Gary Regenstreif
By Gary Regenstreif
Though the US and Chinese presidents heralded a “new model” of cooperation at their weekend summit, a growing competition looks more likely. The whirlwind of activity before President Barack Obama met with his Chinese counterpart Xi Jinping in the California desert revealed that Beijing and Washington’s sights are set on a similar prize — and face differing challenges to attain it.
Their focus is Latin America and the prize is increased trade and investment opportunities in a region where economic reforms have pulled millions out of poverty and into the middle class.
Latin America is rich in the commodities and energy that both China and the US need, largely stable politically and eager to do deals.
Consider the travel itinerary: Obama visited Mexico and Costa Rica last month. Vice President Joe Biden recently went to Colombia, Trinidad and Tobago and Brazil.
Chile’s president paid Obama a visit last week, Peru’s leader arrived Tuesday and Brazil’s is due in October.
Meanwhile, just after Biden left Trinidad, Xi arrived, part of a tour that also took him to Costa Rica and Mexico to promote trade and cooperation.
US and Chinese officials, however, are finding a more self-confident Latin America, able to leverage its new strength to forge better agreements and find multiple trading partners.
That will likely force Washington to work harder to maintain its leading trade position against China — which has money to burn in the region.
“There is a more energetic [US] tone, a more optimistic mood about economic agenda in second term than [the] first time,” Michael Shifter, president of the Inter-American Dialogue, a Washington policy group, told me.
“There’s something happening in the region and the US wants to be part of it. Whether there’s a well-thought-out vision or policy remains a question. But there is more of an affirmation of the region and a willingness to engage.”
The US, Latin America’s largest trading partner throughout much of its history, still retains this position.
Washington has now signed free trade agreements with more than a third of the hemisphere’s nations and annually exchanges more than $800bn in goods and services with Latin America — more than three times the region’s commerce with China.
In Obama’s first term, however, the administration was widely viewed as neglecting Latin America. And China has moved in fast.
China built its annual trade with the region from virtually nothing in 2000 to about $260bn in 2012. In 2009, it overtook the US as the largest trading partner of Brazil, the region’s powerhouse — largely through massive purchases of iron ore and soy.
Washington’s renewed ardour is at least partly because of the fear that China will repeat in Latin America the economic success it has built in Africa.
China has been able to present itself as a benevolent partner there, which has played well against the West’s history of meddling in domestic affairs.
As with many new starts, a recognition of past mistakes is in order. “For many in Brazil,” Biden said, “the United States doesn’t start with a clean slate. There’s some good reason for that scepticism.
That scepticism still exists and it’s understandable. But the world has changed. We’re moving past old alignments, leaving behind old suspicions and building new relationships.”
China has particular interest in Mexico, the region’s second-largest market. Beijing has been competing with Mexico to supply the US market with manufactured goods.
But China is now looking to work with Mexico City — investing in infrastructure, mining and energy because of the expected reforms that would open the oil industry to foreign investment.
There are obstacles ahead. One irritation that President Enrique Peña Nieto shared with Xi is that though Mexico posted a trade surplus with its global partners, it ran a big deficit with China.
China is looking for even more however. It is eager to pursue a free trade agreement with Mexico, but Mexico City said last week it was too soon.
Mexico’s trade with the US continues to flourish and it is due to displace Canada as the largest US trade partner by the end of the decade, according to the Dialogue.
Each superpower also brings baggage to the region. Washington still seeks to exert pressure on its partners. It has told Brazil, for example, that it has the responsibility to use its leverage with others, such as Iran.
“Chinese investment,” Farnsworth said, “doesn’t always bring with it good governance practices or anti corruption or environmental concerns.”
Just as Latin America doesn’t want to rely too much on the US, it also now doesn’t want to depend too much on Beijing, particularly in light of the China’s current economic slowdown.
“It gives them options,” Shifter said about the different dynamics in play.
“The US relationship comes with more complications. The Chinese one comes strictly on the economic question. They’re very targeted, strategic in areas they want to support,” Shifter said.
“They have a specific agenda. The US agenda is more diffuse. Latin America welcomes both,” he added.
