Former Mexican Undersecretary for Foreign Trade Luz María de la Mora discussed the future of Latin American trade with Georgetown University students on Feb. 6.
The Latin American Policy Association (LAPA), a student group dedicated to the discussion of Latin American policies and politics, and the Georgetown University Graduate Association of Mexican Students (GUGAMS), a student group focused on professional development and Mexican cultural appreciation, organized the event.
De la Mora focused the discussion on restructuring supply chains, which she sees as a top economic priority for Latin American countries, particularly Mexico, in combination with maintaining macroeconomic stability and a strong fiscal policy.
De la Mora said it is important for Latin America to scale up its supply chains in order for the region to play a bigger role in political development.
“Geopolitics are taking a very important place in global issues, and Latin America has a role to play,” de la Mora said at the event. “We are not very clear about where we are located and what are the benefits of integrating or participating in the global economy, so we are suffering from the effects of the global decisions.”
Latin American countries have experienced a slowdown of trade integration efforts because of geopolitical circumstances like the pandemic, according to de la Mora.
“We have talked about the US-China trade relations, we have talked about the Russia-Ukraine invasion, we have talked about things that are happening in the European Union, how this is affecting global supply chains,” de la Mora said. “We know that there are very important challenges now. For example, we have suffered tremendously from inflation as a result of the Russia-Ukraine invasion, but also because of the pandemic.”
De la Mora said the existing state of affairs in Latin America is dismal because Latin America has not been a traditional hotspot for international trade.
“Latin America is a minor player in international trade,” de la Mora said.
Latin America makes up about three percent of exports and three percent of imports of global trade, according to de la Mora. Trade in Latin American countries like Brazil and Argentina amounts to less than 30% of their GDP.
De la Mora said that Latin American countries could take advantage of nearshoring, which are outsourcing efforts by geographically proximate countries and free trade agreements to stimulate trade in the region.
“The opportunity here is, how can we find those specific inputs or products or sectors?” de la Mora said. “In labor intensive industries, for example, textile and fashion, that is an area in which we see a lot of movement.”
Countries like Mexico already have multiple trade agreements in place, but could stand to gain from building new relationships with countries they have not previously interacted with, according to de la Mora.
“After the European Union, the UK and the U.S., Mexico does not have agreements with the Republic of Korea or China, as other countries do have,” de la Mora said. “So that tells you and gives you an idea of where we could integrate into those supply chains.”
De la Mora said Latin America has a high ceiling for growth, especially if political leaders make strategic decisions both in the short and long term.
“I think that Latin America needs to think about industrial policy,” de la Mora said. “And when we talk about industrial policy, I think that we need to choose sectors, we need to choose the champions because we cannot use all of our resources for everything.”
De la Mora said it is important for Latin American countries to direct much more investment into their economic futures so they can compete with the rest of the world.
“We need to invest in physical infrastructure in workforce development, rule of law and long term vision,” de la Mora said. “Otherwise, I think we will only see opportunity when there is plenty of room and there is plenty of work.”
