Globalization, as we knew it, has entered quarantine. AND the health emergency has turned the configuration of global value chains upside down. The structure of the production systems will not be dynamited, experts point out, but they will be reformulated and new variables will be addressed beyond cost, with special prominence in the short term of the proximity factor. A new balance that opens opportunities for an Ibero-American region forced to bet on greater integration and the promotion of international trade, reinforcing legal certainty to activate the investment magnet, as pointed out in the digital meeting «The regionalization of global chains value of goods and services ”, recently organized by the Ibero-American Business Council (CEIB), the Ibero-American General Secretariat and the Ibero-American Federation of Young Entrepreneurs (FIJE).
“It is important to make a firm commitment to multilateralism, and it is that alone we get there faster, but together we get further,” said Antonio Garamendi, president of the CEOE, in the opening session. The leader of the Spanish employers’ association insisted that this path of commercial opening “is not an option, but something absolutely necessary as a guarantee for the future.”
The Covid has disrupted the rules. “We are facing a new international order, in which sustainability prevails in business models and supply chains,” recalled the Secretary General of the International Organization of Employers (IOE), Roberto Suárez. The virus has unleashed an economic tsunami global, but it has also opened new windows of opportunity from which to look at a clearer future. An example, as recalled by the Ibero-American Secretary General, Rebeca Grynspan, is that of Mexico, which “could benefit from the relocation of supply chains in the United States, from Asia to the North American country.” There are already previous symptoms. A Kearney report shows that, while US imports from China fell by € 90 billion in 2019, Mexico’s imports grew by € 13 billion.
As explained by the Chief of Staff at the General Directorate of International Trade and Investments of the Spanish Ministry of Industry, Trade and Tourism, Luis Óscar Moreno, the trends that have been observed in global value chains (shortening or regionalization) have been exacerbated with reason for the trade war and Covid-19. «Value chains will probably from now on incorporate factors that go beyond efficiency and the big blocks will determine with their commercial policy the geography of the supplies ». This implies “shorter, less complex and concentrated value chains, which creates opportunities for regionalization of trade with Latin America.”
A vision in which all the experts agreed. “It is a good opportunity for Latin America to attract and diversify foreign investment and further promote intraregional trade,” said Jorge Arbache, vice president of the Development Bank of Latin America-CAF. We are living at a time when the service economy is gaining in importance and “a creative construction” is taking place, which represents an opportunity for well-prepared countries, said the president of the Chilean business organization SOFOFA and president pro tempore of the Business Council of the Pacific Alliance (CEAP), Bernardo Larraín.
A mutant scenario in which public-private collaboration will be essential. The priority: to shore up the business fabric of the Region, recognizes the executive director and chief economist of the Argentine Industrial Union, Diego Coatz, but also it is time to bet on innovation and digital transformation, as well as “rethinking a regional integration scheme that allows adding value at source.” Juan Duarte, president of the ANDI of the Future, pointed out that regional markets, such as the Pacific Alliance, will be key to weathering the “worst economic crisis in the last 120 years.”
The occasion is obvious. “We are facing a historic opportunity in relation to global value chains to reduce our strong dependence on China and strengthen the Ibero-American region,” said Antonio Magraner, Secretary General of the Ibero-American Federation of Young Entrepreneurs (FIJE). There are strong points, such as the high level of qualification and a promising young bonus, as explained by Roberto Suárez. But the pending work is enormous. “To take advantage of regional opportunities, it is essential to improve transportation infrastructure, as well as advance trade facilitation policies at the regional level,” said the Minister of Economy of Guatemala, Antonio Malouf. Reducing the heavy weight of the informal economy and bureaucracy are other pending duties. And reinforce the role of SMEs. Pablo Adrián Hardy, head of Economy and Business at Segib, defended open innovation as the ideal instrument to open the way to smaller firms on the boards of global markets.
At the closing of the meeting, the permanent secretary of CEIB and general director of CEOE Internacional, Narciso Casado, agreed that the situation created by the Covid will lead to an increase in Ibero-American integration and that, through digitization and online connectivity, a greater sense of community will be generated. “This pandemic and everything it brings with it must become an opportunity to learn,” he insisted. The main lesson: advance in integration and multilateralism, “do more Latin America”. A union that must join forces from the foundations of a great social pact, as Grynspan claimed.