U.S. President Barack Obama and his Costa Rican counterpart Laura Chinchilla attend a cultural event with students in San José, Costa Rica, on May 3 2013
President Barack Obama is sending Vice President Joe Biden on a swing through Brazil, Colombia and Trinidad and Tobago later this month. Which means two things: first, the prospect of off-the-cuff gaffes in three different languages. (Memo: don’t call Latin America our “backyard” as Secretary of State John Kerry did last month.) Second, the Obama Administration is suddenly interested in Latin America and the Caribbean after four years of indifference. Obama just completed a trip to Mexico and Costa Rica, and early next month he’ll host Chilean President Sebastián Piñera and Peruvian President Ollanta Humala at the White House.
So why this sudden spate of south-of-the-border schmoozing? Even Biden calls it “the most active stretch of high-level engagement on Latin America in a long, long time.” Maybe the U.S. feels it can show its face in the region again a year after a posse of Secret Service agents was caught partying with prostitutes in Cartagena, Colombia, on the eve of the Summit of the Americas. But the serious explanation is economics: after a decade of boom in Latin America, the Administration has finally figured out that many of the region’s economies are strong enough global players now to be useful to the U.S. as bloc partners in its bid to stay ahead of China’s burgeoning trade and financial power. By incorporating dynamos like Chile, Peru and Mexico (countries with whom the U.S. already has free-trade agreements) into major new free-trade initiatives like the Trans-Pacific Partnership (TPP), Washington hopes to flex more muscle when it engages formidable regions like Asia.
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On the one hand, this development ought to make Latin America’s day. For once the region can feel as though Washington is approaching it from a standpoint of pragmatism instead of paternalism — “not out of geopolitical security fears or some sense of First World noblesse oblige,” says Christopher Sabatini, senior director of policy at the Americas Society and Council of the Americas in New York City, “but out of a realistic sense that it needs closer ties to these Latin American markets.” Trade between the U.S. and Latin America, in fact, is hitting record highs: $843 billion in goods alone last year, a 6% increase over 2011. Latin America purchases 25% of U.S. exports; Mexico alone buys 75% more from the U.S. than China does. The U.S., meanwhile, has inked free-trade pacts with more than a third of the hemisphere’s nations.
Analysts now see the U.S. waking up to the fact that it can leverage its links with other hemispheric markets to fashion what Sabatini calls “a stronger hinge to help it project itself more effectively, especially to the Pacific and Asia.” As Ed Gerwin, senior fellow for trade-and-economic policy at the Third Way think tank in Washington, D.C., pointed out recently for GE’s Ideas Lab, it makes Economics 101 sense for the U.S. Under NAFTA, for example, “Exports from Canada and Mexico often contain an extraordinarily high level of ‘embedded’ U.S. content,” Gerwin writes. “Because of this significant integration, the U.S. often wins when Canada and Mexico succeed in global markets.” That’s a big reason the U.S. brought those next-door neighbors into TPP negotiations last year — and although it doesn’t share that degree of integration with other countries in the Americas, their sheer proximity as well as growing economic clout are an impetus for, as Biden puts it, greater high-level engagement than Washington usually accords the region.
(MORE: Mexico’s New Boom: Why the World Should Tone Down the Hype)
On the other hand, Latin America can also be excused if it’s a little irked — if it’s asking the U.S., Why did you wait so long to make this outreach, if you really are making a genuine outreach? Washington feels more urgency to look south at the moment largely because of China’s increasing incursion into the hemisphere: annual China–Latin America trade exceeds $200 billion today compared with less than $10 billion in 2000. U.S.–Latin America trade may be robust. But this month Sabatini’s publication, Americas Quarterly, lays out striking evidence of U.S. decline: in 1995, for example, the U.S. sent Brazil, Latin America’s largest economy and now the world’s sixth largest, more than a fifth of that country’s imports; by 2011 it was 15%, the same share sent from China. Ditto with regard to Brazil’s exports: in 1995 the U.S. bought 21%, but just 10% in 2011, while for China it was 17%. China, as a result, surpassed the U.S. as Brazil’s top trading partner in 2009. What’s more, business with the Americas as a share of total U.S. trade has actually dropped over the past decade.
The investment tally is even more striking: in 1995, the U.S. accounted for 37% of Brazil’s foreign direct investment vs. 10% in 2011 — less than China’s. Granted, it’s good for Latin America to be less dependent on the U.S. But it’s hardly unreasonable to conclude that Washington wouldn’t be facing this China syndrome in its own hemisphere if it had simply taken “high-level engagement on Latin America” more seriously a decade or more ago. Or even four years ago, when Obama took office pledging a more benign U.S. foreign policy toward the region and then used that, say critics, as an excuse for benign neglect.
Obama’s aides argue that distractions like the 2009 Honduras coup and the relentless anti-Yanqui noise from Venezuela’s now deceased President Hugo Chávez, not to mention U.S. wars in Iraq and Afghanistan, made more substantive dealings harder in his first term — and that factors like the Latin American left’s current weakness (including last month’s slim election victory for Chávez’s handpicked successor, Nicolás Maduro) make it easier in his second. If Obama really has embarked on a more attentive Latin America strategy (a wait-and-see approach is best at this point), “I think it could be one of the more interesting things the U.S. has done post–Cold War,” says Sabatini. Better late than never.