Protectionism is back in Latin America, though that fact was kept out of the Summit headlines according to on-the-spot reporting by the Miami Herald. Argentina and Brazil appear to be leading the pack. I have posted recently about an unprecedented complaint by fourteen countries in the WTO about Argentina’s import license regime, plus Argentina’s refusal to pay off on international arbitration awards. They are on a roll in Buenos Aires, where the Argentines have also banned books, citing the possible lead content of foreign ink as the reason. Mexico is furious with Brazil because the latter has reneged on an old deal for free trade in vehicles, putting in jeopardy a proposal for a full Mexico-Brazil free trade agreement.
Mexican President Felipe Calderón took the unusual step of denouncing the protectionist trend publicly at the beginning of the summit, in a meeting with some of the hemisphere’s top business leaders – and of naming names.
Latin America’s way to face the world’s economic recession “should clearly not be protectionism,” Calderón said. “There are protectionist measures in the U.S. Congress, but there is also protectionism in many, I would say, in all of our countries.”
He added that for Mexico “it is vital to have a free trade agreement with Brazil. But unfortunately, what we are finding (in Brazil) is a trend in the opposite direction.”
- Miami Herald, April 15, 2012
U.S. President Barack Obama is said to have made trade issues the centerpiece of his chat with Argentina’s President Cristina Fernández de Kirchner last Saturday. Peru was heard to complain about trade problems with Brazil, and Colombia has trade worries with Ecuador. The impression is that protectionism is on the march. This is not unusual after years of recession, but the economies of Latin America fared better than most the last few years.
Some are blaming high commodity prices and the competition to supply raw materials to China for de-emphasizing the need to build trade among the Latin countries. This gained credence this week with Argentina’s threat to nationalize an oil company at the expense of its majority shareholder in Spain. The hot rumor is that Buenos Aires plans to sell the stolen company to a Chinese oil company.