It is undeniable that the Joe Biden Administration has looked for a better relationship with the Americas, in sharp contrast to the Donald Trump years.
Between 2017 and 2020, not only did Trump avoid the traditional North American Summits with Mexico and Canada. By the time the VIII Summit of the Americas took place in Peru in 2018, the United States was represented by Vice president Mike Pence. The message was clear: even though the birth of the Summit of the Americas took place during the Clinton Administration back in 1994, with a clear leadership by Washington, the fact that in almost 30 years Latin American and Caribbean Countries have only hold nine meetings with the US and Canada - plus one special meeting held in Mexico after the 9/11 attacks - shows that the region is not a priority to the US. But this is not new.
In the past 30 years the world has dramatically changed, and the US has shown a decline tendency that is the result of the limits of its own expansion in face of the rise of other powers and emerging economies. Not only that: Washington has not paid enough attention, either to the region or to the increasing presence of China, a country that has benefited from joining the World Trade Organization (WTO) at the beginning of the century and has developed a view consisting of securing strategic commodities from all over the globe, Latin America included, to feed its development needs.
Thus, Beijing has challenged the US dominance in the Western Hemisphere and Washington has not challenged back. The US, since the Donald Trump years, has conducted a trade war against China that may benefit Latin America - as it has clearly been for Mexico. Many US companies operating in China have moved their operations to Mexico to take advantage of the new USMCA trade agreement, protecting them from the US sanctions against the Asian giant.
Putting Mexico aside, Chinese trade with Latin America grew from just $12 billion in 2000 to an astonishing $430 billion dollars in 2021. This is the result of the growing demand in the Chinese market of commodities like soybeans, copper, iron ore, oil, etc. It is important to understand as well that this has not been a one-way ride. China exports a wide range of value-added manufactured goods to Latin America and by 2022, China was already the region’s second-largest trading partner and the biggest trading partner in nine countries (Cuba, Paraguay, Argentina, Chile, Brazil, Uruguay, Peru, Bolivia and Venezuela). This has happened - with the exception of Chile - without free trade agreement negotiations - Beijing has also free trade agreements with Costa Rica and Peru.
It is thanks to Mexico, at times the first, and at times the second largest trading partner of the US, that the American trade figures still look good in Latin America. But that is mostly the result of the structural relationship between Mexico and the US and the role of vicinity, as well as the largest Mexican diaspora in the world residing north of the border, responsible for remittances key to the functioning of the Mexican economy. No other Latin American country holds that preeminence on US trade: Mexico takes 71% of US’s trade with Latin America!
Yet, since 2005 China has provided more than $140 billion dollars in sovereign loans to countries like Venezuela, Argentina, Brazil and Ecuador in exchange for oil and other raw materials. The Belt and Road Initiative has led to loans for infrastructure projects in the region such as port facilities, highways, dams, bridges, etc., through China’s Development Bank and the Export Import Bank. Today 11 Latin American countries belong to the Belt and Road Initiative, including Argentina, Chile, Uruguay, Bolivia, Peru, Ecuador, Venezuela, Panama, Costa Rica, El Salvador and Cuba, making the Southern Cone - and some parts of Central America - a domain of Chinese interests.
By looking at these figures and projects it is clear the Latin American enthusiasm for Chinese ascendance, even though its trade and investment practices are, in many cases, far from being benign.
Yet, whilst China was brokering important trade and investment agreements in Latin America, the US was rejecting free trade with the region with Trump even going as far as to declare the then-North American Free Trade Agreement (NAFTA) with Mexico and Canada, the “worst trade deal ever.” Trade deficits with its major partners was declared by Trump a threat to America’s national security. Thus, Washington withdrew from the Transpacific Trade Partnership (TPP) in 2017 and not only threatened China but also Latin American countries with using trade sanctions as political tools. One may remember the Trump tariffs threat against Mexico were the country not able to stop undocumented migrants from entering the US territory. By making necessary a new free trade negotiation with Mexico and Canada - the new USMCA agreement - Trump indicated it may act in a similar fashion against Latin American countries with which the US has FTAs. Not surprisingly, Latin American governments looked for alternative partners and found China willing to fill the gap.
Under Biden, there seems to be a different mood towards Latin America. By the end of 2021, the US President called for a virtual summit on democracy, directed mostly against China and Russia and other authoritarian governments in the world. Some Latin American countries were not invited, of course, but the majority were virtually present. Then, in June 2022, Biden hosted in Los Angeles the IX Summit of the Americas with the notorious absence not only of Cuba, Venezuela, and Nicaragua, but also its major trade partner: Mexico. President López Obrador excused himself from the meeting, arguing that he would not attend due to the exclusion from the Summit of the afore mentioned countries. It was in that Summit that Biden announced the Americas Partnership for Economic Prosperity (APEP) to tackle economic inequality, foster regional economic integration and good jobs, and restore faith in democracy by delivering for working people across the region. Too many it seemed a little bit late for such an initiative, given that Chinese influence in the region has been soaring.
Last November 3, leaders from Barbados, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Peru, Uruguay and Panama took part, along with top officials from Mexico - the Foreign Minister Alicia Bárcena attended - took part in the first APEP Summit. They joined Biden in Washington for the event. The intention looked good. After all, Latin American countries may be lured back to Washington by what they perceive to be predatory practices and loans from Beijing, Chinese indifference to the environment and human rights and the need to retain control over land and strategic minerals like lithium. The optimal scenario would be one where the US improves borrowing conditions for Latin America, as states compare the transparency, quality and productivity of Chinese-funded projects versus U.S.-funded ones. Well, yes, of course. But the US needs to become far more proactive.
The reality is that the first APEP Summit was not attended by key Latin American countries like Brazil and Argentina, the latter currently facing a complicated presidential electoral process. The President of Mexico was also absent. Without the “big three” in Latin America, one may wonder whether the APEP effort will lead to anything. Of course, Mexico-US relations must be analyzed differently, due to their complexity and intensity.
It is also true that China’s investments and sovereign lending to Latin American countries have diminished substantially due to the slow down of the Chinese domestic economy, and once again the region may turn to the US as a lifesaver. At the APEP Summit, Washington made clear the InterAmerican Development Bank would be the provider of financial resources to promote sustainable investment and catalyze regional growth. There is the need to diminish undocumented migration since the issue has created great turmoil in InterAmerican relations. The problem may be that Ukraine and the Middle East are top priorities for Washington, and unless these conflicting regions follow a peace settlement path, Latin America could remain as a secondary region for US interests. Again, with a recessive China and a pre-electoral environment in the US, Latin America may end up without options for the time being. Summing up: it seems APEP has come too late with too little to offer to Latin America, at least on the US side.
Editor’s Note: The above guest column was penned by María Cristina Rosas, a professor and researcher at the Faculty of Political and Social Sciences of the National Autonomous University of Mexico in Mexico City. The column appears in The Rio Grande Guardian International News Service with the permission of the author. Rosas can be reached via email at mcrosas@prodigy.net
