Americas
8:20 am
Mon May 27, 2013

Why China Is Behind Fresh U.S. Moves In Latin America

School children in Sao Paolo, Brazil take a Mandarin-language proficiency class at the Confucius Institute, which offers language courses and Chinese cultural programs.
School children in Sao Paolo, Brazil take a Mandarin-language proficiency class at the Confucius Institute, which offers language courses and Chinese cultural programs.
Credit Juan Forero/NPR

U.S. Vice President Joe Biden will visit Colombia, Brazil, Trinidad and Tobago next week. President Obama already swung through Mexico and Costa Rica this month and next month Obama will host the presidents of Chile and Peru at the White House.

Has the Obama Administration finally discovered Latin America and the Caribbean? After a first term marked largely by indifference to the region, is the U.S. poised for what Biden is calling “the most active stretch of high-level engagement on Latin America in a long, long time” -- one that could also be a boon to Miami’s economy? If so, there’s probably one word that sums up Washington’s sudden interest in the world to the south, and it’s located in the far east:

China.

Make no mistake, the U.S. is still Latin America’s chief trading partner. In fact, total commerce between the two hit a record trillion dollars last year. Still, after a decade of economic boom in Latin America, U.S. influence in the western hemisphere is in serious decline -- and China, the U.S.'s biggest economic rival, has been eager to fill the void.

In 2000, for example, China’s trade with Latin America was less than $10 billion; today it tops $200 billion, according to Beijing, and China’s investment in the region is burgeoning as well. For Washington’s part, business with Latin America and the Caribbean as a share of total U.S. trade has actually dropped over the past decade.

In 1995, the U.S. sent Brazil, Latin America’s largest economy and now the world’s sixth largest, more than a fifth of that country’s imports; today it’s about 15% -- less than the share China sent to Brazil. Back then the U.S. accounted for 37% of Brazil’s foreign investment; today it’s a tenth -- again, less than China’s share.

A trade and investment gathering in Miami Beach this month hosted by the Colombian Proexport Agency drew a larger than usual crowd thanks in no small part to the buzz about renewed U.S. outreach to Latin America and the Caribbean.

As a result, the Obama Administration may be more eager than usual to re-engage Latin America and the Caribbean. The President’s aides argue he was preoccupied with U.S. wars in Afghanistan and Iraq in his first term, not to mention the Arab Spring; but now that so many Latin American countries have become global economic players, say analysts, he understands that strengthening ties with them helps the U.S. as well.

“The Administration suddenly realizes there is now an economic power broker element in Latin America,” says Christopher Sabatini, senior director of policy and the Americas Society and Council of the Americas in New York.

Colombia just finished the first year of a free trade agreement with the U.S. Now it hopes Biden will announce during his visit next week that Washington is set to help the South American nation take part in bigger global initiatives like the Trans-Pacific Partnership (TPP) and win membership in the exclusive, Paris-based Organization for Economic Cooperation and Development (OECD).

A trade and investment gathering in Miami Beach this month hosted by the Colombian Proexport Agency drew a larger than usual crowd thanks in no small part to the buzz about renewed U.S. outreach to Latin America and the Caribbean.

If that outreach is really serious -- and given the U.S.‘s disappointing track record in its own hemisphere, it’s better to take a wait-and-see approach -- it could mean a bigger role for Miami as the business nexus of the Americas.

Argentinian President Cristina Kirchner and former Chinese President Hu Jintao shake hands during the signing of a major trade agreement between both countries in 2010.
Argentinian President Cristina Kirchner and former Chinese President Hu Jintao shake hands during the signing of a major trade agreement between both countries in 2010.
Credit thediplomat.com

South Florida trade with Latin America is already at record highs, topping $60 billion last year. “Miami is very important,” says Juan Carlos Gonzalez, Proexport’s vice president for foreign investment. “It is a major gateway for the U.S. and Latin America.”

There are of course skeptics. I asked Robert Pastor, a former White House national security advisor for Latin America and now an international relations professor at American University in Washington, D.C., if he thinks the U.S. is doing enough to keep itself relevant in the Americas.

“No it’s not,” he says. “President Obama’s trip (to Mexico and Central America) is a good first step, but he needs to do a lot more to open up and show America’s interest in re-engaging with the rest of South America.”

Pastor has a point: for decades, Latin America has heard a lot of rhetoric from the U.S. about engagement -- the kind Biden offered the Council of the Americas in Washington recently, when he declared that the hemisphere “matters more (to the U.S.) today because it has more potential than any time in American history.”

Maybe this time, China has provided enough incentive for Washington to turn that rhetoric into reality.