U.S. courts Latin America


Brazilians seem to be doing pretty well already.


Vanderlei Almeida

The U.S. is back in the race to woo Latin America.

Earlier this month, Congress approved three free-trade agreements, two of which were with Latin American nations Colombia and Panama. (The other was key Asia ally South Korea.)

Then last week, Thomas Nides, the U.S. deputy secretary of state, in an address to the U.S. Chamber of Commerce, urged greater engagement with Latin America in order to boost U.S. growth.

To stay on top, the State Department argues, the U.S. needs to bolster its economic power.

Nides said that Hillary Clinton, the secretary of State, has sent “formal instructions” to U.S. posts worldwide, stressing “the need to elevate the role of economics and business in everything we do.”

“It’s not enough to look east to Asia. We also have to look south to our own hemisphere,” Nides said.

In the past decade, the U.S. has been focused on Afghanistan and Iraq, and fighting the war on terror.

As both of those wars wind down, and the terror threat appears less imminent, the State Department clearly wants to concentrate more resources elsewhere.

There’s a bit of urgency in that interest. 

While the U.S. focused elsewhere, China has stepped in, investing in commodities in Brazil, in particular.

The U.S. may find, as it did in Africa, that Latin American nations are interested less in paternalism than they are in strong trade partners. And that, increasingly, there may be less room for the U.S. at the trading table.

But it’s hard to see how much clout the State Department will have on U.S. policy in the coming years.

The department’s funding has been slashed amid the budget-cut frenzy in Congress. And Clinton, who helped to raise its profile during her time in office has said she will step aside after Obama’s term ends in January 2013.

Clinton said the department is struggling even to back the fledgling democracies emerging from the Arab Spring, which is an important priority for the U.S. as it tries to boost its image in the region.

Still, Nides laid out reasons why the US is — or should be — more competitive than China in Latin America:

1. Geography. The U.S. exports three times as much to Latin America than it does to China, and more than it does to Europe, Nides said. Also, 43% of all U.S. exports stay in the hemisphere. The argument is that it’s easier, and more logical, for the region to trade with the U.S.

2. Being a good neighbor. The US wants to help Latin America grow, Nides said. Most Chinese investment in the region is in commodities only. At the moment, 60% of Latin American exports to the US are manufactured goods, while 87% of the region’s exports to Asia are raw materials. “Latin American economies want to diversify, modernize and move up the value chain,” Nides said. “If we get this right, the U.S. will be their partner in years to come.” 

3. American jobs. Well, the U.S. isn’t doing this out of the goodness of its heart. President Barack Obama aims to double U.S. exports in five years to create more jobs at home. That means trade with the region has to increase if the U.S. wants its growth back. This time, the U.S. needs Latin America.

It will be interesting to see how these ideas translate into policy. And, of course, how Latin America responds.