Last week the Round Table was held virtually “The new challenges of the regulation of strategic trade in Latin America: the transfer of semiconductors and emerging technologies”, an initiative of the Inter-American Committee against Terrorism (CICTE) of the Organization of American States (OAS).
The meeting brought together academics and representatives of business associations to raise awareness about the current geopolitical environment, international standards for secure strategic trade and the situation of the semiconductor supply chain in the region - particularly the cases of Brazil, Costa Rica and Mexico - with the aim of identifying the main legislative obstacles to commercial transactions.
According to Marcelo Martínez, Regional Coordinator of CICTE OAS, “Latin America's challenge in the marketing, production and distribution of raw materials is to strengthen strategic trade control mechanisms to facilitate safe trade.”
Current moment with history
On the basis that there is a need to generate greater awareness on the issue, Gonzalo Paz, Researcher at Georgetown University, made a clear historical review of the current moment characterized by security that has permeated the agenda of contemporary international relations. “The world we knew after the fall of the Berlin Wall (1989) and the dissolution of the Soviet Union (December 25, 1991) is undergoing changes,” he said.
Paz briefly reviewed globalization, the result of the communications revolution, which made the relocation of industrial activities possible. He described the emergence of China in trade and the major financial crisis of 2008 that originated in the United States, which caused its government to adopt protectionist measures, a situation that was noticeably accentuated by the trade policy of President Donald Trump's government.
In summary, Paz also said that in this context there was a change in energy production where lithium became the fundamental element for batteries and storage. “These are some of the elements of the serious situation we are going through, characterized by competition between China and the United States and by an economy based on fear,” he said.
Control of strategic trade
Taking into account this global context, Emiliano Buis, Expert Consultant in Strategic Control of CICTE OAS, He referred to semiconductors and emerging technologies in Latin America. These technological enablers are experiencing a rapid growth rate as building blocks of all modern technology. “They are elements used in many sectors of production such as defense, becoming dual-use goods, that is, both for peaceful use and for the manufacture of weapons,” said Buis. In this sense, “it is essential to ensure a world free from the threat of non-conventional weapons,” he added.
Additionally, Buis analyzed the foundations of the multilateral regime implemented to combat these dangers, as well as its challenges and obstacles. Specifically, he discussed the 1540 resolution adopted by the United Nations Security Council on 28 April 2004, which complements all existing international conventions, paying special attention to non-state actors and expanding the actions that must be regulated and controlled.
In Latin America, weak controls can lead to destabilization and promote the irresponsible transfer of these strategic products.
Buis therefore advocated for compliance and proper implementation of current legal standards to consolidate the growing role of Latin American countries in the production and transfer of emerging technologies, reducing the risks of proliferation.
Strategic Trade Facilitation
Erika Medina, Senior Consultant at Procomex, developed another central theme entitled “Mapping the semiconductor supply chain as a tool to advance safe trade facilitation in the Latin American region: the cases of Brazil, Costa Rica and Mexico.”
During his participation, Medina described the context and challenges of the semiconductor industry in the world, led by important players such as the United States, Taiwan, China, South Korea and Latin America, where Mexico and Brazil dominate the industry in the region and Costa Rica is an emerging player. He also reviewed certain international trends that point to greater regionalization of production and trade, characterized by the agreement establishing the Regional Comprehensive Economic Partnership (RCEP) between 15 countries in Asia and the Pacific (2022), as well as the USMCA, the new Free Trade Agreement between the United States, Canada and Mexico in North America (2020), and the Chips for America Act (2021), a broad program for the semiconductor industry whose main objective is national security.
He also discussed the structure of the semiconductor industry that is developing in Brazil, the current government's intentions to integrate the South American country into this production chain, the measures to be implemented, and the positive situation in manufacturing and research. Along similar lines, Costa Rica has the capacity to develop this highly competitive industry, with global research and service centers. Meanwhile, Mexico has an ecosystem of approximately 600 companies.
The expert highlighted the opportunity for Latin America to expand the development of the semiconductor supply chain in a secure manner by facilitating trade.
“Trade facilitation involves increasing cooperation between the parties involved, strengthening cross-border coordination leading to more robust trade exchange initiatives, intensifying communication efforts in areas such as simplification and harmonization, and responding to training mechanisms by the public and private sectors,” he explained.
The region has the conditions. And the speakers outlined the elements that we must consider to boost the semiconductor supply chain in Latin America. Hence the message and the title of the event.
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