The Economic Commission for Latin America and the Caribbean (ECLAC) has sounded a warning that Asia, particularly China, may be in the process of throwing down a challenge to the United States for the title of principal trading partner with Latin America and the Caribbean.
ECLAC is calling for a new alliance between the United States and its traditional trading partners in Latin America and the Caribbean in the face of what it says is the current absence of an explicit trade policy towards the region and a contrasting dynamism shown in recent years between various countries in the region and countries in Asia.
A study, titled ‘Latin America and the Caribbean in the World Economy 2010-2011’ released in Santiago, Chile late last month, points to the contrasting postures of the United States and Asia to strengthening trade ties with the Caribbean noting that while the United States remains the region’s main trading partner, there have not been “great developments in trade negotiation” since 2007.
By contrast, ECLAC points to a more aggressive approach by Asian countries to making inroads into Caribbean and Latin American markets. The study notes that over the past ten years the relative importance of Asia in Latin America and the Caribbean foreign trade increased significantly compared with a decline in the United States. Over the last five years, exports from the region to Asia-Pacific grew at an annual rate of 22 per cent and that during the same period, imports from Asia-Pacific have also grown at an annual rate of 15 per cent, more quickly than overall imports. At the same time the ECLAC study says that Latin America has now become China’s most dynamic trading partner, with an annual growth of 31% in its exports to the region between 2005 and 2010, compared with 16% to the rest of the world during the same period.
The study calls for “a new alliance between the United States of America and the region” in order to tackle what it terms better integration into the world economy. At the same time ECLAC says that there are interesting perspectives for cooperation between Europe and the region in areas such as green technology and social business responsibility.
And according to the ECLAC study, social and economic transformations that have taken place in the region since 2003 coupled with its strong recovery from the global economic crisis of 2008-2009 places it in an attractive position to enhance its negotiating capacity with its main partners. The study lists the region’s large reserves of natural resources, its demographic advantages, growth of the middle class and market potential as important bargaining chips with which to negotiate with its partners.
The ECLAC study says, however, that the region must overcome various challenges if it is to improve its negotiating position vis-à-vis its partners. It calls for, among other things, the re-evaluation of global alliance strategies to take advantage of South-South trade and investment opportunities and the creation of a joint approach with Asia-Pacific, particularly China. The region, the study says, must also increase the value and knowledge component of its exports, improve the governance of its natural resources and take innovation to another level.