Uncertain about Trump, LatAm eyes Asia, particularly China

As it is likely that Exxon Mobil Corp. chief executive Rex Tillerson will serve as the U.S. secretary of state, Latin American countries are feeling increasingly uncertain about what trade policy President-elect Donald Trump will adopt during the next four years.

During his campaign, Trump said repeatedly he would reconsider the trade policy of the United States, especially the 22-year-old North American Free Trade Agreement (NAFTA), in order to win jobs back home.

However, this would contradict the possible choice of Tillerson, who has been renowned for his longstanding support for free trade.

"It is not known yet whether Trump is really going to raise U.S. protectionist flags. If he did, it would certainly affect Mexico," Mario Torrico, a political analyst at Mexico's research institute FLASCO, told Xinhua.

During a surprise trip to Mexico City to meet President Enrique Pena Nieto in August, Trump said "I shared my strong view (with Nieto) that NAFTA has been a far greater benefit to Mexico than it has been to the U.S., and that it must be improved to make sure that workers, so important, in both countries benefit from fair and reciprocal trade."

Mexico shuddered at the comment. The trade pact has helped Mexico channel 80 percent of exports to its neighbor, and an improvement Trump wants might mean huge losses for Mexico.

There are more shocks for the so-called "backyard of America" in store. High expectations are being thwarted for the Trans-Pacific Partnership (TPP), which has been trumpeted by the administration of President Barack Obama to align regional trade, but was dismissed by Trump as worthless.

The accord involves 12 countries, with Mexico, Peru and Chile in Latin America all in need of collective treaties to boost their development.

Global or regional trade agreements like NAFTA and TPP are meant to bind members for common benefits in trade and tariffs. As such impetus is diminishing in the Western Hemisphere, Latin America is turning to the East, or Asia, especially China.

"However, right now I think that Asia, China in particular, has a very significant economic potential. Latin American countries could take advantage of that economic potential to diversify their exports," said Torrico.

Highlighting the Free Trade Area of the Asia-Pacific (FTAAP), Chinese President Xi Jinping assured Latin America's aspiration for more markets based on globalization.

The FTAAP is "a strategic initiative critical for the long-term prosperity of the Asia-Pacific," Xi said at the APEC meeting in Lima, Peru, in November, urging relevant sides to "firmly pursue the FTAAP as an institutional mechanism for ensuring an open economy in the Asia-Pacific."

Pulling Asia-Pacific countries together, the FTAAP aims to revitalize the engine role of trade and investment, while enhancing the openness and inclusiveness of free trade and continuing multilateralism.

Behind this unprecedented initiative is the truth that opportunities multiply with multilateralism and decrease with protectionism.

"I am afraid that the big countries, especially the U.S., will probably incline to conservatism in global trade, (and) even more protectionism," Mauricio Santoro, professor of international relations at the Rio de Janeiro State University of Brazil, told Xinhua.

"China will maintain a more open attitude to the world," said Evandro Carvalho, an international law expert at the Getulio Vargas Foundation of Brazil, adding that is exactly what is needed now.

Official statistics show that for Latin America, China is the second largest trade partner and the third largest investment source, while Latin America is China's seventh largest trade partner and an important overseas investment destination.

In 2015, trade volume between China and Latin America reached 236.5 billion U.S. dollars, up more than twentyfold over the past decade.

"It is pivotal for us to keep good relations with China. We expect the China-Latin America trade exchanges to score new developments," said Santoro.

China, the world's second largest economy, agreed with Latin America and the Caribbean in 2015 to reach 500 billion dollars of bilateral trade within the upcoming decade.

This in part explains why the region is hesitating at U.S. offers, while paying more attention to Asia, especially China. Enditem

(With Zhang Qichang and Zhang Wuyue reporting from Rio de Janeiro, and Qian Yongwen and Luis Brito from Mexico City).

source: Xinhua