Conclusion

While geographic proximity is important in establishing economic relations, in a globalized world it no longer stands as the primary factor for countries or regions to engage in cooperative initiatives. A government commitment to create an environment conducive for economic growth and development is just as essential, if not more essential, than physical proximity when engaging in regional cooperation. It is in this light that an interregional economic partnership between Latin America and the Caribbean and the Asia and Pacific region has been made possible.

Clearly, there are still a lot that must be done before the Asia and Pacific region and Latin America and the Caribbean can engage in a meaningful economic partnership. Gaps and bottlenecks exist that must be addressed. The two regions are characterized by stark structural and policy differences. Production structures and export capacities are very different. Bi-regional economic links have remained weak and have shown little diversification as inter-industry trade still accounts for most of the trade flows, with the Asia and Pacific region exporting manufactures and Latin America and the Caribbean exporting primary commodities to the Asia and Pacific region. As such, there is a need for Latin American countries and the Caribbean to strengthen their trade capacities to make their economies more complementary with the Asia and Pacific region and establish trade and investment partnerships. Latin America and the Caribbean, as a whole, should work on product diversification to integrate itself in the supply chain networks of the Asia and Pacific region. It should also capitalize on complementary trade opportunities between the two regions and create partnership for innovation and competitiveness.

Market access, high transportation costs, and weak small and medium enterprises have been identified as major obstacles that should be given adequate attention in order to strengthen the partnership between the two regions. One of the biggest challenges for Latin American countries is gaining market access to the Asia and Pacific region. As already shown, the Asia and Pacific region has a highly protected agriculture sector. Latin America should engage the Asia and Pacific region to develop trade agreements that would bring down tariff levels in Asia's agricultural sector. Trade facilitation initiatives should also be undertaken. It is also important to study the maritime and air transportation systems of the regions, focusing specifically on how to bring down freight costs. Finally, it is important to strengthen small and medium enterprises and trade associations to achieve scale economies for small and medium exporters. Also, the two regions should explore possible cooperation in technological upgrading and bringing down the risks associated with new ventures (UNECLAC 2008).

Building partnerships to enhance the competitiveness and innovation of Latin America is also important. There are a broad range of issues that the two regions can work on, such as financing to improve infrastructure and logistics and other macroeconomic issues that would eventually strengthen trade and investment links.

As an initial step, information exchange and policy dialogue between the two regions should be enhanced, particularly on areas leading to more market opportunities, market access, and investments. FTAs should also be explored, whether on a bilateral, sub-regional, or regional level with simplified and harmonized ROOs to ease trade between the two regions.

Existing interregional forums could be used as a platform to advance cooperation between Latin America and the Pacific. APEC, for instance, could leverage its Economic and Technical Cooperation (ECOTECH) and Trade and Investment Liberalization and Facilitation (TILF) agenda. Likewise, the Forum for East Asia-Latin America Cooperation (FEALAC), established in 2001 to serve as a venue for dialogue between the two regions, could potentially have an important role in enhancing partnerships in economic, social and cultural sectors. FEALAC currently has 33 country members in both regions.

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