Trade finance linkages in Latin America

Civil society dialogue: Spring meetings 2006

28 April 2006 | Minutes

Notes by Olivia McDonald, Christian Aid

This meeting was a report back of a regional meeting regarding trade-finance linkages in Latin America and the Caribbean. The panel presentations discussed the issues in the region as well as the outcomes in the meeting, which was not a new network, rather a group of interested groups who can share and enhance their analysis around these issues. The meeting led groups from different countries to devise action plans for work at the national level. Shared information will feed into international level advocacy focused at the international finance institutions.

For example, in Peru a new free trade agreement is being agreed between the US, Peru, Colombia and Ecuador. It needs to go through Congress but CSOs are campaigning for a referendum on the issue. Trade liberalisation will reduce national income further as there will be no more revenue from tariffs which combined with low tax collection will increase the need for new loans and thus indebtedness: loans are already being proposed for the three countries to enhance trade competitiveness and infrastructure.

Colombia has been encouraged to specialize in markets where there is already a global surplus and compete with other tropical countries. Colombia is thus vulnerable to shifts in commodity prices, and continually has income that is lower than the investment needed for development, which increases debt. In the last two years debt has increased substantially. This creates a deficit leading to IMF agreements and consequent structural reforms. As a result Colombia becomes more dependent on the IMF, which has an impact on social programmes as the IMF generally restricts social spending.