CARIFORUM and UK EPA Study

Value Chains (GVC’s), which means that only 30% of all global trade originates in final products. CARIFORUM for the most part contravenes the global trend. Though more study is needed into Global Value Chains for CARIFORUM, for Latin America and the Caribbean (LAC) region a study (Inter-American Development Bank , 2020) finds that participation in GVCs is lower than in other regions. Traditional Trade Statistics as examined in this section cannot provide an accurate picture of supply and demand linkages, making the measurement of this type of integration between economies and sectors a difficult task (Cappariello, Mancini, & Caffarelli, 2019). Additionally, the WTO (2019) notes that as GVCs increase measures of domestic value added declines, suggesting less emphasis should be placed on this. Backward participation 24 in GVCs captures the extent to which foreign goods and services are used in the production of domestic goods that are exported, the OECD notes that this is also lower in Latin America and the Caribbean than other regions examined ( Latin America and the Caribbean 18 % of exports, 32 % in Asia and 40 % in the EU). Forward Participation in GVCs captures the extent to which domestically produced goods and services are used in the production of foreign exports. So that for example fruit and nuts exported from the CF may be processed into higher value added such for example a granola bar or trail mix in the UK and then exported to the EU. Though studies show that LAC participation in forward linkages is also lower than other regions, the lag is not as great as with backward linkages. UNCTAD in the World Investment Report in 2013, noted the important role of regional value chains, though much less developed in LAC. 25 The CF-UK EPA with its diagonal cumulation provisions may actually facilitate regional value chains, as steppingstones to global value chains. Importantly studies (WTO, 2019) have indicated that participation in global value chains is advantageous and should be pursued versus a policy of focusing on increasing domestic value-

24 “Participation” and “integration” are used interchangeably in this study. 25 https://worldinvestmentreport.unctad.org/wir2013/chapter-4-global-value-chains-and-development/

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