among the 15 largest economies in the world and is the second largest economy in

Latin America. The country is highly dependent on the United States, its largest trading

partner and the destination of 80% of its exports. In 2019, the economy registered an

estimated growth of only 0.4%, compared to 2% the previous year, due to a climate of

uncertainty after the first year in power of President López Obrador, and also due to a

reduction in domestic demand and investment. Higher wages, lower inflation, and higher

remittances are expected to contribute to growth of 1.3% this year, and 1.6% in 2021

(IMF), although there is still uncertainty regarding trade relations. with the United States.

[ CITATION Ban19 \l 3082 ]

According to statistics of social and economic growth of Mexico, they indicate that the

country, after the change of government between 2018 and 2019, suffered a drop in its

growth percentages with respect to previous years since it did not meet the established

goals, this due to a slowdown in economic activities and reductions in private government

investment, negative effects on external demand for products and services due to the also

economic slowdown and lower federal taxes for its main consumer, the united states.

The economic performance of this country has also been affected by social behaviors such

as the seizure of railroads by education workers, strikes in the maquiladoras in the north of

the country and the insufficient supply of gasoline in important states for the activity.

economic situation of the country, due to the strategy of combating fuel theft in the

pipelines.

Mexico also suffers indirect effects on its economy in these times as it has changed its

political behavior and this makes investors change their perception and reduce their
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participation in the country. There are other factors such as the change in international

financial conditions due to an increase in United States interest rates, trade tensions

(particularly between the United States and China), the decrease in public oil revenues, an

abrupt departure from the Kingdom United of the European Union and delays in the

ratification and implementation of the T-MEC.

Growth Iindicators 2017 2018 2019 (e) 2020 (e) 2021 (e)

GDP (billions of USD) 1.156,95e 1.222,05e 1.274,18 1.322,49 1.380,72

GDP (annual growth in%, constant price) 2,1e 2,0e 0,4 1,3 1,9

GDP per capita (USD) 9.367e 9.797e 10.118 10.406 10.768

Balance of public finances (in% of GDP) -2,3 -2,3e -2,8 -2,5 -2,1

State indebtedness (in% of GDP) 54,1 53,6e 53,8 54,6 54,7

Rate of inflation (%) 6,0 4,9e 3,8 3,1 3,0

Unemployment rate (% of active population) 3,4 3,3e 3,4 3,4 3,4

Source, Santander trade

CHILE

Chile is traditionally considered a model in Latin America in terms of political and

financial transparency. It has also been one of the fastest growing economies in Latin

America in the last decade, allowing the country to significantly reduce poverty (World

Bank). According to the IMF, GDP grew 2.5% in 2019. According to the World Bank, the

slowdown is due to a difficult external environment, adverse weather conditions and delays

in certain government reforms. In addition, according to Reuters, the protests and riots have

generated billions in losses in the private sector and public infrastructure. However, Chile's

economic recovery after years of low commodity prices is based on high private
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consumption and investment, rising wages, low interest rates, private sector confidence,

higher copper prices, increased mining production, and - to a lesser extent - increased

wholesale trade and commercial services (World Bank, 2019).

Chile's unemployment rate declined to 6.9% in 2019, with projections estimating equivalent

rates for 2020 and 2021, respectively. The country has the highest GDP per capita in the

region but also high levels of inequality and informality Factors in the wealth disparity

include the current tax system which mainly hurts the middle and lower income classes.

Chile has invested heavily in renewable energy, which is expected to account for up to 20%

of its energy generation by 2020. The Gini index reached 46.6 and has dropped sharply in

2020.

Source, Santander Trade

The service sector contributes 57.6 per cent of GDP and employs about 68.2 per cent of the

population. The Chilean economy faces three main challenges: overcoming its traditional

dependence on the price of copper, as copper production represents 50% of the country's

exports; developing a self-sufficient food supply, as agriculture currently produces less than

half of domestic needs; and increasing its productivity, especially in the mining sector.
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According to Fedetur, tourism in Chile declined by 11% from 2017 levels due to a 25%

drop in Argentine visitors.

In Chile the poverty was reduced, the GDP grew to 2.5%, it is the country that has the

highest GDP in the region, the unemployment rate decreased, this shows that it is a country

that advances more and more trying to help its people and that its economy is improving

more and more, although because of the wealth that the country has the low and medium

strata have problems, the government has tried to improve on this issue, compared to Brazil

you can help economically with cooperation to overcome any need.

