Vice President Mike Pence will represent President Trump at the Summit of the Americas in Lima, Peru, on April 13-14. While the press focuses on whether Pence will meet with Cuba’s Raúl Castrowho has oddly been invited despite the exclusion of Venezuela’s Nicolas Maduro for being a dictatorattention should be on the need of a wide-ranging vision for hemispheric relations.
The lack of vision has been the reason these summits have become uselessunless you are a U.S.-bashing demagogue. There was a vision until 2005: it was called the Free Trade Area of the Americas. Its most daring promoters wanted to do away with the greatest number of barriers to the circulation of goods, services, ideas, capitaland perhaps, one day, even people.
This idea had been spelled out in various forms since the first summit in 1994. Concrete steps were to be taken once the leaders of the hemisphere gave their seal of approval at Mar del Plata, Argentina, in 2005. But a coterie of leftists, including Brazil’s Lula da Silva, Argentina’s Néstor Kirchner, and Venezuela’s Hugo Chavez, with the support of soccer legend Diego Armando Maradona, buried the idea, arguing that free-trade agreements were an imperialist U.S. weapon. How ironic that today the U.S. president is disfiguring the North-American Free Trade Agreement (NAFTA) with the argument that Mexico takes unfair advantage of the United States!
In a rational world, leaders would not carve up the globe into trading blocs and would understand the wisdom of eliminating barriers even unilaterally. But in the real world, some integration is better than none. That is why, now that several Latin American countries once governed by clowns have opted for presidents with a better sense of the rule of law, international relations, and open economies, the U.S. president should team up with them to put forward a new vision based on the circulation of things tangible and intangible, and, hopefully one day, people: a new, real Free Trade Area of the Americas.
Surely President Trump can intuit the opportunity. The U.S. now runs a trade surplus with South America and Central America, including Brazil and Argentina. The balance “favored” the U.S. by some $35 billion in 2017, about half the U.S. deficit with Mexico that so rattles the president. The U.S. currently exports goods worth $150 billion to Central and South America, while it imports some $116 billion. Imagine how much more the U.S. could exchange with that part of the world if all barriers were eliminated and the 11 free-trade agreements now linking it to various Latin American countries were replaced with a single integrating mechanism.
Given that many South and Central American countries have experienced faster economic growth than Mexico in recent decades and that those, such as Brazil and Argentina, once affected by a combination of disastrous policies and the end of the commodities boom are coming back, one can only imagine how much room there is to expand U.S. commerce and investment. In that scenario, Trump could conceivably see the U.S. surplus with Central and South American countries match or surpass the deficit with Mexico. Trade surpluses and deficits are meaningless concepts, but if deficits are a problem in Trump’s mind, why not expand trade with the entire region as a way of “compensating” for Mexico´s surplus with the U.S. by espousing a wholly integrated Americas rather than fighting self-defeating trade wars?
The relationship has room to grow. Last year, more than 50 percent of foreign direct investment in Latin America came from the European Union and only 20 percent from the U.S. Many Americans denounce China’s growing presence in the region as a threat to this country. But the truth is that the U.S. footprint is much larger than Chinas, though well below its potential.
Nobody is spelling out a clear vision of hemispheric relations today. If the U.S. president and his Latin American counterparts don’t want the Lima summit to be another missed opportunitya farcical spectacle with no substanceit is time to start thinking big again.
|Alvaro Vargas Llosa is Senior Fellow at The Center on Global Prosperity at the Independent Institute. He is a native of Peru and received his B.Sc. in international history from the London School of Economics. His Independent Institute books include Global Crossings: Immigration, Civilization, and America, Lessons From the Poor: Triumph of the Entrepreneurial Spirit, The Che Guevara Myth and the Future of Liberty, and Liberty for Latin America.|
The erosion of national boundariesand even the idea of the nation stateis already underway as people become ever more inter-connected across borders. A jungle of myth, falsehood and misrepresentation dominates the debate over immigration. The reality is that the economic contributions of immigration far outweigh the costs.