It’s no big secret that the United States has lost some economic and political clout in Latin America over the past decade, but United Nations economic projections for 2020 should set off alarm bells in Washington DC.
According to the Santiago, Chile-based UN Economic Commission for Latin America and the Caribbean (ECLAC), US exports to the region have fallen from 60 per cent of overall US exports in 2000 to 39 per cent today, and — if current trends continue — will fall further to 28 per cent of total US exports in 2020.
As for US imports from Latin America and the Caribbean, they have fallen from 51 per cent of total US imports in 2000 to 33 per cent today, and under the current trends will fall further to 26 per cent of total US imports in 2020. China has replaced the US market as the leading buyer of goods of several South American countries, it says.
“It’s very important that the United States look at Latin America with greater interest, because the US presence in trade with the region has been decreasing,” ECLAC chief Alicia Bárcena told me in an interview.
“There is a perception in Latin America that the United States does not include the region among its priorities,” she said. “More importantly, there is a perception that the United States does not have a strategic vision of the region.”
While Washington in previous decades launched ambitious regional initiatives, such as the Alliance of Progress, the Initiative of the Americas, or the Free Trade Area of the Americas, today no such grand plan exists. Washington has bilateral ties, but no regional plan, she said.
President Barack Obama will have a great opportunity to propose new regional economic initiatives at the April 14-15, 34-country Summit of the Americas in Cartagena, Colombia. Among other things, Obama should propose new ways to ease customs restrictions and create more efficient supply chains within companies throughout the continent, Barcena said.
US officials, on the other hand, say the relative decline of US trade with Latin America is due to the extraordinary rise of Asian economies over the past two decades, which has diversified the pie of US trading partners. But they stress that the United States remains by far the biggest trade and investment partner of Latin America.
US investments account for 38 per cent of all foreign investments in the region, compared to 29 per cent from all 27 European Union countries combined, and virtually nothing from China, they say, citing ECLAC’s own figure. On the trade side, the United States buys much more manufactured goods from Latin America than Asian countries, which buy mostly raw materials that produce few jobs, they say.
Still, the perception that Washington does not pay much attention to its ties with Latin America has grown since Obama declared in November that “the United States is a Pacific country,” and that its first economic priority will be the Asia-Pacific region.
In a tour of Asian countries, Obama announced a plan to drastically expand the Trans Pacific Partnership (TTP), a nine-country group that currently includes the United States, Australia, New Zealand, Singapore, Chile and Peru, and that may be joined by Mexico, Canada and Japan. If the expansion takes place, it would become the world’s largest and most comprehensive trade bloc.
US officials say the TTP will be open to other Latin American countries. “Our view is that TTP is the best chance to drive a new wave of trade liberalization in the Western Hemisphere, and to re-enforce each of our countries’ global competitiveness,” one US official told me. Translation: the TTP is the only US regional trade plan right now, and there is no similar proposal being contemplated for Latin America.
My Opinion: It would be unfair to blame Obama for the relative decline in trade with the region, since the trend started at least a decade before he took office. And claims from critics from both the left and the right that Washington has become almost irrelevant in the region are vastly overblown, because the United States remains the biggest player in the region.
But there is little question that for the first time in decades, there is no US regional plan to increase trade ties with Latin America. It’s ok for Washington to look East, but it should also look south. Unless it does so, the bleak ECLAC forecasts for 2020 will come true.
© The Miami Herald, 2012. Distributed by Knight Ridder/Tribune Media Services.
