Latin America got a new boost as the place to watch after Vice President Joe Biden returned home from a six-day tour that included stops in Trinidad and Tobago, Colombia and Brazil.
Biden, a longtime follower of events south of the border, made it clear that neglecting political and economic relationships with a region that still remains one of the greatest markets for U.S. imports is no longer an option. With Chinese investors aggressively moving into the Americas, China’s economic competitiveness with the United States demands a new level of policymakers. Attention must be paid if we are to remain in the game.
Biden emphasizes importance of trade
Judging from the early reports of Biden’s trip, it seems that times are changing in the region. The message that the vice president repeated over and over again was the importance of trade and investment by both U.S. and Latin American companies to build a stronger and more resilient hemisphere. Battling transnational crime and countering narcotics was certainly a part of the discussions, especially in Trinidad and Tobago and in Colombia. It did appear that the emphasis on a failed drug war had been replaced by a more positive mantra of partnership and cooperation against illicit networks.
As Latin American economies expand, focus goes to China and the U.S.
Latin America’s economies continue to expand, with growth projected at 3.4 percent this year. This fact has not been lost on either the United States or Chinese investors.
While both countries deny an outright competition, it is clear that trade competition between the United States and China is being played out daily as emerging economies like Brazil, Peru, Chile, Colombia and Panama face a new choice of trading partners. Yet, even as Chinese investment soars, the U.S. still remains a major exporter of manufactured goods to Latin America. How long that trend prevails, however, is unclear.
China is still looking at the Americas as an entrepot of raw materials — copper, iron ore, fossil fuels and commodities like soy. Chinese imports from Latin America have increased 20-fold — from $3.9 billion in 2000 to $86 billion in 2011. Yet these types of investments have been more about extraction of wealth rather than about investing in growth and development, something that U.S. investments have sought to balance through bilateral free trade agreements. As Vice President Biden noted, “our goal is simply not growth, but growth that reaches everyone.” In other words, it is the quality of the trade and what we bring that is as important as the dollars at stake. Free trade and transparency of transactions are central to democratic economies.
But just as Vice President Biden’s plane was lifting off from Brazil — his final stop on this trip — Chinese President Xi Jinping was arriving in Trinidad to begin his first tour of the region. This visit, coming only three months since the political transition in China, demonstrates the importance of Latin America to China’s overall foreign investment plans.
Xi is also visiting Costa Rica, where the Chinese are offering a $400 million loan to modernize a highway, and Mexico. In all of these places the Chinese government is expected to offer generous loan and investment packages aimed at making inroads into these economies. These loans play a major role in China’s ability to assert its presence in the region.
A step towards a more mature relationship with Brazil
Biden’s visit to Brazil was especially significant. The vice president came to offer a new start to a more mature relationship with Latin America’s largest nation.
Evidence of this reset came when Biden announced that President Obama will host his first state dinner of his second term in October, for Brazilian President Dilma Rousseff. An emerging power on the global stage, Brazil is seeking a role that extends beyond hemispheric leadership, especially as it is poised to be one of the largest petroleum exporters in the next decade. Moreover, the recent selection of a Brazilian, Roberto Azevedo, as the World Trade Organization’s director general is also confirmation of Brazil’s growing importance on the world economic stage.
Can we conclude from this visit that the United States is trying to reengage with its neighbors in a way that promotes partnership over patronage? Is Vice President Biden emerging as the new point man for the Americas in the administration? Judging from the reception he and the U.S. delegation received in Trinidad and Tobago, Colombia and Brazil, it seems we are entering a new phase of a relationship that now must factor-in greater competition in trade from China, and recognition that there is more to talk about than drugs. When President Obama meets this week in California with Chinese President Xi Jinping, Latin American relations may well be part of a growing set of bilateral issues that will help refocus attention to this hemisphere.
Johanna Mendelson Forman is a senior associate at the Center for Strategic and International Studies in Washington, D.C., and a scholar-in-residence at the American University School of International Service.