Artificial Intelligence (AI) and blockchain are transforming international trade, showcasing successful cases and opportunities for businesses adopting these innovations. Thus, within the context of globalization and digitalization, emerging technologies are playing a crucial role in the transformation of international commerce.
Transformation of International Trade:
The new generation of applications revolutionizing international trade, known as "TradeTech," is driving global commerce. According to a survey by the World Economic Forum, technologies such as e-commerce, digital payments, cloud computing, the Internet of Things (IoT), digital services, digital documents, and 5G will have a short-term impact on trade. Additionally, robotics, virtual reality, 3D printing, and artificial intelligence (AI) will integrate in the near future.
Artificial Intelligence (AI):
South Korea: According to a report from Georgetown University's Center for Security and Emerging Technology, South Korea is recognized as a "global leader" in AI patent creation and production, as well as in research in this field. AI in South Korea is a rapidly growing market, with $2.76 billion (€2.6 billion) invested in South Korean private companies in 2021, as reported by Georgetown.
Central America: As international trade advances, the business environment in Central America faces a series of challenges and opportunities. In 2024, Central American companies confront the challenge of adapting to a market where digitalization is an emerging area. AI presents the opportunity to open doors in sectors such as Fintech, digital health, renewable energies, and medical supplies factoring, which have potential for growth and development in the region. The projected unemployment rate for Latin America and the Caribbean in 2024, according to the International Labour Organization (ILO), will range between 6.5% and 6.8%. Therefore, managing human resources in 2024 is a challenge where AI can play an important role.
Blockchain:
Blockchain is a tool that enables transparent information exchange within a company's network. Also known simply as blockchain, it is a decentralized and transparent system that facilitates data recording and distribution. This blockchain technology has the potential to revolutionize sectors such as finance, healthcare, and cybersecurity.
South Korea: The Korea Customs Service has developed a blockchain-based customs platform for the e-commerce industry, signing a memorandum of understanding with the Korean malltail operator to develop this platform.
Malltail, the leader in consumer package forwarding to South Korea, boasts a user base exceeding one million. Their Korean operational partner, Korea Center, will oversee both the commercial and technical growth of a blockchain-based customs platform. The company anticipates that by implementing this technology on a large scale, customs clearance procedures will be streamlined through data exchange and automated generation of customs declarations. This will result in a more transparent and efficient customs service.
Central America: In the Central American region, blockchain technology is employed in a system aimed at registering authorized economic operators, aiming to expedite the exchange of information on these operators and container movements.
CADENA Project: The Inter-American Development Bank (IDB) along with customs authorities from five countries in the region have led and developed the CADENA project, a blockchain-based proof of concept. This initiative seeks to address management challenges arising from cross-border data exchange about businesses. Initiated in 2018, CADENA's main objective is to facilitate and ensure the efficiency of logistics chains and trade in Latin America and the Caribbean. The project outlines the implementation of blockchain technology and how challenges related to security, privacy, integration, and scalability were addressed.
Korea-Central America Free Trade Agreement (K-CAFTA)
The Korea-Central America Free Trade Agreement (K-CAFTA) has been a significant milestone in the trade relations between both regions. This agreement not only eliminates tariff barriers but also creates a conducive framework for enhancing economic and trade cooperation.
Opportunities for Central American Companies
Through K-CAFTA, opportunities include supporting export diversification in the region and enhancing international competitiveness. This would be achieved through more comprehensive implementation and greater utilization of K-CAFTA, as well as increased trade flows and integration between Central America and the Republic of Korea. Specifically, support could be provided to public sector organizations in Central America and small to medium-sized enterprises seeking international expansion. Furthermore, positive indirect effects are expected across all commercial value chains connecting the region with the Republic of Korea.
Tips for Leveraging K-CAFTA:
To succeed in the South Korean market, Central American companies should conduct thorough research on consumer preferences, competition, and local regulations. Adapting products and services to meet market needs and establishing strategic alliances with local partners are crucial for overcoming cultural and commercial barriers. Focusing on quality, innovation, and compliance with regulations is essential for standing out and building a strong reputation. Additionally, understanding the terms of free trade agreements, particularly regarding tariff reduction and rules of origin, is fundamental to seizing the opportunities they offer. Seeking specialized advice and staying updated on trends and changes in trade regulations are key steps towards success in this highly competitive market.
