With Washington quibbling over the finer points of the Trans-Pacific Partnership (TPP), many commentators are arguing that lessons of past trade deals, like the North American Free Trade Agreement (NAFTA) and China’s accession to the World Trade Organization (WTO), are useful augers for what to expect. Forays into economic history are always useful; not only does this exercise help telescope the future, but also can serve as reminders of relationships that, once strong, may now be in need of repair. The glaring relationship the TPP recalls, of course, is between the United States and Latin America.
The Latin America region is not doing well on most of socio-economic indicators that count. Put another way, the boom is over. Or rather, it has been over for some time. Institutionalized corruption coupled with economic stagnation, a sluggish global economy especially in Europe, and an increasingly restive populace have caused foreign direct investment to drop 16% from 2014 (already a bad year). The same merry-go-round of populist leaders continue their rhetorical opposition to the West, while simultaneously courting their counterparts in the East. Worse yet, arguably model countries like Chile and Argentina are beginning to mirror the socio-economic failings of their bottom-rung neighbors. The situation in the region is all the more critical because of the indeterminate status many of the countries occupy. This is to say, the line between the second world and third world is in many cases razor thin. Hard work now will save much suffering in the future. And some hard work is underway.
For starters, the sub-regional trade bloc, Mercado Comun del Sur (Mercousur), is still in operation. Founded in 1991, Mercousur used to be an economic powerhouse, which has the potential for a second-wind. Recently, and in an effort to off-set the growing Chinese influence in the area, the European Union showed willingness to return to stalled talks with the trade bloc and in particular, Brazil. The European Union is also engaged with the group of 33 countries that comprise the Community of Latin American and Caribbean States (CELAC), donating $750 million dollars in aid initiatives and publishing multiple political declarations during the June summit. Not to be outdone, Chile, Colombia, Mexico, and Peru, otherwise know as the Pacific Alliance, are in talks with the Association of Southeast Asian Nations to boost trade and innovation.
The one country that should enjoy a closer relationship with Latin America does not. As China pumps $250 Billion in Latin America over the next ten years, and India receives visits from Carlos Slim, the famed Mexican entrepreneur whose wealth rivals Bill Gates, the United States remains largely impassive. One glimmer of hope shown through this past April in Panama when Obama met with Raul Castro in the first step toward normalizing trade relations between the two countries. As Obama noted:
Finally, our shift in policy towards Cuba comes at a moment of renewed leadership in the Americas. This April, we are prepared to have Cuba join the other nations of the hemisphere at the Summit of the Americas. But we will insist that civil society join us so that citizens, not just leaders, are shaping our future. And I call on all of my fellow leaders to give meaning to the commitment to democracy and human rights at the heart of the Inter-American Charter. Let us leave behind the legacy of both colonization and communism, the tyranny of drug cartels, dictators and sham elections. A future of greater peace, security and democratic development is possible if we work together -- not to maintain power, not to secure vested interest, but instead to advance the dreams of our citizens.
Sadly, it is unclear just what the Obama administration has done to show “renewed leadership” in the Americas. Renewed leadership would look to defend against China, Russia, and Indian hegemony in the region. Renewed leadership would not speak in apologetic terms regarding “colonization,” but focus on future economic partnerships. Obama’s moment to revive American relations with its Southern neighbor is effectually over. Naturally, eyes are turning to presidential hopefuls for harbingers of things to come. Some candidates offer promise of hope.
Jeb Bush is perhaps the most interesting of the group of GOP hopefuls with regards to Latin America. Bush, a fluent Spanish speaker, lived in Venezuela as a young businessman, and married a woman from Mexico; Ted Cruz and Marco Rubio are both of Cuban descent. For her part, Hillary Clinton will have an uphill battle convincing Latin America-watchers that a President Clinton will look substantially different from Secretary of State Clinton.
In somewhat brighter news, this week the Obama administration was procedurally given “fast-track” approval by the Senate (60-37), bringing the TPP one step closer to reality. A final vote is expected to bring the same result, and only needs the lower threshold of 51 votes to clear. The much-vaulted trade deal has been hammered home thanks in large part to the assistance rendered by top Republicans. This, for once, is an encouraging sign.All this recalls an old saying by Porfirio Diaz: “Poor Mexico. So far from God, yet so close to the United States.” One might substitute Mexico with all of Latin America as a whole and come closer to capturing the mood of the moment.