The Eurasian Economic Union & Latin America and the Caribbean: A Transcontinental Partnership
Similarly, the base of LAC exports to the Russian Federation appears to have been established and is represented by bananas and meat (mostly frozen bovine boneless meat). Brazil and Ecuador are the primary exporters of those products to the Russian Federation. These two products and trade partners have played an important role in Russian Federation imports from LAC throughout the 20 years considered. Another important trade item that has expanded its import share since 2014 is soya beans (other than seed) supplied from Brazil and Paraguay in virtually equal proportions. Prior to 2002-2011, the list of top import items of LAC origin included cane sugar supplied from Brazil and Guatemala. But such exports to the Russian Federation were more than halved in 2012-2019, replaced by rising domestic (beet) sugar production. As previously indicated, trade between EAEU member States and LAC suggests that not all such States have established the sort of long-term business relations necessary for ensuring steady deliveries. EAEU member States that have achieved steady trade volume levels in cooperation with their LAC partners show a clear specialization in supplying low value-added items. It appears that more prolonged trade is stifled by certain trade barriers. Other barriers to trade can include domestic impediments (i.e. low competitiveness, such as price or quality related issues) and external ones, such as expensive logistics, administrative costs, regulatory requirements, etc. In addition to the aforementioned obstacles, attention should be paid to the absence of trade facilitation agreements between the two regions. The first step to deepen trade and economic relations between the two regions was taken in 2018 when the Eurasian Economic Commission and MERCOSUR signed a memorandum on trade and economic cooperation. Currently, the EEC and SIECA are on their way to concluding a Memorandum of Understanding.
E.
Prospects for deepening trade relations
A suitable starting point for analysing the prospects for deepening cooperation is to identify the spheres in which the two regions are actively trading with other developing countries, while alternative supply sources exist in a partnering region. In other words, if an EAEU member State’s imports can be supplied by LAC countries, it could allow a LAC supplier to occupy that niche. Below follows a general overview of the categories of goods for which import demand exists. In order to be able to classify identified niches with a real potential for deepening trade relations, further work would be needed to ensure that the observed lack of trade is not due to insurmountable hurdles, such as expensive logistics and transport costs, a lack of necessary infrastructure, poor competitiveness, administrative burdens, or technical barriers. It is in the sphere of competence of national trade promotion agencies to improve business awareness overseas and shed light on existing opportunities; overcome technical and other non-tariff barriers and promote efficient lines of infrastructural development. In this vein, the prospects to follow might guide policy makers in determining the path of trade policy. Table II.4 lists top-10 products for which LAC countries could provide exports to the EAEU, according to the above-mentioned considerations.16 This list is marked by a trend towards the 16
The shortlisting procedure comprises three filters. The first identifies the products (six-digit level of the Harmonized System 2017) for which EAEU imports either exceed a determined critical value (α1) or are characterized by a yearly rate of growth exceeding a reference point (α2). The second filters the items for which LAC’s share of supply to the EAEU has been inferior to a reference point (α3). The third selects the ones that could indeed be supplied from LAC, i.e. those for which exports from the region have exceeded an established threshold (α4). The reference point for identifying actively growing imports (α2) has been defined as 25% yearly. The critical value for declaring low LAC share to the EAEU (α3) has been established at 5%. As the EAEU member States’ import volumes differ considerably and, thus, the strictness of absolute values of thresholds α1 and α4 would be uneven, it is recommended to identify the reference values for defining imports to the EAEU and exports from LAC as significant based on the share of the corresponding country’s (region’s) overall imports (exports). The shares have been established so as to filter out top-10 priority products for each of the EAEU member States, which has led to thresholds at nearly 0.01-0.02% of total trade flow depending on the state. The analogic methodology is applied to identify the prospects for deepening EAEU supply to LAC.
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