Exclusive: Look at investment, regulation and tax schemes as core drivers of economic cooperation, says leading LatAm expert
Jerry Haar, Professor at Florida International University, does not have a very high opinion of the various FTAs between the US and Latin America. With expertise in corporate strategy, regional economic integration and Latin American marketing, he tells us why the Nearshore needs to do much, much more than simply removing tariffs in order to compete globally with the likes of India and China.
Does a more cooperative trade environment between the US and Latin America have spillover benefits in outsourcing?
Haar: I think the free trade agreements in place right now between the US and Latin America are actually more symbolic than practical. The main issue is not trade; it’s the investment, regulatory and tax environment in the host countries. A tariff level of zero doesn’t mean a thing if there are pernicious labor rules, the infrastructure is bad, or there is a public safety issue. All that adds to the cost of doing business.
Companies do want a tax environment that they can live with, but they’re also looking at wage rates, corruption levels, and of course flexible labor markets – not markets where it costs more to fire a bad employee than to keep him on the payroll with all the damage he does.
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Read: “Free Trade Agreements are Just Band-Aids for Real Latin America Investment Reform,“ an article by Nearshore Americas.