US can’t de­cide Latin Amer­ica’s trade poli­cies

China Daily (Hong Kong) - - VIEWS - Car­los Aquino and María Oster­loh

Speak­ing at the 8th Sum­mit of the Amer­i­cas in Lima re­cently, US Sec­re­tary of Com­merce Wil­bur Ross said Latin Amer­ica should look to the United States, not China, to pro­mote eco­nomic de­vel­op­ment. To sup­port his claim he said Latin Amer­ica has a trade sur­plus with the US while it has a trade deficit with China. He also said Latin Amer­ica ex­ports man­u­fac­tured prod­ucts to the US but only raw ma­te­ri­als to China. But what he said is not true, at best it is a half truth (even a lie).

Ross said Latin Amer­ica has a trade sur­plus of $117 bil­lion with the US and a deficit of $67 bil­lion with China, but did not dis­close the year the fig­ures were from. Al­though Latin Amer­ica as a re­gion had a trade sur­plus of $125.87 bil­lion with the US and a trade deficit of $63.31 bil­lion with China last year, the fig­ures are dis­torted by the large trade sur­plus that Mex­ico has with the US and the large trade deficit that Mex­ico has with China.

Mex­ico had a trade sur­plus of $132.41 bil­lion with the US and a trade deficit of $67.43 bil­lion with China last year. But many other Latin Amer­i­can coun­tries, such as Ar­gentina, Chile, Colom­bia, Guatemala, Hon­duras, Panama, Peru, Uruguay and Paraguay, had a trade deficit with the US. And sev­eral of them, such as Brazil ($20.16 bil­lion), Chile, Peru and Venezuela had a trade sur­plus with China. So if Mex­ico is ex­cluded from equa­tion, the trade bal­ance of China and the US with Latin Amer­ica would be quite dif­fer­ent — the re­gion would have a large trade deficit with the US and a small one with China. The trade deficit of Latin Amer­ica with the US (ex­clud­ing Mex­ico) was $12.96 bil­lion, while the fig­ure with China was $4.2 bil­lion last year.

As for Ross’s claim that Latin Amer­ica ex­ports mostly man­u­fac­tured goods to the US and raw ma­te­ri­als to China, it too is a half truth. Once again, if Mex­ico (which mostly sells man­u­fac­tured goods to the US) is ex­cluded from the re­gion’s list, it will be­come clear that the re­gion mainly ex­ports raw ma­te­ri­als both to China and the US, and im­ports man­u­fac­tured prod­ucts from them. Nei­ther China nor the US is to blame for Latin Amer­ica sell­ing mostly raw ma­te­ri­als to them, be­cause the re­gion un­for­tu­nately has not de­vel­oped com­pet­i­tive in­dus­tries.

And if one still in­sists on iden­ti­fy­ing the cul­prit, it would be the US, not China, be­cause the re­gion has only in­creased trade with China in the last decade, while it has been trad­ing with the US for decades.

The truth is, Latin Amer­ica has ben­e­fited from its trade with China be­cause the coun­try’s im­ports from the re­gion have in­creased with each pass­ing year. And thanks to China, the prices of raw ma­te­ri­als have risen, which has greatly ben­e­fited the re­gion. In ad­di­tion China is in­vest­ing a lot of funds in the re­gion, mostly for the ex­trac­tion of nat­u­ral re­sources but lately also in the in­fras­truc­ture, agri­cul­ture, fi­nance and other sec­tors.

More im­por­tant, no coun­try or re­gion can dic­tate the re­gion which coun­try to trade with. Apart from the ben­e­fits of trad­ing with a fast-de­vel­op­ing econ­omy such as China, Latin Amer­ica now finds it in­creas­ingly dif­fi­cult to con­duct trade deals with the US be­cause of its pro­tec­tion­ist poli­cies, es­pe­cially due to its with­drawal from the Trans-Pa­cific Part­ner­ship agree­ment, in which Chile, Mex­ico and Peru were also mem­bers, and its move to rene­go­ti­ate the North Amer­ica Free Trade Agree­ment with Canada and Mex­ico.

In con­trast, China has said it wants to help build an en­vi­ron­ment in which free trade and in­vest­ment are the norm, and has vowed to fur­ther open up its econ­omy to the out­side world to pro­mote glob­al­iza­tion.

Car­los Aquino is a pro­fes­sor of Eco­nom­ics at the Na­tional Univer­sity of San Mar­cos in Lima and a spe­cial­ist in Asian Eco­nom­ics, and María Oster­loh holds an MBA from the Nor­mal Univer­sity of Bei­jing and is a re­searcher.


Newspapers in English

Newspapers from China

© PressReader. All rights reserved.