REUTERS
By Gary Regenstreif
Though the US and Chinese presidents heralded a “new model” of cooperation at their weekend summit, a growing competition looks more likely. The whirlwind of activity before President Barack Obama met with his Chinese counterpart Xi Jinping in the California desert revealed that Beijing and Washington’s sights are set on a similar prize — and face differing challenges to attain it.
Their focus is Latin America and the prize is increased trade and investment opportunities in a region where economic reforms have pulled millions out of poverty and into the middle class.
Latin America is rich in the commodities and energy that both China and the US need, largely stable politically and eager to do deals.
Consider the travel itinerary: Obama visited Mexico and Costa Rica last month. Vice President Joe Biden recently went to Colombia, Trinidad and Tobago and Brazil.
Chile’s president paid Obama a visit last week, Peru’s leader arrived Tuesday and Brazil’s is due in October.
Meanwhile, just after Biden left Trinidad, Xi arrived, part of a tour that also took him to Costa Rica and Mexico to promote trade and cooperation.
US and Chinese officials, however, are finding a more self-confident Latin America, able to leverage its new strength to forge better agreements and find multiple trading partners.
That will likely force Washington to work harder to maintain its leading trade position against China — which has money to burn in the region.
“There is a more energetic [US] tone, a more optimistic mood about economic agenda in second term than [the] first time,” Michael Shifter, president of the Inter-American Dialogue, a Washington policy group, told me.
“There’s something happening in the region and the US wants to be part of it. Whether there’s a well-thought-out vision or policy remains a question. But there is more of an affirmation of the region and a willingness to engage.”
The US, Latin America’s largest trading partner throughout much of its history, still retains this position.
Washington has now signed free trade agreements with more than a third of the hemisphere’s nations and annually exchanges more than $800bn in goods and services with Latin America — more than three times the region’s commerce with China.
In Obama’s first term, however, the administration was widely viewed as neglecting Latin America. And China has moved in fast.
China built its annual trade with the region from virtually nothing in 2000 to about $260bn in 2012. In 2009, it overtook the US as the largest trading partner of Brazil, the region’s powerhouse — largely through massive purchases of iron ore and soy.
Washington’s renewed ardour is at least partly because of the fear that China will repeat in Latin America the economic success it has built in Africa.
China has been able to present itself as a benevolent partner there, which has played well against the West’s history of meddling in domestic affairs.
As with many new starts, a recognition of past mistakes is in order. “For many in Brazil,” Biden said, “the United States doesn’t start with a clean slate. There’s some good reason for that scepticism.
That scepticism still exists and it’s understandable. But the world has changed. We’re moving past old alignments, leaving behind old suspicions and building new relationships.”
China has particular interest in Mexico, the region’s second-largest market. Beijing has been competing with Mexico to supply the US market with manufactured goods.
But China is now looking to work with Mexico City — investing in infrastructure, mining and energy because of the expected reforms that would open the oil industry to foreign investment.
There are obstacles ahead. One irritation that President Enrique Peña Nieto shared with Xi is that though Mexico posted a trade surplus with its global partners, it ran a big deficit with China.
China is looking for even more however. It is eager to pursue a free trade agreement with Mexico, but Mexico City said last week it was too soon.
Mexico’s trade with the US continues to flourish and it is due to displace Canada as the largest US trade partner by the end of the decade, according to the Dialogue.
Each superpower also brings baggage to the region. Washington still seeks to exert pressure on its partners. It has told Brazil, for example, that it has the responsibility to use its leverage with others, such as Iran.
“Chinese investment,” Farnsworth said, “doesn’t always bring with it good governance practices or anti corruption or environmental concerns.”
Just as Latin America doesn’t want to rely too much on the US, it also now doesn’t want to depend too much on Beijing, particularly in light of the China’s current economic slowdown.
“It gives them options,” Shifter said about the different dynamics in play.
“The US relationship comes with more complications. The Chinese one comes strictly on the economic question. They’re very targeted, strategic in areas they want to support,” Shifter said.
“They have a specific agenda. The US agenda is more diffuse. Latin America welcomes both,” he added.
REUTERS
