Trade Trends in LAC: Course: Authorized Economic Operator Unit 1: AEO Program Origin and Aims

Trade trends in LAC
Course: Authorized Economic Operator

Unit 1: AEO program origin and aims
Contents
1. World trade trends .................................................. 2

1.1. Evolution of exports ............................................................. 2
1.2. Trade evolution by region .................................................... 2
1.3. Unequal regional trade development ................................... 3
1.4. Evolution of specialization ................................................... 3
1.5. Balance ................................................................................ 3
2. LAC trends .............................................................. 5
3. Strategic value of the AEO program ........................ 6
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1. World trade trends
Trade has been a powerful engine for growth in recent decades. If trade represented
8 % of global GDP in 1950, it currently represents some 25 %.
In the past 30 years, the world goods trade has grown by 7 % per year, in other words,
double that of world production.
1.1. Evolution of exports
Past global exports from developing economies are the following:
• 1980  34 %.
• 2011  47 %.
While global exports from developed economies hold the following percentages:
• 1980  66 %.
• 2011  53 %.
1.2. Trade evolution by region
The proportion of global trade that developing economies represent is significant:
• South – South trade:

– 1990  8 %.
– 2011  24 %.
• North – South trade:
– 1990  33 %.
– 2011  38 %.
• North – North trade:

– 1990  56 %.
– 2011  36 %.
1.3. Unequal regional trade development
Currently 55 % of global trade represents finished products. In areas with more

economic development, such as the United States, there is more regional trade, with
a direct relationship between internal exchange and a country's economic level. Take
the United States as an example, internal exchange is over 70 % while in Africa it is
does not even reach 10 %.
1.4. Evolution of specialization
Countries have stopped being specialized in their exports thanks to:
• Increased spread of technology.

• Increased mobility.
• Accumulation of production factors.
1.5. Balance
In addition to the exponential growth of global trade, the following trends have been
recorded:
• Production fragmentation, from which is derived the importance of global value

chains (see Illustration 1).
• The appearance of other emerging actors (developing countries increasingly
becoming involved in trade exchange) (see Illustration 2).
• Sophistication of supply chain risks.
• Advances in technology, communication and transport bring an urgency into
trade. Companies need their goods to be delivered within fixed time periods
Illustration 1-New Trade Patterns. Source: BID-INT.
Agreements in
Acuerdos en
2014
2014
Illustration 2-New Architecture of emerging trade. Source: BID-INT.
2. LAC trends
The LAC region participates in global trade development. If trade represented 15 % of
its GDP in 1987, that number now hovers around 40 % of GDP. A large part of the
region’s economic and social growth and development is based on trade and there is
no reason to think this will change.
Nevertheless, it is worth pointing out that trade in this region is characterized by the
following trends:
• LAC’s global trade percentage is low, only 7 %, in comparison to other emerging

and developing countries, that of 19 % (IDB-INT with IMF 2013).
• Intraregional trade levels remained a reduced levels, only 20 %, when it is 36 % in
Asia, not counting Japan, and 61 % in the EU. (INT-IDB with COMTRADE 2013).
• LAC offers minor participation in global value chains. For the EU this represents
more than 60 %, Asia almost 60 %, and yet LAC does not reach 50 % (Intrade-IDB
2014).
3. Strategic value of the AEO program

The speed and flexibility in customs processes that is provided by the AEO Program
promotes competition between country economies. Ensuring that products arrive
sooner and in better condition is to be the most competitive and best positioned in
the markets and for business opportunities.
In addition, it implies reduced costs. According to the World Trade Report (2013) from
the World Trade Organization, this factor can have a very big impact. Reducing
customs operations costs by between 10 % and 15 % could represent a benefit of
between 400,000 million and 1 billion dollars for the world economy.
In light of this data, the AEO program presents itself as future solution, for both
customs administrations and companies.
7

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Trade trends in LAC

Course: Authorized Economic Operator

1. World trade trends .................................................. 2

1.1. Evolution of exports

Past global exports from developing economies are the following:

1.2. Trade evolution by region

The proportion of global trade that developing economies represent is significant:

• South – South trade:

• North – North trade:

1.3. Unequal regional trade development

Currently 55 % of global trade represents finished products. In areas with more

1.4. Evolution of specialization

Countries have stopped being specialized in their exports thanks to:

• Increased spread of technology.

• Production fragmentation, from which is derived the importance of global value

Illustration 1-New Trade Patterns. Source: BID-INT.

Illustration 2-New Architecture of emerging trade. Source: BID-INT.

• LAC’s global trade percentage is low, only 7 %, in comparison to other emerging

3. Strategic value of the AEO program

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