Climate Change 2001: Working Group II: Impacts, Adaptation and Vulnerability

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14.1.3.2. Trade Agreements

Several trade agreements exist in the region and have important effects on the economy and, indirectly, on the environment of the region. The most important of these agreements are listed in Table 14-3. Regional intergovernmental agreements could be an important mechanism for adaptation to climate change in Latin America. Agreements such as the one developed for conservation of water, the environment, and natural disaster management in the Central American isthmus (Central American Integration System—SICA) could be interpreted as a way to coordinate sectorial adaptation to different climatic conditions. During the South American presidential meeting in August 2000, leaders attempted to consolidate efforts for the region's political and economic integration, with emphasis on free trade. Because natural disasters cause a decline in productive capacity and increase demand for strong public and private investment in reconstruction, imports are likely to increase and exports are likely to fall, leading to a trade deficit. Disasters such as floods, droughts, and hurricanes also may lead to a significant increase in food product prices if production and distribution are disrupted (IDB, 2000).

There also have been other agreements on the technological and scientific agenda, such as initiatives to foster research on global and climate change and environmental issues. The Inter-American Institute for Global Change (IAI) supports research initiatives to document climate variability and change characteristics and their societal impacts in the Latin American and Caribbean region.

Table 14-3: Important trade agreements in Latin America region.
Agreement	Participating Countries	Notes
Asociación Latinoamericana de Libre Comercio (ALADI)	Spanish speaking countries of the region	Not a particularly active agreement.
Pacto Andino (Andean Pact)	Bolivia, Colombia, Ecuador, Peru, and Venezuela	Tends to eliminate duties in a gradual way. Has incorporated an environment unit and places increasing attention on environmental issues.
Mercosur	Argentina, Brazil, Paraguay, and Uruguay	Bolivia and Chile are associate members. Tends to eliminate duties in a gradual way. Future common currency under consideration.
Central American Common Market	Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua	One of the oldest trade agreements. Plans to convert to a free-trade zone.
North America Free Trade Agreement (NAFTA)	Mexico, plus Canada and USA	Very successful for expanding trade. Strict environmental considerations. Plans call for expansion to all Latin American countries.
Bilateral agreements	Several pairs of countries or groups	Environmental considerations increasingly important, especially in agreements with the European Union.