60 Years of Korea-Latin America Diplomatic Relations... KOTRA Collaborates with Latin American Institutions for Economic Cooperation

'75% US Production Tariff-Free' USMCA

A Treasure Trove of Raw Materials Including Lithium and Iron Ore

Yoo Jung-yeol, President of KOTRA (4th from the left in the front row), is taking a commemorative photo with attendees at the Latin America Regional Trade Office Directors' Meeting held on the 24th in Buenos Aires, Argentina. (Photo by KOTRA)

[Asia Economy Reporter Moon Chaeseok] KOTRA announced on the 26th that it held a council meeting with local trade and commerce organizations to discuss economic cooperation measures such as supply chain diversification and climate change response, marking the 60th anniversary of diplomatic relations with 15 Latin American countries this year. Latin America is a region where the USMCA (United States-Mexico-Canada Agreement), which grants tariff-free benefits only when more than 75% of parts used in automobile exports are made locally in the US, Mexico, and Canada, will take effect from 2025. It is also a major source of key materials for secondary batteries such as lithium.

KOTRA announced that it consecutively held the Latin America regional trade office chiefs meeting and a council meeting with the Argentina Trade and Investment Promotion Agency (AAICI) on the 23rd and 24th. Recently, the global supply chain (GVC) has been rapidly reorganized, and Latin America is gaining attention as a production base. Due to the enforcement of USMCA and free trade agreements (FTAs) with eight Latin American countries including Chile and Peru, it is a market that Korea cannot afford to miss. It is known that Korean companies receive considerable tariff benefits when entering the local market.

From the raw materials perspective, Latin America ranks among the top regions globally in resource deposits such as lithium (Chile), ferro-niobium (Brazil), and iron ore (Brazil). Cooperation with these countries is essential to respond to supply chain risks. Recently, U.S. President Joe Biden announced the Americas Partnership for Economic Prosperity (APEP), a Latin American version of the Indo-Pacific Economic Framework (IPEF), at the Summit of the Americas to restore supply chains. The region has a high ratio of new and renewable energy and competitiveness in green hydrogen production, making it an economic cooperation partner related to climate change.

On the 23rd, KOTRA President Yoo Jung-yeol met with Juan Usandivaras, President of AAICI, in Buenos Aires, Argentina, to discuss economic cooperation measures between the two countries. AAICI is an Argentine government agency that supports small and medium-sized enterprises in pioneering overseas markets, establishing foreign investment attraction strategies, and providing consulting. Both sides agreed to strengthen existing export and investment attraction support and to promote cooperation in new areas such as supply chain stabilization, digital and green economy cooperation. President Yoo emphasized that Argentina is a key Latin American cooperation country for Korea. He also requested support for Korea’s bid to host the 2030 Busan World Expo, as Argentina is a member of the International Bureau of Expositions (BIE).

At the trade office chiefs meeting held on the 24th, KOTRA trade office chiefs from 12 Latin American countries gathered to discuss diversification strategies for Korean companies’ entry into Latin America. They discussed strategies to secure supply chain stability, entry into low-carbon industries, bio-health market entry, and expansion of government-to-government (G2G) contract orders, agreeing to respond swiftly to major economic cooperation demands. President Yoo said, "As we mark the 60th anniversary of Korea-Latin America relations, it is time to create new economic cooperation momentum," adding, "We will actively support Korean companies’ market entry into Latin America by leveraging new economic cooperation demands between Korea and Latin American countries."