Source, Santander Trade

In Latin America, the internal environment has been quite conflictive. In Peru the Congress

was dissolved; In Chile, strong demonstrations were unleashed with significant economic

results, as growth is expected to decrease from 4% in 2018, to a range between 2% and

2.2% in 2019; in Bolivia after the allegations of fraud there was a change of government,

and in Ecuador there have been social protests. Colombia has been no stranger to this

process and in the month of November and the beginning of December several

demonstrations were held that resulted in dialogue tables with the Government.
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Brazil

Brazil is the eighth largest economy in the world. The country is still working to rebuild

itself after the recession that occurred five years ago, when the economy contracted by

almost 7%. Since then, Brazil has not been able to grow at the same rate it was accustomed

to during the decade before the recession. Nevertheless, there is a glimpse of economic

improvement in Brazil, albeit slow.

In 2019, inflation grew slightly, reaching 3.8% Even so, the previous ones have increased

by 25% since the recession - without salaries meeting the same fate. Therefore, although

inflation is now under control, private consumption has yet to recover. The Brazilian

government says the worst is behind it, while showing no sign of relaxing its commitment

to austerity and strict physical discipline. [ CITATION Ban19 \l 3082 ]

The unemployment rate in Brazil remains high, reaching 11.8% in 2019. However, the

government believes the actual figures are considerably higher, as an official study on

employment indicated that 28.3 million people are underemployed, meaning they either do

not work at all or work less than they could.

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Source, Santander Trade

The service sector represents 63.1% of Brazilian GDP and employs 70.3% of the active

workforce. In recent years, the country has embarked on the production of high value-

added services, especially in the fields of aeronautics and telecommunications. Tourism has

also been growing in recent years, making it an important segment of the sector.

Source, Santander Trade

According to the economy of Brazil has varied in all the years to reach a maximum and has

had losses this between the eighth bigger economy of the world, in the subject of

unemployment this subject is the most serious at the moment for this reason has been

increase of delinquency and criminal violence, otherwise it has very serious social

problems.
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Regional integration process and the theoretical problems that faced.

The coronavirus crisis will be a stress test for all Latin American governments belonging to

ALADI by testing presidential leaderships and state apparatuses. Presidents have

monopolized the management of the agenda, which in the current time of uncertainty has

provided certainty and leadership. This occurs in a global context of revaluation of the role

of the State and the public and a generalized social demand for greater and better political

leadership. The feeling that the world as we knew it is no longer the safe place we were

used to has given rise to new uncertainties. No one knows how the current crisis will

emerge, but this doubt and the magnitude of the challenge will condition many government

responses.

The adverse effects of the pandemic on international trade, in general, and on the ALADI

member countries, in particular, will determine that the amounts exported by the region to

the world deepen their recessive behavior.

The IMF (2020) estimates that world output will contract 3% this year. The fall in the level

of activity will be more pronounced in the economies of advanced countries (-6.1%) and in

Latin America and the Caribbean (-5.2%), while in China, economic activity will register a

growth of 1.2% this year

Therefore, unlike other crises such as that of the Great Recession of 2008-2009, the short-

term economic effect is not only very strong, but it is practically simultaneous and global,
 19

therefore, it is not possible that no region of the world is left out of its economic

consequences, which prevents the substitution of clients or commercial suppliers. The

WTO (2020) estimated that international trade in goods could decrease between 13% and

32% in 2020.

The deterioration of the economic situation of the ALADI member countries will

significantly affect the region's trade with the world and intra-regional trade. This impact

will be clearly visualized in the figures corresponding to exports and imports, in March, and

especially from April.

Given this crisis, it is an alarming scheme for Latin American countries since, due to the

recession, the price of oil has fallen too low, mainly affecting oil countries such as

Colombia, Venezuela, Brazil, Chile, Argentina, so each country must take on the challenge

of empowering The services and agriculture market in Chile is as follows the service sector

contributes 57.6% of the GDP and employs about 68.2% of the population The Chilean

economy faces three main challenges: overcoming its traditional dependence on the price of

copper, as copper production represents 50% of the country's exports; developing a self-

sufficient food supply, as agriculture currently produces less than half of domestic needs,

According to international trade theories, if each country specializes in the production of a

good in which it has clear competitive advantages, world production will be favored and

thanks to this, each country will have a greater share in the profits. However, with the

current distribution of production factors and technological resources, developing countries

will have to continue their processes of specialization in the production and export of raw

materials to developed countries, in exchange for processed goods and technology

 20

(Lascano, 2002). for example, Colombia could be the Lulo’s market, where Colombia is the

main producer country worldwide according to the Ministry of Agriculture and

Development, which gives Colombia a profitable comparative advantage when establishing

a marketing proposal.

