Expanding Latin America – Southeast Asia Economic Cooperation

By Carl Meacham

Pacific Alliance

The presidents of Chile, Colombia, Mexico and Peru meet in 2012 during the Fourth Pacific Alliance Summit. Latin American economic engagement and trade with Asia is growing steadily through the Pacific Alliance and TPP. Source: European Southern Observatory’s flickr photostream, used under a creative commons license.

The last year has seen the negotiation and consolidation of two major Latin American trade blocs with the explicit purpose of increasing Pacific trade: the Pacific Alliance and the Trans-Pacific Partnership (TPP). Several Latin American officials have visited their counterparts in Southeast Asia to explore the potential for expanding interregional trade. China is threatening to supplant the European Union as Latin America’s second-largest trade partner, and the region’s exports to ASEAN countries have increased six-fold since the turn of the millennium.

To be sure, relations between Latin America and Southeast Asia are in the midst of a rapid rise—a rise which stands in stark contrast to the previous, more limited nature of the regions’ affairs. What has sparked this recent effort for dynamic interregional engagement? And what potential does this relationship hold moving forward?

Ultimately, it is unsurprising that the regions are gravitating toward one another—especially on the economic front. Their economies are highly compatible and, by increasing ties, all countries involved stand to benefit. The regions’ comparably sized populations, robust economies with average projected annual growth of over four percent, and economic complementarity largely drive the keen interest in deepening ties on both sides of the Pacific Ocean.

Moreover, as the relationship develops, the regions’ increasingly intertwined economies will likely bring them together in the political realm as well. In the context of a world—and especially a United States and European Union—still struggling to recover from the 2008 global economic recession, Latin American and ASEAN countries are coming to recognize the benefits of engaging increased trade and investment with one another.

The recent developments with the TPP and the Pacific Alliance further this point. The TPP, made up of countries on both sides of the Pacific, is a high-standards trade agreement that seeks to dramatically liberalize interregional trade, address issues of intellectual property, standardize rules of origin, include government procurement, and more. And the Pacific Alliance—currently comprised of Mexico, Chile, Peru, Colombia, and Costa Rica, with many additional observers—has among its goals the firm commitment to its members’ commercial relations with Asia, especially with ASEAN. Pacific Alliance members already have more free trade agreements with Asia than do the rest of the Americas combined with negotiations  expected to proceed with little controversy or disruption moving forward.

Given the growth and rapid rise to prominence of both the TPP and the Pacific Alliance, neither of which includes Brazil, Latin America’s largest economy, and their shared goal of improving engagement with Asia, it would not be surprising to see China and Brazil showing interest in these groups moving forward. Indeed, it would be wise for the two to do just that. The Pacific Alliance should be of particular interest to the United States, as well, based as it is on a commitment to democracy, rules-based trade, and parallel economic interests—by and large the U.S. motto in the region.

Latin America is changing—and it is changing fast. The leaders in the region are increasingly branching out. Where they might once have waited on the United States, they are increasingly looking west—not north—for promising markets and mutually beneficial economic relationships.  It is these leaders that are now championing economic liberalization and rules-based trade across the Pacific, boosting economies on both sides of the ocean. It is time for the United States to realize that it is no longer the only major player in the region—and, as the environment becomes increasingly competitive, the U.S. government will do well to take advantage of the bridge Latin America is building with ASEAN nations, coming onboard before the opportunity passes.

At the end of the day, what matters most for the future of relations between Latin America and Southeast Asia is that the two sides understand one another in order to work together effectively for their mutual benefit. As that awareness grows, so too will the potential of the Pacific Alliance, the TPP, and broader interregional efforts.

To that end, there are several paths immediately available for the United States moving forward. U.S. formal admission to the Pacific Alliance as an observer state is imminent, and will firmly send the message that the Obama Administration supports regional liberalization and integration. In a similar vein, the U.S. Congress should continue to demonstrate its strong support for the ongoing TPP negotiations—and, at some point, the United States would do well to push for China’s inclusion in that group, whose importance will only grow.

Latin America and Southeast Asia are poised to grow into pivotal players in each other’s futures. So let’s get moving.

Mr. Carl Meacham is Director of the Americas Program at CSIS. Follow him on twitter: @Cordillera.


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