CAF, Development Bank of Latin America, with the support of the Bogota Chamber of Commerce, will present its Report on Economy and Development (RED2021), entitled "Pathways to Integration: Trade Facilitation, Infrastructure and Global Value Chains", which analyzes the state of Latin American integration and proposes actions in three specific areas to strengthen it: trade facilitation; the creation and modernization of physical infrastructure; and productive integration.

During the presentation of the report, a group of high-level Colombian and Venezuelan experts will discuss how to take advantage of the integration opportunities created by the opening of the border between Colombia and Venezuela, and how the reactivation of binational trade can become an engine for growth, well-being, business opportunities and social integration in both countries. "In Latin America and the Caribbean we need to push integration projects more strongly, especially cross-border trade, logistics corridors, energy efficiency projects and the digital agenda. The opening of the Colombian-Venezuelan border represents a great opportunity to incentivize these trade integration efforts and boost new trade synergies that contribute to sustained growth and improve the quality of life of citizens in both countries," said Sergio Diaz-Granados, CAF's executive president.

"At the CCB, we are prepared to accompany entrepreneurs to take advantage of the opportunities arising from the opening of the border and the reestablishment of economic relations between Colombia and Venezuela. We are sure that this will be an opportunity to recover the exchange with our former main trading partner, but also to increase industrial cooperation that generates employment and benefits two-way business development," said Nicolás Uribe Rueda, president of the Bogota Chamber of Commerce. Commercial integration of Colombia and Latin America

According to RED, Colombia showed a similar dynamism in its foreign trade levels to the average for Latin America and the Caribbean, although starting from lower trade levels. In the period 1980-2019, its trade in relation to GDP went from 27% to 37%, while in the rest of the region it went from 52% to 62%. However, there are still pending tasks to continue promoting the international insertion of Colombian companies and their participation in regional and global value chains, in order to translate this greater openness into increased productivity and well-being for all Colombians. In this context, the reopening of the border between Colombia and Venezuela may offer a new boost to trade between the two countries, considering that exports to Venezuela reached a maximum share of 17% of Colombia's total exports of goods, and by 2021 only represented 1%. However, it must be taken into account that the size and structures of the countries have changed, which will mean new opportunities, but also new challenges. Likewise, improving land transportation infrastructure would allow firms from both countries to expand their access to markets.

In Latin America, most countries have implemented trade liberalization policies over the last 30 years that have reduced tariffs and non-tariff barriers. Although for the average of the region these policies generated increases in trade and investment, their magnitude was modest and did not have a significant impact on economic growth and the welfare of the population. This is partly explained by the fact that the agreements did not generate significant and sustained increases in intra-regional trade, which has remained at around 15% of total exports since the mid-1990s, with little variation over time. In contrast, intraregional trade in Europe is close to 60% of the total, while in North America it reaches 45% and in East and Southeast Asia 35%.

"The regional market has not been a space for companies, especially SMEs, to integrate commercially and productively, something that would have generated opportunities to expand their sales and generate new jobs. At the same time, there is room for improvement in the transportation infrastructure that would allow greater access to markets for both consumers and companies. The challenge lies in the prioritization of infrastructure projects and in an adequate balance of new construction, maintenance and restitution," says Lian Allub, chief economist of CAF's Socioeconomic Research Department and editor of RED2021. RED2021 proposes actions in three areas to promote integration: reducing costs at the border through the implementation of trade facilitation measures; providing the necessary transportation infrastructure to improve physical integration between countries, including that which favors energy integration; and regulations that promote productive integration between economies, promoting the participation of companies in regional value chains.