Lulo is a fruit with production in Colombia; Currently, exports are made to countries in

some countries in Europe, and in Asia to Japan and Korea, however, interest in reaching the

American or intraregional market has not yet been aroused, this is largely due to restrictions

on the way in which the pulp but the whole fruit could give greater profitability and better

image through a package that allows the transport of the product, conserves its organoleptic

characteristics and complies with the regulation;

Its harvest is 8 to 10 months, for planting and success of the crop the conditions of the

climate and soil are: Height above sea level of 1,300 to 2,200 meters, 4 to 6 hours a day of

sunlight, temperature between 14 and 18 ° C, humidity not higher than 80% (taken from

The cultivation of lulo, DANE 2014).

Colombia sells 36 to 120 tons of lulo to European countries per year, for this reason its

demand and fresh marketing are growing. This figure varies because export volume is

subject to production availability. Colombian lulo is exported in polypropylene packaging,

which have the colors of the flag that identify the place of origin of the product, which at

the same time allows us to guarantee future purchases, as well as expanding demand with

new consumers. Even so, the bet is to reach that market with the whole fruit and halved so

that it shows its freshness, coloration and condition, and so immediate consumption is

promoted.

Lulo prices in Colombia on average between July and December 2018 were $ 1.78 pesos

per kilo, with a maximum price of $ 1.69 and a minimum of $ 1.10 (Weekly Bulletin
 21

Wholesale Prices, 2013). Being in Colombia Ocati SA, the main exporter with a 57%

corresponding to 44780.9 USD FOB, the company CI Colombiana de Exportaciones

Agropecuarias S, A (13%), Comercializadora Internacional Commodities Importa y

Exporte (12%), CI Comercia Caribe SAS (7%) and Paraíso Andino with 5% of the

exported volume (Bacex, 2016).

Given the previous data, it is valid to affirm that Colombia is the first Lulo exporter in the

world, for which reason the same competition is generated in producers in the region;

However, this gives us a viability towards the export project based on the fact that the main

reason why there is not a great demand for lulo is due to marketing strategies in different

countries (Chong and Andrade, 2014)

 22

Conclusions

As a conclusion, it can be contributed that ALADI is an international entity, it was signed

in the assumption treaty and this allowed the free circulation of goods, services and

productive factors of each of the members.

The ALADI in this way, aware of the failure of her predecessor, considers a much more

flexible itinerary to achieve her goal. In this sense, the objective is to create a common

market through a series of flexible and differentiated multilateral initiatives according to the

level of development of each country. Thus, the 1980 Montevideo treaty contemplates

various options to advance in economic integration, through areas of economic and tariff

preferences, which may be partial or regional

In addition to this it is valid to conclude that it is really necessary for a country to belong to

ALADI since the average trade of each country in the region corresponds to 23% and not

only do those who want trade agreements belong to this agreement, they also share

sustainable ideas, knowledge scientific and medical to make the region competitive

The Timely Indicators of Total Exports and Imports of the ALADI member countries, with

information available as of February, already show a decrease in external purchases and

sales, which deepened from the month of March.  During the month of February, the

sanitary measures applied by the Chinese authorities had an important effect on the trade of

this country with the member countries of ALADI.

 Exports to China decreased, with the exception of those made by Brazil and Colombia. As

for imports, the drop is widespread and very important.  Although the Intraregional Trade

Indicator, in the first two-month period of 2020, tended to stabilize after the sharp drop
 23

registered from May 2018, the measures derived from the policies to contain the pandemic

in the region and the health responses to combat it represent a new negative shock that will

accentuate the drop in intraregional trade levels in the coming months.

It is valid to clarify that agriculture is a fundamental factor to be able to fight this economic

crisis, although the countries that belong to ALADI have a great strength in agriculture,

they should take advantage of this competitive advantage in order to trade between the

region and abroad. Colombia clearly has a competitive advantage over the other South

American countries in terms of lulo production given its location, experience and comfort

when handling the fruit, however this advantage may not be exploited since it has not

expanded its trade in the region, in view of the crisis Colombia could see in the lulo a

source of employment and economic growth for the country

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 24

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