Success stories and tips to make the most of this agreement.
"BCIE, a Strategic Partner Seeking More Investment in the Region" (BCIE)
The inclusion of Korea into the Central American Bank for Economic Integration (BCIE) has yielded immediate benefits, particularly in the institution's financial profile, due to Korea's strong credit rating. This rating enabled the capital subscribed by Korea to be considered in the evaluation indicators of BCIE's capital position by leading credit rating agencies, resulting in improvements in BCIE's ratings by Standard & Poor's and Moody's in 2019, as highlighted by BCIE's Executive President, Dr. Dante Mossi. Furthermore, Korea's industrialization and its position as one of the world's leading exporters and importers provide a high-quality business environment expected to benefit BCIE's partner countries through initiatives such as BCIE-Korea Week.
Prior to officially becoming a member of BCIE, Korea had already maintained a close relationship with the Bank, using BCIE as a bridge to Central America through cooperation schemes aimed at contributing to regional development. This history of prior cooperation strengthens the partnership between Korea and BCIE, laying the groundwork for a more solid and beneficial collaboration for the region.
Importance of Establishing Strategic Alliances in International Trade:
The inauguration of the Korean Agricultural Cooperation Center (KOPIA) in Guatemala marks a strategic collaboration between both countries aimed at enhancing agricultural and livestock production through the application of science and technology. This center, a result of six decades of ties between Korea and Guatemala, will initially operate for five years with the objective of conducting joint research, providing training, and supporting sustainable food systems. This initiative aligns with the government's priority to economically develop rural areas and promote the marketing of agricultural products, promising significant contributions to food security and the development of the agricultural sector in Guatemala, which already represents 13.6% of the country's GDP.
The Role of CAMCOR
CAMCOR plays a pivotal role in promoting strategic alliances between South Korea and Central America, facilitating meetings among companies interested in collaborating through advisory services, networking, and commercial promotion. In 2020, Guatemala exported goods worth $85 million to South Korea, while imports amounted to $248 million. The prospect of Guatemala joining the Free Trade Agreement (FTA) between South Korea and Central America is generating optimism in sectors such as agriculture and tourism, given South Korea's market of 52 million people with a demand for high-quality products. The signing of a memorandum of understanding with KOIMA, the association of Korean importers, during an official visit to South Korea, represents a significant step toward promoting bilateral cooperation and business. It is expected that negotiations for accession to the FTA will conclude this year, allowing Guatemala to fully capitalize on the potential of the South Korean market.
Benefits for Both Regions
The strengthening of strategic alliances between South Korea and Central America promises significant mutual benefits. For South Korea, these collaborations represent access to new emerging markets and investment opportunities, while for Central America, they involve technology transfer, local capacity development, and job creation. During the IV SICA-Korea Meeting, the importance of the free trade agreement and solidarity cooperation in times of crisis, such as COVID-19, was emphasized, as well as joint efforts against climate change and for global peace. South Korea announced its commitment to strengthening economic cooperation, offering financial support for vaccines, and proposing the establishment of a Korea-SICA Cooperation Center. Furthermore, the importance of inclusive and sustainable recovery was emphasized, with a focus on digital transformation and green economy, and both sides agreed to continue dialogue to promote mutually beneficial development in new sectors.
Success Cases in Strategic Alliances:
The Hélice-UCR project, signed on January 16, 2019, is a collaboration between the University of Costa Rica (UCR) and the Republic of Korea aimed at boosting national competitiveness through technological innovation. Korea will invest $4.5 million by 2022, with a portion dedicated to entrepreneurial initiatives and university-industry linkage. UCR will construct a building to house this initiative, promoting triangular cooperation and strengthening the established innovation ecosystem in Costa Rica.
The project seeks to enhance UCR's and the country's innovative capacity, fostering an ecosystem of open innovation and promoting social and productive transformation. Collaboration with Korea, renowned for its successful economic innovation model, provides opportunities for Costa Rica's technological development, leveraging the experience and financial support offered by the Asian country. Involving various UCR units, Hélice-UCR aims to be a catalyst for change that drives competitiveness and enables innovation.
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