LatAm Alphabet Soup

There's UNASUR and MERCOSUR, obviously NAFTA and CAFTA-DR.

ALBA, CAN (Andean Community of Nations), ACS (Association of Caribbean States), OECS (Organization of Eastern Caribbean States) ALADI (The Latin American Integration Association which is Mexico plus most of South America but not Central America), and SICA (Central American Integration System).

And of course the US Congress is still evaluating passage of free trade agreements with Colombia and Panama, with Canada working towards one with the Caribbean (CARICOM).

Whew.

For good measure, this year some new ones are being inaugurated: AIP (Área de Integración Profunda) - a new body made up of Chile, Colombia, Peru and Mexico. And Chile, Colombia and Peru are consolidating their stock markets.

As an aside, since every rising market needs a good name (BRICs, PIIGS, Civets), I'm going to go ahead and dub these the "Andean Jaguars." Can't wait for that to take off.

Ok, you get the idea. But aside from the myriad of summits that led Felipe Calderon to compare Latin American diplomacy to a mountain range, what is the tangible impact of all these agreements?

Despite the seemingly excessive, frequently overlapping agreements and integration systems, the recent rise of "Multi-latinas," a new class of competitive cross-border Latin American firms is one of the most positive developments of all these agreements.

The Multi-latinas are companies that operate across Latin America, primarily with Latin American capital, and that take advantage of their local expertise to find niches and beat international competitors. América Móvil is a perfect example.

Some are true multinationals - Vale, CEMEX, Bimbo, Embraer. Many more operate exclusively within the region. They are big drivers of growth in the region and could turn into what multinationals in Latin America emulate in order to succeed, rather than the other way around.

A provision of establishing the common stock market was that Peru lower its capital gains tax to 5% (previously it had ranged from 5-30%). By comparison, the US capital gains tax is 15% after the "Great Tax Compromise." Granted, it's difficult to actually incorporate a business in Peru. But 5% is attractive nonetheless.

Image Source: AmericaEconomia

Online Sources: Financial Times TILT Blog, Bloomberg, Colombia Reports, Wikipedia, The Economist, La Republica, Americas Society/Council of the Americas, BusinessWeek, Boston Consulting Group

News briefs – Free trade

* El Salvadorian President Tony Saca showed his support for free trade with the U.S. during a meeting with President George W. Bush on Thursday. In addition, Saca said that the Central American country will send a new yet reduced contingent of troops to Iraq.

* Israel and the Mercosur trading bloc are close to agreeing to a free trade pact according to Israeli officials. “It is something very important because it will be the first trade agreement for Israel in South America,” observed Israeli ambassador Itzhak Levanon over the possible agreement with what BBC News considers as the Americas’ “leading trading bloc.”

* Trade between the members of North American Free Trade Agreement (U.S., Canada, Mexico) grew by almost 6% in September. The U.S. government report also said that U.S.-Mexico trade was worth over $24 billion during that month.

* Much progress has been made in the latest round of free trade discussions between Peru and Canada admitted a top Peruvian trade official. Meanwhile, economists with a major U.S. manufacturing group asserted that a U.S.-Peru pact being debated in Congress is “a waste of time and a diversion from more pressing issues”.

Sources- Voice of America, AFP, Associated Press, Forbes.com, BBC News, Living in Peru, Western Farm Press

Image- USA TODAY (Mexican trucks cross into the U.S.)