Interregional Trade Relations Between The European Union – Latin America – The Caribbean And Their Structure

Inter-regionalism has become an important EU foreign policy tool for establishing and consolidating its external relations with Latin America and the Caribbean. The aim of this paper is to examine the development of EU’s trade relations with Latin America and the Caribbean before and after the entry into application of interregional trade agreements. We focus on the changes in comparative advantage of interregional trade, employing the Lafay index of international specialization. We conclude that there exist several asymmetries in EU-Latin America and the Caribbean trade relations. Latin American and Caribbean subregional groupings or countries continue to have a strong comparative disadvantage in export of manufactured goods, whereas they have a positive comparative advantage in export of primary commodities. To sum up, the values of Lafay index indicate that interregional trade agreements have not contributed much to export diversification of LAC countries towards products with a higher added value.