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A beleaguered Argentina had hosted the G-20 finance ministers to work out the agenda for their leaders’ December conclave in Buenos Aires. While officially focussed on infrastructure and the future of work, these more technical discussions were overshadowed by US tariff threats and President Donald Trump’s belligerence towards allies and the World Trade Organization.
The US attack on the global trading system comes as Latin America is finally embracing free trade. In a resurgence of market-friendly leaders, politicians from the left and right are seeking to expand their nations’ global commercial footprint through a flurry of free-trade and investment agreements. In normal tim-es, they might have turned to the US, a top investor and trading partner for most every nation. Yet Trump’s obstinacy throughout the Nafta negotiations suggests few deals are to be had to the north. As a result, a marked shift is now under way.
Latin American free traders are taking their cause to Asia. Mexico, Peru and Chile were founding partners of Trans-Pacific Partnership, now the Compreh- ensive and Progressive Agreement for Trans-Pacific Partnership after the US withdrawal, and neighbouring Colombia is among nations clamoring to join. Me- rcosur is eyeing negotiations with South Korea, following a path laid out by Costa Rica, El Salvador, Honduras, Nica-ragua and Panama, which all signed bilateral deals this year. Panama has begun negotiations with China, while Colombia and Mercosur are flirting with the idea. And the South American trading bloc has started talks with Can- ada and reached out to New Zealand, Australia to gauge interest in boosting trade ties.
The main Latin American economies are also moving to make real the long elusive dream of regional economic integration — in which it lags every region but Africa.
While not as large a prize as the EU or China, this preferential agreement could be more important for Latin America’s future prosperity. Intra-regional trade and
investment lean towards medium to higher technology sectors — including chemicals, cars, and pharmaceuticals — and higher value-added industries that bring in technology, enhance productivity and create better jobs. If Latin American nations want to prosper from global supply chains, they must develop regional production to the point where they can compete with the integrated enterprises of Asia, Europe and North America.
Of course, Latin America’s current free-trade fervour could wane. The G-20 mantle will move on to Japan. Mexico’s president-elect Andres Manuel Lopez Obrador’s Nafta-friendly comments sit uneasily with his more protectionist calls for self-sufficiency in food and energy. And in Brazil, the next president, who will take the helm in January, could reaffirm or discard the nation’s newfound trade enthusiasm.
In that respect, the concrete results of the agreements now on the verge of completion will be critical. Yet even if there is an ebb and flow in sentiment, Latin America’s trade horizons have broadened. While geography remains in large part destiny, Latin America for now is moving on without the United States.
After the NATO summit, Germany’s foreign minister proclaimed that the European Union can “no longer completely rely on the White House.†At least on trade, that lesson is one Latin America has already learned.
— Bloomberg
Shannon O’Neil is a senior fellow for Latin America Studies at the Council on Foreign Relations in New York.