Carlos Aquino and María Osterloh*
The US Secretary of Commerce Wilbur Ross during his
participation in the VIII Summit of the Americas in Lima said that Latin
America should look to the US and not to China because it is better for them. To
support his claim he said that Latin America has a trade surplus with the US while
it has a trade deficit with China. He also said that Latin America exports
manufactures to the US but only raw materials to China[1].
What he said is not true, it is a half-truth or even a lie.
Although Latin America as a region had a trade surplus
with the US of 125.8 billion dollars in 2017 and had a trade deficit with China
of 63.3 billion dollars that same year (see Table attached), the figures are
distorted by the large trade surplus that Mexico has with the US and the large
trade deficit that Mexico has with China.
As seen in that table, which also shows the trade
balance of China and the US with most of the countries in the region, Mexico
had a trade surplus with the US of 132.4 billion dollars in 2017, and with
China had a trade deficit of 67.4 billion dollars. But many Latin American
countries had a trade deficit with the US. For example Argentina, Chile, Colombia, Guatemala, Honduras,
Panama, Peru, Uruguay, Paraguay, among others. And several
countries had trade surplus with China, such as Brazil (20.166 billion
dollars), Chile, Peru, Venezuela. Then Mexico distorts the figures, and if this
country is excluded from the figures of the region, then the trade balance of
China and the US with the region is quite different, where the region had a
large trade deficit with the US and a small one with China. The trade deficit
of 22 Latin American countries (excluding Mexico but also others small
countries, and Cuba which does not trade with the US) was of 11.3 billion
dollars, while with China was of only 4.2 billion dollars (figures for 2017 or
the last available year, see Table below). So the trade deficit of the region
(excluding Mexico) with US was nearly three times larger than with China.
As for the assertion that Latin America sells mostly
manufactured goods to the US and raw materials to China, this is also half true
or not true. Once again, if Mexico is excluded (this country mostly sells
manufactured goods to the US) it will be found that the region sells to China
and the United States mainly raw materials and import of them manufactures.
Neither China nor the US are to be blame for the fact that Latin America sell to
them mostly raw materials, because the region unfortunately has not developed a
competitive industry. If you still want to find a culprit, this would be the US
and not China, because the region has only recently increased its trade with
China, from the last decade, while with the US it has been trading for a long
time.
Instead, the region has benefited from trade with
China because this country buys more and more products from the region. Thanks
to China demand, the prices of raw materials have risen and this has
undoubtedly benefited the region. In addition China is investing a lot of money
in the region, mostly in the extraction of natural resources but lately also
invests in infrastructure, agriculture, finance and other sectors.
Nobody can tell the region to trade with one country
and not with another. Latin America should trade with all countries, especially
more with countries that grow the fastest, as is the case of China. Rather, the
US has lately become protectionist, having withdrawn from the TPP agreement
where it was together with Chile, Mexico and Peru, and is renegotiating the
NAFTA agreement where it is with Canada and Mexico. In contrast, China has
stated that it is in favor of an environment where free trade and investment
are the norm and has expressed its willingness to continue opening its country
to the world.
Table 1: Trade
surplus (or deficit) of Latin America and countries in the region with China
and US (million dollars)
|
|
2016
|
2017
|
|
Latin America
-
US
-
China
|
105,894
-81,927
|
125,875
-63,316
|
|
Argentina
-
US
-
China
|
-2,501
-6,042
|
-3,074
-7,999
|
|
Belize**
- US
- China
|
-220
-97
|
-274
-110
|
|
Bolivia**
-
US
-
China
|
19
-1,281
|
146
-1,212
|
|
Brazil
-
US
-
China
|
-799
11,769
|
1,959
20,166
|
|
Chile
-
US
-
China
|
-1,711
3,112
|
-1,074
4,614
|
|
Colombia
-
US
-
China
|
-1,826
-7,523
|
-1,120
-6,750
|
|
Costa Rica**
-
US
-
China
|
-2,252
-1,867
|
-1,647
-2,036
|
|
Ecuador
-
US
-
China
|
1,682
-2,433
|
2,096
-2,913
|
|
El
Salvador
-
US
-
China
|
-1,099
-849
|
-2,112
-758
|
|
Guatemala**
-
US
-
China
|
-2,813
-1,661
|
-2,884
-1,771
|
|
Guyana**
-
US
-
China
|
-118
-110
|
-148
-93
|
|
Haití**
-
US
-
China
|
-848
-226
|
-718
-275
|
|
Honduras**
-
US
-
China
|
-1,083
-1,261
|
-978
-1,127
|
|
México
-
US
-
China
|
122,953
-64,109
|
132,415
-67,433
|
|
Nicaragua***
-
US
-
China
|
1,450
-823
|
|
|
Panamá**
-
US
-
China
|
-1,490
-4,650
|
-1,574
-3,927
|
|
Peru
-
US
-
China
|
-872
239
|
-1,182[2]
2,736
|
|
Uruguay
-
US
-
China
|
-113
-640
|
-413
9
|
|
Paraguay
-
US
-
China
|
-557
-2,624
|
-1,782
-2,048
|
|
Dominican
Republic**
-
US
-
China
|
-2,662
-2,199
|
-2,926
-2,219
|
|
Trinidad
and Tobago***
-
US
-
China
|
1,517
-557
|
|
|
Venezuela
-
US
-
China
|
6,204
3,044
|
|
Source: Trademap[3]; for Peru the 2017
figures are from Mincetur, and for Venezuela the 2016 figures are the ones
declared by its trade partners
** 2015 and 2016 figures ***2015 figures
April
14, 2018
* Carlos
Aquino is Professor of Economics at San Marcos National University (UNMSM) and
a specialist in Asian Economics. María Osterloh holds an MBA from the Normal
University of Beijing and is a researcher in IEPA
E-mail:carloskobe2005@yahoo.com
