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29 June 2012, Gateway House

Current and Emerging Trends in Latin America and the Caribbean

Although India’s trade with Latin America has increased considerably, there is still much potential to be exploited. India’s should adopt an aggressive market oriented strategy by identifying local partners wherever possible to enable Indian companies to penetrate the region.

Former Indian Ambassador

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The Latin American and Caribbean (LAC) region consists of three principal sub-regions: The South American continent; Central or Meso-America from Mexico to Panama; and the Caribbean. The region comprises 44 disparate countries from tiny island States to mighty Brazil.  There are linguistic, historical, political and economic differences which have complicated efforts at regional integration.

However, in recent years, with the consolidation of democratic structures in almost all of these countries, a virtual absence of conflict, and a desire to maintain and enhance economic growth, leaders and governments have invested strenuous efforts to overcome difficulties and adopt more harmonious and coordinated policies.

Early efforts at integration through the ALADI (Latin American Integration Association); Andean Community; the CARIFTA (Caribbean Free Trade Association), and others met with limited success.  More recent initiatives such as Mercosur (South American Common Market) comprising Brazil, Argentina, Paraguay, Uruguay, with Venezuela awaiting full integration; and UNASUR (Union of South American Nations) comprising 12 South American countries; and to some extent, the Caribbean Community (CARICOM) have demonstrated the feasibility and the advantages of limited regional integration.

Loose regional forums such as the Rio Group and CALC (Latin American and Caribbean Summit) served to provide a stage for the airing of disparate political and economic views by regional leaders.  In recent years, these forums have helped lessen tensions and promote solutions to regional problems such as Colombia-Ecuador-Venezuela(2008); Honduras(2009).

The advent of the Latin American left, whose ideological base was primarily provided by Cuba, and fuelled by Venezuela after Hugo Chavez took power in 1999, led to the formation of the regional group (ALBA  – the Bolivarian Alternative for the Americas), in part a reaction to attempts by the US to form the Free Trade Association of the Americas (FTAA), but also to consolidate the policies and orientation of its members: Cuba, Venezuela, Bolivia, Ecuador, Nicaragua, Dominica, Antigua and Barbuda, Saint Vincent and the Grenadines.  ALBA has brought into sharp focus fundamental differences in politico-economic orientation within the region and may well have an impact on efforts at integration, with some of its resource-rich members, particularly Venezuela, Bolivia and Ecuador, deciding to fence off their economies from the ongoing wave of regional economic liberalization to concentrate on what they define as more equitable economic dispensations.

Conscious perhaps of the challenges posed by such fundamental policy differences and pan-regional issues, such as narco-traffic, organized crime, etc., Latin American leaders decided in February 2010 in Mexico to form the Community of Latin American and Caribbean States – CELAC, which was launched at a Summit in Venezuela in December 2011, and subsumes the other two regional forums – the Rio Group and the CALC. The region will have to maintain a political balance between the opposing forces within the new pan-regional CELAC, which will include Cuba, and excludes the US and Canada, even as the sub-regional groupings forge ahead with initiatives on infrastructure, trade, financial integration, connectivity and other economic projects.

Brazil continues to play a discreet regional leadership role, through the prime regional institution, UNASUR. Mexico, though outside UNASUR, has forged a consensus on regional economic and political integration with like-minded South American countries – Colombia, Peru and Chile. Presidents of the four countries signed up to form the Pacific Alliance in Chile in June 2012, with Panama and Costa Rica attending the event as observers.

