1. Sebastian Saez Senior Economist International Trade Department World Bank

2.  CRISIS CHARACTERISTICS  WHAT WE LEARNT FROM THE CRISIS  FUTURE TRENDS AND THEIR IMPORTANCE FOR THE REGION

3. Sudden, severe and synchronized collapse (Richard Baldwin, 2009)

4. Exports Growth by Region Imports Growth by Region Source: World Bank, Global Monitoring Report, 2010.

5. Commercial transmission channels

6. Source: World Bank based on WTO data, Global Monitoring Report, 2010. Source: World Bank, Global Economic Prospects, Summer, 2010

7.  Changes in trade-GDP elasticities from 1.5-2 to 3+ (Freund, 2009)  Severity: trade composition versus GDP  Synchronization  Specific situation of service trade Source: R. Baldwin, The Great Trade Collapse: Causes, Consequences, and Prospects, 2009 WHY HIGH SENSITIVITY OF TRADE TO CHANGES IN INCOME

8. The higher flexibility in macroeconomic policies allowed for a timely response to the crisis Differences with respect to previous crises in Latin America For Latin America and the Caribbean, the lesson was on the value of sustaining macroeconomic policies

9. For some authors this greater flexibility accounts for a more moderate protectionist reaction as a response to the crisis than originally feared. (B. Eichengreen) In Latin America the protectionist response had a relatively moderate impact although some countries were active. Investigation and cumulative antidumping actions (1 Quarter 2008-1 Quarter 2010) Country Investigation initiated Actions taken Argentina3718 Brazil1612 Chile31 Colombia113 Costa Rica10 Mexico32 Peru42 Venezuela, Bolivarian Republic 00 Latin America 7538 Developed countries7160 Developing countries15689 Total227149 Bown, Chad P. (2010) “First Quarter 2010 Protectionism Data: Requests for New Trade Barriers Fall for Second Consecutive Quarter; Newly Imposed Barriers Also Fall,” A Monitoring Report to the Temporary Trade Barriers Database, The World Bank, 25 May.

10. Greater and ongoing cooperation among countries led to joint efforts and monitoring. Importance of G-20 Economic coordination in the region?

11. Many actions but limited impact on trade. ◦ Actions have focused, both in the North and in the South, on trade with China.  Through December 2009, 350 measures had been adopted globally, 20% of them were non-tariff, representing less than 1% of trade.

12. Source: World Bank based on WTO data, Global Monitoring Report, 2010. Number of restrictive and liberalizing measures

13. DEVELOPING COUNTRIES HAVE STARTED MOST OF THE PROTECTIONIST ACTIONS Source : Bown, Chad P. (2010) “Temporary Trade Barriers Database,” May, available at http://econ.worldbank.org/ttbd Investigations initiated 1Q 2007 – 1Q 2010 (at product level)

14. DEVELOPING COUNTRIES HAVE ADOPTED MOST OF THE PROTECTION ACTIONS Source : Bown, Chad P. (2010) “Temporary Trade Barriers Database,” May, available at http://econ.worldbank.org/ttbd New measures adopted 1Q 2007 – 1Q 2010

15. EVALUATING THE COMMERCIAL RESPONSES Some countries have adopted liberalizing actions: Mexico, Malaysia and other. ◦ Trade facilitation actions. ◦ Reduction in taxes affecting trade and exports. Many of the protection actions adopted are found in industries that traditionally make use of contingent protection. (Messerlin, 2009) But we should see how the situation evolves and maintain monitoring as was done during this period.

16.  1. Changes in incentives: production fragmentation, foreign investment requirements.  2. WTO's role, regional agreements and trade rules in general.  3. Crisis monitoring and surveillance.  4. Past lessons: 30s Crisis and 80s recession. HOW IS THIS EXPLAINED?

17. The lack of international rules allowed for the adoption of actions that lie beyond international surveillance or in an undefined area,

18. Trade rules are important, particularly for small countries: Stability Confidence Importance of completing the Doha Round of trade negotiations. IMPLICATIONS FOR WTO

19.  Open economies tended to be more affected, as it is natural;  Importance of: ◦ Sustainable macroeconomic policies: key for crisis response. ◦ Importance of diversification in terms of products and markets. ◦ Trade in Services plays a role in exports diversification: least explored dimension in trade policies in the region.

20. Services in Doha: What’s on the Table? Batshur Gootiiz and Aaditya Mattoo The World Bank Development Research Group Trade Team April 2009 THE REGION HAS A REASONABLE SERVICE OPENNES RATE BUT…

21. Source: based on WTO data EXCEPT FOR BRAZIL, COSTA RICA AND OTHERS, EXPORT PERFORMANCE IS LESS DYNAMIC THAN IN OTHER REGIONS.

22. Higher growth is expected in the Asian region. Latin American-Asian trade has grown strongly over the last few years, but it represents less than 15% of total exports. Strategy to increase exports to this region

23. Higher and growing trade fragmentation: port nodes are organized around main trade flows that do not go through Latin America

24. The crisis may strengthen the integration of regional blocks: In 2010, 9 new regional agreements were notified to the WTO; In 2009, 20 agreements were notified to the WTO. In recent years, agreements have increasingly included services trade. In the region this is a little developed topic

25. The lessons from past crises were useful. The region must persevere on its international insertion strategy while maintaining the lessons learned. Regional integration has progressed but has lost momentum. The crisis showed the role played by export and product diversification. A pro-competitiveness agenda is particularly relevant Strategic and pragmatic orientation towards Asia.