The United States is finding itself stuck between two increasingly aloof trading partners. To the north, Canada is nuzzling up to Europe; to the south, Latin American nations are rejecting free-trade agreements with America in favor of expanded trade elsewhere.
Of the two, Latin America is more vocally anti-America. Brazil, Argentina, Ecuador and Uruguay have all elected leaders who bristle at what they perceive as America’s arrogance toward its southern neighbor. Luiz Inácio Lula da Silva, before he became Brazil’s president, called the Free Trade Area of the Americas (a stalled plan that the U.S. is trying to revive) “a policy of annexation of Latin America by the United States” (Reuters, Dec. 28, 2004).
As a result, Latin American nations have strengthened trade ties among themselves. In December, 12 Latin nations founded the South American Community of Nations, creating a free-trade zone of over 360 million people.
But they haven’t stopped there. Evidence of Latin America’s growing independence from the U.S. includes an increase in exports to China, South Korea and other Asian Nations. Also, Latin American countries agreed in 2004 to accelerate trade talks with Europe.
Further aggravating U.S. and Latin American relations is the Byrd amendment, which helped U.S. steel industries but was ruled illegal by the World Trade Organization. Mexico, Brazil and Chile were among the countries authorized in November and December of last year to impose penalties against exports from the U.S. because of its failure to retract the law.
Even Canada, a heavyweight U.S. trade partner, submitted a complaint to the wto because of the U.S. steel amendment. It is coordinating with Europe to produce lists of U.S. products on which to impose sanctions in order to fully exploit the effect of the penalties. The sanctions could be substantial, totaling around $150 million a year (Associated Press, Dec. 21, 2004).
Canadian Prime Minister Paul Martin has made it a “priority” to diversify Canadian trade beyond just North America (cnews.canoe.ca, January 9). Disputes with the U.S. over lumber and beef, as well as the falling value of the U.S. dollar versus the Canadian dollar, have helped to drive Canadian trade dollars elsewhere. In the last two months, Martin has made strides toward increasing trade with both Brazil and China.
The trends all point in one direction: Nations that used to be comfortable with America as their primary trading partner are progressively seeking trade agreements elsewhere. Expect this to continue, and the U.S. gradually to become more isolated.