The importance of convergence of political interests and the necessity, perceived by most of the LAC leadership, to maintain a united front, was most evident at the VI Summit of the Americas, held in Cartagena, Colombia in April 2012. The summit, held roughly every three years, was preceded by hectic diplomacy, mainly on account of the insistence by ALBA leaders that Cuba should be invited. This was resisted by the US, principally on the grounds that Cuba is not a member of the Organisation of American States (OAS) which technically organizes and runs these Summits, and had refused to sign the Democratic Charter, rejecting an invitation from the OAS to rejoin in 2009. Though hosts Colombia managed to convince the Cuban and other ALBA leaders not to disrupt the Summit, the event ended without a political  declaration, mainly on the issue of Cuba’s participation, with Ecuador refusing to attend the Summit, and other ALBA leaders claiming this would be the last Summit of the Americas for them unless Cuba is invited to the next. Other significant disagreements included regional policy to tackle the menace of narco-traffic, with most Latin American participants insisting on the need to recognize the role and responsibility of drug users in the developed world, some even pushing for limited legalization of the drug trade; and the Argentinian stand on the Malvinas (Falkland Islands). The sensitivity of even pro-US political regimes to the new regional order was evident in the fact that there was no overt support for the US stand on almost any of the major issues.

India’s interaction

India’s recent attempts at collaboration with the region can be traced to September 1995 when the External Affairs Minister met the Foreign Ministers of the then Troika of the Rio Group in New York.  It was decided to have an annual structured dialogue, which has unfortunately not been followed up.

An agreement for Political Consultation and Cooperation was signed with the Andean Community (CAN) during the visit of External Affairs Minister to Lima, Peru in June 2003.  There has been little follow up on this and related efforts towards economic cooperation.

An agreement was signed between India and the CARICOM to establish a Standing Joint Commission for Consultation, Cooperation and Coordination during the visit of Foreign and Trade Minister of Jamaica, then Chairman of the CARICOM Community Council, in November 2003 to India and the first meeting of India-CARICOM Foreign Ministers was held in February 2005. External Affairs Minister met Foreign Ministers of SICA, the Central American Integration System, in Delhi in August 2008.

On the economic front, India has negotiated Preferential Trade Agreements (PTAs) with Mercosur (in force since 2009) and Chile.


Although India’s trade with the region has increased across the board, there is still much potential to be exploited.  Decades of political and economic distance have come to an end with select countries such as Brazil and Mexico. Trade volumes with Argentina, Chile, Venezuela, and to a lesser extent, Colombia and Peru have grown significantly, largely on account of fuel and commodity imports (crude oil, edible oil, copper etc.), even as India’s export basket is a robust and versatile mix of engineering, pharmaceuticals, textiles and IT services.  India’s core strengths need to be built on through assiduous and aggressive market oriented strategy, identifying local partners wherever possible, to enable Indian companies to penetrate the region.

It is also essential to identify areas where Indian investment can serve as a platform for promotion of our exports, taking advantage of regional integration, e.g. the assembly of vehicles in Manaus, Brazil, to service Mercosur, or in
Mexico for Central America and Colombia.  Investments, such as those by ONGC (Videsh) Ltd., will also serve to source critical raw-materials and inputs for India’s economy such as oil, coal, agricultural products etc.

For all the above, the juridical infrastructure needs to be well established.  This will require coordination through the Ministry of External Affairs with other Ministries such as Commerce, Finance, Petroleum and other economic ministries such as Coal, Mines, Chemicals and Fertilizers, Communication and IT, Textiles, and the scientific departments.  With several countries, India has successfully concluded and even ratified agreements on Investment and Double Taxation.  It needs to harmonize efforts in this area and also leverage its technological skills and resources through instrumentalities like the ITEC programme, financial assistance through LOCs etc., academic contacts, etc. wherever possible.

India’s political relations with the region are trouble-free, and on several multilateral issues we are making common cause with leading Latin American nations. Our relations, however, continue to be defined largely in bilateral terms.  Attempts at dialogue with regional forums have been sporadic, with little follow up.  The declaration of the CELAC speaks of institutional dialogue with important countries. China and India have been identified as important countries with which the pro-tempore Presidency seeks to commence dialogue.  Since CELAC is set to become the apex forum in the region, it will be important to reciprocate and follow up on this interest in institutional and continuous dialogue with this forum, while pursuing economic and commercial initiatives bilaterally.

Ambassador Deepak Bhojwani has served as India’s ambassador to Venezuela, Colombia, Cuba and other countries and is a Latin American expert.

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