As Donald Trump pushes metal tariffs, Latin America builds its own wall

Trump's policies and disparaging remarks about immigrants have forced other countries to help each other out and look for alternatives among themselves

Latin American leaders braced for the worst last year as they watched President Trump take office, with his vows to protect Americans “from the ravages of other countries making our products, stealing our companies and destroying our jobs.”  Then something remarkable happened.

Governments across the hemisphere began forging closer commercial ties with one another and paring back some of their own protectionist policies, embarking on a course reminiscent of what the United States itself had proposed in the 1990s but which failed to materialise: a free trade area reaching from Canada to Chile.

Washington’s protectionist stance comes as leaders in the region are increasingly looking to Asia, and China in particular, to expand trade, obtain loans and finance infrastructure projects.

“Trump has inadvertently done more for commercial integration in Latin America than many Latin American leaders managed to accomplish,” said Patricio Navia, a political scientist at New York University.

Trump’s policies and disparaging remarks about immigrants, Navia added, have forced other countries to say, “We have to help each other out and look for alternatives among ourselves.”

Members of Mercosur — the trade bloc that includes Brazil, Argentina, Uruguay and Paraguay — have jump-started trade negotiations with the European Union, which officials say are closer than ever to a breakthrough after languishing for years.
Canada, which is worried about the potential unraveling of the North American Free Trade Agreement, has begun negotiating a free trade deal with Mercosur.

“There’s never been a better time to diversify,” said François-Philippe Champagne, Canada’s minister of international trade. “It would mean opening a market of some 300 million people, a rising middle class, an economic powerhouse in this part of the world.”

Chile hosted the signing of a trade agreement this month that 11 Pacific nations, including Mexico, Peru and Canada, salvaged after the Trump administration walked away from the agreement, originally known the Trans-Pacific Partnership.

The Pacific Alliance, another free trade bloc that Chile, Peru, Colombia and Mexico formed in 2011, is aiming to expand. Its members are negotiating a partnership with Mercosur and are considering admitting Australia, Canada, New Zealand and Singapore as associate members.

For all of the recent advancements, economists and government officials say that significant obstacles stand in the way of substantive commercial integration in the Americas. These include competition among exporters of the same commodities and poor infrastructure that makes cross-border value chains impractical. Despite moves to lower trade barriers, protectionist policies remain entrenched in some of the largest countries, including Brazil and Argentina.

And voters in several of the region’s largest economies, including Brazil, Mexico and Colombia, will elect new leaders this year, which could diminish the appetite for free trade and integration in some corners.

But Trump’s imposition of new tariffs on steel and aluminium this month, and his appearing to relish the prospect of initiating a trade war, makes him an outlier in the region.

“I think the region as a whole — but especially Brazil and Argentina — has learned to recognise that protectionism is a lose-lose strategy,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics. “Countries saw perverse effects of trade barriers play out in their own economies, and will now get a chance to observe what they are likely to do to the most important economy on the planet.”

In 2002, Brazil was among the key naysayers to the Free Trade Area of the Americas, the deal intended to span two continents, which was championed by the Clinton and George W Bush administrations.

©2018 The New York Times News Service