Presidents from 11 Latin American countries agreed Wednesday to work together to reduce inflation through measures for the exchange of commodities and intermediate goods.
The commitment was announced after a virtual meeting convened by Mexican President Andrés Manuel López Obrador. Representatives from a number of left or centre-left governments, including Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Cuba, Honduras, Venezuela and Saint Vincent and the Grenadines, were involved.
"We can make economic and commercial exchanges if we reach an agreement and remove obstacles, tariffs, sanitary measures and each country has something to offer. All with the aim of allowing food and basic products to arrive at a better price," said López Obrador in his speech to the forum.
He invited his counterparts to Cancún on May 6 and 7 for a summit meeting to finalise a strategy.
The presidents are seeking "better conditions" for the exchange of basic goods and intermediate goods by discussing trade, logistical and financial facilities, according to the declaration of the “Alianza de Países de América Latina y el Caribe contra la Inflación” ("Alliance of Latin American and Caribbean Countries against Inflation").
The priority is to "lower the cost of products for the poorest and most vulnerable” sectors of the population, the document reads.
Inflation in Latin America, as in other parts of the world, has remained stubbornly high due to Russia's invasion of Ukraine and global supply chain problems exacerbated by the pandemic.
Prices in the region rose 14.8 percent last year, according to the International Monetary Fund (IMF), although some nations had it worse than others. Argentina recorded an annual rate of 94.8 percent, a three-decade high.
During his speech, Argentina’s President Alberto Fernández highlighted the impact of the war in Ukraine on the region’s economies.
"Why don't we start thinking about getting involved as a continent and standing up to whoever it is and say 'Let's stop this war because this war is hurting us a lot,’" he declared, calling for a “joint solution.”
In several nations across the region the cost of living has begun to fall, in part due to central bank interventions and a decrease in global food and energy prices, yet López Obrador warned that inflation remains "a threat” to all of Latin America.
The leaders agreed on the creation of a "technical working group" made up of government representatives from each country, which will determine cooperation measures focused "particularly" on "chemical fertilisers and organic fertilisers,” one of the products most affected by the war, according to the joint statement.
The group will be empowered to establish an action plan to implement "within a reasonable timeframe" trade facilitation measures that will address the rise in commodity prices and "inputs to contribute to food and nutrition security," including "technology transfers and cooperation in capacity building."
Delegates will also analyse the feasibility of smoothing access to products through improved logistical conditions, prioritising "where possible" a framework to remove barriers and "harmonise" sanitary and phytosanitary regulations and certifications.
Yet to achieve these goals, Latin American nations face the challenge of building productive supply chains, experts warn.
"If mechanisms can be found to supply these inputs from within the region, it will undoubtedly be beneficial," César Salazar, a specialist at the Economic Research Institute of the National Autonomous University of Mexico (UNAM), told AFP.
"The great challenge is that Latin American economic integration is certainly very weak, there are no major production chains" within the region, he added, pointing out that Mexico has more trade ties with the United States, as does Brazil with China.
"As an idea, it seems to me to be very appropriate and could even have much more ambitious aims, not only to reduce inflation, but also to generate development based on local and regional production chains and stop depending on the north. But it is not easy, the challenge is great," Salazar said.