Friday, March 11, 2011

President Obama visits to Latin America countries: March 2011

When the evaluations were made, there were probably few doubts about the countries President Obama could consider in his short list to his first trip to Latin America: El Salvador, Brazil and Chile .These countries represent what has been historically a priority:
a.- Its strategic influence in Central America
b.- The importance of having reliable Latin America partners, and
c.- To support economic models , which represent an alternative approach to the traditional state based economic model in Latin America.-
Adding up all of these variables, it make up a single one but quite relevant : The rise of Latin America as a new land for investment opportunities at a global scale.
Going back in time, this long run purpose have roots in the late eighties following the Latin America external debt crisis,(1980) and the failure of inward looking trade approach (1950-1980). The Presidency of Mr G. Bush (father),(1989) applied a different focus which based on key consensus concerning trade, investment and debt renegotiation for this continent, shifted from ideology to business pragmatism. (politics inspired by business, rather than business inspired by politics).It was called “An Initiative for the Americas” which also proposed a NAFTA (North America free Trade agreement) as a goal to be reached, in the next decade. A few years later (1995), after the implementation of a free trade agreement with Mexico and Canada , President Clinton could start over the preliminary talks for a free trade agreement for the Americas .(First summit for the Americas held in Miami).
In the year 2004, President G W Bush finally signed the first free trade agreement between USA and a southern Latin America country (Chile) .Then, it followed other countries (Peru ,Uruguay, and Colombia which is still on the list for Congress approval), such that actually there are a whole range of new opportunities for trade, and investment in a variety of fields. It follows that USA-Latin America interaction , it is not that much a matter of countries to include in a Presidential visit, but rather a matter of a long run purpose shared by Latin American economies , which requires additional resources better to be disposable than to be scarce. Sure, there are economies which excluded themselves out, but sooner or later they will join the ones who has taken the lead.
Besides, the trade flows between USA and Latin America, have grown consistently in the last decade. Between 1998 and 2009 total US merchandise trade (export plus import) with Latin America grew 82%, compare to 72% with Asia and 64% for the world. Mexico account with a 11,7% of total USA merchandise trade flows , and 56% of the region trade flows with USA, the rest of Latin America account with a 8,5%(Brazil, Colombia and Venezuela). Thus, the USA-Latin America trade partnership goes forward to become deeper.
On the other side , there is still an important trade potential arising from the new rising Asian markets, and its demand for raw materials and commodities which requires huge investment in infrastructure facilities , new technologies for energy supply and innovation. Brazil and Argentina make an interesting and huge market for commodities, to be exported to Asian economies. Chile (along with Peru), play the role of the exit port toward the pacific of such a potential. At the same, time it also represents a reference of stability for additional investments , and integration to global economy, which also requires new policies approaches in terms of a deeper decentralization focused in regional competitiveness requirements , and additional investment in energy non traditional sources to stay on with the expectations.-.