Essential regional consensus to boost the digital economy in Latin America

Closing the digital divide in Latin America will require more efficient coordination mechanisms that help drive a more competitive regional digital market and promote sustained development. Without this, the possible duplication of activities and the lack of coordination between initiatives threatens to widen the regional lag in relation to more advanced economies, according to the report “Regional and sub-regional approaches of the digital economy,” published by CAF–development bank of Latin America.

To improve the effectiveness of digital integration initiatives in Latin America, the report proposes, among other measures, to standardize the legal, regulatory and market frameworks of national economies, as this builds more trust, expands trade circuits and enhances the exchange of goods and services that are marketed on digital platforms.

“To close digital divides, Latin America will need to develop homogeneous institutional frameworks, remove barriers to cross-border trade, attract investment in digital markets and create aligned legal frameworks, without ignoring the enormous efforts that are yet to be made in digital infrastructure. Only thus will we reap the economic and social rewards associated with new technologies,” said Mauricio Agudelo, senior ICT specialist at CAF.

According to the report, greater coordination and institutional harmonization at regional level would help to:

• build investor confidence and stimulate foreign direct investment
• stimulate innovation and economic diversification across the region
• increase cross-border trade, and confidence in the use of e-commerce and electronic payments among Latin America’s more than 600 million consumers
• drive the demand for high-quality connectivity
• increase productivity, including between MSMEs

There are currently no Latin American supranational authorities capable of efficiently articulating a digital market in the region. Creating them will require supporting the work of sub-regional integration blocks to promote a common vision based on priorities, objectives, goals, specific milestones, resources, governance and a clear timetable. In addition, effective coordination and financing mechanisms, dialogue with the various sub-regional organizations, adequate technical staffing and monitoring and evaluation mechanisms will be needed to ensure implementation.

All regional and sub-regional associations have worked on issues related to the digital economy. The report summarizes the commitment of the following regional bodies to the digital economy:

The Pacific Alliance 

The Pacific Alliance aims to benefit its population through the free movement of goods, services, capital and people. The Additional Protocol to the Pacific Alliance Framework Agreement includes a chapter on telecommunications and a chapter on e-commerce. The most relevant measures in the telecommunications chapter address issues such as:

• Non-discriminatory interconnection
• Numerical portability
• Equitable allocation and use of scarce resources
• International roaming
• Competitive safeguards, which are important to prevent dominant actors from engaging in anti-competitive practices, and facilitate market entry; effective dispute resolution, and universal service.

The chapter on e-commerce applies to electronic transactions of goods and services, including digital products, to facilitate trade by electronic means. The main measures include:

• Facilitating e-commerce, avoiding and removing unnecessary obstacles
• Customs duties
• Advertising rules and procedures
• Consumer protection rules. Protection of personal data
• Authentication and digital certificates
• Cross-border information flow

The Pacific Alliance Innovation Group has a sub-group on the Digital Agenda (SGAD). Its objective is to implement, develop and discuss specific topics included in the telecommunications and e-commerce chapters. 

The Mesoamerica Project and the Central American Integration System (SICA)

The Mesoamerica Project seeks to strengthen regional integration and promote economic and social development of its countries. Since its inception, the Mesoamerica Project has helped create regional projects and initiatives. In the first phase, it focused on the physical integration of electrical, telecommunications and transport infrastructures. In the second phase, it promoted initiatives with high social impact, such as health care and environmental protection.

One of the main initiatives supported by the Mesoamerica Project is REDCA, an infrastructure project co-financed by CAF that provides neutral support to wholesale telecommunications services with regional scope. In addition, the Mesoamerican Program for the Integration of Telecommunications Services (AMIST) brings together regional and national stakeholders in the sector and seeks to strengthen public policies at the regional level.

Although the SICA agenda is primarily political, in June 2014 the Heads of State instructed the General Secretariat to coordinate with the highest national and regional authorities responsible for the development of the information society to devise a regional information society strategy and its implementation. 

The Caribbean Community

The roadmap for promoting a Single ICT Space was approved in February 2017, during the 28th Meeting of the Conference of Heads of Government of the Caribbean Community (CARICOM) held in Guyana. This document sets out a vision to promote a borderless space in the ICT field and the steps for implementation. The purpose of the strategy is to provide enabling mechanisms to facilitate the deployment of ICTs in the region, by harmonizing regulatory and legal frameworks for broadband deployment, information management systems, provision of information technology services, and improve digital space security and systems management.  This initiative is expected to promote greater consistency in access, quality and affordability of ICT services in the Caribbean community. 

The Southern Common Market

Mercosur was created in 1991, when Argentina, Brazil, Paraguay and Uruguay signed the Treaty of Asunción, with the aim of creating a customs union and establishing a Southern Common Market aimed at the free movement of goods, capital, services and persons among its members.

The Common Market Group (GMC) within Mercosur operates through a specific structure, including working sub-groups, whose tasks mainly focus on identifying the issues to be harmonized and how negotiation and implementation of common rules should be coordinated among members. Sub-groups do not have autonomy to finance projects.

GMC working sub-groups include Sub-group 1 (“SGT 1”), which deals with communication services. In October 2015, SGT 1 proposed a work plan for the 2016-2017 period.

The Trans-Pacific Partnership

The objective of the TPP is to promote trade and economic relations between signatory nations by reducing or eliminating customs duties and taxes and to set guidelines on policies and economic regulation to promote e-commerce and trade in digital goods and services. Some of its 30 chapters explicitly discuss e-commerce, intellectual property and competitiveness. The Agreement includes obligations to promote the digital economy through a free and open internet and borderless trade, through specific provisions for the digital environment, including security and privacy issues, trade in digital goods and services, and copyright and patent regulation and enforcement. 

The Asia-Pacific Economic Cooperation Forum

The Asia-Pacific Economic Cooperation Forum—a nearly 30-year-old scheme established by 21 economies bordering the Pacific Ocean (Mexico, Chile, and Peru in Latin America)—is an example of a regional commitment to the digital economy. This multilateral economic forum is the only international intergovernmental group committed to reducing barriers to trade and investment without requiring its members to assume legally binding obligations. Thus, it seeks to promote dialogue and make consensus-based decisions, giving equal importance to the opinions of all its members.

APEC recognizes the role of the internet economy for growth and development and is committed to the goal of creating a connected and integrated Asia-Pacific region by 2025 (APEC, 2014). Over the years, cooperation among its members has helped reduce trade barriers, including for e-commerce, and promote ICT innovation and standardization.

Its projects include public and private sector initiatives in partnership with international organizations, such as the International Telecommunication Union (ITU), the Organisation for Economic Co-operation and Development (OECD), the Asia-Pacific Center Network Information Centre (APNIC), the Internet Society (ISOC) and the International Telecommunications Users Group (INTUG). In addition, several projects are initiated and led only by the private sector.