Progress in regulatory convergence in Latin America and the Caribbean to enable expansion of agrifood trade and create more opportunities for farmers

Montevideo / San Jose, 7 December 2021 (IICA) – Public and private sector experts appealed to the member states of the Latin American Integration Association (ALADI, for its acronym in Spanish) to work for regulatory convergence in the agrifood sector, and advised that harmonizing the diversity of regulations in the region is fundamental for expanding interregional trade, generating opportunities for growth for small- and medium-scale farmers and agricultural companies, and strengthening food security in the Americas and the world.

The event entitled “Regulatory convergence in the agrifood sector” was organized by ALADI and the Inter-American Institute for Cooperation on Agriculture (IICA) to draw attention to the need to remove obstacles to the interregional and international food trade to promote a faster and more efficient post-Covid-19 recovery, which has had strong economic and social repercussions.

“We must actively work to adapt local regulatory requirements to reduce the costs of cross-border trade, without the countries losing their regulatory capacity”, stated Sergio Abreu, Secretary General of ALADI.

ALADI was established by the Treaty of Montevideo of 1980 and is the largest Latin American group of integration. It’s thirteen member states, including Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Panama, Paraguay, Peru, Uruguay and Venezuela, have a combined total of over 510 million inhabitants and span 20 million square kilometers.

Abreu cited statistics from IICA indicating that Latin America holds a 14% share of the international agrifood trade in the world. Of these exports, 86% are destined to countries outside the region and 51% are concentrated on only ten products.

“We must diversify our agrifood production and the destination of our exports to contribute to the sustainable production of increasingly healthier foods. To that end, we must exchange experiences and good regulatory practices”, affirmed Abreu.

The Secretary General of ALADI praised the role of IICA at the United Nations Food Systems Summit held in September and its insistence of the need to remove barriers to trade to aid in eradicating hunger worldwide.

Similarly, Lloyd Day, Deputy Director General of IICA, mentioned that “international trade is key to strengthening and transforming agrifood systems and that was the message proclaimed by the ministers of agriculture of the Americas at the Summit”.

Day explained that the agrifood trade in Latin America fulfils a strategic role in global food security, as well as in post-COVID-19 economic recovery.

The Deputy Director General of IICA underscored that only 14% of agrifood exports from Latin America and the Caribbean are destined for other countries in the region and, along those lines, urged for a reduction of trade barriers.

“We can improve interregional trade”, he maintained, “and one way is to promote regulatory convergence. Here at IICA, we are working to strengthen the capacities of the ministers of agriculture in terms of agricultural trade policies and export capacities”.

Diplomat Guillermo Valles, former ambassador of Uruguay to the World Trade Organization (WTO) and current ambassador to Brazil, served as moderator and applauded IICA’s and ALADI’s initiative in organizing the event.

“If we want to promote interregional trade, we know we must make progress on this issue. The world awaits us with a very costly regulatory diversity. If we’re unable to promote regulatory convergence in our own region, we’re less likely to prosper in a fragmented world, with more costly and less transparent regulations for our countries. This should be an incentive for the region to work toward regulatory convergence”, insisted Valles.

In turn, Mariana Karttunen, a specialist with the Regulatory Policy Division of the Organization for Economic Cooperation and Development (OECD), an organization with 36 member states from different regions, explained that the first challenge is for governments to include regulatory cooperation as a central policy.

“Given the interdependence of the countries, domestic policies can only have limited efficacy. Regulatory fragmentation creates barriers”, she warned.

Adriana Campos, International Trade Specialist at IICA, maintained that agricultural trade, which performed very well during the pandemic compared to other sectors, would have a much greater potential if regulatory obstacles were reduced.

“Greater regulatory cooperation could help to expand transactions, develop value chains, improve the participation of small- and medium-scale farmers and businesses, and achieve greater food security”, she explained.

“Regulatory diversity increases costs and hinders cross-border trade”, concluded the expert. “Moreover, it leads to friction that causes interruptions and delays in the value chains. It also makes small- and medium-sized businesses less willing to participate in international trade”.

Sandra de León with ALADI’s Agreements and Negotiations Department, referred to the effects of the pandemic on the region: “Today, the challenge is not a shortage of food, but rather access to it. It’s essential that countries maintain the supply chains active and work for regulatory convergence to connect small-scale farmers with the markets”.

De León explained that key elements to achieve regulatory convergence in the region include the willingness of governments, the involvement of the private sector, conducting a regulatory analysis, promoting equivalency through agreements, creating a system of mutual recognition, and framing these actions in agreements with partial and regional scope in the framework of ALADI.

Important stakeholders in Latin America’s agrifood industry also raised the need for cooperation between business and the State in terms of regulations that favor an expansion of trade. In that regard, the experts considered it to be imperative to have a clear methodological framework of the objectives to be achieved.

“This isn’t just about ensuring public consultation, but of enabling a shared management process of regulatory convergence, because the ability to modify draft regulations once enacted is very limited”, stated Gustavo Idígoras, President of the Argentine Oil Industry Chamber – Cereal Exporters Center (CIARA-CEC).

Based on the results obtained to date in terms of regulatory convergence at the regional level, the expert says it is essential for work to be process oriented and not product oriented.

Mauricio García from Mexico’s National Agriculture Council, wonders why there isn’t greater integration of the value chains in the region and affirmed that the answer is not based on tariffs only.

“We must put an end to the regulatory diversity that only generates high transaction costs and hinders the international food trade”, stated García, who referred to this situation as “regulatory inflation”. He also highlighted IICA’s role as advocate for the sustainability of the region’s food systems at the 2021 Food Systems Summit.

In turn, Kathia Rojas from CAN, referred to the existing instruments and regulations in the Andean agricultural health system, to the regional cooperation agenda of the Andean Community, and to the challenges faced by the countries in terms of regulatory convergence.

The event enabled a reflection on the importance of regulatory convergence for trade and food security in the region, as well as the identification of inputs to build a roadmap that will facilitate the effective implementation of actions.

The inputs identified and mentioned by Ambassador Valles include a joint public/private sector work group with clear objectives; defining regulatory principles to accept SPS measures in the region; conducting a regulatory analysis of ALADI countries; and adopting a process-oriented approach.

Moreover, specific actions were recommended to help achieve of the proposed objectives, including the creation of a network of laboratories for diagnosing diseases and pests and for determining phytosanitary and veterinary residues; the creation of a regional sanitary risk assessment center; mutual recognition of national veterinary and phytosanitary product registration systems; and the harmonization of national processed food registries, among others. Together, these provide guidelines for a roadmap for the regional convergence of agri-food regulations.

More information:

Institutional Communication Division

comunicacion.institucional@iica.int